IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 01/11/2002
CORAM
THE HONOURABLE MR.JUSTICE P.D.DINAKARAN
W.P.No.31589 of 2002
and W.P.Nos. 31590, 13664, 13665, 19380 to 19383,
19495 to 19504, 19485 to 19494, 30453, 30460, 30328,
13998 to 14000, 14083, 14084, 14188 to 14191, 18839 to
18842, 18849 to 18852, 19855 to 19864, 21187 to 21191,
21231 to 21239, 21240 to 21248, 21683, 21680, 21851 to
21853, 14748, 14078 to 14081 & 15180 to 15183 of 2002
and
WPMP Nos.46042, 46043, 18437, 18438, 26718 to 26721,
26907 to 26916, 26896 to 26905, 44610, 44619, 44242,
18997, 18998, 19133 to 19136, 25925 to 25928, 25935
to 25938, 27409 to 27415, 29285 to 28289, 29347 to
29355, 29356 to 29364, 30007, 30002, 30213 to 30215,
19809, 18992 to 18995 & 202388 to 20391 of 2002.
W.P.No.31589 of 2002
S. Jayalakshmi .. Petitioner
-Vs-
1. The Government of Tamilnadu
rep. by Special Secretary to
Government Commercial Taxes
(J1 Department)
Secretariat, Chennai 600 009.
2. Inspector General of Registration
Chennai 600 028.
3. The District Registrar
Tiruchy District
Tiruchirappalli 620 001. .. Respondents
Petition under Article 226 of the Constitution of India praying for a
writ of Mandamus as stated therein.
For Petitioners : Mr.R. Krishnaswami, S.C.
For Mr.C. Ramesh
For Respondents : Mr.D. Krishna Kumar, Spl.G.P.
:O R D E R
Heard.
2. Aggrieved by the demand of additional stamp duty on the document
of sale executed by the Tamil Nadu Police Housing Corporation Limited
(hereinafter referred to as the “Corporation”), a Government of Tamil Nadu
undertaking, in favour of the petitioners herein and the consequential refusal
to release the respective sale deeds of the petitioners already registered
before the concerned Sub Registrar of Registration, for non payment of the
additional stamp duty, the petitioners, individually, seek a writ of Mandamus
to forbear the third respondent from demanding the additional stamp duty for
the respective sale deeds of the petitioners and to direct the respondents to
deliver them the said sale deeds registered before the third respondent.
3. Since the grievance of the petitioners in these writ petitions and
the relief sought for are common in nature, all these writ petitions were
heard jointly with the consent of both parties.
4.1. Concedingly, the petitioners were allotted respective flats by
the Corporation, a Government of Tamil Nadu undertaking, in the year 1985, on
lease cum sale agreement basis and the petitioners have paid their respective
entire sale consideration in instalments and also got their sale deed duly
executed by the Corporation before the concerned Sub Registrar Office as early
as 1999, 2000 and 2001. But, instead of returning the respective sale deeds
to the petitioners, the respondents served notice on them, demanding
additional stamp duty on the basis of the market value of the property at the
time of registration, initiating action against them under Section 47-A(1) of
the Indian Stamp Act (hereinafter referred to as the “Act”).
4.2. The petitioners and the similarly placed allottees formed an
association as Tiruchy Navalpattu Police Colony Owners and Occupants
Association and registered the same under the provisions of the Societies
Registration Act. Placing reliance on the decision of this Court dated
19.3.1998 made in W.P.Nos.15873 and 16833 of 1995, the said association
represented to the third respondent on 29.8.2002 that the levy of additional
stamp duty on the basis of market value of the property at the time of
registration is incorrect, illegal, improper, and contrary to the decision in
Padmavathi, S.P. v. State of Tamil Nadu reported in 1997 (2) CTC 617 = 1997
(2) LW 579. However, the respondents, by letter dated 9.11.2001 informed the
Association that the request made on behalf of the petitioners cannot be
complied with. Hence the above writ petitions.
