In exercise of the powers conferred by Article 213(1) of the Constitution of India, the Governor of Maharashtra promulgated the Maharashtra Stamp (Amendment and Validation) Ordinance, 2021 (“Ordinance”) on February 09, 2021, which shall come into force with effect from February 09, 2021.
The Ordinance has amended/ substituted Section 5, Articles 6 and 40 under Schedule I of the Maharashtra Stamp Act (“the Act”).
The key changes are mentioned hereinbelow:
Section 5 of the Act has been substituted and shall be deemed to have been substituted with effect from the August 11, 2015, with the following:
“Any instrument comprising or relating to several distinct matters or transactions shall be chargeable with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters or transactions, would be chargeable under this Act.”
As per the Statement to the Ordinance, this amendment is in line with Section 5 of the Gujarat Stamp Act, 1958 as amended in the year 2007, which covers instrument comprising of or relating to distinct transactions as well and has been upheld by the Supreme Court in the case of Chief Controlling Revenue Authority v. Coastal Gujarat Power Limited, [Civil Appeal No.6054 of 2015, decided on August 11, 2015]. Further, the Bombay High Court, while interpreting Section 5 of the Act in the case of Navi Mumbai SEZ Private Limited v. The State of Maharashtra, [Writ Petition No.8014 of 2019, decided on September 11, 2019], has held that the phrase, ‘distinct matters’ appearing therein, is equivalent to the phrase ‘distinct transactions’.
Article 6 of Schedule I of the Act provides for stamp duty on agreement or any instrument evidencing an agreement relating to deposit of title deeds, pawn, pledge, or hypothecation and stamp duty on such instruments in relation to loans exceeding INR 5,00,000/- (Rupees five lacs) has been changed from 0.2% to 0.3%, subject to a maximum of INR 10,00,000/- (Rupees ten lacs).
Additionally, after Article 6 clause (2), the following clause has been added, namely:
(3) The instrument falling under this article when executed as a collateral or auxiliary or additional security and where the proper duty has been paid on the Principal or Primary security under this article
Five hundred rupees
Addition of this clause will provide relief to mortgagors, when providing additional security, from payment of full stamp duty when stamp duty under Article 6(1) or (2) under Schedule I of the Act, has been paid on principal document in relation to mortgage by deposit of title deeds or hypothecation or pledge.
Article 40(b) under Schedule I of the Act provides for stamp duty on mortgage deeds, when possession of the property is not given or agreed to be given. Stamp on mortgage deed has been amended and substituted with the following:
(b) when possession of the property is not given or agreed to be given as aforesaid: -
if the amount secured by such deed does not exceed rupees five lakhs
0.1% of the amount secured by such deed, subject to minimum of INR 100/- (Rupees one hundred).
in any other cases
0.3 per cent of the amount secured by such deed, subject to maximum of INR 10,00,000/- (Rupees ten lacs).
As per the Statement to the Ordinance, the stamp duty payable on an instrument evidencing mortgage by deposit of the title deeds under Article 6(1) under Schedule I of the Act, is less than that payable on simple mortgage deed under the said Article 40 under Schedule I of the Act. Due to the difference in charging stamp duty, sometimes documents are drafted in such a way that, even though the nomenclature of the document indicates mortgage by deposit of title deeds, it attempts to cover simple mortgage. Such documents create difficulties in adjudication of amount of proper stamp duty chargeable for them under the Act.
Therefore, in order to bring uniformity in stamp duty chargeable on the instruments of mortgage by deposit of title deeds and simple mortgage deed under Article 6 and 40 under Schedule I of the Act and to enable execution of agreement relating to mortgage by deposit of title deeds at certain towns which are notified by the State of Maharashtra, from time to time, Articles 6 and 40 under Schedule I of the Act has been amended.
Please find attached a copy of the Ordinance.
This update has been contributed by Prakash Panjabi (Senior Partner), Pratish Panjabi (Partner) and Harshita Jagwani (Associate).
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