Venkataramiah J. - (1.) The appellant in Civil Appeal No. 988 of 1972 is Somaiya Organics (India) Ltd. (hereinafter referred to as 'Somaiya Organics') and the appellant in Civil Appeal No. 989 of 1972 is Godavari Sugar Mills Ltd., (hereinafter referred to as the 'Godavari Sugar Mills'). These two appeals are filed under Art. 136 of the Constitution against the judgment of the High Court of Allahabad in Miscellaneous Reference No. 466 of 1969 which was a reference made by the Chief Controlling Revenue Authority, Board of Revenue, Uttar Pradesh under S. 57 of the Indian Stamp Act, 1899 (hereinafter referred to as 'the Act') as in force in the State of Uttar Pradesh involving the question relating to the proper stamp duty chargeable in respect of a transaction under which certain lands and buildings belonging to Godavari Sugar Mills were sold in favour of Somaiya Organics. The facts of the case are these.
(2.) Godavari Sugar Mills was the owner of a distillery plant consisting of the lands, buildings, machinery etc. situated in the village called Basahia alias Captainganj in the district of Deoria, State of Uttar Pradesh. It had entered into a technical collaboration agreement with M/s. Melle Bezons and in that connection pursuant to the resolution of its Board of Directors passed on October 23, 1964 it had obtained a deferred payment guarantee up to the limit of Rs. 65 lakhs from the Punjab National Bank Ltd., in favour of M/s. Speichim, Paris under an equitable mortgage by deposit of title deeds of its property including the lands and buildings referred to above. That on March 2, 1962 Godavari Sugar Mills had resolved to sell the lands, buildings and machinery to Somaiya Organics for a consideration of Rs. 36,64,678/- and pursuant to the said resolution a sale deed was executed on May 20, 1968. The sale deed recited that out of Rs. 36,64,678/-, referred to above, Rs. 28,88,678/- represented. the price payable for the machinery, vehicles, stores, finished goods etc. being all moveable items, the sale and transfer of which had been completed by the parties to the document by manual delivery and the balance of Rs. 7,76,000/-, represented the price payable in respect of the lands and buildings of the sugar factory as described in Schedule 'A' attached to the said document and that the said document was being executed for the purpose of conveying title in respect of the lands and buildings free of all encumbrances. The above Rs. 7,76,000/- was to be paid not in cash but in the form of allotment of 7760 fully paid-up equity shares of the face value of Rs. 100/- each. The document further stated that in case the vendee was to pay any amount on account of any charge or incumbrances created by the vendor on the properties sold, the vendee would be entitled to get back the entire sale consideration with interest at 1 per cent per month from the vendor. That on October 28, 1968 a declaration was signed for and on behalf of the Godavari Sugar Mills by the two Directors of the Godavari Sugar Mills who had been. authorised to do so which had the effect of modifying or correcting certain error which had crept into the document dated May 20, 1968. It stated inter alia: "3. On the 15th day of December, 1964 the company deposited with the Punjab National Bank Ltd., (hereinafter referred to as "the Bank") the title deeds of the Company aforementioned immoveable property with intent to create a security in favour of the Bank by way of equitable mortgage. The creation of such security by way of equitable mortgage was authorised by a resolution of the Board of Directors of the Company passed on the 23rd day of October, 1964. A list of title deeds so deposited with the Bank is set out. in the Second Schedule hereto. 4. By a Deed of Sale dated the 20th day of May, 1968 and made between the Company of the one part and Messrs. Somaiya Organics (India) Limited (hereinafter for the sake of brevity called "the S. 0. I. L.") of the other part, the Company transferred with effect from 1st June, 1967 all its right, title and interest in the said immoveable property described in the First Schedule hereto along with the Buildings standing thereon in favour of the S. O. I. L. for the consideration and on the terms and conditions set out in the said deed of the Sale dated 20th May, 1968. 