Authored By : Rankin, Charu Chander Ghose, P.L. Buckland

Rankin, C.J.

1. This is a Reference under Section 57 of the Indian StampAct of 1899 made by the Board of Revenue, Bengal, pursuant to an order made bymy learned brother, Mr. Justice Panckridge.

2. The question is as to the amount of duty to be chargedupon a conveyance, dated the 13th December, 1928, whereby the applicant, U. K.Janardhano Rao, bought from Rama Raju Hanumantha Rao certain: immoveableproperty known as 16, Ramesh Mitter Road in Calcutta. The case stated does notset out the facts at all clearly, but the following facts are not, in dispute:-

3. On the 23rd May, 1923, a certain man called Biswas andhis wife executed a mortgage over this property to a lady of the name ofHemlata for Rs. 15,000 with certain interest. The property, at. that time, mayhave belonged to Biswas or to his wife, or to both, or to neither; the mortgagemay or may not have been a mortgage, according to the Drue-construction whereofthe mortgagors, or either of them, became personally liable to repay the loan.In 1925, Rama Raju, in execution of a money decree obtained by him againstBiswas, purchased the right, title and interest of Biswas in this property fora sum of Rs. 3,233-6. On the 13th December, 1928, when the applicant purchasedthe same from Rama Raju, by the conveyance, which is now in question, there wasdue and outstanding upon the mortgage of Hemlata a total sum of Rs. 25,636,namely, Rs. 10,636 due as interest and Rs. 15,000 as principal. The documentwas stamped with a stamp of Rs. 35 on the footing that the stamp had to becalculated solely on the purchase price payable thereunder by the applicant toRama Raju, namely Rs. 1,000. The Board of Revenue claim that they are entitledto a stamp duty amounting to Rs. 405 upon the sum of Rs. 26,636, that is, uponthe consideration of Rs. 1,000 plus Rs. 25,636 due for principal and intereston Hemlatas mortgage.

4. Now, an instrument must be stamped according to its legaleffect and intention. The conveyance before us recites that the vendor isseized and possessed of, or otherwise well and sufficiently entitled to, theproperty therein described; it recites that this property was sold on the 16thof July, 1925, in execution of a decree obtained by the vendor against Biswasand was purchased by the vendor for Rs. 3,233-6; that the certificate of salewas issued by the Court of the Subordinate Judge, 24-Parganas, on the 9thMarch, 1926; and that delivery of possession was obtained from the said courton the 19th of April, 1928. By its operative clause, in consideration of Rs.1,000, the vendor grants to the purchaser all the right, title and interest of thevendor in the property. Next the vendor declares that he has not in any wayincumbered the property. Next comes a covenant for further assurance and thenfollows this: "Be it stated that there is a suit, being Title "SuitNo. 98 of 1928, pending in the court of the 1st "Subordinate Judge ofAlipore relating to the said "property brought by one Sreemati HemlataDasi of "124, Ahiritola Street, Calcutta, for enforcing "a previousmortgage deed for Rs. 15,000 said to be "executed on the 23rd May, 1923,by Rasaraj Biswas, "the aforesaid vendee of the vendor, and his wife"Sreemati Pramodini Dasi of Sonamukhi within the "district ofBankura, in which the said vendor has "been made a Defendant."

5. It appears to me that the first question to be asked uponthis document is whether or not, according to the true meaning and intention ofthe applicants bargain with the vendor, the vendor undertook, for theconsideration of Rs. 1,000 therein stated, to give to the applicant a title tothe property free from all claim of Hemlata under her mortgage.

6. To this question the answer is in the negative. Thelearned advocate for the applicant did not contend before us to the contrary.His contention was that there is a dispute as to whether the property belongedoriginally to Biswas or to his wife; that unless it belonged to Biswas, theapplicant by his purchase has got nothing; and that this accounts for thesmallness of the consideration money of Rs. 1,000. It is not disputed, however,that there was a mortgage of the 23rd May, 1923, and that Biswas was a partythereto as a mortgagor. The goodness or badness of the vendors title in no wayaffects the question of the stamp duty. The instrument has to. be stampedaccording to the true intent and meaning of the bargain which it represents.

7. The amount of stamp duty which is payable depends uponthe terms of Section 24 of the Stamp Act of 1899 which runs as follows:

Where any property is transferred to any person inconsideration, wholly or in part, of any debt due to him, or subject eithercertainly or contingently to the payment or transfer of any money or stock,whether being or constituting a charge or incumbrance upon the property or not,such debt, money or stock is to be deemed the whole or part, as the case may be,of the consideration in respect whereof the transfer is chargeable with advalorem duty:

Provided that nothing in this section shall apply to anysuch certificate of sale as is mentioned in Article 18 of Schedule I.

