1. Under the orders of Krishnaswami Naidu J. on Appln. No. 1170 of 1951, the Board of Revenue, Madras, as the Chief Controlling Revenue Authority, submitted a statement of the case under Section 57) Stamp Act, (Act 2 of 1899). The question for determination is the liability of the document, executed on 22-3-1948 by the Crompton Engineering Co. (Madras) Ltd., (referred to as the Borrower) to Best and Co., Ltd., (referred to as the company in the document), to be stamped as a mortgage deed under the provisions of the Indian Stamp Act.
2. The clauses of that document dated 22-3-1948 relevant for the determination of this question ran:
"Clause 1: That the whole of the Borrower's floating assets .........and comprising lands, buildings and premises bearing door No. 27, Tiruvottiyur High Road, Madras, together with the electrical installation, plants, and machinery, furniture and fittings, office and transport vehicles, loose tools, book debts, imprest cash with employees, investments, interest accrued on investments, cash on hand and with bankers belonging to the Borrower and all other stocks and goods of the Borrower whether raw or in process of manufacture, and all articles manufactured therefrom which now or hereafter from time to time during the security shall be brought into, stored or be in or about the Borrower's warehouse, godowns, buildings or premises aforesaid or wherever else the same may be including any such goods in course of transit or delivery, shall be -hypothecated to the company and its assigns by way of first charge as continuing security for the payment by the Borrower ......... Clause 9: That this Agreement shall operate as a continuing security for all monies, indebtedness and liabilities aforesaid notwithstanding the existence of a credit balance on the said account at any time or any partial, payments or fluctuations of accounts."
The document dated 22-3-1948 was not attested. It was not registered.
3. "Mortgage deed" is defined for the purposes of the Stamp Act, and for the purposes of that Act only, in Section 2(17) of the Act:
"'Mortgage deed' includes every instrument whereby for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates, to, or in favour of, another, a right over or in respect of specified property."
Of the arguments advanced by Mr. Nambiar for the borrower in support of his contentions, that the document was not a mortgage deed as defined by Section 2(17) of the Stamp Act only two need be considered: (1) there was no 'transfer' of right and (2) there was no transfer of right over or in respect of 'specified' property.
4. The reference to the premises described in the document dated 22-3-1948 as bearing door No. 27 Thiruvpttiyur High Road, is obviously to a "specified" property within the meaning of Section 2(17), Stamp Act. Even with reference to the stock-in-trade the -- 'Secretary of Commissioner of Salt, Abkari and Separate Revenue, Madras v. Mrs. E. W. Orr and Bank of Madras AIR 1916 Mad 374 (2) (F.B.) (A), should suffice to conclude the question whether it is "specified property" within the meaning of Section 2(17), Stamp Act. White C. J. observed at page 376 ; "It seems to me that so far as the stock-in-trade etc. which are described in the deed as trust property are concerned, the trust property is specified."
5. Various other items of properties of the Borrower were no doubt enumerated in the document dated 22-3-1948. But the transaction was one and indivisible, and, the document to evidence that was equally one and indivisible. It is on that basis we have to determine its liability to be stamped under the provisions of the Indian Stamp Act.
6. Mr. Nambiar was well-founded in his contention, that there could be no transfer of rights over or in respect of the specified premises No. 27 Thimvottiyur High Road, unless the requirements of Section 59, T. P. Act, were satisfied.
7. Section 59, T. P. Act, runs : "Where the principal money secured is one hundred rupees or upwards, a mortgage other than a mortgage by deposit of title deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses." That the specified immoveable property was worth over Rs. 100 was not in dispute. But the document dated 22-3-1948 was neither attested nor registered.
8. That the transfer contemplated by Section 2(17), Stamp Act, is a transfer valid in law, should be obvious. Such a valid transfer would not have been effected under the document dated 22-3-1948, which was neither attested nor registered. Under Section 59, T. P. Act, a valid mortgage can be effected only when the instrument is (1) signed by the mortgagor; (2) attested by at least two witnesses; and (3) registered. Leaving aside the question of registration of an insufficiently stamped document, no one can claim that a document not signed by the mortgagor is an instrument of mortgage liable to be stamped. That the attestation need not be contemporaneous with the signature of the mortgagor in no way affects the question at issue in this case; the document was not attested. The law embodied in Section 59, T. P. Act, necessitates the signature of the mortgagor and the attestation by at least two witnesses in equal degree. To ensure the validity of the instrument as a mortgage, attestation is made as much a part of the execution as the signature of the mortgagor.
9. The learned Government Pleader pointed out that, on 29-5-1948, when the document was impounded under Section 33, Stamp Act, the time for effective registration of that document had not expired. The document was not attested, and it was not registered. The impounding authority could not have enforced registration. In any case, it could not cure the failure to attest, which by itself was enough to invalidate the document as an instrument of mortgage.
10. The learned Government Pleader urged that it was as an "instrument" that the document of 22-3-1948 was impounded under Section 33, Stamp Act. The definition of "instrument" under Section 2(14), Stamp Act, runs :
"An instrument includes every document by which any right or liability; is or purports to be created, transferred, limited, extended, extinguished or recorded."
The document certainly purported to transfer the right in the immoveable property among other things, though in law it could not and did not transfer that right. Even Section 33 refers to an instrument chargeable with duty, that is, stamp duty payable under the provisions of the Indian Stamp Act. The document dated 22-3-1948 may be an instrument; but it is not an instrument chargeable with duty, that is, chargeable, as a mortgage deed as denned by Section 2(17), Stamp Act.
11. The very difference between the definition of ah instrument in Section 2(14) and a mortgage deed in Section 2(17) should show that the "transfer" provided for in Section 2(17) is a transfer valid in law. To make a document liable to stamp duty as a mortgage deed, it is not enough if the document purports to effect a transfer. It must "transfer."
12. We hold that the document dated 22-3-1948 is not a mortgage deed within the meaning of Section 2(17), Stamp Act, and it is not, therefore, liable to be stamped as a mortgage deed under the provisions of the Indian Stamp Act.
13. No order as to costs.