' SHEZADA MAZHAR, J.---Through this judgment, I intend to dispose of Writ Petition No. 2645 of 2000 and Civil Revision No. 566-D of 2000, as both have similar facts and relate to the same issue.
2. In Writ Petition No. 2645 of 2000, the petitioner, Chakwal Cement Company Limited has challenged the order dated 25-8-1999 passed by respondent No.
1. The District Collector, Chakwal and order dated 31-7-2000 passed by respondent No.
5. The Chief Controlling Revenue Authority/ Member Board of Revenue, Lahore, whereby recovery of Rs.22,46,57,650 which include Rs.4,49,31,530 on account of shortfall of stamp duty and five times penalty thereon was passed.
3. In Civil Revision No. 566 of 2000, the petitioner Messrs Chakwal Cement Company Limited has challenged the judgment and decree dated 20-5-2000 passed by the learned Civil Judge Ist Class, Chakwal, whereby suit for declaration and perpetual injunction with consequential relief and rectification of the mortgage deed was decreed to the extent of rectification deed and rejected the plaint to the extent of remaining part of the relief. The petitioner has also challenged the judgment and decree dated 23-10-2000 rendered by the learned Additional District Judge, Chakwal, whereby the learned First Appellate Court dismissed the appeal of the petitioner against judgment and decree of the learned Civil Judge dated 20-5-2000 and rejected the plain in toto.
4. Facts necessary for the disposal of these cases are that petitioner entered into an agreement for financial accommodation with respondent No. 4 for a loan of two billion Japanese Yen, which at the relevant time was equal to Rs.64,52,72,000. As security for the above loan the petitioner created a charge in the sum of Japanese Yen two billion by means of hypothecation of machinery and various other securities including Legal Mortgage of land. On 9-5-1998, respondent No. 1 issued a notice alleging that petitioner has evaded stamp duty in the sum of Rs.4,49,31,530 on registration of mortgage deed, therefore, petitioner is liable to pay 10 times penalty along with actual stamp duty total amounting to Rs. 49,42,46,830/-. The said demand was challenged by the petitioner in Writ Petition No. 1264 of 1998 before this Court. In the said writ petition respondent No,l was directed to "issue show-cause notice to the petitioner who shall be at liberty to file reply raising objections noted supra to the jurisdiction of the Collector and objections of petitioner shall be dealt with on merits by the Collector after hearing the petitioner in accordance with law and through a speaking order".
5. Respondent No. 1 issued fresh show-cause notice dated 3-7-1998 whereby petitioner was asked to show cause as to why the amount of Rs.49,42,46,830 should not be recovered from the petitioner on account of deficiency of stamp duty and penalty thereon. On or about 11-12-1998 petitioner filed a suit for declaration and perpetual injunction with consequential relief and Rectification of the mortgage deed. In the said suit respondent No. 4 was also party who appeared and filed written statement and conceded that mortgage amount was Rs.33,93,000 and the balance amount was secured through various other charges. Due to the admission of the respondent No. 4 petitioner filed application under Order XII Rule 6 C.P.C. For passing of decree to the extent of respondent No.
2. Petitioner and respondent No. 4 also moved a joint application to the effect of rectification and in this regard respondent No. 2's counsel also recorded statement in Court on 20-11-1999. In view of the statement of respondent No. 2 the trial Court decreed the suit to the extent of rectification deed however rest of the plaint was rejected on the ground that same matter is pending before the relevant authorities. The appeal against the said judgment and decree was also dismissed, hence, the Civil Revision.
6.The respondent No. 1 also after hearing the petitioner's counsel passed the order dated 25-8-1999 whereby it was held that petitioner is required to pay Rs.4,49,31,530 on account of shortfall of stamp duty along with five times penalty total amounting to Rs.22,26,57,650. Against the said order petitioner filed revision petition under section 56 of the Stamp Act, 1899 before respondent No. 5 who maintained the order, hence, the present writ petition.
