Supreme Court of India
S.N. MATHURversusBOARD OF REVENUE & ORS.
- Citation
- 2009 INSC 208
- Decided
- 18 February 2009
- Disposal
- Case Partly allowed
- Bench
- R V RAVEENDRAN
Holding
A deed of trust that records a non‑testamentary disposition for religious or charitable purposes also satisfies the definition of a settlement, making the higher duty under Article 58 of Schedule 1‑B applicable.
Issues considered
- Whether a deed of trust also qualifies as a settlement deed under section 2(24) of the Indian Stamp Act, 1899.
- Whether stamp duty is payable under Article 58 of Schedule 1‑B (settlement) as opposed to Article 64 (trust).
- Whether a penalty equal to the deficit stamp duty can be levied.
Legislation cited
- Indian Stamp Act, 1899s. 2(24), s. 3, s. 5, s. 57, s. 6, s. Schedule 1-B Articles 58, 64
Subjects
stamp dutysettlement deedtrust deedIndian Stamp Actnon‑testamentary dispositioncharitable purposepenalty
Judgment
[2009] 2 S.C.R. 681
<;...\ S.N. MATHUR A
v
BOARD OF REVENUE & ORS.
CIVIL APPEAL N0.4916 OF 2003
FEBRUARY 18, 2009
B
(R.V. RAVEENDRAN AND J.M. PANCHAL, JJ.)
Indian Stamp Act, 1899:
Sections 2(24), 3, 5, 57 and Schedule 1-B, Articles 58, 64
- Trust Deed - Whether also answers the description of c
settlement deed and whether stamp duty is payable under
Article 58 of Schedule 1-B - Held: High Court rightly subjected
the deed to stamp duty under Article 58 of Schedule 1-B -
However, the case does not warrant levy of penalty equal to
the deficit of stamp duty.
D
. Words & Phrases:
"Settlement", "deed of trust': "disposition" - Meaning of.
In view of the facts of the case and the contentions
raised, the question that arose for consideration in this
E
appeal was whether the instrument in question which
answers the description of 'Trust deed', will also answer
the description of "settlement deed", and if so whether
stamp duty is payable-on the instrument, under Article 58
of Schedule 1-8 to the Indian Stamp Act, 1899 as amended
in U.P. F
Allowing the appeal in part, the Court
HELD: 1. Merely because an instrument answers the
definition of a trust deed it does not cease to be a
settlement deed for the purpose of stamp duty, if it G
answers the definition of 'settlement' also. It is well settled
..(
that all trusts are not settlements, and all settlements are
not trusts, but a deed of trust can also be a deed of
sett\ement. [Para 7] [689-G]
681 H
682 SUPREME COURT REPORTS [2009] 2 S.C.R.
A 2.1 It is evident from the definition of "settlement" in ~_,.
section 2(24) of the Indian Stamp Act, that any non-
testamentary disposition in writing, either of moveable or
immovable property made for any religious or charitable
purpose is a settlement. The definition also makes it clear
B that even where there is no such disposition in writing,
any instrument recording whether by way of declaration
of trust or otherwise, the terms of any of such disposition
~
· will also be a settlement. It is thus evident that not only
instruments which are non-testamentary dispositions of
c property for any religious or charitable purpose, but also
declarations of trust which record the terms of such
disposition, are settlements. 'Disposition' is a term of wide
import which encompasses any devise or mode by which
property can pass and includes giving away or giving up
D by a person of something which was his own.[Para 8]
[689-H; 690-A-B]
2.2 In this case, the instrument is not termed as a
"Settlement". It is clearly a declaration of trust and is
described as a 'deed of Trust'. But it records the terms of
E disposition of an immovable property for religious and
charitable purposes. The operative portion of the
instrument clearly recites that the three donors/Founders
grant, convey and transfer their property 'Mathur
Atithishala' unto the trustees (that is the three founders ..
F and two others) and also declares that the Trust shall own,
possess and manage the same as the absolute owner.
The three executants of the Trust deed divested
themselves of ownership of the property which was
transferred to the Trust represented by five trustees. Thus
G ·there was a disposition for religious and charitable
purposes. It is thus clear that the instrument answers the
j.
definition of "settlement" under section 2(24) of the Act.