5. Mr.R. Krishnaswami, learned senior counsel appearing for the
petitioners contends that
(a) the impugned demand of additional stamp duty on the respective sale deeds
is contrary to various decisions of this Court, viz.
(i) the order dated 19.3.1998 made in W.P.Nos.15873 and 16833 of 1995;
(ii) District Collector, Erode District Erode, v. M.Ponnusamy reported in
2001 (2) CTC 449 confirming the order dated 6.11.1997 made in W.P.Nos.11952 of
1997 batch, reported in 1999 (2) LW 231; and
(iii)Sukumaran, R. v. State of Tamil Nadu reported in 2002 (2) CTC 3 29.
(b) the respondents have no jurisdiction to invoke Section 47-A(1) of the Act,
unless they have reason to believe that the market value of the property,
which is a subject matter of conveyance has not been duly set forth in the
document, with a view to fraudulently evade the payment of proper stamp duty;
and
(c) since the impugned sale deeds were executed by the Corporation, a
Government of Tamil Nadu undertaking, there cannot be any room for under
valuation of the property conveyed by the Corporation nor any fraudulent
evasion or mala fide attached to such transaction.
6. Per contra, learned Special Government Pleader appearing on behalf
of the respondents contends that
(a) the price fixed by the Corporation at the time of allotment is only a
tentative cost and the same is not final, and therefore, the registering
authority is entitled to charge stamp duty based on the market value of the
property at the time of registration, but not based on the price fixed by the
Corporation in the sale deeds;
(b) if the petitioner relies upon the cost price fixed at the time of
allotment and as a result, the market value of the property conveyed has not
been truly set forth in the document, the Registering Officer, after
consideration of the document, shall refer the same to the Collector for
determination of the market value of the property conveyed and the stamp duty
payable thereon, exercising the powers conferred under Section 47-A(1) of the
Act; and
(c) once the Registering Officer is empowered to initiate action under Section
47-A(1) of the Act as above, it is further contended that as per Sub rule 3 of
Rule 3 of the Tamil Nadu Stamp (Prevention of Under-valuation of Instruments)
Rules, 1968, (hereinafter referred to as the “Rules”), the Registering Officer
may, for the purpose of finding out whether the market value has been
correctly furnished in the instrument, make such enquiries as deemed fit and
he may elicit from the parties concerned any information bearing on the
subject and call for and examine any records kept with the public officer or
the authority; and Sub rule (4) of Rule 3 of the Rules, further empowers the
Registering Officer to look into the Guidelines Register containing the value
of the properties supplied to them for the purpose of verifying the market
value, and therefore, the respondents are within the jurisdiction to initiate
action against the petitioners under Section 47-A of the Act and consequently
to demand additional stamp duty from the petitioners for releasing their
respective documents.
7. I have given careful consideration to the submissions of both
sides.
8. The vital point that arises for my consideration in this batch of
writ petitions is whether the demand of additional stamp duty from the
petitioners on the deed of sale, which is admittedly executed by the
Corporation, a Government of Tamil Nadu undertaking, by the respondents, based
on the alleged market value, is valid and justified in law or not?
9.1. It is not in dispute that the petitioners were allotted
respective flats by the Corporation, a Government of Tamil Nadu undertaking.
The allotment of the plots were made as early as 1985, when the cost of the
respective plots were arrived at, determined and settled conclusively between
the parties to the sale. Therefore, there is no material on record either to
suspect or to hold that the impugned conveyance is either attracted by alleged
under valuation or fraudulent evasion of stamp duty. On the other hand, since
the sale has been executed by a Government of Tamil Nadu undertaking in favour
of the petitioners, it is presumed to be a bona fide transaction.
9.2. No doubt, the market value of any property in the matter is a
changing factor and the same will depend upon various circumstances and
matters relevant for consideration, viz. requirement of the property by the
purchaser, urgent requirement of funds by the vendor etc. Unless there is any
substantial and material evidence and reasons to believe that the market value
of the property conveyed has not been truly set forth in the instrument, with
an object to commit a fraudulent evasion of the stamp duty to cause loss to
the revenue, it cannot be presumed that the powers conferred under Section
47-A(1) of the Act is a routine procedure to be followed, in respect of each
and every transaction and respective document presented for registration.
