High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 11.07.2007CoramThe Hon'ble Mr. Justice V.DHANAPALANW.P.No.13202 of 2007 and M.P.No.1 of 2007Devi Narayanan Housing DevelopmentPvt. Ltd., rep. by itsManaging Director N.Nandakumar2, Link Street, II FloorIV Man RoadKottur Gardens, Chennai – 600 085Petitioner Vs.1.The Inspector General of Registration,Department of Registration,Government of Tamil Nadu,Santhome High Road, Chennai – 4.2.The District Revenue Officer (Stamps),District Collector's Office, Chennai – 1.3.The Sub Registrar,Alandur, Chennai – 16.RespondentsPetition filed under Article 226 of the Constitution of India prayingto issue a writ of certiorari to call for the records connected with theproceedings of the respondents particularly that of the third respondentunder Ref.K.N.No.1198/2007/14/07 dated 02.04.2007 and quash the same asillegal, invalid without jurisdiction and against the principles ofnatural justice.For Petitioner..Mr. K. MoorthyFor Respondents..Mr.L.S.N.Hasan Fizal, Govt. AdvocateORDERThis writ petition has been filed challenging the proceedings of thethird respondent dated 02.04.2007 seeking to quash the same as illegal,invalid and without jurisdiction and against the principles of naturaljustice. https://hcservices.ecourts.gov.in/hcservices/ 2It is the case of the petitioner that a company by nameM/s.Telematics Systems Limited was ordered to be wound up by this Court inC.P.No.239 of 1997 vide order dated 18.07.2001. Pursuant to the same, theOfficial Liquidator took possession of the entire movable and immovableassets of the company. The petitioner company has offeredRs.13,55,00,000/-. The petitioner was accepted as a highest bidder andthis Court by order dated 03.11.2006 in Application No.834 of 2006permitted the Official Liquidator to sell the entire property. Pursuant tothe same, the petitioner company also remitted the entire saleconsideration of Rs.13.55 crores in two instalments. Thereafter, thepetitioner presented the document for registration. 3The further case of the petitioner is that the value fixed bythis Court in Court auction has to be taken into consideration and therespondent has to register the document and act on it. On the contrary,the third respondent, vide order dated 02.04.2007, proceeded to refer thematter under Section 47A of the Stamp Act stating that the amount fixed inthe document of Official Liquidator and the prevailing market value in andaround the places of the property in question are varying from Rs.1,000/-to Rs.1,200/- and the guideline value of Rs.15,24,60,000/- has to be takeninto account and the same has been challenged by the petitioner in thiswrit petition.4The respondent has filed counter and it is contended that thedate of execution of Document No.1198 of 2007 is 28.03.2007 and as persub-section (6) of Section 2 read with the explanation to Section 47(A) ofthe Indian Stamp Act, the stamp duty has to be collected based on themarket value as per guidelines on the date of the execution of thedocument; the value fixed by the Guideline Value Fixation Committee on01.04.2003 for Mount Poondamallee Road was Rs.549/- per square foot andthe value has been revised by the same Committee on 15.12.2004 for thesame property vide Chennai Zone's Deputy Inspector General of Registrationin his order No.9359/v/2004 dated 04.12.2004 based on the order of theInspector General of Registration and G.O. Ms.No.249/95 dated 17.07.1996as Rs.1,000/- per sq. ft. from 15.12.2004; further higher value documentat Rs.1,200/- per sq. ft. was also registered in document no.3456 of 2006on 06.10.2006 and therefore, the value fixed by the petitioner for hisdocument is very low and it is against the guidelines.5Heard Mr.K.Moorthy, learned counsel for the petitioner andMr.Hasan Fizal, learned Government Advocate for the respondents. 6The learned counsel for the petitioner assailed the order of thethird respondent on the ground that if the property is purchased in Courtauction sale, the value fixed by the Court has to be taken into accountand there cannot be any differing value prevailing in the surroundingareas to be taken into note. Learned counsel for the petitioner relied onan unreported decision of this Court in W.P.No.24520 of 2004 dated28.09.2004 and the relevant paragraph reads as follows: https://hcservices.ecourts.gov.in/hcservices/ "Only after accepting the highest offer, thisCourt has issued directions to the Official Liquidatorto execute the sale deed. Accordingly, a sale deed wasexecuted by the Official Liquidator in respect of theland and building, in consideration of Rs.3.00 croreson 07.04.2004. Under such circumstances, there cannotbe insistence by the department stating that the stampduty has got to be paid either for the guideline valueor for the higher value, since the machinery formspart of the building. A reading of the sale deed inquestion would clearly indicate that the assets namelyland and building were sold by the Official Liquidatorunder the sale deed only in