In Brief
Two construction and manufacturing companies executed deeds titled "Security Bond cum Mortgage Deed" and "Security Bond or Mortgage Deed" to secure external development charges and loan repayment, respectively. They paid stamp duty under Article 57 (lower rate) but authorities reassessed under Article 40 (higher rate), demanding deficit amounts. The Supreme Court held that the true test for stamp duty classification is substance, not nomenclature. Since both companies mortgaged their own properties to secure their own obligations without a distinct third-party surety, the deeds were mortgage-deeds under Article 40, not security bonds under Article 57. Article 57 applies only where a surety executes the instrument to secure another's obligations. Both appeals were dismissed, affirming the High Court's orders and upholding the deficit stamp duty demands.
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