9.3. The powers conferred under Section 47-A(1) of the Act is not
meant to work as an engine of oppression, but is a machinery to check
fraudulent evasion of the stamp duty payable on the instrument, while
registering any instrument of conveyance, etc. Therefore, the powers
conferred under Section 47-A(1) of the Act should be exercised with great
caution and care should be taken to ensure that it does not work as an engine
of oppression nor as a matter of routine mechanically, without any application
of mind as to the existence of any material or reason to believe the
fraudulent evasion of stamp duty. The above view is supported by the ratio
laid down by a Division Bench of this Court in Padmavathi, S.P. v. State of
Tamil Nadu reported in 1997 (2) CTC 617 = 1997 (2) LW 579, which reads as
under.
” … Power under Sec.47-A of the Act can only be exercised when the
Registering Officer has reason to believe that the market value of the
property, which is the subject of conveyance, has not been truly set forth,
with a view to fraudulently evade payment of stamp duty. Mere lapse of time
between the date of agreement and the execution of the document and the
execution of the document will not be the determining factor that the document
is undervalued and such circumstance by itself is not sufficient to invoke the
power under Sec.47-A of the Act, unless there is lack of bona fies and
fraudulent attempt on the part of the parties to the document to undervalue
the subject of transfer with a view to evade payment of proper stamp duty …”
10.1. Even though the learned Special Government Pleader would
contend that Sub rule (3) and (4) of Rule 3 of the Rules, empower the
respondents to demand additional stamp duty based on the guidelines prescribed
in the Guidelines Register maintained by the revenue authorities in this
regard, if the market value of the property conveyed has not been truly set
forth in the instrument, in my considered opinion, Sub rules (3) and (4) of
Rule 3 of the Rules themselves are not applicable to the instant case, in view
of my earlier finding that Section 47-A(1) of the Act itself is not attracted
to the case of the petitioners, for want of sufficient materials or reasons to
believe that the petitioners have fraudulently evaded the stamp duty while
registering their respective sale deeds.
10.2. This Court in The Collector of Nilgiris v. M/s. Mahavir
Plantations Pvt. Ltd. reported in AIR 1982 Mad. 138 = (1981) 94 LW 685,
held as under.
” The valuation guidelines prepared by the Revenue Officials at the
instance of the Board of Revenue were avowedly intended merely to assist the
Sub-Registrars to find out, prima facie, whether the market value set out in
the instruments had been set forth correctly. The guidelines were not
intended as a substitute for market value or to foreclose the inquiry by the
Collector which he is under a duty to make under Sec.47-A. The valuation
guidelines were not prepared on the basis of any open hearing of the parties
concerned or of any documents. They were based on data gathered broadly with
reference to classification of lands, grouping of lands and the like. This
being so, the Collector acting under Sec.47-A cannot regard the valuation
guidelines as the last word on the subject of market value. To do so would be
to surrender his statutory obligation to determine market value on the basis
of evidence, which is a judicial or a quasi judicial function which he has to
perform.”
10.3. Similarly, it is held in Sagar Cements Ltd. v. State of A.P.
reported in 1989 (3) Andhra Law Times 677 that the Government has unilaterally
fixed the value of the lands in the Basic Valuation Register and the same had
no statutory foundation and therefore it does not bind the parties.
10.4. The view with regard to the statutory force of basic value in
the Basic Valuation Register has no statutory foundation and therefore, it
does not bind the parties of the conveyance, has been confirmed by the Apex
Court in Jawajee Nagnatham v. Revenue Divisional Officer reported in 1994 (4)
SCC 595.
10.5. Following the above basic principles laid down in various
decisions of this Court as well as the Apex Court, K.Govindarajan, J, in
W.P.No.15873 and 16833 of 1995, by order dated 19.3.1998, quashed the
proceedings of the Registering Officer demanding additional stamp duty by
exercising the powers conferred under Section 47-A of the Act and directed to
refund the stamp duty paid by the petitioner under protest.
