IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.12.2009 CORAM THE HON'BLE MR. JUSTICE P.JYOTHIMANI W.P.Nos.29413 of 2007 and 24301 of 2009 and M.P.Nos.1 of 2007 and 1 of 2008 G.Srinivasan .. Petitioner in W.P.No.29413 of 2007 M.K.Cables and Conductors Pvt. Ltd., Chennai 12. .. Petitioner in W.P.No.24301 of 2009 Vs. 1.The Sub Registrar, O/o. Sub Registrar, Udumalpet. 2.The Official Liquidator, High Court, Madras as Official Liquidator of Sri Muthukumaran Cotton Mills Pvt. Ltd., Kuralagam, Block 1, 1st Floor, Esplanade, Chennai - 108. .. Respondents in
W.P.No.29413 of 2007
1.Govt. Of Tamil Nadu rep. By
Secretary, Revenue Department,
Fort St. George, Chennai 9.
2.The District Revenue Officer
(Stamps),
O/o. The District Collector,
5th Floor, M.Singaravelar Maligai,
No.32, Rajaji Salai, Chennai 1.
3.The Inspector General of
Registration, Santhome,
Chennai 4.
4.The Sub Registrar,
Gummidipoondi,
Tiruvallur District 601 201. .. Respondents in
W.P.No.24301 of 2009
W.P.No.29413 of 2007: Petition under Article 226 of The Constitution of India praying for the issuance of a writ of certiorari to call for the records of the first respondent in issuance of notice in Reference No.348 of 2007 dated June, 2007 and connected records therewith and quash the notice dated June 2007 in No.348 of 2007.
W.P.No.24301 of 2009: Petition under Article 226 of The Constitution of India praying for the issuance of a writ of certiorarified mandamus to call for the records of the second respondent in Tha.Ka.No.35/08/A4 dated 08.09.2008, quash the same and consequently direct the fourth respondent to remove the entries pertaining to the charge endorsed in the records at the time of return of the sale deed, registered as Doc.No.5964 of 2007 on its file.
For petitioners .. Mr.S.R.Rajagopal in both the W.Ps
For respondents .. Mr.P.S.Raman, Advocate General
assisted by Mr.R.Murali,
Govt. Advocate in both the W.Ps
COMMON ORDER
These cases are relating to the purchases made and documents registered by virtue of the sale effected by the official liquidator pursuant to the orders passed by the concerned Company Courts.
2.In W.P.No.29413 of 2007, the petitioner, based on the advertisement published by the second respondent/official liquidator of this Court for sale of the property measuring an extent of 2 acres 23 1/2 cents comprised in Survey Nos.183/C1 and 184/B1 in Pukkulam Village, Udumalpet Taluk came to know that the property belonging to M/s.Sri Muthukumaran Cotton Mills Private Limited, which was ordered to be wound up by this Court by order dated 23.07.2002 in C.P.No.5 of 2000 and thereafter all the properties came to the control of the official liquidator. In the Court auction sale which was conducted in the Company Court, the petitioner was declared as the highest bidder for a total sale consideration of Rs.75 lakhs and the petitioner has also deposited the amount as per the order dated 30.10.2006 in C.P.No.5 of 2000. The sale was confirmed in favour of the petitioner on 13.11.2006 in C.A.No.1987 of 2006 and pursuant to the said confirmation, the second respondent executed the sale deed in favour of the petitioner on 15.12.2006 and the document was duly presented before the first respondent for registration, which was registered as Document No.4508 of 2007. However, the document was not released while the first respondent has issued a notice stating that the value of Rs.75 lakhs does not reflect the true value under Section 47A (1) of the Indian Stamp Act. The first respondent has also sent a impugned communication stating to that effect, which is challenged in the said writ petition.