consideration of Rs.3.00crores and hence, the contention of the department hasgot to be negatived. This Court is unable to noticeany reason to hold that the document is undervalued,in view of the fact that it was a sale conducted bythe Official Liquidator, pursuant to the orders ofthis Court, that too in a public auction. Under thecircumstances, this Court is of the view that thecontentions put forth by the respondents' side tosustain the order under challenge cannot becountenanced, and thus, the order of the firstrespondent has got to be quashed. Accordingly, it isquashed."7He has placed further reliance on yet another unreporteddecision in C.A.No.2478 of 2000 in Company Petition No.130 of 1999 in thecase of I.L. Raghunath and 11 others vs. Anubhav Plantations Limited dated24.08.2001 and the relevant portion reads as under:"3.The purchaser has addressed a letter to theAdministrator stating that the Sub Registrar, Alandurdirected her to pay stamp duty for a higher amountarrived on the basis of present guideline value. It hasbeen held by this Court as well as the Supreme Courtthat the guideline values fixed by the Government areonly administrative instructions. I am of the view thatwhen an auction sale is conducted in pursuance of thedirections of the Court inviting offers and in the openCourt the offer is considered and accepted by theCourt, the amount offered and accepted by the Courtwould represent the real market value of the property.Therefore, the Sub Registrar, Alandur is directed notto insist on the purchaser to pay a stamp duty arrivedat on the basis of present guideline value and he isdirected to accept the stamp duty on the sale price ofRs.2,25,000/- which was accepted by the Court andregister the document executed in favour of thepurchaser, C.Vijayalakshmi in respect of the unfinishedflat at "Abilash", No.T-17, Block No.25, No.75, Lakshmi https://hcservices.ecourts.gov.in/hcservices/ Nagar IV Stage, Nanganallur, Chennai.4.The Inspector General of Registration is alsodirected to issue suitable directions for futureguidance and compliance to all the Registrars and theSub Registrars of the Registration Department to theeffect that in the case of auction sale of theproperties belonging to the company in liquidation andwhere the offer is accepted by the Court in an openauction sale, the price accepted by the Court shall betaken up the value of the property in question for thepurpose of determining the stamp duty to be paid by thepurchaser, and not the value arrived at on the basis ofthe guideline value as there is no possibility ofevasion of stamp duty in Court sales."8In support of his contention, reliance has also been placed bythe learned counsel for the petitioner on:a.a judgment of the Calcutta High Court reported in Nitya HariKundu Vs. State of W.B. (AIR 2001 Calcutta 76) and the relevant portionreads as under:"Therefore, in interpreting the statutes if I makeharmonious construction of Section 47A read with theRules made thereunder, it will be read that valuationmade by the Court cannot be said to be done not trulyset forth and there is any reason to disbelieveotherwise. If any authority does so it will tantamountto exceeding the jurisdiction made under the law. Theauthority concerned cannot sit on appeal over a Courtdecision unless appeal is preferred from such orderwhich is absent herein."b.a judgment of this Court reported in AIR 1997 Madras 296 in thematter of S.P. Padmavathi vs. State of Tamil Nadu and others (para 12)"We accordingly, answer Point No.1 as follows:"Power under Section 47-A of the Actcan only be exercised when the RegisteringOfficer has reason to believe that themarket value of the property, which is thesubject of conveyance, has not been trulyset forth, with a view to fraudulently evadepayment of proper stamp duty. Mere lapse oftime between the date of agreement and theexecution of the document will not be thedetermining factor that the document isundervalued and such circumstance by itselfis not sufficient to invoke the power underSection 47-A of the Act, unless there is https://hcservices.ecourts.gov.in/hcservices/ lack of bona fides and fraudulent attempt onthe part of the parties to the document toundervalue the subject of transfer with aview to evade payment of proper stampduty..."c.yet another judgment of this Court reported in 1998 (III) CTC366 in the matter of M. Krishnan and 44 others vs. The District Collector,Erode District, Erode and two others: (paras 41, 42, 44 and 45)"It is essential to point out that beforeregistration, the Registering Authority has to recordthat he has reasons to believe that the value of theproperty has not been duly set forth in the instrument.Only after recording such reasons, the RegisteringAuthority has to complete registration of theinstrument in question and thereafter alone, he couldrefer the same to the Collector.To this extent, the functions of the RegisteringAuthority is quasi judicial in nature and he has tocome to a conclusion that the