IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 07/04/2006
CORAM
THE HON'BLE MR.JUSTICE M.KARPAGAVINAYAGAM
THE HON'BLE MR.JUSTICE AR.RAMALINGAM
AND
THE HON'BLE MS.JUSTICE K.SUGUNA
C.R.P.No.3092 OF 1996
M/s.Sakthi & Co.,
through its
Partner Veeranan.... Petitioner
-Vs-
Shree Desigachary .. Respondent
Revision against the judgment dated 30.07.1996 made in
R.C.A.No.136 of 1994 on the file of Rent Control Appellate
Authority-cumPrincipal Subordinate Judge, Madurai, as against the order dated
30.09.1994 made in R.C.O.P.No.131 of 1993 on the file of Rent
Controller-cumDistrict Munsif, Madurai.
!For petitioner : Mr.V.Sitharanjandas
^For respondent:Mr.M.V.Venkataseshan
:O R D E R
M.KARPAGAVINAYAGAM,J.
Which is the criterion that has to be taken into account by the Rent
Controller for fixing the fair rent i.e., whether the guideline value, as
contained in the revenue records, or, the market value, as per the sale deeds
executed at the relevant point of time ?
The above is the question, posed before this Full Bench.
2. Facts :
“(i) The landlord, respondent herein, filed a petition,
namely, R. C.O.P.No.131 of 1993 before the Rent Controller under Section 4 of
the Tamil Nadu Buildings (Lease & Rent Control) Act,1960, for fixing the fair
rent at the rate of Rs.5,850/- per month, on the ground that the contractual
rent of Rs.425/- per month is not sufficient.
(ii) The tenant, petitioner herein, resisted the said
petition, contending that the contractual rent of Rs.425/- per month itself is
sufficient and the claim of the landlord for fixing the fair rent at
Rs.5,850/- per month is on the higher side.
(iii) The Rent Controller, during the course of trial, called
for the guideline value from the Sub-Registrar’s Office and the valuation
register from the Municipality, and, on the basis of the reports of the
Advocate Commissioner and the Chartered Engineer and also taking the guideline
value at Rs.250/- per square feet, fixed the fair rent at the rate of
Rs.2,642/- per month.
(iv) The tenant/petitioner, challenging the said fixation of
fair rent, filed R.C.A.No.136 of 1994 before the Rent Control Appellate
Authority.
(v) After hearing the counsel for the parties, the Rent
Control Appellate Authority, by the judgment dated 30.07.1996, dismissed the
appeal, confirming the findings of the Rent Controller and fixing the fair
rent at Rs.2,642/- per month.
(vi) Assailing the orders of both the Rent Controller and the
Rent Control Appellate Authority, this Civil Revision Petition has been filed
by the petitioner/tenant before this Court.”
3. The main point, that has been urged before Justice K.P.
Sivasubramaniam, a learned single Judge of this Court (as he then was), by the
learned counsel for the petitioner/tenant, is, that the authorities below
should not have accepted the guideline value, maintained by the
Sub-Registrar’s Office, or, the valuation register, maintained by the
Municipality, as the basis for fixation of fair rent, and they should have
fixed the fair rent only on the basis of the market value of the land,
considering the sale deeds executed by the parties, with reference to the land
situated in the area, at the relevant point of time.
4. On the other hand, learned counsel for the
respondent/landlord, in justification of the orders impugned, brought to the
notice of the learned single Judge a decision reported in 1995 T.L.N.J.226 (N.
Sulaiman v. R.Ravichandran), rendered by Justice M.Srinivasan (as he then
was), wherein it was held that the guideline value could be taken as the basis
for fixation of land value.
5. On the side of tenant, a decision reported in 1997 (3) LAW
WEEKLY 193 (Srinivasa Gounder v. K.Venkatesan), rendered by Justice S.S.
Subramani (as he then was), giving a contrary view, was brought to the notice
of the learned single Judge, to the effect that the guideline value, as
maintained by the Sub-Registrar’s Office, cannot be accepted for fixing the
fair rent and the market value of the property and the value, as per the sale
deeds executed at the relevant point of time, alone would have to be taken
into consideration.