Explanation.--In the case of a sale of property subject to amortgage or other incumbrance, any unpaid mortgage-money or money charged,together with the interest (if any), due on the same, shall be deemed to bepart of the consideration for the sale:

Provided that where property subject to a mortgage istransferred to the mortgagee, he shall be entitled to deduct from the dutypayable on the transfer the amount of any duty already paid in respect of themortgage.

Illustrations.

(1) A owes to B Rs. 1,000. A sells a property to B, theconsideration being Rs. 500 and the release of the previous debt of Rs. 1,000.Stamp-duty is payable on Rs. 1,500.

(2) A sells a property to B for Rs. 500 which is subject toa mortgage to 0 for Rs. 1,000 and unpaid interest Rs. 200. Stamp-duty ispayable on Rs. 1,700.

(3) A mortgages a house of the value of Rs. 10,000 to B forRs. 5,000, B afterwards buys the house from A. Stamp-duty is payable on Rs.10,000 less the amount of stamp-duty already paid for the mortgage.

8. It may be as well to proceed, to begin with, entirelyupon a construction of the words used by the legislature--I will say somethinglater as to the history of this section. But the section must be construed, andthe applicants liability depends upon it being shown from the words of the sectionthat there is a clear intention to tax him in the manner and at the rateclaimed by the revenue authorities.

9. To begin first with the section itself. "Where"any property is transferred to any person subject "either certainlyor contingently to the payment of "any money, whether being a charge of an"incumbrance upon the property or not." Do these words fit thepresent case The language is somewhat abstract, and more than a little vagueand only in the widest sense of the words can it be said that when property issold, subject to a mortgage, it is transferred subject either certainly orcontingently to the payment of money. In Sha Nagindas Jeychand v. HalalkoreNathwa Gheesla (1881) I.L.E. 5 Bom. 470., this wide interpretation was given toSection 24 of the Indian Stamp Act of 1879, which is identical with the firstclause of the present section; the proviso, the explanation and theillustrations having been added in 1899. Putting these additions upon one sidefor the moment, and considering by itself the first paragraph, which is commonto both statutes, I find, that though the Bombay High Court stuck firmly to itsopinion [cf. Meer Kaisurs case I.L.R. (1890) 15 Bom. 532. and Shantappas caseI.L.R. (1893) 18 Bom. 175.], a contrary view of its meaning was taken by thisCourt in In re Reference to the Board of Revenue I.L.R. (1883) Cal. 92., by theMadras High Court in 1882 and 1884 [References under the Stamp Act I.L.R.(1882) Mad. 18. and I.L.R. (1884) Mad. 421.] and by the Allahabad High Court in1892 [Jwala Prasad v. Ram Narain I.L.R. (1892) All. 107, 108.]. Now theexplanation, which was added by the present Stamp Act of 1899, was clearlyintended to resolve the difference of opinion disclosed by these decisions, andthe opening clause of the present section has now to be examined andinterpreted in the light of the legislatures explanation of its meaning.

10. The first question, which can be put, is whether thephrase "subject to a mortgage or other incumbrance," qualifies theword "property" or qualifies the word "sale." If the formeris the correct meaning, then property which is in fact subject to a mortgagewill, if it is sold, attract the consequences set forth in the explanation,whether or not the property is sold on the terms that the vendor is to clearoff the mortgage and give to the purchaser a clean title. In Waman Martandscase I.L.R. (1924) 9 Bom. 73., this question was raised and it was held thatthe clause "subject to a mortgage or other incumbrance" governs"sale of property" and not "property;" that property may besubject to a charge and yet the sale may not be subject to it; and that where abargain between the vendor and the purchaser is that the vendor will make agood title free from all incumbrances, the explanation does not apply. I amclearly of opinion that this is the correct view. To begin with, an instrumentis to be stamped according to the nature of the bargain. That is the generalprinciple in the light of which a question of this character must beapproached. The language of the main clause shows that the question is whetherthe property is transferred subject to the payment of money. The explanationis, in my judgment, entirely consistent with the language of the main clause.If property is subject to a mortgage, but the vendor, in return for thepurchase price, is to give a clear title free from all incumbrances, theexplanation does not apply. Nor does the 2nd illustration apply, for the casethere put is clearly not a sale free from the incumbrance. It is dangerous torest ones view of a clause in the Stamp Act upon reasons of justice orfairplay. Still it would require very clear words to induce one to think that,where the purchase price is given as the full value of the property and thevendor as part of the consideration therefor undertakes to clear off anincumbrance, the amount of the incumbrance was intended to be added to thewhole value of the property and stamp duty assessed upon the same thing twiceover.