As. the stamp duty leviable under a deed of settlement
under Article 58 is more than the stamp duty leviable in
H regard to a deed of trust under Article 64, the authorities
S.N. MATHUR V. BOARD OF REVENUE & ORS. 683
~ under the Stamp Act have rightly held that the instrument A
is chargeable with the higher duty prescribed under Article
58 applicable to a settlement. [Para 8] [690-E-H; 691-A]
The Commissioner of Giff Tax Madras vs. N. S. Getty
Chettiar AIR 1971 SC 240; The Collector of Estate Duty
B
Andhra Pradesh vs. Kancharla Kesava Rao AIR 1973 SC 2485
and Goli Eswariah vs. Commissioner of Gift Tax AIR 1970 SC
.... 1722 - relied on .
• "Black's Law Dictionary" - referred to.
'\ c
3. The decision to subject the deed to stamp duty
under Article 58 of the Act is upheld. However, the case
does not warrant levy of penalty equal to the deficit stamp
duty. On the facts and circumstances, the penalty is
reduced to Rs.5/- [Para 10] [694-C] D
,.
Board of Revenue, U.P v. Sridhar, Advocate AIR 1964
All. 537 and The Chief Controlling Revenue Authority v.
Banarsi Dass Ahluwalia AIR 1972 Delhi 128 - approved.
Sardar Deorao Jadhav v. State of Madhya Pradesh AIR E
1991 MP 247 - held inapplicable.
Narendra Singh Ju Deo v. Junior Secretary, Board of
- ..- Revenue AIR 1947 Allahabad 141 and The Chief Controlling
Revenue Authority, Board of Revenue v. T Ranganathan Pillai
AIR 1981 Mad. 193 - referred to. F
Case Law Reference
AIR 1947 Allahabad 141 referred to Para 3
AIR 1981 Mad. 193 referred to Para 3 G
-- ..J. AIR 1991 MP 247
AIR 1964 All. 537
held inapplicable Para 3
approved Para 4
AIR 1972 Delhi 128 approved Para 4
H
684 SUPREME COURT REPORTS [2009] 2 S.C.R.
A AIR 1971 SC 240 relied on Para 8 ......
AIR 1973 SC 2485 relied on Para 8
AIR 1970 SC 1722 relied on Para 8
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4916
B of 2003
From the Judgement and Orde·r dated 05.04.2002 passed .,..
by the High Court of Allahabad at Allahabad in Civil Misc. Writ
Petition No. 12130 of 1997. •
c Arvind Kumar, Laxmi Arvind, Poonam Prasad for the
Appellant.
Aarohi Bhalla, Manoj Kr. Dwivedi, G.V. Rao, Kamlendra
Misra for the Respondent.
D The Judgement of the Court was delivered by
..
R.V.RAVEENDRAN, J.
This appeal relates to the stamp duty payable in regard to
a deed of trust dated 9.8.1991 executed by the appellant and
E his two brothers. The executants paid a stamp duty of Rs. 1,325/
thereon, under Article 64 of Schedule 1-B to the Indian Stamp
Act, 1899 as amended in U.P. ('Act' for short). The registering
authority being of the view that it was not duly stamped,
impounded it and referred it to the adjudicating authority. The " ""
F said Authority made an order that the deed also answered the
definition of "settlement" as defined under section 2(24) of the
Act, and therefore stamp duty was payable under Article 58 of
Schedule 1-B of the Act on the declared value of the trust property
(Rs.2,10,000/-). He directed recovery of deficit stamp duty of
G Rs.10,225/- and an equal amount as penalty. The said order
was challenged by the appeMant by filing a revision before the
Chief Controller (Board of Revenue), Allahahad. The revisional
authority dismissed the revision by order dated 21.5.1996. The
).
--
appellant challenged the said order in Writ Petition No.54 of
2002. The High Court dismissed the writ petition holding that
H
S.N. MATHUR V. BOARD OF REVENUE & ORS. 685
[R.V.RAVEENDRAN, J.]
i~
the authority under the Stamp Act did not commit any error in A
construing the instrument to be a "settlement" as defined under
section 2(24) of the Act and that stamp duty was payable under
Article 58. The said order is challenged in this appeal.