3.In W.P.No.24301 of 2009, Plot No.D-16(N1), SIPCOT Industrial Complex, Gummidipoondi comprised in Survey Nos.15/2, 15/4 part, Karumbukuppam Village, Gummidipoondi Taluk, Tiruvallur District was given on lease to one M/s.Peacock Polymers Private Limited for a period of 99 years. When the said company was subsequently wound up, pursuant to the order of this Court on 04.12.2001 in C.P.No.600 of 2000, the assets were vested with the official liquidator and when the sale was conducted in the Company Court, by order dated 02.03.2007, it was directed to be brought on sale by public auction. Furtherance to the said order, the official liquidator issued necessary publication and in the sale, one Jayalakshmi Pressings Private Limited was declared to be the highest bidder as confirmed by the Court in the order dated 15.09.2006 in C.A.No.1285 of 2006 for a sum of Rs.80 lakhs, who has nominated the petitioner herein and accordingly, the petitioner had duly remitted Rs.80 lakhs. Thereafter, the official liquidator has also executed the sale deed in favour of the petitioner on 20.07.2007 in respect of the superstructure conveyed in furtherance to the auction conducted by this Court. The sale deed was also presented before the fourth respondent, who has registered the same as Document No.5964 of 2007. The petitioner has also approached the SIPCOT for the purpose of execution of lease deed for the unexpired period by filing application in C.A.No.911 of 2009 in C.A.1285 of 2006 in C.P.No.600 of 2000 and the same was ordered by this Court on 22.01.2009 with necessary direction to SIPCOT. In the meantime, the fourth respondent has been insisting higher amount of stamp duty and therefore, the petitioner has filed W.P.No.36330 of 2007 for a direction against the fourth respondent to return the document and the said writ petition was allowed on 18.08.2008 directing the fourth respondent to return the document. Thereafter, the impugned notice in Form I came to be served on the petitioner on 15.09.2008 valuing the property at Rs.1,08,10,009/- and demanding deficit stamp duty of Rs.7,20,803/-.
4.In these cases, the common issue that has been raised by the learned counsel for the petitioners is that inasmuch as the sales have been effected at the supervision of this Court either the High Court of Madras or the High Court of Andhra Pradesh exercising the power under Companies Act, there is no question of any suppression of valuation. In fact, as per the Court order, the amount for which the property has been purchased in the public auction in the Court have been deposited in the Court and the High Court has confirmed the sale, based on which, the official liquidator has executed the sale deeds.
5.In such view of the matter, the contention of the learned counsel for the petitioners is that there is no suppression of the valuation and therefore Section 47A of Indian Stamp Act would not apply. He has also relied upon latest judgment of the Supreme Court in V.N.Devadoss Vs. Chief Revenue Control Officer cum Inspector and Others ((2009) 7 SCC 438) to substantiate the contention that for the purpose of invoking jurisdiction under Section 47A of the Act, the transfer must be for a fraudulent intention to evade payment of proper stamp duty. Therefore, according to the learned counsel, when once the sale has been effected under the supervision of the High Court, there is no question of any fraudulent intention to evade the payment of proper stamp duty and therefore, the entire proceedings under Section 47A are to be nullified.
6.On the other hand, Mr.P.S.Raman, learned Advocate General would submit that while it is true that the Supreme Court in the judgment rendered in V.N.Devadoss Vs. Chief Revenue Control Officer cum Inspector and Others (cited supra) has held that for the purpose of having jurisdiction under Section 47A, there must be a wilful and wanton intention. According to the learned Advocate General, Section 47A nowhere refers to the intention aspect of the parties in purchasing the properties for the purpose of undervaluation or evasion of stamp duty. When the stamp duty paid in an instrument has not disclosed the true value of the property in the mind of the registering authority, it is open to the registering authority to invoke his power under Section 47A. Therefore, according to the learned Advocate General, the aspect of intention is not required for the purpose of undervaluation under Section 47A.
7.On the admitted facts and circumstances of the case, the cases are to be decided only based on the latest judgment of the Supreme Court referred to above, wherein, the Apex Court while dealing with the powers and jurisdiction of the registering authority under Section 47A (1) and 3 of the Tamil Nadu Amendment Act, 1967 has held that under Section 47(A) (1) and (3) the intention of the legislature should have been that while deciding about the cases where the market value of the property has not been truly set out in the instrument, the basis of the powers to be exercised by the registering authority should be to find out as to whether there is a wilful undervaluation or otherwise. It was held by the Apex Court that unless there is a fraudulent intention to evade proper stamp duty, there is no power on the part of the registering authority to invoke jurisdiction under Section 47A. In fact, the Supreme Court has held about the market value which is changing concept and in cases where the property was offered for sale in an open market and bids were invited and in that case as per the direction of BIFR on the basis of the value fixed by the Assets Sales Committee, it was held that there was no possibility of any undervaluation and therefore the applicability of Section 47A was held invalid.
