Reportable  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4916 OF 2002

S N Mathur ……. Appellant

Vs.

Board of Revenue & Ors. ….… Respondents  

J U D G M E N T

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 his  two brothers.   The

executants  paid  a  stamp  duty  of  Rs.  1,325/  thereon,  under  Article  64  of

Schedule I-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 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 I-B of the Act on the declared

value of the trust property (Rs.2,10,000/-).   He directed recovery of deficit

stamp duty of Rs.10,225/- and an equal amount as penalty. The said order was

challenged by the appellant 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 the authority under the Stamp Act did not commit any error in

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 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

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

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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

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 and management of the said property. The operative portion of the

said deed states :  

“The Donor Trustees in pursuance of their wish and desire as aforesaid do hereby grant, convey and transfer all that 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 made  clear  that  the  Trust  shall  own,  possess  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  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.

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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 Deo v.  Junior

Secretary,  Board  of  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  hand,  learned counsel  for  the  State  and the  authorities

under the Stamp Act (respondents 1 to 4) submitted that the instrument in

question  came within  two descriptions  in  Schedule  I-B to  the  Act,  that  is

“Deed  of  Settlement”  chargeable  under  Article  58  and  “Deed  of  Trust”

chargeable  under  Article  64;  that  where  an  instrument  comes within  more

than one description in Schedule I-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 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,  U.P.  v.  Sridhar,

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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 instrument is a deed

of trust  or  not.  The fact  that  the instrument  falls  within the description of

Trust deed is not in doubt.  In fact that is not challenged by the State. The

question is whether the instrument answers the definition of ‘settlement’ and

therefore  would  also  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  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 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

duty is payable on the instrument, under Article 58 of Schedule I-B to the

Act.  

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6. Reference to the relevant provisions of the Indian Stamp Act, 1899 (as

amended in Uttar Pradesh) will be necessary to 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-

(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

(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 made in writing, any instrument recording, whether by way of declaration of trust or otherwise, the terms of any such disposition;”

Section  3  provides  that  subject  to  the  provisions  of  the  Act  and  the

exemptions  contained  in  Schedule  I,  every  instrument  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 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

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Pradesh)  enumerates  the  stamp  duty  on  instruments  under  the  Act  in  its

application to Uttar Pradesh. Relevant portions of Articles 58 and 64 of the

said schedule are extracted below :  

                 Description of Instrument                       Property Stamp Duty

“58. SETTLEMENT

--A.—Instrument  of  (including  a  deed  of dower).   

The same duty as a Bond (No.15) for a sum equal to the amount or value of the property settled  

“64. TRUST—

A.—DECLARATION  OF  --  of  or concerning,  any  property  when  made  by any writing not being a Will.

(a)  where  the  amount  of  value  does  not exceed Rs.10,000;

(b)  where  such  amount  exceeds  Rupees 10,000;   

The same duty as on a Bond (No.15).  

On  ten  thousand  rupees  the  duty  payable under clause (a) and on the remainder, Three  rupees  for  every  additional  one thousand rupees or part thereof.”    

7. The principles relating to charging stamp duty are well 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.  

(ii) Stamp duty is levied with reference to the instrument and not in regard to the transaction, unless otherwise specifically provided in the Act.

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(iii) Stamp  duty  is  determined  with  reference  to  the  substance  of  the transaction as embodied in the 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  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  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 instruments would be chargeable.

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

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 charitable purpose is a settlement.  The

definition also makes it clear that even where there is no such disposition in

writing, any instrument recording whether by way of declaration of trust or

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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  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  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

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 defines “disposition” as the act

of  transferring  something  to  the  care  or  possession  of  another;  or

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  records the terms of 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

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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 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 leviable under a deed of settlement under Article 58 is more than the

stamp  duty  leviable  in  regard  to  a  deed  of  trust  under  Article  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.

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 doubt about it. A Full Bench of the Allahabad High Court held

that  the  instrument  was  not  a  settlement  in  view  of  the  following

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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 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 for sometime and that they should deal with it  in the

manner in which he would have dealt with it, if he had not created 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. 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 :  

“This definition of the word “Settlement” itself makes it 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 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”.

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We respectfully  agree  with  the  said  observations.  Referring  to  the  earlier

decision in Narendra Singh Ju Deo, 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 out of the category of a ‘settlement’ as

defined  under  section  2(24).  It  was  held  that  the  instrument  would  be  a

settlement, even if the disposition was not for the purpose of distribution of

the 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 trust amounted to a settlement or not.  The Bench concluded that

deed of trust as also a deed of settlement, can be for a limited period.  

9.2) In  T. Ranganathan Pillai (supra),  a  Full  Bench of  the  Madras  High

Court was dealing with a reference in respect of a deed purporting to be a

Trust deed 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 (c) of section

2(24). The High Court also noted that ultimately the learned counsel for the

State  conceded  that  even  clause  (b)  of  section  2(24)  did  not  apply.

Consequently the High Court held that it  was not a deed of settlement but

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only a declaration of 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 was considering

the question whether the instrument before it 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 merely purported to make proper

provision in respect of the discharge of duties of his office of Shebait of the

family deities  and declared a trust   in respect  of the  properties  mentioned

therein. There was no disposition, but merely a declaration or assertion that

the properties belonged to the deities. In those 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  with  any  property.  He  ‘lost’

nothing  by  executing  the  deed.  The  High  Court  therefore  held  that  the

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instrument was liable to be stamped under Article 64, as a Trust deed. The

decision, on the facts, is inapplicable.  

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 founder created a public charitable trust and appointed himself

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’ 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 that the deed of trust also

answered the definition of ‘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 (supra). Be that as it may.  

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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 the penalty to Rs.5/-. The appeal is allowed in part

accordingly.   

__________________J [R. V. Raveendran]

_________________J [J M Panchal]

New Delhi; February  18, 2009.

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