/2022 INSC 0325/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3070 OF 2022
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 34723 OF 2016)
ASSET RECONSTRUCTION CO. (INDIA) LTD.         ...APPELLANT(S)
VERSUS
CHIEF CONTROLLING REVENUE AUTHORITY      ...RESPONDENT(S)
J U D G M E N T
V. Ramasubramanian, J.
1. Aggrieved   by   the   opinion   rendered   by   the   Full   Bench   of   the
High Court of Gujarat in a Stamp Reference under Section 54(1)(a)
of the Gujarat Stamp Act, 1958 ( hereinafter referred to as the ‘Act’ ),
made   by   the   Chief   Controlling   Revenue   Authority   of   the   State   of
Gujarat,   the  Asset   Reconstruction   Company   (India)   Ltd.,  has   come
up with the above appeal.
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2. We   have   heard   Mr.   V.   Chitambaresh,   learned   senior   counsel
appearing for the appellant and Ms. Archana Pathak Dave, learned
counsel appearing for the State of Gujarat.
3. The   Oriental   Bank   of   Commerce   (‘ OBC’   for   short )   granted
certain facilities to a borrower  and the borrower committed default
in   repayment.   Unable   to   recover   the   loan,   the   Bank   assigned   the
debt   in   favour   of   the   appellant   herein,   which   is   an   Asset
Reconstruction Company registered with the Reserve Bank of India
under   Section   3   of   The   Securitisation   and   Reconstruction   of
Financial   Assets   and   Enforcement   of   Security   Interest   Act,   2002
( hereinafter referred to as ‘Securitisation Act 2002’ ).  The assignment
made by the OBC was under an Agreement dated 18.11.2008. The
Assignment   Agreement   was   registered   with   the   Sub­Registrar,
Bharuch,   on   18.11.2008.   In   fact,   the   registration   of   the   document
was preceded by an adjudication under Section 31 of the Act.
4. However,   an   audit   objection   was   raised   by   the   Office   of   the
Accountant   General   on   the   ground   that   the   deed   of   assignment
contained   a   reference   to   a   Power   of   Attorney   (‘PoA’   for   short )   in
Schedule   3   and   that   the   said   PoA   was   chargeable   to   stamp   duty
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under   Article   45(f)   of   Schedule­I   to   the   Act.   A   demand   for   deficit
stamp   duty   to   the   tune   of   Rs.23,53,800/­   was   raised   pursuant   to
the audit objection.
5. Thereafter,   the   Deputy   Collector   (Stamp   Duty)   referred   the
matter   to   the   Chief   Controlling   Revenue   Authority,   who   in   turn
issued  a   notice   to   the  appellant   herein.  After   considering   the   reply
submitted by the appellant, the Chief Controlling Revenue Authority
passed   an   order   dated   04.01.2012   setting   aside   the   order   of
adjudication   passed   on   23.10.2008   and   directing   recovery   of   the
deficit stamp duty.
6. Aggrieved   by   the   said   order,   the   appellant   submitted   an
application   under   Section   54(1)(a)   of   the   Act.   On   the   said
application,   the   Chief   Controlling   Revenue   Authority   referred   the
following two questions for the opinion of the Court:­
“(A) Whether   the   objection   raised   by   the   Account
General,   Ahmedabad   in   audit   para,   in   the   year   2008   is
proper or not, as per Article­45(f) of the Bombay Stamp Act,
1958 or not?
(B) Whether   the   Asset   Reconstruction   Company   (India)
Limited   is   liable   to   pay   stamp   duty   of   Rs.24,94,100/­   i.e.
4.9% as per Article­20(a) of the Bombay Stamp Act or not?”
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7. For finding an answer  to the above questions, the Full Bench
of   the   High   Court   examined   the   recitals   contained   in   the   deed   of
assignment   and   found   that   the   Bank   had   agreed   to   execute   an
irrevocable   PoA   in   favour   of   the   appellant   herein,   substantially   in
the form set out in Schedule 3 of the deed of assignment. The form
set   out   in   Schedule   3   contained   recitals   empowering   the   assignee,
as   the   agent   of   the   Bank,   to   sell   any   immovable   property.