11. But the case before us is not a case of this character.The bargain between these parties was not that for Rs. 1,000 the vendor wouldpay off Hemlatas mortgage and give a clean title to the applicant. On the faceof it, the applicant can make no such case and the sale to him was a salesubject to Hemlatas mortgage. His learned advocate contends, however, thateven on this footing, the language of the explanation is not intended to applyto a case like the present. Relying upon the opinions expressed by the learnedJudges of the High Court of Bombay in Waman Martands case I.L.R. (1924) 49Bom. 73. already cited, he maintains that the explanation must be confined tocases where, as a part of the consideration which the vendor gets for histransfer, he is to be relieved expressly or impliedly from the burden of themortgage as between himself and the purchaser. If this contention is correct,the applicant is certainly entitled to succeed upon this Reference. The case asstated does not show whether or not under Hemlatas mortgage, either Biswas orhis wife gave any personal covenant to repay the loan or the interest. Even ifthey did, it is highly doubtful, to say the least of it, whether the purchaserin execution of a money decree, who buys the right, title and interest of amortgagor, is liable to indemnify the mortgagor against such a personalcovenant.

12. The Advocate-General has before us disclaimed allintention to rely upon any argument to the effect that the applicants vendorwas under any liability, contingent or otherwise, to repay the mortgage loan,or that the applicant, by his purchase, undertook in any way to indemnify hisvendor in respect of such liability.

13. We have, therefore, to see whether there is any Tealfoundation for the view adopted by the Bombay High Court in the case lastcited, that is, that unless, as a part of the consideration which the vendorgets for his transfer, the purchaser comes under an obligation to relieve thevendor from the burden of the mortgage, the explanation does not apply. Withthe greatest respect for the learned Judges who so held, I am of opinion thatthe explanation cannot be limited in this manner. Keeping still to theconstruction of the section as it stands, I would point out that in the openingclause of Section 24, the words "in "consideration wholly or in partof any debt due to-"him" and the words "subject either certainlyor "contingently to the payment, etc.," are alternatives.. For thepurpose of a case like the present, the first set of words may be neglected. Toconstrue the explanation in such a way as to make out that it will apply onlyto cases in which the mortgage money can be regarded as really and in truthpart of the consideration for the purchase is a misguided effort. "Whatthe main clause says is that where any property is transferred subject, eithercertainly or contingently, to the payment of any money, such money is to bedeemed the whole, or part, as the case may be, of the consideration. Theexplanation is intended to make it clear that this applies to any unpaid mortgagemoney when the property is sold subject to the mortgage. It is reasoning in acircle to cut down the explanation so as to confine it to cases in which, apartfrom the provision of the main clause, it seems reasonable to say that themortgage money is part of the consideration for the purchase.

14. A Stamp Act cannot be wrested in this way. If it. betrue that a tax cannot be imposed without clear and express words for thatpurpose, and that the court will intend nothing in favour of the stamp duty, itis equally clear that general words imposing a tax cannot be restrained in amanner now proposed. [cf. Mortimores case (1864) 2 H.&C. 838 : 159 E. B.347. and In re Wright (1855) 11 Exch. 458 : 156 E.R. 911.]. The words of theexplanation are at least meant to explain. They are intended to show that themore general and abstract language of the main clause applies to the case ofproperty sold subject to a mortgage and to bring that case within them as aminor premise. The view-taken in Waman Martands case I.L.R. (1924) 49 Bom. 73.by Martin J. and Fawcett J. is, in my judgment, inconsistent with the endeavourof the legislature in 1899 to settle the controversy disclosed in the case lawby inserting the explanation and adding illustration (2) thereunder. Further itappears to me to be improbable that the legislature intended that, in order toassess stamp duty upon a conveyance, a decision should be arrived at upon thequestion whether in all the circumstances of the case there is an equity orimplied obligation that the purchaser should indemnify the vendor againstliability for the mortgage debt. To make the liability to stamp duty dependupon a series of facts of which no mention is made in Section 24 is to take aliberty with the section which is all the more serious in view of the statutoryobligation (see Section 27) to set forth in the instrument itself theconsideration and all other facts and circumstances affecting its chargeabilityto duty. See also Section 64 of the Act, which renders punishable a breach ofthis requirement if committed with intent to defraud.

