In a significant ruling clarifying stamp duty classifications, the Supreme Court has dismissed appeals filed by M/s Godwin Construction Pvt. Ltd. against the Uttar Pradesh authorities, holding that a “Security Bond-cum-Mortgage Deed” executed in favour of the Meerut Development Authority must be treated as a mortgage deed and not as a mere security bond. The bench of Justices Prashant Kumar Mishra and Ahsanuddin Amanullah delivered the verdict on October 8, 2025.
Background
The dispute arose after Godwin Construction developed a residential colony called Global City in Abdullahpur, Meerut. As part of the development agreement, the company executed a “Security Bond-cum-Mortgage Deed” in 2006, mortgaging several plots of land to secure obligations related to external development charges. The company paid ₹100 as stamp duty under Article 57 of the Indian Stamp Act, claiming it was a simple security bond.
However, the stamp authorities determined that the document was, in fact, a mortgage deed under Article 40 of Schedule 1-B, making it liable for a much higher duty. Consequently, Godwin Construction was directed to pay ₹4,61,760 as deficient stamp duty, along with a small penalty and interest. The company’s appeals before the Stamp Commissioner and later the Allahabad High Court were both dismissed, prompting the current challenge before the Supreme Court.
Court’s Observations
The bench examined whether the “Security Bond-cum-Mortgage Deed” fell under Article 40 (mortgage deed) or Article 57 (security bond) of the Stamp Act. Justice Mishra, writing for the bench, emphasised that “the decisive factor is not the label of the document, but the substance of rights and obligations it embodies.”
The Court noted that the deed executed by Godwin Construction transferred its interest in certain properties to the Meerut Development Authority as security for development obligations. The Authority was empowered to sell the mortgaged plots in case of default. Thus, the transaction clearly carried the features of a mortgage.
Importantly, the bench clarified that Article 57 applies only when a third party acts as surety-someone distinct from the main debtor-executing a bond to secure another’s performance. “A company executing its own deed cannot be its own surety,” the judges observed, rejecting the appellant’s argument that it qualified as a ‘security bond’.
The Court also examined a similar case involving a business loan secured through a comparable document. It held that, even there, the borrower had mortgaged its property directly, without involving any separate surety, and therefore, the higher stamp duty under Article 40 applied.
Decision
Upholding the findings of the Allahabad High Court, the Supreme Court ruled that the “Security Bond-cum-Mortgage Deed” executed by Godwin Construction was correctly assessed under Article 40 of Schedule 1-B of the Indian Stamp Act, 1899. The bench held there was no legal infirmity in the High Court’s reasoning or in the stamp authorities’ orders.
The Court concluded: “In the absence of any surety, the deed executed by the appellant cannot be termed a security bond. It fulfills all requirements of a mortgage deed and thus falls within Article 40.”
Accordingly, both appeals were dismissed.
Case: M/s Godwin Construction Pvt. Ltd. vs Commissioner, Meerut Division & Anr.
Citation: 2025 INSC 1207
Case Numbers: Civil Appeal No. 7661 of 2014 & Civil Appeal No. 12552 of 2025 (arising out of SLP (Civil) No. 36434 of 2014)
Date of Judgment: October 8, 2025