(1) Where, in the case of any sale, mortgage or settlement, several instruments are employed for completing the transaction, the principal instrument only shall be chargeable with the duty prescribed in Schedule I, for the conveyance, mortgage or settlement, and each of the other instruments shall be chargeable with a duty of one rupee instead of the duty (if any) prescribed for it in that Schedule.
(2) The parties may determine for themselves which of the instruments so employed shall, for the purposes of sub-section (1), be deemed to be the principal instrument:
Provided that the duty chargeable on the instrument so determined shall be the highest duty which would be chargeable in respect of any of the said instruments employed.
Legal Commentary & Landmark Judgments: Section 4
Section 4 of the Indian Stamp Act, 1899 regulates the computation of stamp duty where several instruments are employed for completing a single commercial transaction of sale, mortgage, or settlement.
Each of the other subsidiary or ancillary instruments is chargeable with a nominal statutory duty (typically one rupee, or state-amended fixed fee) instead of full duty.
Sub-section (2) permits the parties to determine for themselves which of the instruments shall be deemed to be the 'principal instrument', provided that the duty chargeable on the instrument so chosen shall not be less than the highest duty chargeable on any of the executed instruments.
Section 4 is commonly deployed in complex financing and corporate real estate acquisitions involving deeds of conveyance accompanied by indemnity bonds, escrow agreements, and possession letters. Parties must explicitly endorse on the face of subsidiary documents that they are ancillary to the principal conveyance.