15. In my view, the unpaid mortgage money is, in the case ofa sale subject to a mortgage, to be deemed to be part of the consideration forthe sale, not because it is part of such consideration but, because thelegislature is determined to tax it. If the question be asked why, in order tomake it taxable, the legislature has declared that it is to be deemed to bepart of the consideration, the answer will be clear enough to any one, who paysattention to the lines upon which the statute is drafted, for example, thelanguage of Article 20 of Schedule I, which is part of the machinery forcarrying out the purposes of Section 24. This is the proper standpoint forpurposes of construction of the statute, though it is no doubt true that themotives of the legislature, even when enacting stamp duties, may be discoveredto have some reason behind them.

16. So much for the construction of Section 24 of the IndianAct of 1899. In view of the fact that the main clause in this Act is inidentical language with that of Section 73 of the English Act of 1870 andSection 57 of the English Act of 1891, and that there is English and Scotsauthority upon its meaning, some observations on the history of this enactmentmay not be out of place. Having regard to the decision of this Court in 1883 inthe case already cited [In re Reference to the Board of Revenue I.L.R. (1883)Cal. 92.], it is I think as well to examine the matter from this point of view.

17. By the Statute, 55 George III c. 184, it was in 1815provided as follows:-

"Where any lands or other property shall be sold"or conveyed in consideration, wholly or in part, of "any sum ofmoney charged thereon by way of "mortgage, wadset or otherwise, and then dueowing "to the purchaser, or shall be sold and conveyed "subject toany mortgage, wadset, bond or other debt, "or to any gross or entire sumof money to be "afterwards paid by the purchaser, such sum of money"or debt shall be deemed the purchase or consideration "money, orpart of the purchase or consideration "money, as the case may be, inrespect whereof the "said ad valorem duty is to be paid."

18. In this enactment, the important words to be noticed are"shall be sold and conveyed subject to any "mortgage * * * or to anygross or entire sum of money "to be afterwards paid by thepurchaser." The meaning and policy of this provision came in question inthe case of the Marquis of Chandos v. The Commissioners of Inland Revenue(1851) 6 Exch. 464 : 155 E.R. 624. By the deed in that case, B had conveyed toC certain estates subject to mortgages and charges of a very large amount. Noprice or purchase money was stipulated to be paid by C. The revenue authoritiescontended that, as the estates were conveyed subject to the mortgages, the deedought to be stamped with an ad valorem stamp upon the amount thereof. It wascontended by the subject that the second portion of the clause applied only tothe case where the amount of the mortgage is agreed to be paid by the purchaseras the consideration or price or part of the consideration or price and thatthis was the true meaning of the words "to be afterwards paid by thepurchaser." It was contended for the revenue authorities that wherever thecharge is not paid or discharged by the vendor it was to be considered as tobe afterwards "paid by the purchaser," that in such cases thepurchaser obtains the power of acquiring all the estate by paying the chargewhenever he pleases and was, therefore, deemed liable to pay the duty on thefull value of the estate. The decision of the Court "was "In theclause which is to define what is the "consideration or purchase money,the terms to be " paid by the purchaser mean where it is stipulated"that he is to pay it and the provision applies only "to those caseswhere, in consideration of the "conveyance of the estate, the vendeeagrees to pay a "certain sum to the mortgagee or incumbrancer."Where the purchaser does not bind himself to pay, "but is left topay it or not as he pleases, it cannot be "a part of the considerationmoney." In consequence of this decision, Parliament in 1853 amended thesection (16 & 17 Vict. c. 59, Section 10). After reciting the previous Actand reciting that it had been held and determined that the said ad valorem dutyis payable in respect of such sum or debt only where a purchaser is personallyliable or bound or undertakes or agrees to pay the same or to indemnify thevendor against the same, it was declared to be expedient to alter and amend thelaw in this respect. "Where any "lands or other property shall besold and conveyed "subject to any mortgage, wadset or bond, or other"debt, or to any gross or entire sum of money, such "sum of money ordebt shall be deemed the purchase "or consideration money or part of thepurchase or "consideration money, as the case may be, in respect"whereof the said ad valorem duty shall be paid, "notwithstandingthe purchaser shall not be or become "personally liable, or shall notundertake or agree to "pay the same, anything in any act or otherwise tothe "contrary notwithstanding."