market value of theproperty dealt under the document had not been trulyset forth and after completion of registration, hecould make a reference. At least some reasons shouldbe recorded and immediately after completion ofregistration or sooner thereafter, a reference has tobe made under sub-section (1) of Section 47-A of thesaid Act.It is further pointed out that admittedly, theRegistering Authority had applied his mind and hadaccepted the market value and as such, he has notentertained any doubt nor he has any reason to believethat the market value of the property has not beentruly set forth in the instruments before completingregistration. In fact, the Registering Authority hadcompleted the registration, assigned document numbersand kept ready for release of the original instrumentsto the petitioners. Thereafter, for reasons best known to him, thedocuments have not been released to the petitioners.It is contended by the learned counsel for thepetitioners that the Registering Authority having notentertained any doubt as to the market value of theproperty, and having completed registration, cannot nowretain the documents or instruments." https://hcservices.ecourts.gov.in/hcservices/ d.a judgment of the High Court of Andhra Pradesh reported inMANU/AP/0576/1998 in the matter of M. Venkata Ramana vs. Collector andDistrict Register, Hyderabad District and another (paras 4 & 7)"The reasoning given above is also furtherfortified by the judgment of this Court being K.Sivaramaiah vs. Special Deputy Collector, Urban,Cuddapah, 1989 (1) ALT 546. The facts of that casewere almost similar to the present case where the landhad been sold in public auction and the High Courtfound "the object underlying Section 47 of the IndianStamp Act is to neutralise the effect of undervaluationof the immovable property conveyed under registeredinstruments of sale, or exchange, or gift or partitionor settlement. In the instant case, there could be noquestion of undervaluation of the property as theproperty was sold in public auction in favour of theappellant. The expression used as "truly" and not"properly" or "correctly". The consideration, theappellant parted with for purchase of the property, itis not denied, was truly set forth in the instrument.It therefore follows that the reference made by theSub-Registrar, Pullampet is bad."e.a judgment of this Court reported in 2003-1-L.W. 562 in thematter of S. Jayalakshmi vs. The Government of Tamil Nadu represented bySpecial Secretary to Government, Commercial Taxes (J1 Department)Secretariat, Chennai – 9 and others (paras 10 & 11)10.2This Court, in The Collector of Nilgiris vs.M/s. Mahavir Plantations Pvt. Ltd., reported in AIR1982 Mad. 138=(1981) 94 LW 685, held as under:. . . The guidelines were not intended as asubstitute for market value or to foreclosethe inquiry by the Collector which he isunder a duty to make under Sec.47-A. Thevaluation guidelines were not prepared on thebasis of any open hearing of the partiesconcerned or of any documents. They werebased on data gathered broadly with referenceto classification of lands, grouping of landsand the like. This being so, the Collectoracting under Sec.47-A cannot regard thevaluation guidelines as the last word on thesubject of market value. To do so would beto surrender his statutory obligation todetermine market value on the basis ofevidence, which is a judicial or a quasi https://hcservices.ecourts.gov.in/hcservices/ judicial function which he has to perform."10.3Similarly, it is held in Sagar Cements Ltd.vs. State of A.P. Reported in 1989 (3) Andhra Law Times677 that the Government has unilaterally fixed thevalue of the lands in the Basic Valuation Register andthe same had no statutory foundation and therefore itdoes not bind the parties.10.4The view with regard to the statutory forceof basic value in the Basic Valuation Register has nostatutory foundation and therefore, it does not bindthe parties of the conveyance, has been confirmed bythe Apex Court in Jawajee Nagnatham v. RevenueDivisional Officer reported in 1994 (4) SCC 595=1994-2LW 14.11In the instant case, as the respondentsfailed to place any material before this Court todistrust that the market value of the property conveyedunder the respective sale deeds of the petitioners hasnot been truly set forth in the respective sale deeds,nor given any reason to believe that the petitionershave fraudulently evaded the stamp duty, I am obligedto hold that the market value of the flats set forth inthe sale deeds executed by the Corporation in favour ofthe respective petitioners are truly set forth and as aresult, respondents have no jurisdiction to initiateany action under Section 47-A(1) of the Act, either torefer the matter to the Collector to hold an enquiry inthis regard or to withhold the respective sale deeds ofthe petitioners any further."9Per contra, the learned Government Advocate has contended thatthe value determined by the authority is the prevailing market value andtherefore, the order