2. The title part of the instrument reads thus: 'This deed of
B
Private Trust is made on 9.8.1991 by (names of three Donor
Trustees) in order to preserve, protect and manage the property
~ known as 'Mathur Atithi Shala' situated at Chitrakoot, on the
following terms and conditions :"The preamble to the instrument
recites that the said property was the self-acquired property of c
their father and he had constructed the Atithi Shala therein for
housing the pilgrims, and the said property is being used for
the said purpose ever since then; that they (the three donor
Trustees) had inherited the said property from their father and
they possess and own the said 'Mathur Atithi Shala' and have D
full disposing power; that as they were no longer able to manage
the property, they decided to form a private trust consisting of
the member of the family to look after the said property and
have accordingly created the said trust to be known as 'Shri
Jamuna Janki Mathur Trust' for the due preservation, protection E
and management of the said property. The operative portion of
the said deed states :
,. "Tbe Donor Trustees in pursuance of their wish and desire
as aforesaid do hereby grant, convey and transfer all that F
property i.e. 'Mathur Atithishala' described in the Schedule
hereto, unto and to the use of the Trustees to HAVE AND
TO HOLD the same in trust for the said donor trustees
subject to such powers and limitations as are hereinafter
specified. It is macte clear that the Trust shall own, possess G
and manage the Trust Property once and for all."
"'-
The deed thereafter proceeded to set down the objects of
the Trust which are charitable and religious in nature. It also
constituted a Board of Trustees consisting of the three donors
H
686 SUPREME COURT REPORTS [2009] 2 S.C.R.
A and two other family members and an Executive Committee ,_.,.
consisting of ten members. It also provided the eligibility criteria
for being appointed as a trustee, the term of office of the trustees,
the circumstances in which the trustees will cease to hold the
office and the powers and duties of the trustees.
B
3. The appellant submitted that the terms of the instrument
clearly make out that it was a deed of trust and not a deed of
settlement. Reliance is placed on three Full Bench decisions, •
namely, Narendra Singh Ju Dea v. Junior Secretary, Board of
c Revenue [AIR 1947 Allahabad 141] The Chief Controlling
Revenue Authority, Board of Revenue v. T Ranganathan Pillai
[AIR 1981 Mad. 193] and Sardar Deorao Jadhav v. State of
Madhya Pradesh [AIR 1991 MP 247].
4. On the other han<;i, learned counsel for the State and the
D
authorities under the Stamp Act (respondents 1 to 4) submitted
...
that the instrument in question came within two descriptions in
Schedule 1-B to the Act, that is "Deed of Settlement" chargeable
under Article 58 and "Deed of Trust" chargeable under Article
E 64; that where an instrument comes within more than one
description in Schedule 1-B, and the duties chargeable
thereunder are different, the instrument should be charged with
the highest of such duties; and that as the stamp duty under
Article 58 was higher than the stamp duty payable under Article '"
F 64, the instrument was chargeable with the stamp duty provided
under Article 58. In support of his contention that the instrument
also came within the definition of "settlement" as defined under
section 2(24) of the Act, he relied upon two full Bench judgments
of Allahabad and Delhi High Courts in Board of Revenue, UP.
G v. Sridhar, Advocate [AIR 1964 All. 537] and The Chief
Controlling Revenue Authority v. Banarsi Dass Ahluwalia [AIR ).
1972 Delhi 128].
5. The question for consideration is not whether the
H instrument is a deed of trust or not. The fact that the instrument
S.N. MATHUR V. BOARD OF REVENUE & ORS. 687
[R.V.RAVEENDRAN, J.]
,.;-_, falls within the description of Trust deed is not in doubt. In fact A
that is not challenged by the State. The question is whether the
instrument answers the definition of 'settlement' and therefore
would als() come under the description of 'settlement deed' in
Article 58. The appellant contends that it will not, and for that
purpose relies on the recitals of the trust deed that the Trust is B
created for preserving, protecting and managing the trust
property known as 'Mathur Atithishala' in Chitrakoot. The state
~
contends that it will, and for that purpose relies on the operative
/ portion of the instrument which shows that the three owners
conveyed and transferred their property to the Trustees, to have c
and to hold the same and to own, possess and manage it as
Trust Property. On the contentions raised, the question that
arises for consideration is whether the instrument in question
which answers the description of 'Trust deed', will also answer
the description of "settlement deed", and if so whether stamp D
duty is payable on the instrument, under Article 58 of Schedule
1-B to the Act.