6. In view of the above conflicting decisions, Justice K.P.
Sivasubramaniam directed the Registry to post the matter before a Larger
Bench, after getting orders of the Hon’ble Chief Justice, as the issue is to
be decided by a Larger Bench. The relevant portions of the observations made
in the reference by Justice K.P.Sivasubramaniam are as follows :
“2. In this context, I have come across at least two conflicting
judgments. In 1995 T.L.N.J.226 (N.SULAIMAN Vs. R.RAVICHANDRAN), Justice
M.Srinivasan as he then was), had held that the guideline value adopted by the
registering authorities would be acceptable basis for fixing fair rent in the
absence of other materials. After referring to the judgment of the Supreme
Court reported in 1995 (1) SCC 717, wherein the Supreme Court had held that
the valuation register maintained by the municipality could not be relied upon
for the purpose of fixing market value under Section 23 (1) of Land
Acquisition Act, the learned Judge went further to observe that the judgment
could not have any bearing on the present case under Section 4 of the Tamil
Nadu Buildings (Lease and Rent Control) Act 1960.
3. Subramani,J. in his judgment reported in 1997 (3) Law Weekly 193
(SRINIVASA GOUNDER V. K.VENKATESAN) had held that the guideline value as
maintained by the Sub-Registrar’s Office cannot be accepted as correct for the
purpose of ascertaining the market value of the property.
4. Therefore, there are two conflicting decisions which require to be
resolved. Having regard to the fact that in many Civil Revision Petitions
before this Court as well as several similar proceedings before the various
Authorities under the Rent Control Act, the same issue arises for
consideration, it would be desirable to have the issue resolved at the
earliest, by a larger Bench. Therefore, the office is directed to place the
papers before My Lord the Honourable the Chief Justice for reference before a
Larger Bench.”
That is how the matter has been referred to this Full Bench, for deciding the
issue in question.
7. Let us now quote the relevant observations from the two
conflicting decisions, one reported in 1995 T.L.N.J.226 (N.Sulaiman v. R.
Ravichandran), rendered by Justice M.Srinivasan, and the other reported in
1997 (3) LAW WEEKLY 193 (Srinivasa Gounder v. K.Venkatesan), rendered by
Justice S.S.Subramani :
(i) In 1995 T.L.N.J.226 (N.Sulaiman v. R.Ravichandran),
Justice M. Srinivasan held as under :
“The first contention urged by learned counsel is that the market
value of the site has been erroneously fixed by the Rent Controller and
affirmed by the Appellate Authority on the basis of the guideline value
adopted by the registering authorities. According to learned counsel, the
guideline value should not have been adopted at all. It is contended that the
said value is only for the purpose of collecting stamp duty on documents and
it cannot be considered to be the market value of the property in question.
Reliance is placed on a judgment of the Supreme Court in Land Acquisition Offi
cer, Eluru & Others v. Jasti Rohini and Another (1955 (1) Supreme Court Cases
717). The case is one under the Land Acquisition Act. The Supreme Court held
that the basic valuation register maintained by the Municipality on the basis
of a notification issued by the Government under Sec.47-A of the Stamp Act
could not be relied upon for the purpose of fixing the market value of the
land under Sec.23 (1) of the Land Acquisition Act. The judgment cannot have
any bearing in the present case where we are concerned with Sec.4 of the Act
under which fair rent for the building is fixed.”
(ii) In 1997 (3) LAW WEEKLY 193 (Srinivasa Gounder v.
K.Venkatesan), Justice S.S.Subramani observed as follows :
“9. A Division Bench of our High Court has also held that for
determination of market value for the purpose of fixation of fair rent under
the Tamil Nadu Rent Control Act also, the same principle applies. In
paragraph 30 of the judgment, reported in 1996-2-L.W.658 (K. Ramanathan
(died) and others v. B.K.Nalini Jayanthi), it has been held by the Bench that
the evidence must be by examining the persons connected with the sale deed or
the transactions. In that case, even though registration copies of sale deeds
were produced to determine the market value, their Lordships held that they
were not sufficient and persons connected with those transactions have to
prove the contents also. I had an occasion to consider a similar case in the
decision reported in 1996-2-L.W.637 (Rahmath Fathima, T.H.S. v. T.K.Kader
Mohideen), where I held that for determination of the market value,
transaction between a willing purchaser and a willing seller will have to be
considered, and I also held that the value fixed by the Government for the
purpose of stamp duty has no relevance. In paragraph 17 of the judgment, I
have said thus :-
“….The Government fixes the value only for the purpose of Stamp Duty
i.e., for the purpose of its revenue. The value is fixed for the locality and
not for a particular survey number. The market value for a particular survey
number is the result of a bargain between the parties. That is a matter to be
proved by evidence. Judicial notice cannot be taken regarding the value of
the property on the basis of a value fixed by the Government.”