Therefore, considering the fact that Article 45(f) of Schedule I to the
Act   makes   a   PoA   given   for   a   consideration   and   containing   an
authority to sell any immovable property chargeable to stamp duty
as   a   conveyance,   the   High   Court   came   to   the   conclusion   that   the
appellant has to pay stamp duty as fixed by Article 45(f). The High
Court   opined   that   merely   because   the   power   to   sell,   forms   part   of
the   deed   of   assignment  under   Schedule   3,   the   appellant   could  not
escape   the   charge   of   duty   and   that   the   PoA   is   required   to   be
considered independently. 
8. But we do not think that the above reasoning can be accepted.
First of all, what was presented for registration by the appellant was
a   single   document   namely   an   “Assignment   Agreement”.   Clause
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11.12  of the  Assignment  Agreement  contained recitals  to  the effect
that   the   seller   (assignor,   namely   the   OBC )   had   agreed   to   execute
simultaneously   with   the   execution   of   the   deed   of   assignment,   an
irrevocable   PoA,   substantially   in   the   form   set   out   in   Schedule   3.
What   was   contained   in   Schedule   3   to   the   Assignment   Agreement
was the format of an irrevocable PoA.
9. The   High   Court   overlooked   the   fact   that   there   was   no
independent   instrument   of  PoA  and  that  in  any  case, the  power  of
sale   of   a   secured   asset   flowed   out   of   the   provisions   of   the
Securitisation Act, 2002 and not out of an independent instrument
of   PoA.   Section   2(zd)   of   the   Securitisation   Act,   2002   defines   a
‘secured   creditor’   to   mean   and   include   an   Asset   Reconstruction
Company.   The   appellant   has   acquired   the   financial   assets   of   OBC
in terms of Section 5(1)(b) of the Securitisation Act, 2002. Therefore,
under   sub­section   (2)   of   Section   5   of   the   Securitisation   Act,   2002,
the appellant shall be deemed to be the lender and all the rights of
the Bank vested in them. In fact, under Amendment Act 44 of 2016,
sub­section (1A) was inserted in Section 5 of the Securitisation Act,
exempting   from   stamp   duty,   any   document   executed   by   any   bank
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under   Section   5(1)   in   favour   of   an   Asset   Reconstruction   Company
acquiring   financial   assets   for   the   purposes   of   asset   reconstruction
or   securitization.   Though   the   said   amendment   may   not   be
applicable  to   the   case   of  the   appellant,   as  the   deed  of   assignment,
in   this   case,   was   executed   long   prior   to   the   amendment,   we   have
just  taken   note  of  the   amendment  to   show  how  far   the  Parliament
has gone.
10. Article 45(f) of Schedule I to Act, reads as follows:­
(f) (i)   when   given   for
consideration   and
authorizing   the
attorney   to   sell   any
immovable property The   same   duty   as   is   leviable
on a conveyance under Article
20   for   the   amount   of   the
consideration   or,   as   the   case
may   be,   the   market   value   of
the   immovable   property
whichever is greater;
11. For   invoking   Article  45(f),   two   conditions  have   to   be  satisfied.
They   are,   (i)   the   PoA   should   have   been   given   for   a   consideration;
and   (ii)   an   authorization   to   sell   any   immovable   property   should
flow out of the instrument.
12. In the case on hand, the consideration paid by the appellant to
OBC, was for the purpose of acquisition of the financial assets, in
respect of a particular borrower. The draft of the PoA contained in
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Schedule   3   of   the   deed   of   assignment   was   only   incidental   to   the
deed   of   assignment.   The   deed   of   assignment   has   already   been
charged to duty under Article 20(a) which deals with “ conveyance ”.