8.Some of the observations and findings of the supreme court which are relevant for the purpose of deciding these cases are as follows:
“13.Sub-sections (1) and (3) of Section 47-A clearly reveal the intention of the legislature that there must be a reason to believe that the market value of the property which is the subject matter of the conveyance has not been truly set out in the instrument. It is not a routine procedure to be followed in respect of each and every document of conveyance presented for registration without any evidence to show lack of bona fides of the parties to the document by attempting fraudulently to undervalue the subject of conveyance with a view to evade payment of proper stamp duty and thereby cause loss to the revenue. Therefore, the basis for exercise of power under Section 47A of the Act is wilful undervaluation of the subject of transfer with fraudulent intention to evade payment of proper stamp duty.
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16.Market value is a changing concept. The explanation to sub-rule (5) makes the position clear that (sic market) value would be such as would have fetched or would fetch if sold in the open market on the date of execution of the instrument of conveyance. Here, the property was offered for sale in the open market and bids were invited. That being so, there is no question of any intention to defraud the revenue or non-disclosure of the correct price. The factual scenario as indicated above goes to show that the properties were disposed of by the orders of BIFR and AAIFR and that too on the basis of value fixed by Assets Sales Committee. The view was expressed by the Assets Sales Committee which consisted of members such as representatives of IDBI, debenture-holders, Government of West Bengal and Special Director of BIFR. That being so, there is no possibility of any undervaluation and therefore, Section 47-A of the Act has no application. It is not correct as observed by the High Court that BIFR was only a mediator.
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18.On the facts of the case it cannot be said that Section 47A has any application because there is no scope for entertaining a doubt that there was any undervaluation. That being so, the High Court’s order is clearly unsustainable and is set aside. The registration shall be done at the price disclosed in the document of conveyance. There is no scope for exercising power under Section 47A of the Act as there is no basis for even entertaining a belief that the market value of the property which is the subject matter of conveyance has not been truly set forth with a view to fraudulently evade payment of proper stamp duty.”
9.Even though it is the vehement contention of the learned Advocate General that under Section 47A, nowhere the term intention of the parties to evade payment has been used and therefore, the word intention is not the necessary ingredient for the purpose of invoking jurisdiction under Section 47A. The Apex Court in no uncertain term has made it clear that the undervaluation should be with a fraudulent intention so as to enable the registering authority to invoke power under Section 47A. A bare reading of Section 47A is as follows:
“47-A. Instruments of conveyance etc., undervalued how to be dealt with: (1) If the registering officer appointed under the Indian Registration Act, 1908 (Central Act XVI of 1908) while registering any instrument of conveyance, exchange, gift, release of benami right or settlement, has reason to believe that the market value of the property which is the subject matter of conveyance, exchange, gift, release of benami right or settlement, 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 market value of such property and the proper duty payable thereon.”
10.The term used is that the registering authority should have reason to believe that the market value has not been truly setforth in the instrument and there is no specific mention about the wilful intention or fraudulent intention of the parties. There may be cases where the parties with wilful intention of evading payment of proper stamp duty may give undervaluation. But it cannot be stated especially in the light of the judgment of the Supreme Court that aspect has not been considered. In fact as elicited above in para 13 of the said judgment the Supreme Court has considered about the market value truly set out in the instrument and ultimately it was decided that the basis for exercise of powers under Section 47A is wilful undervaluation of the property which is the subject matter of transfer with fraudulent intention to evade payment of proper stamp duty.
11.In such view of the matter, the contention of the learned Advocate General to the contra is not acceptable. Based on the judgment of the Supreme Court, the writ petitions are allowed and the impugned orders are set aside with a direction to the registering authority to release the documents concerned within a period of four weeks from the date of receipt of a copy of this order. No costs. Consequently, connected miscellaneous petitions are closed.
12.In W.P.No.24301 of 2009, it is stated that the document has been returned with an endorsement of having a charge over the property by the Government under Section 47(A) (5) of the Indian Stamp Act. It is needless to state that the registering authority shall remove the said endorsement.
mmi
To
1.The Sub Registrar,
O/o. Sub Registrar,
Udumalpet.
2.The Official Liquidator,
High Court, Madras as
Official Liquidator of
Sri Muthukumaran Cotton Mills
Pvt. Ltd., Kuralagam,
Block 1, 1st Floor, Esplanade,
Chennai – 108.
3.The Secretary to Government,
Revenue Department,
Fort St. George, Chennai 9.
4.The District Revenue Officer
(Stamps),
O/o. The District Collector,
5th Floor, M.Singaravelar Maligai,
No.32, Rajaji Salai,
Chennai 1