10.6. In identical circumstances, where the Registering Officer,
after duly registering the deed of conveyance, referred the matter to the
Collector under Section 47-A of the Act holding that the market value of the
property conveyed are not truly set forth in the deed of conveyance and
consequently refused to release the original documents of conveyance,
E.Padmanabhan, J, by order dated 6.11.1997 made in W.P.Nos.11952 of 1997 batch
case, (Ponnusamy, M. & Others v. The District Collector, Erode & others)
reported in 1999 (2) LW 231, following the ratio laid down in the decisions
referred to above, held as follows.
” .. The language of Section 47-A of the Indian Stamp Act is very clear. The
condition precedent for making a reference is, there must be reason for the
Registering Authority to believe that the market value of the property has not
been truly set forth in the document presented for registration. Hence, it
follows that the reasons must be recorded, however short it may be. It is the
duty of the Registering Authority to record reasons for his belief that true
market value has not been set out in the document, complete registration and
thereafter refer the matter to the Collector for determination of the market
value of the property and the proper duty payable thereon. … It is
essential to point out that before registration, the Registering Authority has
to record that he has reasons to believe that the value of the property has
not been duly set forth in the instrument. Only after recording such reasons
the Registering Authority has to complete registration of the instrument in
question and thereafter alone, he could refer the same to the Collector under
Sub-Section (1) of Section 4 7-A of the Indian Stamp Act.”
10.7. The above decision in Ponnusamy, M. & Others v. The District
Collector, Erode & others reported in 1999 (2) LW 231 has also been confirmed
by a Division Bench of this Court by order dated 30.4.2001 made in W.A.Nos.26
to 32 and 110 to 143 of 1998, reported in 2001 (2) CTC 449, reiterating the
ratio laid down in the earlier decisions of this Court that unless the
Registering Officer has reason to believe that the documents have been under
valued based on sufficient materials in that regard, he has no jurisdiction to
initiate any action under Section 47-A of the Act to refer the document to the
Collector for adjudication and in any event, the Registering Officer himself
cannot hold an enquiry regarding under valuation, once the document is
registered and such enquiry should precede the registration.
10.8. In one another identical case, where a document was executed
and registered by the Tamil Nadu Housing Board in favour of the allottee,
based on a lease cum sale agreement, E.Padmanabhan, J, by order dated 5.4.2002
in W.P.Nos.23097 of 2001 batch (Sukumaran, R. v. State of Tamil Nadu)
reported in 2002 (2) CTC 329, held that the sale deed executed by the Tamil
Nadu Housing Board and presented for registration is held to be bona fide and
therefore, the Registrar cannot have any ground or reason or basis to
entertain doubt about sale consideration or the market value of the property
conveyed nor can claim any additional stamp duty from the allottee and
consequently directed the Registrar of registration to release the documents
without insisting any further payment of stamp duty.
11. In the instant case, as the respondents failed to place any
material before this Court to distrust that the market value of the property
conveyed under the respective sale deeds of the petitioners has not been truly
set forth in the respective sale deeds, nor given any reason to believe that
the petitioners have fraudulently evaded the stamp duty, I am obliged to hold
that the market value of the flats set forth in the sale deeds executed by the
Corporation in favour of the respective petitioners are truly set forth and as
a result, respondents have no jurisdiction to initiate any action under
Section 47-A(1) of the Act, either to refer the matter to the Collector to
hold an enquiry in this regard or to withhold the respective sale deeds of the
petitioners any further.
The writ petitions are allowed as prayed for. Consequently,
respondents are directed to release the respective sale deeds of the
petitioners within two weeks from the date of receipt of a copy of this order,
without demanding any additional stamp duty. No costs. Connected WPMPs are
closed.
To
1. The Special Secretary to
Government Commercial Taxes
(J1 Department)
Secretariat, Chennai 600 009.
2. Inspector General of Registration
Chennai 600 028.
3. The District Registrar
Tiruchy District
Tiruchirappalli 620 001.