6. Reference to the relevant provisions of the Indian Stamp
Act, 1899 (as amended in Uttar Pradesh) will be necessary to E
answer the question raised. Section 2(24) of the Act defines
settlement thus :
"settlement" means any non-testamentary disposition, in
... writing, of moveable or immoveable property made-
F
(a) in consideration of marriage,
(b) for the purpose of distributing property of the settler
among his family or those for whom he desires to provide,
or for the purpose of providing for some person dependent
on him, or G
--- .(
(c) for any religious or charitable purpose;
and includes an agreement in writing to make such a
disposition and, where any such disposition has not been
H
688 SUPREME COURT REPORTS [2009] 2 S.C.R.
A made in writing, any instrument recording, whether by way I-;;.
of declaration of trust or otherwise, the terms of any such
disposition;"
Section 3 provid~s that subject to the provisions of the Act
and the exemptions contained in Schedule I, every instrument
B mentioned in the Schedule to the Act shall be chargeable with
duty of the amount indicated in that Schedule as the proper duty
therefor. Section 6 provides that subject to the provisions of
section 5, an instrument so framed as to come within two or
more of the descriptions in Schedule I, (or Schedule IA or IB, as
C the case may be) shall, where the duties chargeable thereunder
are different, be chargeable only with the highest of such duties.
Schedule IB (as amended in Uttar Pradesh) enumerates the .
stamp duty 9n instruments under the Act in its application to
Uttar Pradesh. Relevant portions of Articles 58 and 64 of the
D said schedule are extracted below :
Description of Instrument Property Stamp Duty
"58. SETTLEMENT The same duty as a Bond
-A-Instrument of (including a (No.15) for a sum equal to
E deed of dower). the amount or value of the
the property settled
"64. TRUST-
A.-DECLARATION OF -
of or concerning, any
F
property when made by any
writing not being a Will.
(a) where the amount of value The same duty as on a
does not exceed Rs.10,000; Bond (No.15).
G (b) where such amount On ten thousand rupees
exceeds Rupees 10,000; the duty payable under
).
clause (a) and on the re riainder,
hree rupees for every ad-
ditional one thousand ru-
H pees or part thereof."
S.N. MATHUR V. BOARD OF REVENUE & ORS. 689
(
~-
[RVRAVEENDRAN, J.]
7. The principles relating to charging stamp duty are well A
/-'t
settled. They are:
(i) The object of the Stamp Act is generation of revenue.
It is therefore a fiscal enactment and has to be
interpreted accordingly.
B
(ii) Stamp duty is levied with reference to the instrument
and not in regard to the transaction, unless otherwise
~ specifically provided in the Act.
' ,. (iii) Stamp duty is determined with reference to the
substance of the transaction as embodied in the c
instrument and not with reference to the title, caption
or nomenclature of the instrument.
(iv) For classification of an instrument, that is to determine
whether an instrument comes within a particular D
description in an article in the Schedule to the Act,
the instrument should be read and construed as whole.
(v) Where an instrument falls under two or more
descriptions in the Schedule to the Act, the instrument
----<
shall be chargeable with only one duty, that is the E
__.,' highest of the duties applicable to the different
description. But where an instrument relates to
several distinct matters, it shall be chargeable with
~- the aggregate amount of duties to which separate
Ai
instruments would be chargeable. F
Merely because an instrument answers the definition of a
trust deed it does not cease to be a settlement deed for the
purpose of stamp duty, if it answers the definition of 'settlement'
also. It is well settled that all trusts are not settlements, and all
settlements are not trusts, but a deed of trust can also be a G
ti( deed of settlement.
