* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 8th November, 2011.
+ W.P.(C) 13122/2009
% SEEMA GROVER SETH ..... Petitioner
Through: Mr. Anil Kathuria, Adv.
Versus
GOVT. OF NCT OF DELHI & ORS ..... Respondents
Through: Ms. Neha Kapoor, Adv. for Mr. N.
Waziri, Adv. for R-1.
Mr. Anil Sharma, Adv. for R-3.
AND
+ W.P.(C) 13888/2009
% GOVT. OF NCT OF DELHI ..... Petitioner
Through: Ms. Neha Kapoor, Adv. for Mr. N.
Waziri, Adv.
Versus
SANJAY GROVER & ANR. ..... Respondents
Through: Mr. Anil Sharma, Adv. for R-1.
Mr. Anil Kathuria, Adv. for R-2.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may Not necessary
be allowed to see the judgment?
2. To be referred to the reporter or not? Not necessary
W.P.(C) No.13122/2009 & W.P.(C) No.13888/2009 Page 1 of 24
3. Whether the judgment should be reported Not necessary
in the Digest?
RAJIV SAHAI ENDLAW, J.
1. Both petitions impugn the order dated 1st July, 2009 of the Additional
District Judge allowing the appeal preferred by Sh. Sanjay Grover under
Section 47-A of the Indian Stamp Act, 1899 as applicable to Delhi and
setting aside the order dated 19th August, 2008 of the Collector of Stamps,
Delhi. Notices of the petitions were issued. Pleadings have been completed
and the counsels have been heard.
2. The controversy concerns a Gift Deed registered on 1 st May, 2006.
Vide the said Gift Deed Sh. Chander Bhan Grover who was the father of the
Ms. Seema Grover Seth and Sh. Sanjay Grover gifted industrial plot
admeasuring 383.4 sq. yards of freehold land in the industrial area of Village
Naraina, Delhi together with two and half storeyed construction thereon to
Sh. Sanjay Grover. The property subject matter of gift was valued in the
said deed at `19 lacs and the Gift Deed was executed on Non-Judicial Stamp
Paper of `1,52,000/-. Sh. Chander Bhan Grover died shortly thereafter on
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6th September, 2006. Several legal proceedings are stated to be pending
between Ms. Seema Grover Seth and Sh. Sanjay Grover relating to the estate
of Sh. Chander Bhan Grover as well as pertaining to the Gift Deed aforesaid.
3. The order dated 19th August, 2008 (supra) of the Collector of Stamps
records that on 24th April, 2008, Ms. Seema Grover Seth made a complaint
that the Gift Deed aforesaid under valued the property gifted causing loss to
the Govt. Exchequer. The Collector on prima facie enquiry found a case of
evasion of stamp duty to have been made out; notices were issued to Sh.
Sanjay Grover as well as to the Tehsildar to furnish the valuation of the
property. The Tehsildar in his report dated 19th August, 2008 assessed the
value of the property at `1,34,72,050/- on the basis of “current market rate
of land” @s `35,000/- per sq. mtr. and construction cost in the year 2006 at
`300 per sq. ft. However the report does not give any basis for the rates
taken. Sh. Sanjay Grover of course supported the valuation at `19 lacs on
which stamp duty had been paid at the time of registration.
4. The Collector of Stamps in his order dated 19th August, 2008
observed/held:-
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(i) That the Govt. cannot be a mere spectator in such cases of
evasion and has to be a watchdog of revenue in public interest;
(ii) That as on 1st May, 2006 the circle rates had not been notified
and which came to be notified for the first time only on 18 th
July, 2007;
(iii) That under Sections 27 and 47-A of the Act it was obligatory
on the part of the executants of the Deeds to pay duty on the
market value or consideration whichever was higher and to give
all the facts of market value for the purposes of chargeability of
the stamp duty, which had not been done;
(iv) That the Registration had been obtained at the value of `19 lacs
on the basis of a report of a registered government valuer but
which report did not even claim the said value to be the then
market value of the property; there was thus nothing before the
Sub-Registrar while registering the Deed to conclude the
market value of the property as `19 lacs;
(v) The valuation report was on the basis of rate of land at ` 5,926/-
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per sq.mtr. and of which there was no basis and was an
eyewash;
(vi) That even the circle rates notified on 18th July, 2007 are not
market rates which are much above the circle rates;
(vii) That as per the circle rates notified on 18th July, 2007, the
market value of the property was `1,25,92,351/- and even if the
same was reduced @ 20% per year, the market value as on 1st
May, 2006 would not be less than `75,55,411/-;
(viii) That similarly even if the market value assessed by the
Tehsildar at `1,34,72,050/- was also reduced @ 20% per year,
the market value in 2006 was `80,83,230/-;
(ix) The Collector thus, by giving benefit of reduction in market
value @ 20% per year backwards from 18th July, 2007 when the
circle rates were notified, arrived at the market value of the
property at `75,56,000/- on which stamp duty of `6,04,480/-
was payable and thus held the stamp duty paid on the Gift Deed
to be deficit by `4,52,480/-.
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(x) The Collector of Stamps further held that it being a case of
evasion of stamp duty, penalty under Section 35 of the Act was
levyable and taking a lenient view imposed penalty of
`2,82,800/;
The Collector of Stamps thus directed Sh. Sanjay Grover to deposit
`7,35,280/- i.e. `4,52,480/- + `2,82,800/- within fifteen days and failing
which threatened proceedings under Section 64 read with Section 27 of the
Act and under other provisions of law.
