MR. PARAMVEER ABHAY SANCHETI vs THE DEPARTMENT OF STAMPS AND REGISTRATION

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

TH
DATED THIS THE 16 DAY OF JUNE, 2026

BEFORE


THE HON'BLE MR. JUSTICE M.G.S. KAMAL

WRIT PETITION NO. 7887 OF 2021 (GM-ST/RN)


BETWEEN:

MR. PARAMVEER ABHAY SANCHETI
S/O ABHAY HARAKHCHAND SANCHETI
AGED ABOUT 33 YEARS
R/A PLOT NO.45, HILL ROAD,
SHIVAJI NAGAR,
DHARAMPETH EXTN,
NAGAPUR-440 010
MAHARASTHRA.
…PETITIONER

(BY SRI. PRAMOD NAIR, SENIOR ADVOCATE FOR
SRI. VAMSHI KRISHNA C.,ADVOCATES)

AND:

1. THE DEPARTMENT OF STAMPS AND
REGISTRATION
GOVERNMENT OF KARNATAKA
TH
KANDAYA BHAVAN, 8 FLOOR,
KEMPEGOWDA ROAD
BENGALURU, KARNATAKA -560 009.
REP BY SPP HIGH COURT OF KARNATAKA AT
BENGALURU - 560 001.

2. DISTRICT REGISTRAR AND











Digitally signed
by SUMA B N
Location: HIGH
COURT OF
KARNATAKA

DEPUTY COMMISSIONER OF STAMPS
S.S. COMPLEX, MAHALASHMI LAYOUT

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OPPOSITE TO KABASHADI MAHAL
M B ROAD, KOLAR - 563 101.

3. THE SUB REGISTRAR
MINI VIDHANA SOUHDA
TALUK OFFICE PREMISES
MALUR TOWN,
KOLAR DISTRICT PIN-563 130.

…RESPONDENTS

(BY SRI. MAHANTESH SHETTAR, AGA FOR R1 TO R3)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
QUASH THE ORDER DATED 19.11.2020 DATED
11.01.2019 PASSED BY THE R2 ANNEXURE-H

THIS PETITION, COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE
THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE M.G.S. KAMAL

ORAL ORDER
1. Petitioner had executed a document entitled as
''Memorandum of Entry'' for creation of mortgage by deposit of
title deeds, dated 11.01.2019 as per Annexure-A. Petitioner
claims to have paid the stamp duty as prescribed under Article
6 of the Karnataka Stamp Act, 1957 (hereinafter referred to as
'the Act, 1957'). By the impugned order dated 19.11.2020,
respondent No.2 has called upon the petitioner to pay

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additional stamp duty of Rs.6,75,00,000/- calculated under
Article 34(b) of the Act, 1957. Hence, the petition.
2. Sri. Pramod Nair, learned Senior counsel appearing for
petitioner submits that the respondent No.2 would have been
justified in passing the impugned order if the document in
question satisfied the ingredients of clause (b) of Section 58 of
the Transfer of Property Act, 1882. He reads into the terms,
conditions and recitals of the said document to point out that
petitioner herein is not a mortgager, who has bound himself
personally to pay the mortgage money. He also refers to clause
(f) of Section 58 of the Transfer of Property Act, and submits
that the petitioner has merely delivered the documents of title
of his immovable property to the lender named in the
document with an intention to create security against the
payment of loan borrowed by the borrower named in the
document. Thus, he submits this distinction between clause (b)
and clause (f) of Section 58 of the Transfer of Property Act has
been lost sight of by the respondent No.2 while passing the
impugned order.

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3. He relies upon the judgment of the Co-ordinate Bench
of this Court in the case of Rashtrothana Parishat Vs. State
of Karnataka reported in ILR 1992 KAR 565. Referring to
paragraph Nos.13 and 14 of the said judgment submits that the
question which arises in this petition stands fully covered.
Hence, seeks for allowing of the petition.
4. In response, learned AGA referring to unnumbered
clause 4 of the document at Annexure-A submits that the
petitioner herein has consciously handed over the title deeds of
immovable property described in the document, with a clear
intent to create charge over the same until the loan was fully
paid and satisfied, which according to learned AGA falls within
the ambit of Article 34(b) of the Act, 1957. Therefore, he
submits that the impugned order calling upon the petitioner to
pay the differential amount of Rs.6,75,00,000/- is justified.
5. He further submits that in terms of Section 45A(3), of
the Act, 1957 an appeal is provided before the Karnataka
Appellate Authority. As such, the petition is not maintainable.
6. Heard and perused the records.