19. Between 1853 and 1870, it was thus absolutely clear inEngland that the liability to pay stamp duty upon the amount of a mortgage debtdepended in no way upon there being an undertaking by or obligation on thepurchaser to discharge it or to indemnify the vendor against it.

20. In Mortimore v. The Commissioners of Inland-Revenue(1864) 2 H.&C. 838 (853) : 159 E.R. 347 (354)., Baron Martin put the matterthus: . "The scope and object of the enactment is clear, "namely,that upon every purchase ad valorem duty "shall be paid on the entireconsideration which either "directly or indirectly represents the value ofthe "free and unincumbered corpus of the subject matter "of thesale." It may be noticed that in that case the property was charged with asum which was to be paid within three months after the decease of two persons,provided that one of them died without issue male. Accordingly, the debt, withwhich the property was charged, was a contingent debt and the argument onbehalf of the subject was that a debt, which may not become payable at all, wasnot within the words "subject to any mortgage or debt or sum ofmoney" as used in Section 10 of the Act of 1853. This contention wasrejected by the Court on the ground that a contingent debt is a debt: "Thewords are "general and we think we are bound to give them "generalapplication."

21. In 1870, the words with which we are now-concernedappear for the first time in Section 73 of the Stamp Act and instead of theprovision "subject "to any mortgage or to any gross or entire sum of"money" the language now employed is "subject "eithercertainly or contingently to the payment or "transfer of any money orstock whether being or "constituting a charge or incumbrance upon the"property or not." The old phrase "to be afterwards "paidby the purchaser," which had given difficulty in the Marquis of Chandoscase (1851) 6 Exch. 464 : 155 E.R. 624. had been eliminated in 1863. On theother hand, the Act of 1870 no longer contains the words "Notwithstanding"the purchaser shall not be or become personally liable "or shall notundertake or agree to pay the same or "to indemnify the vendor or anyperson against the "same." The intention of the legislature in 1870was to restate the matter in a positive fashion and the only-question iswhether it meant to make any change in the liability of the subject to pay taxupon the amount of the mortgage money, if he bought the property subject to themortgage. As by Section 57, the present Stamp Act in England, the Act of 1891,repeated the words of 1870 and added no explanation to make more plain theirpurpose, that question has not lost its importance in English law. Now Section73 of the English Act of 1870 was copied verbatim into the Indian Statute Bookas Section 24 of the Indian Stamp Act of 1879. Curiously enough, neither SirMichael Westropp in Sha Nagindas case (1) nor Sir Richard Garth in theCalcutta case [In re Reference to Board of Revenue (2)] already cited appear tohave noticed that the provisions of the English Act of 1853 had already beenincorporated in Section 34 of the Indian Stamp Act (Act XVIII) of 1869. ClauseB of that section contained the words "Notwithstanding the purchaser isnot or does not "become personally liable for such debt or sum or does"not agree to pay the same or indemnify the seller "against thesame." So that in 1869, the law in India upon this subject was exactly thesame as the law in England. When the Indian Act of 1879 adopted the language ofthe English Act of 1870, it seems to have been thought both by Sir Michael"Westropp and by Sir Richard Garth that, if the Act was construed as theRevenue authority was contending, something altogether new was being introducedinto India, and that difficulty would be experienced in India if, in order toassess stamp duty upon a conveyance, it was necessary to ascertain the amountdue upon outstanding mortgages. The real question, both upon the English Act of1870 and upon the Indian Act of 1879, is whether or not the new language thenintroduced was intended to effect a change in the law--a relaxation of therigour of the duty in favour of the subject and a reversion to the meaningwhich the Court of Exchequer had attributed to the old Statute (55 Geo. III. c.184) or at least an approach thereto.

