108. (SC)
(Decided on: 08.10.2025)
A. Indian Stamp Act, 1899 (2 of 1899), Section 2(17), 3, Schedule 1-B, Article 40, 57 -- Stamp duty – Nomenclature/ substance of document – Mortgage deed -- In matters of stamp duty, the decisive factor is not the nomenclature assigned to the instrument, but the substance of rights and obligations it embodies -- Court is duty-bound to ascertain the true legal character of the instrument.
-- Appellant executed a “Security Bond cum Mortgage Deed” in favour of the MDA -- Instrument fulfils the essential characteristics of a mortgage deed -- In substance and effect, the deed confers a right over specified properties in favour of the Meerut Development Authority to secure performance of an obligation, while preserving the appellant’s interest until full discharge of obligation -- Nomenclature “Security Bond cum Mortgage Deed” is, therefore, inconsequential.
(Para 14-17)
B. Indian Stamp Act, 1899 (2 of 1899), Section 2(17), 3, Schedule 1-B, Article 40, 57 – Indian Contract Act, 1872 (9 of 1872), Section 126 -- Stamp duty – Nomenclature -- Surety bond/ Mortgage deed -- Article 57 of Schedule 1-B of the Indian Stamp Act operates in two distinct limbs -- The first limb covers security bond or mortgage deed executed by way of security for the due execution of office, or to account for money or other properties received by virtue thereof -- The second limb, demarcated by the words “or executed by a surety to secure the due performance of a contract”, is restricted in its application to the execution of security bond or mortgage deed by a surety to secure the obligations of another, and does not extend to cases where the principal itself executes the deed to secure its own obligations -- The term “surety” must be strictly understood in accordance with Section 126 of the Indian Contract Act, 1872.
(Para 20-22)
C. Indian Stamp Act, 1899 (2 of 1899), Schedule 1-B, Article 40, 57 -- Security Bond cum Mortgage Deed -- Deed was not executed by a surety but by the principal debtor/appellant, the company, through its director -- Company itself mortgaged the properties and not the director in his individual capacity -- This firmly establishes that the properties were not mortgaged by a third party, but by the principal debtor itself, which, does not attract Article 57 -- Deed executed by the appellant cannot be termed as a security bond -- It, however, fulfils all the requirements of a mortgage deed, falling under the ambit of Article 40 of Schedule 1-B of the Indian Stamp Act.
(Para 25, 26)