10. Since the Appellate Authority has relied upon only the hearsay
evidence of P.W.1, and that too on the basis of the information ascertained by
him from the Sub-Registrar’s Office where registers have been kept for the
purpose of determining stamp duty, the same cannot be accepted as correct.”
8. On a reading of the above observations, it is clear that
Justice S.S.Subramani decided the issue in two cases, namely, 1996-2-L.W.6 37
(Rahmath Fathima, T.H.S. v. T.K.Kader Mohideen) and 1997 (3) LAW WEEKLY 193
(Srinivasa Gounder v. K.Venkatesan), holding, that for determination of
market value, transaction between a willing purchaser and a willing seller
will have to be considered and the guideline value, which is intended for
assessing the stamp duty, has no relevance. These two decisions were rendered
by Justice S.S.Subramani, on the strength of the decision of a Division Bench
of this Court reported in 1996-2-L.W.658 (K.Ramanathan (died) and others v.
B.K.Nalini Jayanthi) and on the decision of the Supreme Court reported in
(1996) 3 SCC 1 24 (U.P.Jal Nigam v. Kalra Properties (P.) Ltd.).
9. Justice M.Srinivasan distinguished the earlier decision of
the Supreme Court reported in 1995 (1) Supreme Court Cases 717 (Land
Acquisition Officer, Eluru & Others v. Jasti Rohini and Another), stating
that the opinion given by the Supreme Court that the value fixed for the
purpose of collecting stamp duty cannot be considered to be the market value
would not apply to the present case, as the Supreme Court did not deal with
the Rent Control Act and, on the other hand, it had dealt with only the Land
Acquisition Act. However, the decision reported in 1995 T.L.N.J.226
(N.Sulaiman v. R.Ravichandran), rendered by Justice M.Srinivasan, was not
brought to the notice of Justice S.S.Subramani. Thus, there are two
conflicting decisions.
10. In the above situation, we have to decide as to whether
the guideline value, as contained in the revenue records or the municipal
records, or, the market value, as per the sale deeds executed at the relevant
point of time, has to be taken into consideration, for fixing the fair rent.
11. Let us now refer to various judgments, relied upon by the
learned counsel for the parties :
(i) In (1994) 4 SUPREME COURT CASES 595 (JAWAJEE NAGNATHAM v.
REVENUE DIVISIONAL OFFICER), the Supreme Court held as follows :
“5. The question, therefore, is whether the Basic Valuation Register
is evidence to determine the market value. This Court in Special Land
Acquisition Officer v. T.Adhinarayan Setty (AIR 1959 SC 429) in paragraph 9
held that the function of the Court in awarding compensation under the Act is
to ascertain the market value of the land at the date of the notification
under Section 4(1). The methods of valuation may be (1) opinion of experts
(2) the price paid within a reasonable time in bona fide transactions of
purchase of the lands acquired or the lands adjacent to the lands acquired and
possessing similar advantages; and (3) a number of years purchase of the
actual or immediately prospective profits of the lands acquired. Same was the
view in Tribeni Devi v. Collector of Ranchi ((1972) 1 SCC 480). It was
reiterated in catena of decisions, vide, Periyar and Pareekanni Rubbers Ltd.
v. State of Kerala ((1991) 4 SCC 195). Therefore, it is settled law that in
determining the market value, the Court has to take into account either one or
the other three methods to determine market value of the lands appropriate on
the facts of a given case to determine the market value. Generally, the
second method of valuation is accepted as the best. The question, therefore,
is whether the Basic Valuation Register would form foundation to determine the
market value…. It is, therefore, clear that the Basic Valuation Register
prepared and maintained for the purpose of collecting stamp duty has no
statutory base or force. It cannot form a foundation to determine the market
value mentioned thereunder in instrument brought for registration. Equally,
it would not be a basis to determine the market value under Section 23 of the
Act, of the lands acquired in that area or town or the locality or the taluk
etc. Evidence of bona fide sales between willing prudent vendor and prudent
vendee of the lands acquired or situated near about that land possessing same
or similar advantageous features would furnish basis to determine market
value….”