' 8. It is evident from the definition of "settlement" in section
2(24) that any non-testamentary disposition in writing, either of
..... moveable or immovable property made for any religious or H
690 SUPREME COURT REPORTS [2009] 2 S.C.R.
A charitable purpose is a settlement. The definition also makes it
r-:..
clear that even where there is no such disposition in writing, any
instrument recording whether by way of declaration of trust or
otherwise, the terms of any of such disposition will also be a
settlement. It is thus evident that not only instruments which are
B non-testamentary dispositions of property for any religious or
charitable purpose, but also declarations of trust which record
the terms of such disposition, are settlements. 'Disposition' is
a term of wide import which encompasses any d.evise or mode .,..
by which property can pass and includes giving away or giving
c up by a person of something which was his own (see : The -'\
Commissioner of Gift Tax Madras vs. N. S. Getty Chettiar -
AIR 1971 SC 240 and The Collector of Estate Duty Andhra
Pradesh vs. Kancharla Kesava Rao - AIR 1973 SC 2485).
This Court has also held that the word "disposition" refers to a
bilateral or multilateral act of transfer and will not apply to a
D
unilateral act as, for example, when a person treats his individual
property as a joint family property. (See : Goli Eswariah vs.
Commissioner of Gift Tax - AIR 1970 SC 1722). Black's Law
Dictionary d~fines "disposition" as the act of transferring
something to the care or possession of another; or
E relinquishment or giving up of property". In this case, the
instrument is not termed as a "Settlement". It is clearly a ~
;.
declaration of trust and is described as a 'deed of Trust'. But it I-
records the terms of disposition of an immovable property for
religious and charitable purposes. The operative portion of the .. ,...
F instrument clearly recites that the three donors/Founders grant,
convey and transfer their property 'Mathur Atithishala' unto the
trustees (that is the three founders and two others) and also
declares that the Trust shall own, possess and manage the same
as the absolute owner. The three executants of the Trust deed
G divested themselves of ownership of the property which was
transferred to the Trust represented by five trustees. Thus there
was a disposition for religious and charitable purposes. It is "'
thus clear that the instrument answers the definition of
"settlement" under section 2(24) of the Act. As the stamp duty
H leviable under a deed· of settlement under Article 58 is m-ore ....
S.N. MATHUR V. BOARD OF REVENUE & ORS. 691
[R.V.RAVEENDRAN, J.]
,.,. Article
than the stamp duty leviable in regard to a deed of trust under A
64, the authorities under the Stamp Act have rightly held
that the instrument is chargeable with the higher duty prescribed
under Article 58 applicable to a settlement.
9. We will now examine whether the three decisions relied
on by the appellant is of any assistance. B
9.1 In Narendra Singh Ju Deo (supra), the Chief
~
Controlling Revenue Authority made a reference to the High
Court under section 57 of the Act, expressing the opinion that
the instrument was a trust and not a settlement, but had some c
doubt about it A Full Bench of the Allahabad High Court held
that the instrument was not a settlement in view of the following
circumstances: (a) Though the owner of the property transferred
the property to three trustees who were to manage the property
on his behalf during his life-time and to make certain
D
arrangements in the event of his death, there was nothing to
/.. show that the deed could be regarded as one executed for the
purpose of distribution of owner's property. (b) The owner of
the property had reserved a right of revocation of the trust to
himself and it seemed that the general intention of the owner
was that the property should remain in the hands of the trustees E
.
I
for sometime and that they should deal with it in the manner in
which he would have dealt with it, if he had not createq a deed
of trust. The said decision was not supported by any reasoning
. or principle. In fact, the said decision was not accepted by a
larger Bench of that High Court in Board of Revenue, UP vs. F
Sridhar (supra), wherein a Special Bench of five Judges
examined whether a draft deed in respect of which a reference
was made under section 57 of the Act, was a declaration of
trust or settlement. They examined the terms of the deed and
found that there was a disposition of property. The Court held : G
"This definition of the word "Settlement" itself makes it
i
clear that even instruments which are executed containing
a declaration of trust can be settlements provided the
conditions laid down in the earlier part of the definition are
H
692 SUPREME COURT REPORTS [2009] 2 S.C.R.
A satisfied. The question in these circumstances that falls ~
for own opinion is whether this particular instrument, to
which this instrument relates, is' a "settlement" or not, even
though it may on the face of it, be a deed of Trust".
We respectfully agree with the said observations. Referring
B to the earlier decision in Narendra Singh Ju Dea, the Special
Bench held that the reasons given therein to hold that the
disposition did not amount to a settlement were not sufficient to >·
take the instrument o"'t of the category of a 'settlement' as \:
defined under section 2(24). It was held that the instrument would .