7. Learned counsel for the petitioner submits that there can be no national impounding of a document; that section 40 of the Stamp Act, 1899 has been wrongly invoked; that for impounding actual document needs to be taken into possession and admittedly the document was never taken into custody by the respondents; that action was taken in violation of law as the mortgage deed was never produced before the Collector; that after registration of the document Collector as well as the Sub-Registrar became functus officio; that no evasion of stamp duty and registration fee as alleged was made by the petitioner; that only consequence of deficiency in the stamp duty and registration fee relates to the admissibility of the mortgage deed in evidence; that no stamp duty or penalty can be levied on the company; that section 48 is also not applicable to the facts of the case as section 48 itself refers Chapter 4 of the Stamp Act, 1899 which is not applicable to the facts of the present case. Further submits that the impugned order has been passed on a presupposed hypothesis that the land was mortgaged as a security for the entire amount of loan, whereas, the mortgage is one of the several other securities furnished by the petitioner; that loan of Rs.64,52,72,000 cannot be reasonably expected to have been secured by a piece of land the market value of which does not exceed Rs.33,93,000; that nowhere in the mortgage deed the amount of two billion Japanese Yen has been specified to be secured vide mortgage deed in question. In fact it is a ceiling for which number of other collaterals have been offered by the petitioner. It is also submitted that petitioner rightly paid the stamp duty leviable on the mortgage deed on the basis of market value of the mortgage property; that Article 40 of the Stamp Act Schedule 1 applies to a situation where the value of the property and the amount secured thereby are the same. The article therefore has been misapplied. In support of his contentions learned counsel for the petitioner has relied upon the following judgments, (PLD 1996 Lah 663), (PLD 2005 SC 772), (PLJ 1978 SC 97)(sic), (AIR 1961 SC 787), (2002 CLD 145) (PLD 2007 Lah. 507) and (2012 CLD1976).
8. It is relevant to mention here that the arguments were heard on 31-10-2013 and the judgment was reserved, however, on 11-11-2013 learned counsel for -the petitioner moved an application and raised another legal question that whether the Board of Revenue under section 57 of the Stamp Act, was bound to refer a question of law to the High Court? In this regard learned counsel referred to the order of the District Collector wherein he mentioned that he sent the matter for advice twice to the Board of Revenue and submitted that in view of section 57 of the Stamp Act, 1899 it was necessary upon the Chief Revenue Authority to send the reference to High Court. In this regard learned counsel relied upon (PLD 1959 (W.P) Karachi 1). Learned counsel further submits that Board of Revenue in the impugned order relied upon the definition of mortgage as given in the Transfer of Property Act; that recital of the mortgage deed reveals that it was a bond and the same has been stamped as a bond.
9. On the other hand, learned A.A.-G. Fully supports the impugned judgments and submits that petitioner has no cause as Article 40 of the Stamp Act, 1899 is very clear which states the stamp duty on the amount secured. In the present case amount secured is the amount of loan to be received by the Company; that mortgage deed clearly states in para (d) the mortgage money which include the loan as well as the interest etc. Further submits that the Corrigendum was drafted to avoid the liability; that the same has not been registered till date, therefore, cannot be considered; that the same is an afterthought; that under section 48 of the Stamp Act, 1899 the Collector has powers to recover any avoided stamp duty.
10. I have heard the arguments and have also gone through the record of the cases,
11. Before this Court learned counsel for the petitioner has placed much emphasis on the remand of the case on the ground that Collector as well as the Chief Revenue Authorities have failed to follow sections 56 and 57 of the Stamp Act, 1899. For ease both the provisions are reproduced hereunder:- -
56. Control of, and statement of case to, Chief Revenue Authority. (I) The powers exercisable by a Collector under Chapter-IV and Chapter-V and under clause (a) of the first proviso to section 26 shall in all cases be subject to the control of the Chief Revenue Authority.
(2) If any Collector, acting under section 31, section 40 or section 41, feels doubt as to the amount of duty with which any instrument is chargeable, he may draw up a statement of the case, and refer it, with his own opinion thereon for the decision of. The Chief Revenue Authority.
