JUDGMENT
K.C. Jagadeb, J.
1. The petitioner is a person belonging to Scheduled Caste and has obtained permission under Section 22 of the O.L.R. Act to sell a piece of homstead land situated in Bhubaneswar Master Plan Area to one Smt. Labanyabati Samantray and the said permission has been accorded to him by the Revenue Officer in Revenue Miscellaneous Case No. 450/88 by order dated 6-4-1989.
2. Having found that there is already a Government executive instruction issued from the Government under the signature of the Additional Secretary to Government to the Inspector General of Registration, Orissa, Cuttack fixing the market value of the land in Bhubaneswar Master Plan area and ensuring the market value fixed for the revenue villages under Bhubaneswar Market area and Town Planning to be set forth in instrument and directing the impounding of the said instrument of transfer by the registering officers by reference to Collector under Section 47(A) of the Indian Stamp Act even if the said market value is not shown on the document, has challenged the same with a prayer to quash the said notification of the Government dated 17-2-1990 as per Annexure-1 of this present writ application and with a further prayer that the valuation indicated in the permission certificate of the Revenue Officer under Section 22 of the O.L.R. Act be accepted as the valuation of the document and stamp duty shall be paid only on that valuation.
3. The Opposite Party Nos. 1 and 2, namely the State of Orissa, represented by the Secretary, Revenue and Excise Department and Inspector General of Registration, Orissa have jointly filed a counter to the writ application. In the counter, they have justified the instruction contained in Annexure-1 and have stated that it was within the scope, ambit and jurisdiction of the Government of Orissa
to issue such instruction which would help the
registering authority to know the exact
valuation of the land in Master Plan area,
Bhuhaneswar. By this method, people who
are showing low valuation and thereby
evading stamp duty on registration should be
checked.
4. We allowed the learned counsel for both the parties to argue this case at length as the decision will not only affect the petitioner alone but also other people facing similar situation.
5. Section 47-A of the Indian Stamp Act was inserted to the present Act by Orissa Act 25 of 1962 and reads as follows:
47-A. Instrument under valued how to be dealt with–
(1) If the registering officer appointed under the Indian Registration Act, 1908, while registering any instrument transferring any property, has reasons to believe that the value of the property or the consideration, as the case may be, has not been truly set forth in the instrument, he may, after registering such instrument, refer the same to the Collector for determination of the value or consideration, as the case may be, and the proper duty payable thereon.
(2) On receipt of a reference under Sub-section (1) the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner as may be prescribed by rules made under the Act, determine the value or consideration and the duty as aforesaid and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty.
(3) The Collector may suo motu within two years from the date of registration of any instrument not already referred to him under Sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of its value or consideration, as the case may be, and the duty payable thereon and if after such f examination, he has reasons to believe that the value or consideration has not been truly set forth in the instrument, he may determine the value or consideration and the duty as aforesaid in accordance with the procedure provided for in Sub-section (2); and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty.
(4) Any person aggrieved by an order of the Collector under Sub-section (2) (or Sub-section (2a) may within thirty days from the date of the order, prefer an appeal before the District Judge and all such appeals be heard and disposed of in such manner as may be prescribed by rules made under this Act.”
6. The Indian Stamp Act of 1899 is a fiscal enactment charging stamp duty on instrument of various kinds. The dutiable instruments are classified under Schedule I to the Act and for each class of instrument the schedule prescribes appropriate rate or rates of stamp duty payable thereon. The schedule has been the subject of amendments by different States and modifications in rates of duty have been made from time to time. Originally, the stamp duty on a conveyance of immovable property was levied ad valorem on the value as set forth in the instrument, but under the present system, stamp duty is payable on the market value of the property which is the subject matter of the conveyance. For ensuring the correct stamp duty to be paid on the correct market value of the property, rules have been prescribed by the State Government in the interests of the Revenue, Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules 1968, is one of such rules and under Rule 3 of the said rules, the party executing the document has to attach to the instrument a separate statement furnishing information about various particulars having a bearing on market value and his own assessment of the market value of the property conveyed. The Collector, however, has jurisdiction under Section 47-A of the Act, to go into the truth or correctness of the market value set forth in the instrument, for the purpose of ensuring that proper stamp duty has been paid on the instrument. He has also jurisdiction to reassess the market value and redetermine the stamp duty payable on the basis of such reassessment.
