D.Dis No.16162/P1/2021, Review Petition on Document No.P-215/2016
The Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, issued D.Dis No.16162/P1/2021 dated 10 August 2022, allowing Repco Home Finance Limited's revision petition concerning a Mortgage Deed Cum Debenture Trust Deed registered as pending document No.P215/2016 at the Ashok Nagar Sub Registrar Office. The authority classified the document only as a simple mortgage under Article 40(b) of the Indian Stamp Act, 1899, and set aside the District Registrar, Chennai (Central) order demanding deficit stamp duty of Rs.4,00,00,000 and a penalty of Rs.2,000.
Document and parties
D.Dis No.16162/P1/2021 concerns a Mortgage Deed Cum Debenture Trust Deed executed on 29 December 2016 to secure debentures issued by Repco Home Finance Limited.
- Pending document number: P215/2016, Ashok Nagar Sub Registrar Office.
- Executant: Repco Home Finance Limited, Chennai.
- Claimant and trustee: Catalyst Trusteeship Limited, Pune.
- Amount secured: Rs.100,00,00,000.
- Stamp borne by the deed: Rs.40,000.
Why the stamp duty was disputed
The registering officer considered wording in clause 11 as allowing Catalyst Trusteeship Limited to deal with the trust properties, including by sale or lease, before the security became enforceable. The document was therefore impounded on the view that it also granted a power of attorney to sell immovable property for consideration.
The District Registrar, Chennai (Central), classified the document as having two components:
- A mortgage deed under Article 40(b) of the Indian Stamp Act, 1899.
- A power of attorney to sell immovable property granted for consideration under Article 48(e).
Based on that classification, the District Registrar determined deficit stamp duty of Rs.4,00,00,000 and a penalty of Rs.2,000.
Findings on revision
The Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, read clauses 11 and 12 together. The authority found that the trustee could exercise the relevant powers only with the borrower company's concurrence and in the event of default.
The authority therefore concluded that:
- The trustee's power was neither absolute nor final.
- The power was only a legal remedy available upon default.
- The deed could not be treated as a power of attorney for consideration under Article 48(e).
- The deed was classifiable only as a simple mortgage under Article 40(b).
Who is affected
D.Dis No.16162/P1/2021 directly affects Repco Home Finance Limited, Catalyst Trusteeship Limited and pending document No.P215/2016. The revision petition was allowed, and the District Registrar, Chennai (Central) decision imposing the additional classification, deficit stamp duty and penalty was set aside.
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Common questions
Was the deed treated as a power of attorney to sell property?
No. The Chief Controlling Revenue Authority and Inspector General of Registration concluded that the deed could not be classified as a power of attorney for consideration under Article 48(e).
What was the final stamp classification of document No.P215/2016?
The document was classified only as a simple mortgage under Article 40(b) of the Indian Stamp Act, 1899.
Did the Rs.4,00,00,000 deficit stamp duty demand remain in force?
No. D.Dis No.16162/P1/2021 allowed the revision petition and set aside the District Registrar, Chennai (Central) order that determined deficit stamp duty of Rs.4,00,00,000 and a penalty of Rs.2,000.
Why was the trustee's power not treated as an independent power to sell?
The authority found from clauses 11 and 12 that the trustee could act only with the borrower company's concurrence and in the event of default. The power was therefore neither absolute nor final.
