Khushi Gupta
Published on: May 2, 2022 at 17:44 IST
The Supreme Court recently clarified that separate stamp duty need not be paid towards a Power of Attorney document signed along with an Assignment Deed executed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act, 2002.
A Bench of Justices V Ramasubramanian and Hemant Gupta observed that the Power of Attorney (PoA) was an integral part of Sale Agreements executed under the SARFAESI Act.
“The High Court overlooked the fact that there was no independent instrument of Power of Attorney and that in any case, the power of sale of a secured asset flowed out of the provisions of the Securitisation Act, 2002 and not out of an independent instrument of Power of Attorney. Section 2(zd) of the Securitisation Act, 2002 defines a ‘secured creditor’ to mean and include an Asset Reconstruction Company”
“The appellant has acquired the financial assets of Other Backward Class in terms of Section 5(1)(b) of the Securitisation Act, 2002. Therefore, under subsection (2) of Section 5 of the Securitisation Act, 2002, the appellant shall be deemed to be the lender and all the rights of the Bank vested in them”, the Apex Court said in its Judgement.
“In the Case on hand, the consideration paid by the Appellant to Other Backward Class, was for the purpose of acquisition of the financial assets, in respect of a particular borrower. The draft of the Power of Attorney contained in Schedule 3 of the deed of assignment was only incidental to the deed of assignment”, the Top Court underscored.
“In all taxing Statutes, there are Taxing Provisions and Machinery Provisions. Once a single instrument has been charged under a correct charging provision of the Statute, namely Article 20(a), the Revenue cannot split the instrument into two, because of the reduction in the stamp duty facilitated by a notification of the Government issued under Section 9(a)”, the Judgement stated.