(ii) In (1995) 1 SUPREME COURT CASES 717 (LAND ACQUISITION
OFFICER, ELURU AND OTHERS v. JASTI ROHINI AND ANOTHER), the Supreme Court
observed as under :
“7. The reasonable method to determine the market value of the
acquired land is on the evidence of transactions of bona fide sales of
acquired land, but not on evidence of sales of such land got up having had
knowledge of the proposed acquisition, the former would furnish reasonable
basis to determine the compensation. In its absence, bona fide sales but not
manipulated sales of the lands in the neighbourhood possessed of same or
similar quality and having the same or similar advantages would give an
unerring assurance to the court to determine just and proper compensation.
Such sales must not only be proved but also be bona fide transactions etc.
These factors must be established as a fact by examining either the vendor or
the vendee. Marking of certified copies of sale deeds are not proof of either
the contents or the circumstances in which it came to be executed. Bona fide
sale or series of sales or small pieces of land do not furnish the sole basis
to determine market value. Bona fide sales may furnish evidence of the market
conditions for consideration. Fixation of market value on the basis of the
basic valuation register is, therefore, illegal and unsustainable.”
(iii) In 1995 (II) CTC 492 (G.LOGANATHAN v. S.CHENNIYA
CHETTIAR), this Court held as follows :
“5. The Supreme Court and other Courts, including our High Court,
have held that the guideline value is not the market value and it would be
dangerous to value the property according to the guideline value because there
is no guarantee or truth or correctness of the data given in the guideline
value. In Naganatham v. Revenue Divisional Officer, Adilabad (AIR 1983
A.P.155), the Andhra Pradesh High Court has held that the fixation of market
value cannot be made on the basis of the value noted in the market value
register maintained by the Government and the Court has to take into account
the price which a selling (sic willing) purchaser is prepared to pay to a
willing vendor. This view has been confirmed by the Supreme Court in the same
case, which was later taken before the Supreme Court in Jawajee Naganatham v.
Revenue Divisional Officer (1994 (4) S.C.C.595). In a recent case, Land
Acquisition Officer v. Jasti Rohini (1995 (1) S.C.C.717), the Supreme Court
has observed that valuation register on the basis of the notification under
Section 47-A of the Stamp Act is for collection of Revenue and it cannot be
the basis for determination of the market value of the land. In this case
also, the Supreme Court has observed that the price which the willing seller
expects from the willing purchaser is the market price. This Court also in
Collector, Nilgiris v. M/s.Mahavir Plantations Pte.Ltd. (AIR 1982 Madras
138) has held that to adopt figures prepared in the valuation guideline would
be dangerous because they offer no guarantee of the truth or correctness of
data. The Delhi High Court in Inder Prasad v. Union of India (AIR 1985 Delhi
304) also has repeated the same expression that the price which a willing
seller might reasonably expect to obtain from a willing purchaser is the test
to determine the market value and it cannot be based on the opinion or
information given by the Government. Therefore, from these chain of
decisions, it is made clear, that the guideline value cannot be the market
value of the property as the guideline value is intended for the collection of
the Revenue. As the market value alone is the criteria to value the suit and
in this case there is no contra evidence on the defendant’s side to show that
the property covered under Ex.A.1 is more that (sic than) the value given in
the sale deed, as held in Varadarajulu v. Venkatakrishnan (1959) (1) M.L.J.
(Notes of cases 9), the valuation given in the sale deed has to be accepted.
As a matter of fact, the Supreme Court in Lakshmi Ammal v. Madhavakrishnan
(AIR 1978 S.C.1607) would point out that the question of court fee is a
peripheral issue and when there is reasonable doubt, benefit must be given to
the party, who pleads for the lesser court fee.”