(3) Such authority shall consider the case and send a copy of its decision to the Collector, who shall proceed to assess and charge the duty (if any) in conformity with such decision.
57. Statement of case by Chief Revenue Authority to High Court. (1) The Chief Revenue Authority may state any case referred to it under section 56, subsection (2), or otherwise coming to its notice, and refer such case, with its own opinion thereon:-
(a) if the case arises in East Pakistan, to the High Court of East Pakistan;
(b) if the case arises in West Pakistan, to the High Court of West Pakistan;
(2) Every such case shall be decided by not less than three Judges of the High Court to which it is referred, and in case of difference the opinion of the majority shall prevail.
' Bare reading of the above clauses reveals that if the Collector feels doubt as to the amount of duty with which instrument is chargeable he is required to draw up a statement and refer the same for an opinion of the Chief Revenue Authority. Similarly Chief Revenue Authority may refer such matter to High Court. In the case in hand neither the Collector nor the Chief Revenue Authority is in doubt about the amount of duty with which the mortgage deed was to be charged. Therefore, no question arises for referring the matter to '"Chief Revenue Authority or the High Court.
12. The reference made to letters written by the Collector and referred in his order dated 25-8-1999.
The relevant portion is reproduced hereunder:- "Going over the written reply and the oral statement made before me on this occasion, I found certain difficulties in adjudicating the matter on my own and referred it to the Board of Revenue for advice along with copies of the relevant document. The first advice was received by me vide letter No.3217- 99/2166-ST(I) dated 19-10-1998 under the signatures of the Secretary (Settlement and Consolidation), Board of Revenue, Punjab. The advice was "where an insufficiently stamped instrument is acted upon by mistake or oversight, the State can at any time recover the duty and penalty from the person found leviable to pay stamp duty under section 48 of the Stamp Act, 1899". Not being satisfied with the advice 1 again referred the matter to the Board of Revenue through my letter dated 16-11-1998 seeking advice on specific issues. The Board of Revenue apparently examined the matter and also made a reference to the Law Department, Government of the Punjab. Finally, the Board of Revenue under the signatures of Chief Inspector of Stamps, vide letter No. 2505-99/ 1179 ST(1) dated 10-7-1999 sent me the advice of the Law Department for further necessary action. The advice of the Law Department was that "The Collector can recover deficient stamp duty on a mortgage deed under section 48 of the Stamp Act in the same manner as he is empowered to recover such like deficiencies and penalties on any other- document required to be registered and liable to pay stamp duty under the said Act." I may add here that I made all efforts possible in compelling the Board of Revenue to focus on the specific issues and also by pointing out that the objections raised by the Chakwal Cement Co. Ltd. Had to be taken into consideration."
' The above para clearly shows that the doubt, 'if any', was with regard to the "adjudicating" the matter and not the chargeability of the mortgage deed.
13. Now I shall take up the other objection with regard to the instrument, i.e. The "Mortgage Deed" which according to the learned counsel was rightly stamped as it was firstly secured only to the extent of property mortgaged and secondly it was termed as Mortgage deed but in fact it was a bond. In this regard I will first examine the Mortgage deed. However, before going to the deed itself I will reproduce the definition of Mortgage Deed as given in the Stamp Act, 1899, which states:- "2(17) Mortgage deed." "Mortgage deed" includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates, to, or in favour of, another, a right over or in respect of specified property; ' From the above, it is clear that any instrument which transfer or creates to transfer a right over a specified property for securing money advanced or to be advanced. Now the mortgage deed in para (b) of the preamble states as under:-- "At the request of the Mortgagor, the Lender has agreed to extend a Loan of upto two billion Japanese Yen to the Mortgagor (the "Loan") under the terms of the Loan Agreement entered into with the Mortgagor on 7th March, 1996 (the "Agreement")."