This process of reassessment cannot be taken as a matter of course in any and every case. The Collector can assume jurisdiction in this regard only under two given situation, that is to say, either on a reference from the concerned registering authority which has registered the document in question or by acting suo motu on his own study of the records. In either case, there must be a reasonable basis for the proceedings to be initiated. In the first case, the registering authority himself must have reason to believe that the market value has not been truly set forth in the instrument. In the other case, the Collector must on a study of the instrument in question, believe, and must have reasons for believing, that the market value set forth in the instrument has not been truly so set forth. In Madras then so called, Valuation Guidelines Register was prepared in 1968 as instructed by the Board of Revenue and was revised from time to time. These guidelines were avowedly intended merely to assist the Sub-Registrars to find out, prima facie, whether the market value set out in the instrument 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 Section 47-A of the Act, when once a reference comes to him from the registering authority. In a case reported in (1981) 94 Mad LW 685 (690) : (AIR 1982 Mad 138 (143)). The Collector of Nilgiris at Ootacamund v. Mahavir Plantations Pvt. Ltd. the Madras High Court held thus:
“.. ……. These guidelines 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 Section 47-A of the Act, when once a reference comes to him from the registering authority. The Collector, under Section 47-A, cannot shirk his responsibility of determining the market value by adopting the guidelines, nor can he fix the market value without proper materials and evidence to support it. The very idea of an inquiry contemplated by Section 47-A and the detailed procedure prescribed in the relevant rules goes to show that the Collector’s finding must be verifiable by evidence. The valuation guidelines prepared by the Revenue Officials at the instance of the Board of Revenue were not prepared on the basis of any open hearing of the parties concerned or of any documents with a view to eliciting the market value of the properties concerned. They were based on date gathered broadly with reference to classification of lands, grouping of lands and the like. This being so, the Collector acting under Section 47-A cannot regard the guidelines valuation 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. To adopt figures prepared at the instance of the Board of Revenue in the valuation guidelines which are merely a compilation of data by subordinate officials of an administrative authority on the basis of administrative action would be dangerous, because they offer no guarantee of truth or correctness of the data, not being susceptible to check or verification by a judicial or quasi judicial process of evaluation of evidence.”
A similar view has been expressed by V. Ramaswami, J. in Hema v. State of Tamil Nadu of the said High Court in a judgment dated 15th November, 1979. The usual tests adopted by Courts of law in land acquisition cases of the market value being the price which is paid by a willing buyer and a willing seller. In other words, it refers to the price which the property would fetch or would have fetched if sold in the open market. ,While dealing with the market value under Section 47-A of the Stamp Act, it is the market value that can be determined on the basis of conditions of equilibrium and not on the basis of speculative trends, where by reason of exercise of economic power on the part of influential interests in real estate which would wield enormous bargaining authority, prices of individual properties are neither rigged up or depressed, tending to distort the price structure. Therefore, the market value for the purpose of Section 47-A must always mean a fair market value in the sense that there are no economic shackles or inhibitions of any kind which prevent the price level from finding its level. The conception of open market rules out, at one end, fancy prices and, at the other end, distress sales. Economic equilibrium is the criteria of assessment of the market value.
7. The rationale behind Section 47-A of the Act is only to neutralise the effect of under valuation of property with a view to evading stamp duty. It is not correct to say that in absence of any other sales in the vicinity during the material time, the guidlines valuation must be adopted without question, as the one or only basis of market value. In the absence of comparable sales at the material time the consideration paid may be taken as the proper basis to test the correctness of the market value which the party has set out in that instrument of conveyance.
From the above discussion, we would conclude that any guidelines the State Government or the Board of Revenue or associated Department of the Government gives to the registering authority regarding the valuation of the land in a particular area is not the last word in the assessment of market value. Therefore, the State Government has not acted rightly in issuing Annexure-1 fixing the market value of the land in Bhubaneswar Master Plan area and requiring the registering officers to stick on to that valuation while considering the valuation of the property under the document and to impound the document and refer the document to the Collector for determination of the market value when the valuation shown in the document appeared to be low compared with the valuation chart shown by the Government which is Annexure 4. The issuance of Annexure A has the tendency of arbitrarily affecting the opinion of the registering authority and thereby interferes with the jurisdiction given to the registering authority under Section 47-A to reach the satisfaction of the property and will guide him to mechanically refer all the documents to the Collector on being impounded, harassing the general public on the basis of this statement regarding market value of land in Bhubaneswar market area when there is no authenticity in its correctness.
This statement annexed to Annexure-1 is also bound to affect the mind of the Collector in making determination of the market value on his own. This would unduly influence his judgment and allow him to shirk the responsibility in determining the market value by merely adopting the guidelines and not looking into the proper materials and evidence in support of it, and will force him to shut his mind to consider other aspects which add or detract the market value of the land, for instance, its situation, the amenities being made available in the vicinity, commercial potentiality etc. We are, therefore, of the view that the executive instruction as per An-nexure-1 cannot be allowed to stand and is accordingly quashed. That apart, as the Annexure-1 shows the Government has basically classified the land into two categories (i) within 40 feet of the road and (ii) beyond 40 feet of the road of the Revenue villages under Bhubaneswar Municipality area and Town Planning area and has fixed the market value on these two classified lands. This classification, no doubt, is unreasonable and bad as it has no exclusive relevence in determining the value of any land.
The petitioner has also made a prayer in his application for a direction to Opp. Party No. 2 to accept the document to be executed for registration without being prejudiced in any manner by taking into Annexure-1 into account. Since we are quashing Annexure-1, we do not make any further direction in that regard as regards presentation of the document for registration or its acceptance by the registering authority. The law will take its own course.
8. In the result, the writ application is allowed. Hearing fee is assessed at Rs. 300/-.
L. Rath, J.
9. I agree.