(iv) In 1996 (II) CTC 60 (U.P.JAL NIGAM, LUCKNOW v. KALRA
PROPERTIES (P) LTD.), the Supreme Court would hold as follows :
“6. The finding of the Court that the concession that the market
value determined by the Collector on the basis of basic valuation would be
properly applied, is obviously illegal. Shri Gopal Subramaniam contended that
the Government of U.P.had issued three different circulars accepting the
position that the basic valuation would form basis for determination of the
compensation under Section 23 (1) and that, therefore, the High Court was
right in accepting the valuation made by the Collector and in directing to pay
the compensation on that basis. After the judgment in Nagnatham case, 1994
(4) SCC 595, the Division Bench of the High Court of Allahabad in State of
U.P. v. Shau Singh, 1995 (1) H.V.D.191, had held that the rates fixed for
the collection of stamp duty cannot be relied upon to determine market value.
Therefore, the instructions issued by the Government for determination of the
market value on the basis of basic valuation register were held illegal. The
Collector, therefore, was obviously wrong in determining the compensation
under Section 23 (1) on the basis of prevailing rates in 1992 as per basic
valuation circulars.”
(v) In 2004 SUPREME COURT CASES (CRI) 377 (R.SAI BHARATHI v.
J. JAYALALITHA AND OTHERS), the Apex Court, in paragraphs 22 and 24, held as
follows :
“22. The guideline value has relevance only in the context of Section
47-A of the Indian Stamp Act (as amended by T.N.Act 24 of 1967) which provides
for dealing with instruments of conveyance which are undervalued. The
guideline value is a rate fixed by authorities under the Stamp Act for
purposes of determining the true market value of the property disclosed in an
instrument requiring payment of stamp duty. Thus the guideline value fixed is
not final but only a prima facie rate prevailing in an area. It is open to
the registering authority as well as the person seeking registration to prove
the actual market value of property. The authorities cannot regard the
guideline valuation as the last word on the subject of market value. This
position is clear in the explanation to Rule 3 of the Tamil Nadu Stamp (
Prevention of Undervaluation of Instruments) Rules,1968. The said Explanation
reads as follows :
“Explanation.- The ‘guidelines register’ supplied to the officers is
intended merely to assist them to ascertain prima facie, whether the market
value has been truly set forth in the instruments. The entries made therein
regarding the value of properties cannot be a substitute for market price.
Such entries will not foreclose the enquiry of the Collector under Section
47-A of the Act or fetter the discretion of the authorities concerned to
satisfy themselves on the reasonableness or otherwise of the value expressed
in the documents.”
24. This scheme of the enactment and the Rules contemplate that
guideline value will only afford a prima facie basis to ascertain the true or
correct market value, undue emphasis on the guideline value without reference
to the setting in which it is to be viewed will obscure the issue for
consideration. It is clear, therefore, that guideline value is not sacrosanct
as urged on behalf of the appellants, but only a factor to be taken note of,
if at all available in respect of an area in which the property transferred
lies. In any event, therefore, if for the purpose of the Stamp Act guideline
value alone is not a factor to determine the value of property, its worth will
not be any higher in the context of assessing the true market value of
properties in question to ascertain whether the transaction has resulted in
any offence so as to give a pecuniary advantage to one party or the other.”
(vi) In (2005) 12 SUPREME COURT CASES 59 (RANVIR SINGH AND
ANOTHER v. UNION OF INDIA), the Supreme Court observed as under :
“31. Furthermore, it is well settled that the sale deeds pertaining
to the portion of lands which are subject to acquisition would be the most
relevant piece of evidence for assessing the market value of the acquired
lands.”
12. We have gone through the above judgments, cited by the
counsel for the parties.
13. At the outset, it shall be stated that the guideline
value, as pointed out by the Supreme Court, is a value determined for the
purpose of collecting stamp duty. The Basic Valuation Register is maintained
by the revenue authorities, on the basis of the notification issued by the
Government under Section 47-A of the Indian Stamp Act. The same is meant to
be a guide for collection of revenue and the stamp duty. It is mainly for
collection of stamp duty for registration of an instrument. The Notification
under Section 47-A, which is meant to be a guide for collection of revenue,
cannot form basis for determination of the market value. The Government fixes
the value, as indicated above, only for the purpose of stamp duty i.e., for
the purpose of its revenue. The value is fixed for the locality and not for a
particular survey number. The market value for a particular survey number is
the result of a bargain between the parties. On the other hand, as pointed
out by the Supreme Court, the market value is the value, as described in the
sale deed.