' In the above para petitioner has clearly defined the "Loan" which is two billion Japanese Yen. In para (d) of the preamble petitioner has stated:- ' The Mortgagor undertakes to repay the Loan with interest, default interest by way of liquidated damages, commitment charge, front-end fees and all other monies payable under the Agreement (collectively referred to, the Mortgage Money")
' In the above para petitioner has clearly stated that mortgage money include the loan, as well as interest, default interest etc. Which will definitely be more than the 2 billion Japanese Yen. The clause 2 of the mortgage deed has clarified all the issues which states as under:-- ' The Mortgagor hereby charges with the payment of the Mortgage Money and until such payment hereby transfers and conveys absolutely to the Lender by way of a registered English mortgage, the Mortgaged Property for the purpose of securing the Mortgage Money to the Lender.
15. When the above clause is read with Article 40 of the Schedule I of the Stamp Act, 1899 the controversy with regard to the amount of stamp duty resolves then and there Article 40 states: S.No. Description of Instrument Proper Stamp Duty 40.MORTGAGE DEED not being an AGREEMENT RELATING TO DEPOSIT OF TITLE-DEEDS, PAWN OR PLEDGE (No.6), BOTTOMERY BOND (No. 16) MORTGAGE OF A CROP (No. 41)RESPONDENTIA BOND (No. 56), OR SECURITY BOND (No. 57)-- (a)When possession of the property or any part of the property comprised in such deed is given by the mortgagor or agreed to be given;The same duty as on a Conveyance (No.23 for a consideration equal to the amount secured by such deed.
(b)When possession is not given or agreed to be given as aforesaid;The same duty as on a bond (No.15) for the amount secured by such deed.
Explanation---A mortgagor who gives to the mortgagee a power-of attorney to collect rents or a lease of the property mortgaged or part thereof, is deemed to give possession within the meaning of this article.
(c)When a collateral or auxiliary or additional or substituted security, or by way of further assurance for the above-mentioned purposes where the principal or primary security is duly stamped--for every sum secured not exceeding Rs. 1,000; and for every Rs. 1,000 or part thereof secured in excess of Rs. 1,000,Ten Rupees.Ten Rupees.
EXEMPTIONS (2)Instruments, executed by persons taking advances under the Land Improvement Loans Act, 1883, or the West Pakistan Agriculturists Loans Act, 1958, or by their sureties as security for the repayment of such advances.
(2)Letter of hypothecation accompanying a Bill of Exchange.
15. It is well-settled that it is the document as it stand which is determinative of the duty payable and not the transaction. In other words the Stamp Act does not deal with the bargain but the instrument which record the bargain. In this regard reference is made to "Mst. Shamim Akhtar v.
Naima Baqai" (1977 SCMR 409) which states as under:- ' It must be remembered that what Stamp Act deals with is not the bargain which arises out of the consent of the parties, but the precise instrument which records the bargain. The stamp duty is on the "Instrument" as such and not on the transaction.
' In the present case the amount secured is the 2 billion Japanese Yen plus the interest, default interest by way of liquidated damages, commitment charges, front end fees and all other moneys payable under the Agreement. From the above it is clear that the amount secured by the petitioner through the Mortgage deed was more than 2 billion Japanese Yen. It is also cleared that when the amount secured is not in dispute, as far as the Revenue Authorities are concerned then there was no need for a reference under section 56 or 57 of the Stamp Act, 1899.
16. Now I take up the objection with regard to the impounding of the document. The perusal of the order passed by the Collector dated 25-8-1999 reveals that it was this objection of the petitioner regarding no recovery without impounding read with Chapter-IV of the Stamp Act, 1899, which created doubt in the mind of the Adjudicating Authority.
' As reading of the provisions of Chapter-IV reveals that as if no recovery can be made of stamp duty without impounding the document(sic). Learned counsel has also placed much emphasis on this point before this Court also.
