D.Dis.No.20904/P1/2020-1, Revision Petition on Simple Mortgage Deed
The Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, issued D.Dis.No.20904/P1/2020-1 dated 22.08.2024, setting aside the District Registrar, Chengleput order that demanded deficit stamp duty of Rs.3,19,60,000 and a penalty of Rs.40,000 from Aadhar Housing Finance Limited. The authority found that the mortgage secured debentures, not the listed earlier bank loans, and directed payment of deficit stamp duty of Rs.10,00,000 and a penalty of Rs.10,000 under the Indian Stamp Act, 1899, read with G.O.(Ms).No.60, Commercial Taxes and Registration (J1) Department, dated 16.03.2020.
What the proceedings decide
D.Dis.No.20904/P1/2020-1 dated 22.08.2024 concerns Simple Mortgage Deed No.P.142/2020 in the Joint II Sub Registrar Office, Chengalpattu. Aadhar Housing Finance Limited executed the deed on 08.05.2020 in favour of Beacon Trusteeship Limited to secure repayment of debentures by mortgaging immovable property. The amount secured was Rs.300,00,00,000, and the deed bore stamp duty of Rs.40,000.
The Chief Controlling Revenue Authority and Inspector General of Registration, Chennai, set aside District Registrar, Chengleput order No.4059/B4/2021 dated 18.8.2021. The final direction requires Aadhar Housing Finance Limited to pay deficit stamp duty of Rs.10,00,000 and a penalty of Rs.10,000.
Why the earlier demand was set aside
The Sub Registrar had impounded the deed because it listed existing loans sanctioned by several banks. The District Registrar treated those loans as covered by the mortgage and determined deficit stamp duty of Rs.3,19,60,000 and a penalty of Rs.40,000.
After examining the deed and the revision petition, the Chief Controlling Revenue Authority found that:
- The deed defined “Total Outstandings” as money incurred by the company in respect of the debentures.
- The charge over the property secured the Total Outstandings relating to those debentures.
- The mortgaged assets secured repayment of the debenture principal, premium, interest and related amounts.
- The deed did not create a charge over the property for the earlier loans listed in it.
- The earlier bank loans were listed only for the knowledge of the debenture trustee.
Who is affected
D.Dis.No.20904/P1/2020-1 directly affects Aadhar Housing Finance Limited, Beacon Trusteeship Limited and Document No.P.142/2020 held by the Joint II Sub Registrar Office, Chengalpattu.
The proceedings are also relevant to parties and professionals examining a mortgage deed that mentions earlier loans. The decision distinguishes between loans merely disclosed to a trustee and liabilities actually secured by a charge over the mortgaged property.
Stamp duty basis applied
The Chief Controlling Revenue Authority concluded that the deed was chargeable under section 40(b) of the Indian Stamp Act, 1899, read with G.O.(Ms).No.60, Commercial Taxes and Registration (J1) Department, dated 16.03.2020. The proceedings state maximum limits of Rs.10,00,000 for stamp duty and Rs.1,00,000 for registration fee under that government order.
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Common questions
Did the authority uphold the District Registrar’s demand of Rs.3,19,60,000?
No. The Chief Controlling Revenue Authority set aside that determination and directed payment of deficit stamp duty of Rs.10,00,000 with a penalty of Rs.10,000.
Were the earlier bank loans treated as secured by the mortgaged property?
No. The authority found that the earlier loans were listed for the debenture trustee’s knowledge and that the deed did not create a charge over the property for those loans.
What liability did the mortgage deed actually secure?
It secured repayment of the debentures, including the principal amount, premium, interest and other amounts payable under the debentures.
Was a registration fee ordered in the final direction?
The petitioner had undertaken to pay stamp duty and registration fee under G.O.(Ms).No.60 dated 16.03.2020. The final direction expressly ordered deficit stamp duty of Rs.10,00,000 and a penalty of Rs.10,000.