22. In Great Britain, this question has long ago beenanswered in the negative and under the Acts of 1370 and 1891 the principle laiddown by Martin B. under the Act of 1853 has been upheld. In 1881, this view waschallenged in the Court of Session in the case of Liquidators of City ofGlasgow Bank v. Commissioners of Inland Revenue (1881) 8 Ct. of Sess. Cases,4th S., 389 : 18 Sc.L. Rep. 242.. There the transferor was possessed of certainproperty, which in the hands of a previous owner had been burdened with acharge for 2,400. He was conveying the property subject to the charge inconsideration of a debt due to the liquidators of 2,350. The question: waswhether stamp duty was exigible upon the sum of 2,400 in addition to the sum of2,350. The transferor was not personally bound for the payment of the mortgagedebt. Lord President Inglis, after-referring to the Act of 1853, said:"But they say "that the provision of the 73rd section of the"existing Act is very different from this, and that its "trueconstruction leads to an opposite result. Now,. "the section in questionis no doubt differently "expressed from that which occurs in the Act 16& 17 "Vict. But the reason why it is so expressed. I "apprehend,is this, that it is intended to state the "matter more shortly, and at thesame time, in "compliance with a rule which is now very generally"observed in statutes which are intended to be "applicable to thewhole United Kingdom, and "particularly statutes of thisdescription--Revenue "Acts,--the language employed is not technical"language either of the law of England or of the law "of Scotland,but language of a popular character, "equally intelligible in all parts ofthe United "Kingdom. * * * Now, is not the amount of this bond "anddisposition in security a sum of money subject "to which this property isconveyed I really cannot "conceive anything more simple than the answerto "that question. There cannot be the least doubt that "the propertyin the hands of the purchasers, the "liquidators, is subject to this bondand disposition "in security for 2,400, and when they pay off that"bond, if they think fit to do so, they will then be the "heritableproprietors of a subject the price and value "of which is 4,750, and,therefore, it seems most "reasonable, if it is necessary to look at thereason of "the thing at all, that as they can put themselves"to-morrow in the position of being the unburdened "proprietors ofthis estate, upon adding to the sum "that they have already given the sumcontained in "this bond, they will thereby become proprietors of"that estate who have obtained a conveyance to that "estate of thevalue of 4,750 by means of the deed "which is now to be stamped.

23. "If any other rule were adopted, it is quite plain"that the fair incidence of this tax would be altogether "frustratedand defeated. A proprietor has an "estate worth 20,000. There is a bondupon it for "10,000. He sells that estate and the purchaser "paid tohim the difference between the amount of the "bond and the value of theestate, so that the bond "is for 10,000 and he pays 10,000. The day after"he obtains infeffment he pays off the bond. Well, "the practicalresult of that is that he has paid "20,000 as the purchase-money of thisestate, and "he has obtained a conveyance with an ad valorem "stampof the value of 10,000. That is a simple "defeating of the purpose andintention of the "legislature as expressed in this clause, and therefore"I think it very clear, upon the plain meaning of this "section, thatthere was no intention whatever to go "back upon the enactment of the 16& 17 Vict. and "to restore the enactment of the 55 Geo. III which"is what the liquidators are contending for. On the "contrary, itseems to me that the 73rd section plainly "intended to continue theprovisions of the Statute "16 & 17 Vict., and, therefore, that theCommissioners "of Inland Revenue are right." Lord Shands judgment isexpressed with greater hesitation. "If "this question had to bedecided on the terms of "the Stamp Act of 1870, without the light of the"previous legislation, I should have felt it to be "attended withvery great difficulty, because I think "there was a great deal of room forthe argument "maintained on behalf of the liquidators of the bank"that the word payment occurring in Section 73 of "the Statute,used in this expression subject either " certainly or contingently tothe payment of any " money or stock, ought to be limited to a case inwhich "there was a personal obligation to pay money and "would notinclude the case where the money or stock "was a burden merely upon landwithout a personal "obligation. But I think the difficulty is entirely"removed when the previous legislation is regarded. "* * * but itappears to me, keeping in view what the "existing law was, that this wasintended in briefer "terms to preserve the law upon that footing. The"enactment is, that where the consideration is partly "the dischargeof a debt and partly a payment of "money or stock, whether constituting acharge upon "the property or not, the amount of that charge shall "bepart of the consideration, and I think the word " payment there isintended to cover the case in "which the party is under an obligation tomeet the "burden, or it may be to give stock in return, while "thewords constituting a charge or incumbrance " upon the property areintended to cover the case "whether that is the only way in which theburden is "mentioned, although there be no obligation to pay."

24. Swayne v. The Commissioners of Inland Revenue [1899] 1Q.B. 335. is a clear authority to show that the same view is taken of Section57 of the Stamp Act of 1891 by the English Courts. The question in that casewas whether upon a conveyance of leaseholds, stamp duty could be claimed uponthe rent which the assignee covenanted to pay. It was held that payment of rentis an obligation ordinarily incident to leasehold property and that this didnot come within the words of the section. The judgment of Bruce J., which wasapproved in the Court of Appeal (1), contains this:-

