Case Law Details
Asset Reconstruction Co. (India) Ltd. Vs Chief Controlling Revenue Authority (Supreme Court of India)
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 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.
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.
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 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.
But what has happened in this case was that under a Notification bearing No.GHM/20025M STP1020002749/H1 dated 25th 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.
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very clear and good article easy to understand. Thank you