- 1 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH 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 KANDAYA BHAVAN, 8TH FLOOR, KEMPEGOWDA ROAD BENGALURU, KARNATAKA -560 009. REP BY SPP HIGH COURT OF KARNATAKA AT BENGALURU - 560 001. 2. DISTRICT REGISTRAR AND DEPUTY COMMISSIONER OF STAMPS S.S. COMPLEX, MAHALASHMI LAYOUT R Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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 - 3 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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. - 4 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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. - 5 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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 - 6 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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.— - 7 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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 - 8 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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 - 9 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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 (ii) where the loan or debt amount exceeds rupees ten lakhs 0.1 percent on the loan or debt amount subject to a minimum of rupees five hundred 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; (b) when possession is not given or agreed to be given as aforesaid [and not being a hypothecation]; 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 The same duty as Conveyance (No. 20(1)) for a market value equal to the amount secured by such deed. [Fifty paise for every hundred rupees or part thereof for the amount secured by such deed]. - 10 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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. (ii) for every Rs. 1,000 or part thereof, secured in excess of Rs. 1,000 [(d) for hypothecation of movable property.- If the loan or debt is repayable on demand [Ten rupees]. [Ten rupees plus one rupee for every rupees one thousand or part thereof in excess of rupees one thousand]. 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.'' - 11 - HC-KAR NC: 2026:KHC:29756 WP No. 7887 of 2021 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