,;
-
c be a settlement, even if the disposition was not for the purpose
of distribution of th£? owner's property if the disposition was for ~
the purpose of providing for some persons depending on the
settler. It was also observed that the reservation of the right of
revocation had no bearing on the question whether a deed of
..
'
'
~'
D trust amounted to a settlement or not. The Bench concluded
that deed of trust as also a deed of settlement, can be for a 1.
limited period.
9.2) In T. Ranganathan Pillai (supra), a Full Bench of the
~
E
Madras High Court was dealing with a reference in respect of a r
deed purporting to be a Trust'C:leed under which a Trust was ·<
created by the founder of the Trust in respect of his properties ·~
for the benefit of his family and himself. During the arguments, it •
was conceded on behalf of/"the State that the deed did not fall
,.
within the definition of 'Settlement' either under clauses (a) and
F (c) of section 2(24). The High Court also noted that ultimately
the learned counsel for the State conceded that even clause (b)
I
of section 2(24) did not apply. Consequently the High Court held >
that it was not a deed of settlement but only a declaration of
G
Trust. The High Court on an examination of the terms of the
instrument, also held that it was not made for any of the three
purposes mentioned in clauses (a), (b) and (c) of Section 2(24),
•••
-~
and therefore, it was not a settlement. The said decision is
therefore of no assistance.
9.3) In Sardar Deohao Jadhav (supra), the MP High Court
H
S.N. MATHUR V. BOARD OF REVENUE & ORS. 693
[R.V.RAVEENDRAN, J.]
was considering the question whether the instrument before it A
c:--1 was a trust deed or a settlement deed. In that case the properties
had already been dedicated to the family deities by the
forefathers of the executant of the trust deed and the executant
was only having custody of the properties which was in the
ownership of the deities. By the deed of trust, the executant B
merely purported to make proper provision in respect of the
discharge of duties of his office of Shebait of the famjly deities
. and declared a trust in respect of the properties mentioned
therein. There was no disposition, but merely a declaration or
iJ
assertion that the properties belonged to the deities. In those c
circumstances, the High Court found, reading the deed as a
whole, that the executant was executing a trust deed in respect
of the properties of family deities of which he was the Shebait
and the essence of the document was to provide for the custody
of the properties, and not to make any 'disposition'. By executing
,,, the deed of trust, the executant neither transferred nor parted
D
J.. with any property. He 'lost' nothing by executing the deed. The
High Court therefore held that the instrument was liable to be
stamped under Article 64, as a Trust deed. The decision, on the
facts, is inapplicable.
E
9.4) Neither of the three decisions relied on by Appellant
is therefore of any assistance. In Banarsi Dass Ahluwalia
(supra), relied on by the respondents, a Special Bench of the
{> Delhi High Court was considering an instrument whereby the
'l'
' founder created a public charitable trust and appointed himself F
as the first trustee and dedicated and endowed upon trust his
various assets and properties and declared that the business
and properties described thereunder, shall no longer be the
personal business and properties of the founder but shall be
held in Trust. The Delhi High Court held that the term 'settlement'
G
- j
had a larger ambit than 'trust' having regard to the definition of
settlement in section 2(24). It also held that while a trust made
for the purposes specified in section 2(24) would always be a
settlement, the converse may not be true. The Court therefore
held ~hat the deed of trust also answered the definition of
H
···~ ......... ,:,..
694 SUPREME COURT REPORTS [2009] 2 S.C.R.
A 'settlement' and having regard to section 6, when an instrument
is covered by both Articles 64 and 58 of the Act, it shall be
chargeable to duty under Article 58 as the duty thereunder was
higher than the duty under Article 64. This decision reiterates
the principle enunciated by the Allahabad High Court in Sridhar
B (supra). Be that as it may.
10. We therefore uphold the decision to subject the deed
to stamp duty under Article 58 of the Act. We are however of the
view that the case does not warrant levy of penalty equal to the
deficit stamp duty. On the facts and circumstances, we reduce
C the penalty to Rs.5/-. The appeal is allowed in part accordingly.
GN. Appeal party allowed.
i'
~
+··
,,
~
)
....
~
y
'
I
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