Godwin Construction Pvt. Ltd. Vs Commissioner (Supreme Court of India)
Nomenclature Irrelevant- Essence of Transaction Decides Stamp Duty- Title Can’t Trump Substance- Supreme Court Classifies ‘Security Bond-cum-Mortgage Deed’ as Mortgage for Stamp Duty
When Borrower Pledges Own Property, It’s a Mortgage – Not a Security Bond, Rules Supreme Court- SC holds ‘Security Bond-cum-Mortgage Deed’ executed by principal debtor chargeable under Article 40- not Article 57- of Indian Stamp Act
Appellant executed a document titled “Security Bond cum Mortgage Deed” in favour of the Meerut Development Authority (MDA) to secure its obligations relating to the development of a housing colony called Global City, Meerut. The deed mortgaged specified plots totaling 2,934.45 sq m to secure an amount of ₹ 1.00 crore 44 thousand against external development charges, with ₹ 15 lakh deposited in advance. The company paid only ₹ 100 stamp duty claiming applicability of Article 57 (security bond) of Schedule 1-B of the Indian Stamp Act. The Stamp Authorities held it to be a mortgage deed under Article 40, raising a deficit duty demand of ₹ 4.61 lakh plus interest & penalty. The High Court (A Allahabad, 2013) upheld that view. A similar issue arose in another case concerning a loan to Ajay Forging Pvt. Ltd. from Allahabad Bank, where the instrument was also styled a “Security Bond or Mortgage Deed.” Both matters were heard together.
