Richard Garth, C.J.
1. In this case certain immoveable property was sold by the Sheriff of Calcutta in execution of a decree of this Court for Rs. 5,000. It was sold subject to two mortgages, securing repayment with interest of Rs. 7,000 and Rs. 250 respectively.
2. The Board of Revenue have referred to us the question whether the stamp on the sale certificate should be for Rs. 5,000, the purchase-money, or for Rs. 12,250, being the amount of the purchase-money plus the sum secured by the mortgages.
3. The Collector and the Board of Revenue consider that the stamp should be for Rs. 12,250, and we are referred to two Full Bench authorities, one of the Bombay High Court Sha Nagindas Jeychand v. Halalkore Nathwa Gheesla I.L.R. 5 Bom. 470 and the other of the Madras High Court-Reference under Section 49 of the Stamp Act I.L.R. 5 Mad. 18, which appeared to be in conflict.
4. The Bombay Court decided that where a certificate of sale expressly stated that the sale was made subject to the mortgage right of a third party, the principal sum due upon the mortgage was to be deemed a part of the consideration for the transfer under Section 24 of the Stamp Act.
5. The Madras Court decided that when property is sold under a decree of Court subject to a mortgage, it is not sold 'subject to the payment of the mortgage debt' within the meaning of Section 24. They held that the section only applies, where it is part of the consideration for the transfer, that the mortgage debt should be paid off.
6. Now Section 24 of the Stamp Act appears to be a re-enactment of a provision of the same effect under the title or article 'conveyance' in Part I of the schedule to the English Stamp Act, 55, Geo, III, Cap. 184. This is pointed out in the judgment of the Bombay High Court.
7. The construction which was put upon that enactment by the English Court of Exchequer in the case of The Marquis of Chandos v. The Commissioners of Inland Revenue 6 Exch. 464 was entirely in accordance with the above decision of the Madras High Court, and it is noteworthy that this decision of the Court of. Exchequer was not appealed against, as it might have been. It seems to have been taken for granted that the decision was correct; but the enactment in the Statute of Geo. Ill was afterwards amended by Parliament in the year 1853 by Section 10 of the Statute 16 and 17 Vic. Cap. 59.
8. That section, after reciting the concluding portion of the enactment of the Statute of Geo. III, which we have just referred to, and that it had been held and determined that the said ad valorem duty was payable in respect of any such sum or debt, only where the purchaser is personally liable or bound or undertakes or agrees to pay the same, or to indemnify the vendor against the same; and that it was expedient to alter and amend the law in that respect, enacted as follows:
Where airy lands or other property shall be sold and conveyed subject to any mortgage wadset, or bond or other debt, or to any gross or entire sum of money, such sum of money or debt shall be deemed the purchase or consideration money, or part of the purchase or consideration money, as the case may be, in respect whereof the said ad valorem duty shall be paid, notwithstanding the purchaser shall not be or become personally liable, or shall not undertake or agree to pay the same, anything in any Act or otherwise to the contrary notwithstanding.
9. Now it must be borne in mind that Section 24 of the Indian Stamp Act follows the language of the Statute 55, Geo. III, Cap. 184, and not that of the amending Act 16 and 17 Vic, Cap. 59, and therefore the decision of the Madras High Court is in accordance with English authority.
10. And it seems also in accordance with reason and justice.
11. Where property is sold subject expressly to the payment or transfer by the purchaser of any money or stock, whether such money or stock be charged upon the property or not, such payment or transfer becomes the consideration for the sale; and as soon as it is paid or transferred, and not till then, the purchaser is entitled to his conveyance. In such a case it is perfectly fair that the ad valorem stamp duty should be calculated upon the amount of such money or stock.
12. But where a property is merely sold subject to a mortgage or other charge, the payment of such mortgage or charge forms, under ordinary circumstances, no part of the consideration for the purchase. The vendor simply sells, and the purchaser buys an encumbered property; and it is in no way essential to the validity of the sale that the mortgage or charge should be paid off.
13. Thus, fake the case of a property worth Rs. 50,000, which is mortgaged for Rs. 45,000. The equity of redemption is sold under a decree for Rs. 5,000. It surely would be unjust to oblige the purchaser to stamp his sale certificate with a duty of Rs. 50,000, when the value of the thing which he buys is only Rs. 5,000. It is observable that the Bombay High. Court, although it quotes the English authority, and apparently decides in opposition to it, points out the difficulties and injustice to which Section 24 of the Stamp Act may give rise, and considers apparently that, if the fact of an existing charge upon the property sold appeared upon the proclamation only and not upon the certificate of sale, Section 24 would not apply; and yet if a charge exists upon the property, it is of course sold subject to that charge, whether it is mentioned in the sale certificate or not. There seems no doubt that the observations of the Bombay High Court, with reference to the difficulty and injustice to which the section may give rise, are only too well founded.
14. We observe, however, that the opinion of the Collector of Stamps and also of the Board of Revenue seems influenced, in some measure at least, by a provision in the Transfer of Property Act, which has come into operation since the Madras Full Bench case was decided.
15. It is considered apparently, that Section 55 of that Act makes it obligatory upon the transferee of immoveable property (in the absence of any contract) to the contrary to pay off any mortgage or charge which may exist upon the property at the time of the transfer.
16. We believe that this section has not yet received any judicial interpretation; but it would seem to mean nothing more than this, that the transferee, as between him and the transferor shall take upon himself the burthen of any charge which may exist upon the property. This would leave the law in the generality of cases as it was before the Act passed. The transferee would, as a matter of course, have taken the property subject to the charge. The only burthen which he would not have taken upon himself would be the personal liability (if any) of the transferor, and it is possible that Section 55 may effect some alteration in the law in that respect.
17. But even if it does, it would only affect voluntary notes; and would not apply to sales effected in execution under decrees of Court. Section 2 of the Act expressly provides that the Act (same as provided in Section 57 and chap. IV) is not intended to affect 'any transfer by operation of law or any transfer in execution of a decree or order of a Court.'
18. We think,' therefore, that the judgment of the Madras Court is right, and that consequently in the present case the sale certificate is chargeable only with stamp duty on Rs. 5,000.