17. It is submitted that the prime object of the Stamp Act is to realize and safeguard the public revenue. Section 33 deals with the impounding of the instrument not properly stamped if such an instrument produced or comes before public functionaries. Similarly sections 35 and 36 deals with the insufficiently stamped document if produced in evidence whereas section 48 deals with the recovery of stamp duty if not paid at the relevant time. Further perusal of the record reveals that petitioner has tried to avoid payment of due stamp duty on the basis of technical ground that no recovery can be made without impounding of document. I am afraid there is nothing in the statute books which suggests that because of a technicality of impounding of a document, fraudulent evasion of stamp duty is to be allowed to go scot-free. I am of the view that government cannot be deprived of its revenue on such technical basis. I am fortified in my view E from the judgment reported as "Muhammad Furqan v. Speaker National Assembly and 4 others, (2010 PLC (C.S.) 1013), wherein it was held that:- "The exchequer cannot be deprived of its legitimate right of recovery being guardian of public revenue collected through direct/indirect taxation. Its interest are to be jealously safeguarded to facilitate running of the economy ' It is for the said reasons that the Secretary (Settlement and Consolidation), Board of Revenue, Punjab gave the advice to the Collector in the following words:- "Where an insufficiently stamped instrument is acted upon by mistake or oversight, the State can at any time recover the duty and penalty from the person found leviable to pay the stamp duty under section 48 of the Stamp Act, 1899."
' Similarly, the Law Department also gave the advice to the Collector in the following words:-- "The Collector can recover deficient stamp duty on a mortgage deed under section 48 of the Stamp Act in the same manner as he is empowered to recover such like deficiencies and penalties on any other document required to be registered and liable to pay stamp duty under the said Act."
18. From the above I am of the considered view that the short paid stamp duty is recoverable under section 48 of the Stamp Act, 1899. I am fortified in my view from the judgment of Islamabad High Court reported as "Rousch (Pakistan) Power Limited v. Federation of Pakistan through Chief Commissioner and 4 others (PLD 2012 Islamabad 1), wherein it is held that:- "If any amount is recoverable from the petitioner-Company on the basis of deficient registration fee in respect of Security Documents of the petitioner-company got registered in the year-2008, respondents could proceed against the said Company in accordance with section 48 of Stamp Act, 1899, which reads as under:- "48. Recovery of duties and penalties.---All duties, penalties and other sums required to be paid under this Chapter may be recovered by the Collector by distress and sale of the movable property of the person from whom the same are due, or by any other process for the time being in force for the recovery of arrears of land revenue."
The above-mentioned re-produced Section of Stamp Act, 1899 empowers the Collector to recover all duties, penalties and sums etc. By distress or by sale of the movable property of the person from whom the same are due."
19. The civil revision arises from the suit for declaration wherein the petitioner made the following prayers:- "In view of the above it is respectfully prayed that it be kindly declared that mortgage deed dated 29-5-1996 pertains to immovable property mentioned in the schedule thereto and that the mortgage money was the value of the aforementioned mortgaged property and that the mortgage deed had been properly stamped. Defendant No. 1 be perpetually restrained from continuing the existing proceedings or initiating further proceedings against the plaintiff in respect of the said mortgage deed dated 24-5-1996 under the Stamp Act. Cost of the suit may also kindly be awarded. The relief of rectification of the deed of mortgage dated 29-5-1996, if required, consistent with declaration claimed may also be granted to the plaintiff. "
' This suit was partly allowed by the learned Civil Judge to the extent of prayer of rectification vide judgment and decree dated 20-5-2000. However, on appeal the suit was dismissed and the plaint was rejected on the ground that partial rejection of the plaint is not allowed under the law. Learned counsel for the petitioner did not address any arguments on the civil revision, therefore, it seems that the petitioner is no more interested in pressing the present civil revision. Even otherwise the order passed by the learned Additional District Judge, Chakwal dated 23-10-2000 is in accordance with law and does not require interference.
20. The upshot of above discussion is that the orders passed by the respondent/Collector dated 25-8-1999 as well as that of dated 31-7-2000 are in accordance with law and facts, therefore, the present writ petition is hereby dismissed and respondents are directed to recover the defaulted amount along with five times penalty from the petitioner immediately. The civil revision is also dismissed.