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7. Contents of document namely, Memorandum of Entry
for creation of mortgage by deposit of title deeds as per
Annexure-A, indicate that the petitioner herein describing
himself to be the mortgager, has delivered the title deeds of
the immovable property described in Schedule I and II of the
said document in favour of lender-SBI CAP Trustee company
Ltd., the lender named in the said document, with an intent to
create charge over the said property to form a security for
repayment of the loan borrowed by certain SMS Ltd., the
borrower named in the document.
8. As rightly pointed out by the learned Senior counsel
appearing for the petitioner, close perusal of the said document
would not indicate petitioner having personally undertaken to
repay the loan for and on behalf of the borrower SMS Ltd.
Reference to unnumbered paragraph No.4 as noted
hereinabove and its contents would not meet the requirement
of clause (b) of Section 58 of the Transfer of Property Act. The
said unnumbered paragraph Nos.4 and 5 of document at
Annexure-A, read as under:
'' Mr. Paramveer Abhay Sancheti , assured the Security Trustee that
he is the absolute owner of the Immovable Properties and that the he
has clear and marketable title thereto and that save and except the

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mortgage/charges on the Immovable Properties as aforesaid, there are
no other subsisting mortgages or charges or liens or any other
encumbrances or attachments whatsoever thereon or any part thereof,
in favour of any Government or the Income-Tax Department or any
other Government Department, or any person, firm or company, body
corporate or society or entity whatsoever and that the Mortgagor has
not entered into any agreement for sale, transfer or alienation thereof
or any part or parts thereof and that no such mortgage, charge or lien
or other encumbrance whatsoever will be created or attachment
allowed to be levied on the Immovable Properties or any part or parts
thereof in favour of or on behalf of any Government or Government
Department or any person, firm, company, body corporate or society
or entity whatsoever except with the prior permission of the said Banks
so long as the Borrower continues to be indebted to or liable to the
Lenders on any account in any manner whatsoever and that no
proceedings for recovery of taxes are pending against the Mortgagor
under the Income Tax Act or any other law in force for the time being
and that no notice has been issued and/or served on the Mortgagor
under Rules 2, 16 or 51 or any other Rules of the Second Schedule to
the Income Tax Act 1961, or under any other law. Further, no
objection certificate dated was provided by the Income Tax department
under section 281(1)(ii) of the Income Tax Act, 1961 in relation to
creation of charge to secure the total Facilities.
Mr. Paramveer Abhay Sancheti , further assured to the Security
Trustee that the he has obtained all necessary permissions and
approvals for creation of mortgage over the Immovable Properties as
aforesaid and that the Borrower shall obtain and furnish to the Security
Trustee such other permissions and approvals as may be required.''

9. It is appropriate to refer to clauses (a), (b) and (f) of
Section 58 of the Transfer of Property Act, which read as
under:
'' 58. “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and
“mortgage-deed” defined.—
(a) A mortgage is the transfer of an interest in specific immoveable property for
the purpose of securing the payment of money advanced or to be advanced by
way of loan, an existing or future debt, or the performance of an engagement
which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a mortgagee; the principal
money and interest of which payment is secured for the time being are called
the mortgage-money, and the instrument (if any) by which the transfer is
effected is called a mortgage-deed.
(b) Simple mortgage.—

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Where, without delivering possession of the mortgaged property, the mortgagor
binds himself personally to pay the mortgage-money, and agrees, expressly or
impliedly, that, in the event of his failing to pay according to his contract, the
mortgagee shall have a right to cause the mortgaged property to be sold and
the proceeds of sale to be applied, so far as may be necessary, in payment of
the mortgage-money, the transaction is called a simple mortgage and the
mortgagee a simple mortgagee.
(c)…
(d)…
(e)…
(f) Mortgage by deposit of title-deeds.—
Where a person in any of the following towns, namely, the towns of Calcutta,
Madras, and Bombay, and in any other town which the State Government
concerned may, by notification in the Official Gazette, specify in this behalf,
delivers to a creditor or his agent documents of title to immoveable property,
with intent to create a security thereon, the transaction is called a mortgage by
deposit of title-deeds. ''

10. Plain reading of the provisions of clause (b) of Section
58 of the Transfer of Property Act would indicate that in order
to constitute a simple mortgage, the mortgagor should bind
himself personally to pay the mortgaged money and should
have agreed expressly or impliedly, that in the event of his
failing to pay according to the contract, the mortgagee would
have right to cause the mortgaged property to be sold. Distinct
conditions of personal agreement undertaking and consequence
of failure to perform said undertaking is not present in the
document at Annexure-A.
11. Conversely, clause (f) of Section 58 of the Transfer of
Property Act as noted above do not contain any such

