Current Affairs · Banking Law and Corporate Finance
A corporate borrower executes a set of loan documents for a credit facility. During the stamping process, the bank discovers that the primary mortgage deed was executed on a non-judicial stamp paper in the state of Maharashtra, but the immovable property being mortgaged is located in Karnataka. According to the Indian Stamp Act, 1899, what is the legal requirement to ensure the document is admissible as evidence in a court in Karnataka?
- 1The bank can ignore the difference in stamp duty if the loan is classified as a priority sector advance under RBI guidelines.
- 2A fresh document must be executed in Karnataka because stamp duty paid in one state is never adjustable against another state for immovable property.
- 3The document must be stamped according to the laws of the state where the property is situated, and if the duty paid in Maharashtra is lower, the difference must be paid in Karnataka upon the document first entering that state.✓
- 4The document must only pay the stamp duty applicable in the state of execution since the contract was signed there.
Correct answer
The document must be stamped according to the laws of the state where the property is situated, and if the duty paid in Maharashtra is lower, the difference must be paid in Karnataka upon the document first entering that state.
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