25. "The history of the legislation on this subject, I"think, confirms the view that I have expressed. It "is related inthe judgments delivered by the Lord "President and the other Judges of theCourt of "Session in the case of Commissioners of Inland "Revenue v.Liquidators of City of Glasgow Bank (1881) 8 Ct. of Ses. Cases, 4th S., 389 :18 Sc.L.R. 242. "Where property is incumbered and is sold subject "tothe incumbrance, or even subject to a bond or "condition that certainmoney shall be paid in futuro, "then upon payment off of the incumbranceor upon "payment of the money stipulated to be paid in futuro, "thepurchaser obtains an estate discharged from the "incumbrance, or bond, orcondition, and the money "so paid in discharge of the incumbrance, orbond, "or condition is paid indirectly as part of the "purchase-moneyof the estate, and, therefore, it is "right that the sums of money, uponthe payment of "which the purchaser is able to obtain anunin-"cumbered state, should be taken into consideration "as formingpart of the purchase-money and be added "to the amount paid by thepurchaser as the price of "the incumbered estate, or as the price of theestate "sold burthened with the condition of the payment of "money infuture. It was to meet cases of this kind "that from time to time variousprovisions have been "made by the legislature, the last of which is"contained in the section now under consideration. "No doubt thewords in the section are very wide, but "I think they cannot properly beapplied to mean "more--to use the language of Martin B. in the case"of Mortimore v. The Commissioners of Inland "Revenue (1864) 2 H.&C.838 : 159 E. R. 347.--than this, that ad valorem duty shall "be paid onthe entire consideration which, either "directly or indirectly,represents the value of the " free and unincumbered corpus of the subjectmatter " of sale. "Wills J. said "The real question is, what isthe "meaning to be put upon the word property in "Section 57 of theStamp Act, 1891 In the case of "a mortgage it has been held to be thephysical "property which is the subject of the mortgage "consideredas unincumbered."

26. Turning now to Indian decisions, we find that, as verymany sales of immoveable properties are judicial sales, the section gave sometrouble and on this point the present Act of 1899 has amended the law byexcepting certificates of sale from the provisions of the section.

27. In 1882, the Madras High Court, dealing with a salecertificate of property sold subject to a previous mortgage, held that thestamp duty on a conveyance is assessed on the consideration, that anundertaking in the future to pay money or deliver stock may be part of thatconsideration, that where there is such an undertaking the property istransferred subject to the payment, but where there is not such an undertakingthe transfer is not subject to the charge. In Sha Nagindas case I.L.R. (1881)5 Bom. 470., Westropp C.J., having examined the language of the section in thelight of its history, came, as we have seen, to anopposite-conclusion--"If the property be sold expressly subject "to adebt due upon a mortgage of such property, that "debt must be added to thefurther sum, if any, given "as purchase-money in order to ascertain thetotal "amount of consideration for the certificate sale or "privateconveyance, as the case may be, upon which "the stamp duty ispayable."

28. The matter came in 1883 before Sir Richard Garth and aDivision Bench of this Court [in In re Reference to Board of Revenue I.L.R.(1883) Cal. 92]. An examination of the judgment of the Chief Justice shows thathe was of opinion that the language of the Indian Act of 1879 and the EnglishAct of 1870 followed the language of Statute 55, George III, Cap. 184. In thisand in his view that the decision in the Mar quis of Chandos case (1851) 6Exch. 464 ; 155 E. R. 624. governed the construction of the section before him,he appears to have been mistaken. The crucial words in the earliest Act"to be "afterwards paid by the purchaser" upon which thedecision had turned are not to be found in the Indian Act. They had beenjettisoned in England in 1853 and had never been re-enacted. It is true that itcannot be said of the Indian Act that it follows the language of Section 10 ofthe English Act of 1853, since it does not contain the words"Notwithstanding the purchaser "shall not be or become personallyliable, etc." The learned Chief Justice argued that "where property"is sold subject expressly to the payment or transfer "by thepurchaser of any money or stock, whether such "money or stock be chargedupon the property or not, "such payment or transfer becomes the consideration"for the sale and as soon as it is paid or transferred, "and not tillthen, the purchaser is entitled to his "conveyance. In such a case it isperfectly fair that "the ad valorem stamp duty should be calculated upon"the amount of such money or stock; but where "property is merelysold subject to a mortgage or "other charge, the payment of such mortgageor "charge forms, under ordinary circumstances, no "part of theconsideration for the purchase. The "vendor simply sells and the purchaserbuys an "incumbered property and it is in no way essential "to thevalidity of the sale that the mortgage or "charge should be paidoff." He did not observe the difficulty arising in this view from thewords "subject "either certainly or contingently," but the chiefpoint on which the argument fails is this, that it fails to take account of thecircumstance that, in order to construe the section, we have not got to findout what, in ordinary language or even in truth and in right reason, does formpart of the consideration of a purchase. We have to construe a section in whichthe legislature has laid down that something, presumably not part of theconsideration, shall be deemed to be part of the consideration for the purposeof computing ad valorem duty. The same criticism must be made of the Allahabaddecision based simply on the ground that "the incumbrance constituted no"part of the consideration" [Jwala Prasad v. Ram Narain I.L.R. (1892)All. 107, 108.]. Again the appeal to "reason and "justice" isnot very impressive. It is always a dangerous argument in a stamp case, not somuch perhaps because the stamp law "imports nothing of "reason andjustice, but depends entirely upon the "language of the legislature"[per Taunton J. in Morley v. Hall (1834) 2 Dowl. 494.] as because thelegislature may have reasons, and good reasons, which do not appear upon thesurface. It presumably had some reasons for enacting Section 34 of the Act of1869.

