Brief Overview:

Stamp duty payable on an instrument must be determined on the basis of the true legal character of the instrument, rather than its name or nomenclature.

Technical Details:

A question arose: Should stamp duty on a document titled “Security Bond-cum-Mortgage Deed” be assessed as per the provisions applicable to a security bond or a mortgage deed?

1) The Hon’ble Supreme Court clarified that the determining factor is not the label/nomenclature, but the substance of rights and obligations set out in the instrument. Courts are bound to ascertain the true legal nature of the document, irrespective of how it is styled.

2) In this case, since the instrument possessed all the essential characteristics of a mortgage deed under Section 2(17) of the Stamp Act, it was treated as such. The title “Security Bond-cum-Mortgage Deed” could not dilute its true nature, and hence, higher stamp duty applicable to a mortgage deed was held payable.

JC takeaway:

1) Stamp duty must be assessed based on the instrument’s true legal character, not its nomenclature.

2) Substance prevails over form, the rights and obligations created by the document determine its nature.

For further details, please see:

Godwin Construction Pvt. Ltd. v. Commissioner, Meerut Division and Another (2025 SCC OnLine SC 2179)

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