In   fact   Article   45(f)   also   requires   a   PoA   covered   by   the   said
provision to be chargeable to stamp duty under Article 20.
13. But   what   has   happened   in   this   case   was   that   under   a
Notification   bearing   No.GHM/2002­5­M   STP­102000­2749/H­1
dated 25 th
 January, 2002, the Government ordered the reduction of
stamp duty  payable on an instrument of securitization of loans or
assignment of debt with underlying securities, to 75  paise  for every
Rs.1000 or part thereof.  This Notification reads as follows:­
“In exercise of the powers conferred by clause (a) of
Section   9   of   the   Bombay   Stamp   Act,   1958   (Bom   LX   of
1958) and in supersession of Government Orders Revenue
Department   No.   GHM­98­22­M­STP­1096­2527­H­1   dated
26.02.1998,   the   Government   of   Gujarat   hereby   reduces
from   the   date   of   publication   of   this   order   the   duty   with
which   an   instrument   of   securitization   of   loans   or
assignment   of   debt   with   underlying   securities   chargeable
under   Article   20   (a)   of   Schedule   I   to   the   said   Act   to   75
paise   for   every   rupees   1000   or   part   thereof   the   loan
securitised or debt assigned with underlying securities.
By   order   and   in   the   name   of   the   Governor   of
Gujarat.”
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14. The   above   Notification   was   amended   by   a   subsequent
Notification   bearing   No. GHM/2003/28/STP/102002/2065/H­1
dated 1 st
 April, 2003.  The said Notification reads as follows:­
“In   exercise   of   powers   conferred   by   clause   (a)   of
section   9   of   the   Bombay   Stamp   Act,   1958   (Bom   LX   of
1958),   the   Government   of   Gujarat   hereby   amends
Government   Order   No.   GHM/2002/5/M/STP/102000/
2749/H­1, dated 25 th
 January, 2002 as follows, namely:­
In   the   said   order,   for   the   words   and   figures   “to
seventy  five   paise   for  every  rupees   1000   or  part   thereof”
the words and figures “subject to maximum of rupees one
lakhs,   seventy­five   paise   for   every   rupees   1000   or   part
thereof” shall be substituted.
By   order   and   in   the   name   of   the   Governor   of
Gujar at.”
15. In view of the Notification dated 01.04.2003 issued in exercise
of the power  to reduce, remit or  compound the duty, conferred by
Section 9(a) of the Act, the amount of duty  chargeable in terms of
Article 20(a) was capped at Rs. 1,00,000/­. In addition to the said
amount   of   Rs.1,00,000/­,   the   appellant   was   asked   to   pay   an
additional   duty   of   Rs.40,000/­   under   Section   3­A.     The   appellant
has thus paid a total amount of Rs.1,40,000/­ with the instrument
having been charged as a conveyance under Article 20(a).
16. In   all   taxing   Statutes,   there   are   taxing   provisions   and
machinery provisions. Once a single instrument has been charged
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under   a   correct   charging   provision   of   the   Statute,   namely   Article
20(a), the Revenue cannot split the instrument into two, because of
the reduction in the stamp duty facilitated by a notification of the
Government issued under Section 9(a).  In other words after having
accepted   the   deed   of   assignment   as   an   instrument   chargeable   to
duty as a conveyance under Article 20(a) and after having collected
the  duty  payable on  the  same, it  is not open  to  the  respondent to
subject the same instrument to duty once again under Article 45(f),
merely   because   the   appellant   had   the   benefit   of   the   notifications
under Section 9(a). Since the impugned order of the High Court did
not   address   these   issues   and   went   solely   on   the   interpretation   of
Article   45(f),   the   same   is   unsustainable.   Therefore,   the   appeal   is
allowed and the impugned order is set aside. The demand made by
the Chief Controlling Revenue Authority is consequently set aside.
There will be no order as to costs.
………………………………….J.
(Hemant Gupta)
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………………………………….J.
(V. Ramasubramanian)
New Delhi
April  26, 2022   
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