14. The methods of valuation for ascertaining the market
value, as suggested in the above decisions, are as follows :
(1) Opinion of experts
(2) The price paid within a reasonable time in bona fide transactions
of purchase of the lands acquired or the lands adjacent to the lands acquired
and possessing similar advantages. Evidence of bona fide sales between
willing prudent vendor and prudent vendee of the lands acquired or situated
near about that land possessing same or similar advantageous features would
furnish basis to determine market value.
(3) A number of years purchase of the actual or immediately
prospective profits of the lands acquired.
15. It is a settled law, as laid down in the judgments
referred to above, that in determining the market value, the Court has to take
into account either one or the other three methods to determine market value
of the lands appropriate on the facts of a given case. According to the
Supreme Court, generally, the second method of valuation is accepted, as the
best. This method would furnish the evidence of bona fide sales between
willing prudent vendor and prudent vendee of the lands acquired or situated
near about that land possessing same or similar advantageous features, which
would enable the Court to determine the market value correctly.
16. In view of the above ratio decidendi fixed by the Supreme
Court, the fixation of market value on the basis of guideline value or
valuation register, summoned from Sub-Registrar’s Office and the Engineer, is
illegal and unsustainable.
17. The view expressed by Justice S.S.Subramani, in our view,
is correct, as it is in consonance with the principles laid down by the
Supreme Court. The other view expressed by Justice Srinivasan is not correct,
as the methods suggested by the Supreme Court for fixing the market value
would not include the consideration of guideline value and valuation register.
So, in our opinion, the said view is wrong.
18. Therefore, our conclusions are as follows :
(1) The guideline value, contained in the Basic Valuation Register,
maintained by the Revenue Department or the Municipality for the purpose of
collecting stamp duty, has no statutory base or force. It cannot form a
foundation to determine the market value mentioned thereunder in instrument
brought for registration.
(2) Evidence of bona fide sales between willing prudent vendor and
prudent vendee of the lands acquired or situated near about that land
possessing same or similar advantageous features would furnish basis to
determine the market value. In this case, the guideline value alone has been
considered, which, in our view, is illegal.
(3) The Rent Controller and the Rent Control Appellate Authority, in
the present case, are not right in relying upon the guideline value,
maintained by the Revenue Department, for arriving at a fair rent, to be fixed
under Section 4 of the Tamil Nadu Buildings (Lease & Rent Control) Act,1960.
19. In view of the above settled position of law and
conclusions, both the counsel for the parties would now agree for setting
aside the orders impugned and for remanding the matter for fixing the fair
rent in respect of the property during the relevant point of time to follow
the methods as mentioned above, after allowing the parties to adduce evidence.
20. Therefore, it would be appropriate to remand the matter
to the Rent Controller, after setting aside the orders impugned, and to allow
the parties to adduce evidence, to help the Rent Controller in arriving at the
market value, on the basis of the evidence of bona fide sales between the
vendor and the vendee of the lands situated near about that land possessing
same or similar advantageous features during the relevant point of time; which
is, accordingly, ordered.
21. While the reference was made for Larger Bench, the
learned single Judge directed the tenant/revision petitioner to pay a sum of
Rs.1 ,500/- per month commencing from the month of April,2000, towards monthly
rent directly to the landlord during the pendency of the above revision
petition, which shall be adjusted after final adjudication.
22. We make it clear that the said interim order shall
continue till the disposal of the matter by the Rent Controller.
23. Since the R.C.O.P.is of the year 1993 and, by now,
thirteen years’ period has elapsed, the Rent Controller is directed to dispose
of the matter within a period of two months from the date of receipt of copy
of this order.
24. Civil Revision Petition is disposed of accordingly. No
costs.
dixit
To
1.The Rent Control Appellate Authority
-cum-Principal Subordinate Judge,
Madurai.
2.The Rent Controller
-cum-District Munsif,
Madurai.