5. Through inadvertence and oversight it has been stated in the said Deed of the Company had covenated that the entire property sold was "free from all sorts of transfer charges or incumbrance created by the Vendor (the company) in favour of any one." In the said Deed of Sale it was also further stated that in case of vendee (ie. the S. O. I. L.) might have to pay any amount by way of charge transfer or incumbrance created by the vendor (i.e., the company) on the said property the vendee (i.e., the SOIL) shall be entitled to get back the entire sale consideration with interest at 1% per month from the said vendor (i.e. the Company). We say that it was not the intention either of the to transfer the company or of the S. O. I. L. to transfer the said immoveable property described in the First Schedule hereto free from the charge created by the Company in favour of the Bank by way of Equitable Mortgage by deposit of title deeds as aforesaid and it was only through oversight and inadvertence that it was erroneously stated in the said Deed of Sale that the property was free from any incumbrance or charge, or that in the event of the S. O. I. L. having to pay any amount by way of charge transfer or incumbrance the S. O. I. L. should be entitled to get back the entire sale consideration as stated aforesaid. 6. We solemnly and sincerely declare and say that the intention of the company as also the S. O. I. L. was that the said immoveable property should be transferred subject to the charge created in favour of the Bank by the Company by deposit of title deeds on the 15th day of December, 1964 as stated-in paragraph 3 above." (underlining by us)
(3.) As can be seen from the extract of the declaration given above that the properties which were being transferred under the document dated May 20, 1968 were being sold subject to the equitable mortgage which had been created in favour of' the Punjab National Bank Ltd. in connection with the., deferred payment guarantee. Before the above declaration was signed resolutions were passed by the Board of Directors of Godavari Sugar Mills and the Board of Directors of Somaiya Organics on 17th September, 1968 affirming transfer of property under the document dated May 20, 1968 subject to the equitable mortgage in favour of the Punjab National Bank Ltd., up to the limit of Rs. 65 lakhs. The resolution passed by the Board of Directors of Somaiya Organics on the 17th September, 1968, referred to above, contemplated the execution of a tripartite agreement by and amongst Godavari. Sugar Mills, Somaiya Organics and the Punjab National Bank Ltd., treating the deferred, payment guarantee issued in favour of M/s. Speichim, Paris as having been given at the instance and on behalf of Somaiya Organics, confirming the equitable mortgage, and transferring the liability threreunder as mentioned in the draft tripartite agreement which had been placed before the Board for its consideration. Somaiya Organics also executed a deed of declaration on October 28, 1968 stating that it had purchased the properties sold under the document dated May 20, 1968 subject to the equitable mortgage executed by Godavari Sugar Mills in favour of the Punjab National Bank Ltd. All the three documents, namely, the sale deed dated May 20, 1968 and the two deeds of declarations executed by Godavari Sugar Mills and by Somaiya Organics respectively acknowledging that the sale was subject to the equitable mortgage were presented before the SubRegistrar, Hata for registration. The document dated May 20, 1968 had been written on a stamp paper of Rs. 35,000/- treating that the consideration for the sale deed was Rs. 7,76,000/-. The Sub-Registrar was of the view that the properties had been sold subject to two liabilities, one for Rs. 1,20,00,000/- and another for Rs. 65,00,000/-. According to him the total consideration payable for the sale was in the order of Rs. 1,92,76,000/- and there was deficiency of stamp duty of Rs. 8,32,420/-. He was also of the view that each of the two supplementary deeds of declarations which had been written on stamp papers of Rs. 3.50 should have been written on stamp papers of Rs. 4.50 and one rupee was payable on each of them as deficient duty. The Sub-Registrar accordingly impounded the sale deed and the deeds of declarations and forwarded them to the Collector for necessary action. The Collector in his turn under S. 56(2) of the Act referred the matter to the Chief Controlling Revenue Authority, i.e., Board of Revenue, Uttar Pradesh. The Chief Controlling Revenue Authority, i.e., Board of Revenue thereafter referred the case to the High Court of Allahabad under S. 57 of the Act. In its reference the Board of Revenue referred six questions for the opinion of the High Court.;