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undertaking to be given by the mortgager. Language employed
therein would indicate ''any person may deliver to a creditor or
his agent documents of title to immovable property, with an
intent to create a security thereon''.
12. Juxtaposing clause (b) with clause (f) of Section 58 of
the Transfer of Property Act, would make it clear that in the
later there is no personal undertaking or consequences of
failure to perform the undertaking as contemplated under
clause (b) of Section 58 of the Transfer of Property Act.
13. Impugned order does not advert to this legal
requirement and has merely proceeded to pass the order
referring to Article 34(b) of the Act, 1957, which in the
considered view of this Court is inapplicable. It is also
appropriate to refer to Article 6 and Article 34(b) of the Act,
1957 which read as under:
Description of Instrument Proper Stamp Duty
[Art. 6 . Agreement relating to
deposit of title deeds, pawn or
pledge, that is to say, any
instrument evidencing an agreement
relating to, -




[(1) The deposit of title deeds or
instruments constituting or being

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evidence of the title to any property
whatever (other than a marketable
security), where such deposit, has
been made by way of security for the
repayment of money advanced or to
be advanced by way of loan or an
existing or future debt:





If such loan or debt is repayable on
demand from the date of instrument
evidencing the agreement.-


(i) where the loan or debt amount
does not exceed rupees ten lakhs
0.1 percent on the loan or debt
amount subject to a minimum of
rupees five hundred


(ii) where the loan or debt amount
exceeds rupees ten lakhs
0.2 percent on the loan or debt
amount subject to a maximum of
rupees ten lakhs.]

Description of Instrument Proper Stamp Duty
Art. 34 Mortgage deed, not being
an agreement relating to [Deposit of
title-deeds, [pawn or pledge] (No.
6)], Bottomry Bond (No. 13),
Mortgage of a Crop (No. 35),
Respondentia Bond (No. 46), or
Security Bond (No. 47)-




(a) when possession of the property
or any part of the property
comprised in such deed is given by
mortgagor or agreed to be given;
The same duty as Conveyance (No.
20(1)) for a market value equal to
the amount secured by such deed.

(b) when possession is not given or
agreed to be given as aforesaid [and
not being a hypothecation];
[Fifty paise for every hundred rupees
or part thereof 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

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thereof within the meaning of this
Article.


[(c) when a collateral or auxilliary or
additional or substituted security, or
by way of further assurance for the
above mentioned purpose, where the
principal or primary security is duly
stamped.-




(i) for every sum secured not
exceeding Rs. 1,000.
[Ten rupees].

(ii) for every Rs. 1,000 or part
thereof, secured in excess of Rs.
1,000
[Ten rupees plus one rupee for every
rupees one thousand or part thereof
in excess of rupees one thousand].

[(d) for hypothecation of movable
property.-
If the loan or debt is repayable on
demand

14. Co-ordinate Bench of this Court in the case of
Rashtrothana Parishat (Supra) , at paragraph Nos.13 and 14
has held as under:
''13. The next question pertains to the nature of the document, copy of
which is filed as annexure to the writ petition. If the document is an
''agreement relating to deposit of title deeds'', the stamp duty is
leviable as per Article 6 of the Schedule to the Act; otherwise, and if it
is a mortgage deed, Art. 34 is attracted. Art. 34 is applicable to
'mortgage deed not being an agreement relating to deposit of title
deeds' falling under Art. 6. Therefore, the approach ought to be see to
whether the instrument is an agreement relating to deposit of title
deeds; if it falls within Art. 6, then, question of Art. 34 would not arise.
14. As per Sec. 58(f) of the Transfer of Property Act, where a person
delivers to a creditor documents of title to immovable property with
intent to create a security thereon, transaction is called a mortgage by
deposit of title deeds. The intention is to be that the title deeds shall
be the security for the debt. Essence of the transaction is to make the
title deeds, security for the debt in question.''

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15. Facts in the instant case and the provisions referred
to above are similar to the one which are dealt with by the Co-
ordinate Bench of this Court in the aforesaid order.
16. Clearly mortgages by deposit of title deeds have been
excluded from the application of Article 34 of the Act, 1957,
which is the case at hand. Therefore, the impugned order
passed by the respondent No.2 is unsustainable.
17. For the aforesaid reasons, following:
ORDER
(i) Petition is allowed.
(ii) Impugned order dated 19.11.2020 in
No.SM.MLR.01/2020-21 regarding document
No.6438/2018-19 dated 11.01.2019 passed by
respondent No.2 as per Annexure-H is hereby
quashed.


Sd/-
(M.G.S. KAMAL)
JUDGE

RL
List No.: 1 Sl No.: 23