passed by the third respondent is in conformity withthe Act and the rules contemplated and therefore, there is no reason tointerfere with the impugned order.10On a reading of the explanation to Section 47A(1), it is clearthat for the purpose of this Act, market value of any property shall beestimated to be the price which in the opinion of the Collector or theappellate authority, as the case may be, such property would have fetchedor fetch if sold in the open market on the date of execution of theinstrument of conveyance, (exchange, gift, release of benami right orsettlement). In the instant case, as discussed earlier, the value of theproperty has been fixed in the court auction sale and therefore, theamount fixed by this Court for the property is the value to be taken todetermine the market value and this is in accordance with the explanationto Section 47A(1) of the Act. https://hcservices.ecourts.gov.in/hcservices/ 11A perusal of the document filed in support of the petition and acareful reading of the rulings of this Court and other High Courts make itclear that the value fixed by the Court has to be taken into account forregistration and not otherwise. On the contrary, the respondent hasproceeded further and fixed the value contrary to the value fixed by theCourt while the property has been purchased in the Court auction. 12A harmonious construction and interpretation of the provision ofSection 47-A and also the rules has made it clear that the value fixed bythe Court cannot be deviated. When a property is purchased in a courtauction, the value fixed thereon should be the value truly fixed based onmaterial consideration. If any value other than the value fixed by thecourt is taken into consideration, then, it tantamounts to exceeding thejurisdiction made under the law. The authorities concerned cannot sit onappeal over the court's decision unless an appeal is preferred from suchan order. Therefore, the value of the property in question for thepurpose of determining the stamp duty to be paid by the purchaser is thevalue fixed in the court auction purchase which is arrived at after anoffer and acceptance and the amount offered during the auction andaccepted by the Court would represent the real market value of theproperty. In the instant case, the authority concerned has exceeded hisjurisdiction by going beyond the value fixed by the Court. In the absenceof any other principle contrary to the above settled proposition of law, Iam obliged to follow the proposition laid down by this Court in the casereferred to above.13Admittedly, the property for registration was purchased by thepetitioner in a public auction conducted in the open court and thepetitioner company was declared as the highest bidder and the offer madeby the petitioner was Rs.13.55 crores for the property including land,buildings and superstructure and the offer was accepted and the petitionertoo purchased the same and remitted the sale consideration of Rs.13.55crores in two instalments. Since the amount fixed by the court is to betaken as the real value of the property, the petitioner presented thedocument for registration indicating the value of the document as Rs.13.55crores. However, in the impugned order, the respondent has fixed theguideline value as Rs.15,24,60,000/- contrary to the settled principlethat the property purchased in court auction is the value determined bythe court and no authority can fix any other value taking note of thesurrounding circumstances. In the instant case, the value indicated bythe petitioner is the value fixed by the court and therefore, the same hasto be taken into account and accordingly, the petitioner has to pay thestamp duty only on the basis of the value fixed by the court in the courtauction. https://hcservices.ecourts.gov.in/hcservices/ 14Therefore, in view of this settled proposition that the valuefixed by the Court has to be taken by the respondent, the impugned order,which is made contrary to the above said proposition cannot be sustainedand the same is liable to be set aside. The reasons set out in theimpugned proceedings, taking note of the market value on the surroundingareas, are not the basis to decide the guideline value of the property forregistration when the Court has fixed the true value of the property.Therefore, looked at from any angle, the impugned order cannot be said tobe an order in accordance with law and the same has to be set aside.Accordingly, the impugned order is set aside and the writ petition standsallowed. No costs. Consequently, connected M.P. is closed. mmiSd/-Asst.Registrar/true copy/ Sub Asst.RegistrarTo1.The Inspector General of Registration,Department of Registration, Government of Tamil Nadu, Santhome High Road, Chennai – 4.2.The District Revenue Officer (Stamps),District Collector's Office, Chennai – 1.3.The Sub Registrar,Alandur, Chennai – 16.+2 ccs to Mr.K.Moorthy, Advocate Sr.Nos.36590 & 39038.+1 cc to The Government pleader Sr.No.36428.KA(CO)dcp/22.8W.P.No.13202 of 2007