29. The real question and the only question was whether whenproperty is transferred subject to a mortgage, it is transferred "subjecteither certainly "or contingently, to the payment of money" Madrassaid "No--not unless there is an undertaking "by the purchaser to payor be liable for the mortgage "money." Calcutta said "No--notunless the "payment of the mortgage money is a condition to be"fulfilled by the purchaser before he gets his "conveyance." Theformer answer seems to have the greater reason and, simply as an interpretationof the words of the section, it has genuine force. When dealing with a chargingsection in a taxing statute, it is not unreasonable to reject a wider meaningin favour of a narrower lest the intention be exceeded. The subject is not tobe charged without clear words. Hence neither the English decisions which Ihave cited, nor the weakness of some of the reasoning in the Indian cases, leadme to any confident opinion that the Bombay view was right or that the Madrasand Calcutta cases were wrong in the result.

30. We need not, however, dwell upon the law as it stood in1883. In 1899, the legislature excluded certificates of sale from the operationof the section and added the explanation with which we are now concerned. Thepurpose of the explanation is to clear up the question whether in the case of asale of property subject to a mortgage, the unpaid mortgage money is liable toduty or not, and to make this matter plain in view of the conflict of authorityalready noticed. The High Court of Bombay which in Sir Michael Westropps timehad, in the absence of the explanation, held that the mortgage was liable toduty has recently, in spite of the explanation refused so . to hold save incases where the purchaser undertakes to pay the mortgage debt or to relieve thevendor therefrom. No such qualification is to be found in the explanationitself or in the illustration which is given by the legislature to throw lightupon its meaning. The argument takes no notice of the possibility that thelegislature, well knowing that a mortgage debt is in many cases no part of theconsideration, according to the meaning of the bargain between vendor andpurchaser, may, nevertheless, have enacted that it is to be deemed to be partthereof, because, for purposes of tax, it desires that, as a purchaser of anestate subject to a mortgage puts himself into the position by his purchase ofhaving the right to acquire the whole property by paying off the mortgagemoney, he should be taxed in a manner which will correspond to the unincumberedvalue of the property. What was clear law in India from 1869 and for ten yearsthereafter, what has passed in England for over 50 years for a wise andreasonable method of levying stamp duty, cannot well be regarded by the IndianCourts as something so unreasonable that the express terms of this explanationwill fail to convince them that it can have been intended by the Indianlegislature. In my judgment, whatever difficulty there may be in making certainof the meaning of the language of the main clause of this section, had it stoodentirely by itself, there is no difficulty in saying that the explanation hasmade clear the intention of the clause to exact duty in such a case as thepresent upon the basis that unpaid mortgage money is to be added to theconsideration money properly so called in order to find the sum upon which thestamp duty is to be calculated under the schedule.

31. The question which Mr. Justice Panckridge ordered to bereferred to us was in the following terms: "Whether the property No. 16Ramesh "Mitter Lane in the suburbs of Calcutta, conveyed "to theapplicant on the 13th December, 1928, was by "the conveyance of that datesold subject to a mortgage "or encumbrance within the meaning of Section24 of "the Indian Stamp Act." In my opinion, this question should beanswered in the affirmative and the document is liable to stamp duty calculatednot only upon the sum of Rs. 1,000 but also upon the amount of any unpaidmortgage money and interest due on the mortgage of the 23rd May, 1923.

32. The revenue authorities must have their costs againstthe applicant of this Reference.

Charu Chander Ghose, J.

33. I agree.

P.L. Buckland, J.

35. I agree.

.

U.K. Janardhano Raovs. Secretary of State for India(12.02.1930 - CALHC)3