R.A Sharma, J.:— The respondents invited tenders for constructing drains, culvert etc., in response to which petitioners submitted their tenders. As per terms of the tender, tenderers, whose tenders are accepted have to deposit two percent of the contract amount as earnest money and ten percent of the contract amount as security deposit, which were liable to be refunded, if the work is completed within the prescribed time. However, if the tenderers fail to complete the work within the specified time, the said amount was liable to be forfeited. Petitioners' tenders were accepted. An intimation to that effect was given to them by a letter dated 24.6.1994 By the same letter the petitioners were required to make security deposit and also to supply non-judicial stamps for execution of the appropriate deed containing the offer of the said amount as security. In paragraph 4 of the writ petition, it has been stated that on the basis of the Government instructions the respondents are demanding the stamp duty from the petitioners on the security deposit at the rate of Rs. 125/- per thousand, if the deposit is made in cash and at the rate of Rs. 62.50 per thousand if the deposit is made in terms of N.S.C or F.D.R Being aggrieved by the direction contained in the said letter, requiring them to deposit the stamp duty, the petitioners have filed this writ petition.
2. We have heard the learned counsel for the petitioners and the learned Standing Counsel.
3. A special Bench of this Court in Hindustan Sugar Mills Ltd. v. State of U.P . AIR 1972 Alld. 8., has laid down that a security bond is chargeable with a duty under Article 57 Schedule of the Stamp Act. A special Bench of Delhi High Court in Chief Controlling Revenue Authority v. Marshall Produce Brokers Pvt. Ltd. . AIR 1980 Delhi 249. has held that “the amount of security deposit paid for due performance of the contract of lease is chargeable under Article 57 Schedule 1B.” Recently a Division Bench of this Court in Sripal Goel v. Deputy Director Construction,3 has reiterated the same principle, holding that stamp duty on such an agreement is to be paid under Article 57 Schedule 1B of the Stamp Act.
4. The position is thus settled that a security deed is chargeable with duty under Article 57 of the Schedule 1-B.
5. The Supreme Court in Board of Revenue v. A.N Ansari . 1976 3 SCC 512, has laid down that the sum, which is offered as security is not a mortgage and, therefore, is not liable to stamp duty under Article 35(c) of the Stamp Act. In this case a full Bench decision of this Court in Rishideo Sondhi v. Dhampur Sugar Mills . AIR 1947 Alld. 190., wherein it was held that an instrument in which specific amount is offered as security is not a mortgage deed, was cited with approval.
6. This writ petition is accordingly allowed. The impugned order, so far as it demands stamp duty from the petitioners on security deposit is quashed. The respondent will be free to realise the stamp duty, if not already, from the petitioners under Article 57 Schedule 1B of the Stamp Act as amended by the State of U.P In view of the facts and circumstances of the case, there shall be no order as to costs.
7. Petition Allowed.