D.Dis.No. 9583/P1/2018, Revision Petition on Document No. P.19/2016
The Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, issued D.Dis.No. 9583/P1/2018 dated 9 December 2023, allowing Muthoot Finance Limited's revision petition concerning Debenture Trust Deed No. P.19/2016 registered at the Sub Registrar Office, Virugambakkam. It found that the trustee's power to sell mortgaged property was limited to carrying out the trust in the event of default, and set aside the Sub Registrar's decision treating the deed as also containing a power of attorney to sell immovable property for consideration.
What the proceeding covers
D.Dis.No. 9583/P1/2018 dated 9 December 2023 concerns a Debenture Trust Deed executed on 20 January 2016 by Muthoot Finance Limited, Kochi, in favour of IDBI Trusteeship Services Limited. The deed secured repayment of debentures valued at Rs.500,00,00,000 by mortgaging property in favour of the debenture trustee.
The deed bore stamp duty of Rs.40,000. The Sub Registrar, in the cadre of District Registrar, Virugambakkam, classified it as covering both a mortgage without possession and a power of attorney to sell immovable property granted for consideration. The Sub Registrar consequently determined deficit stamp duty of Rs.20,00,00,000 and a penalty of Rs.1,000.
Why the classification was challenged
Muthoot Finance Limited filed a revision petition before the Chief Controlling Revenue Authority and Inspector General of Registration. Its advocate was personally heard on 20 September 2023.
The petitioner argued that:
- The principal purpose of the document was to create a trust and mortgage securing repayment to debenture holders.
- The trustee could bring the mortgaged property to sale only after an event of default.
- Clause 52, appointing the debenture trustee as the company's attorney, was ancillary to the trust and mortgage.
- No consideration flowed from the debenture trustee to Muthoot Finance Limited. Instead, the company paid remuneration to the trustee for protecting the interests of non-convertible debenture holders.
Finding and result
The Chief Controlling Revenue Authority and Inspector General of Registration examined Clause 52, which authorised the debenture trustee to act for the company when necessary to carry out the trusts, obligations and powers created by the deed.
The authority concluded that:
- The trustee's power was restricted to carrying out the trust and its obligations.
- The power to sell was available only as a legal remedy in the event of default.
- The power was not absolute or final.
- The deed could not be treated as a power of attorney to sell immovable property granted for consideration.
The revision petition was allowed, and the Sub Registrar's decision imposing the classification and resulting deficit stamp duty and penalty was set aside.
Who is directly affected
D.Dis.No. 9583/P1/2018 directly concerns Muthoot Finance Limited, IDBI Trusteeship Services Limited and Debenture Trust Deed No. P.19/2016 at the Sub Registrar Office, Virugambakkam. It addresses how the trustee's conditional enforcement power was treated for stamp duty in that specific deed.
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
Was the Debenture Trust Deed treated as a separate power of attorney to sell property?
No. The Chief Controlling Revenue Authority and Inspector General of Registration found that the trustee's power was limited to carrying out the trust and could be used to sell the property only in the event of default.
What happened to the deficit stamp duty and penalty imposed by the Sub Registrar?
The revision petition was allowed and the Sub Registrar's decision was set aside. That decision had determined deficit stamp duty of Rs.20,00,00,000 and a penalty of Rs.1,000.
Why was the trustee given authority to deal with the mortgaged property?
The authority found that the power existed to carry out the trusts and obligations created by the Debenture Trust Deed. It was a legal remedy available in the event of default, not an unrestricted power of sale.
Which registered document does the decision cover?
It covers Debenture Trust Deed No. P.19/2016 at the Sub Registrar Office, Virugambakkam, executed on 20 January 2016 by Muthoot Finance Limited in favour of IDBI Trusteeship Services Limited.