5. Aggrieved from the aforesaid order of the Collector of Stamps, Sh.
Sanjay Grover first preferred a revision petition under Section 56 of the Act
before the Chief Controlling Revenue Authority and upon being informed of
the availability of the remedy of appeal under Section 47-A of the Act to the
District Court, thereafter preferred the appeal which has been allowed by the
Additional District Judge vide order dated 1st July, 2009 impugned in these
petitions.
6. Ms. Seema Grover Seth also appealed against the order of the
Collector contending that the valuation of the property at the time of gift was
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more than as assessed by the Collector.7. The Additional District Judge in the order impugned:
(a) Held that Section 47-A(3) of the Act which empowers the
Collector to suo moto within two years from the date of
registration of any instrument call for and examine the
instrument for the purpose of satisfying himself as to the
correctness of its values or consideration, included a case where
such suo moto powers are exercised on a complaint;
(b) Held Ms. Seema Grover Seth to have made the complaint
within two years of registration of the subject Gift Deed and the
action of the Collector of Stamps to be thus justified;
(c) Held that the test as per explanation to Section 47-A was of the
price which in the opinion of the Government or the Appellate
Authority, the property would have fetched if sold in the open
market on the date of execution of the instrument relating to
transfer of property;
(d) Held that the market value of the property, besides being
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governed by the cost of land and cost of construction wouldalso be affected by various other circumstances enveloping the
particular property like the encumbrances, vacant possession,
charges, disputes etc.;
(e) Held, that though the property aforesaid was self acquired
property of Sh. Chander Bhan Grover who was carrying on
business in the name and style of M/s Capital Engineers therein
but subsequently had converted the business from that of sole
proprietor to that of partnership of Sh. Chander Bhan Grover
and Sh. Sanjay Grover; that Sh. Sanjay Grover was in
possession of the property and even if Sh. Chander Bhan
Grover had sold the property at that time, he could not have
delivered the vacant possession thereof and which would have
depressed the price of the property;
(f) Held that the relationship between the donor and the donee also
has to be kept in mind by those determining the value of the
property;
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(g) That the circle rates are mere guidelines and not last word on
the valuation of the property. Reliance in this regard was
placed on R. Sai Bharathi Vs. J. Jayalalitha (2004) 2 SCC 9;
(h) That the construction of the property was old, of the year 1985;
(i) That the leasehold rights in the land underneath the property
had been converted into freehold on 5th April, 2006 on payment
of `2,88,567/- to DDA which was 50% of the un-earned
increase on the value of the property;
(j) That the valuation report of `19 lacs had taken into
consideration the CPWD rate of construction in the year of
construction;
(k) That it could not be said that the executants had tried to play
down the market value of the property;
(l) That the Collector had thus erred in holding that the property
had been undervalued;
(m) That the valuation at which the Deed was registered could not
be said to be so low as to raise suspicion and for the registering
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Sub-Registrar to have referred the matter to the Collector ofStamps;
(n) Consequently, the appeal of Sh. Sanjay Grover was allowed and
the appeal of Ms. Seema Grover Seth was dismissed.
8. Though the counsel for Sh. Sanjay Grover has also urged that the
powers under Section 47-A could have been exercised only within two years
of the registration of the document and the order dated 29th August, 2008 of
the Collector of Stamps after two years from the date of registration i.e. 1st
May, 2006 was bad but there is no merit in the said contention. The order of
the Collector records that the complaint was received from petitioner Ms.
Seema Grover Seth on 24th May, 2008 i.e. well within two years of 1st May,
2006. Once the power under Section 47-A had been invoked within the
prescribed time of two years, it cannot be said that the Collector is bound to
complete the proceedings within two years only. The proceedings in the
present case are found to have been conducted and concluded expeditiously.
9. Before adverting to the aspect of stamp duty, it is deemed expedient to
first deal with the order of the Collector of Stamps and insofar as imposing
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penalty of `2,82,800/-. Though the learned Additional District Judge inappeal has not dealt separately with the aspect of penalty but it is the
contention of Sh. Sanjay Grover that the Collector of Stamps in exercise of
powers under Section 47-A could not have imposed penalty and could have
at best directed making up of deficiency if any found in stamp duty.
Reliance in this regard is placed on Vardhman Properties Ltd. Vs. Collector
of Stamps, Govt. of NCT of Delhi AIR 2007 Delhi 214 holding that the
power under Section 40 of the Act to impose penalty can be exercised only
when the Collector impounds any instrument under Section 33 of the Act or
receives any instrument sent to him under Section 38(2) of the Act and not
otherwise. Per contra, the counsel for Ms. Seema Grover Seth contends that
the said judgment has not considered Section 47-A of the Act and is thus not
applicable; he contends that the power to impose penalty is implicit in
Section 47-A.
10. Though undoubtedly Section 47-A of the Act has not been considered
in the judgment supra but Section 47-A also does not empower the Collector
to levy penalty. I see no reason to take a different view from that already
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taken by this Court. The Legislature having restricted the power to imposepenalty to the eventualities under Sections 33 and 38(2) only, the Collector
cannot be held empowered to do something is not provided. Section 47-
A(3) expressly refers to deficient amount of duty only and not to any
penalty. Thus, it has to be necessarily held that exercise of power under
Section 47-A is limited only to imposition and recovery of deficient stamp
duty and not to penalty.
11. On the aspect of assessment of the market price, I am unable to accept
the reasoning given by the learned Additional District Judge. The market
price of the property subject matter of the Gift Deed could not by any stretch
of imagination be held to be depressed for the reasons of Sh. Sanjay Grover
being a partner in the business being carried on in the property or otherwise
being in possession of the said property. The Additional District Judge had
nothing on record to conclude that in the event of the property being sold as
on 1st May, 2006, it would not have been possible to deliver the physical
possession to the purchaser. A Gift Deed is always in consideration of, and
the subject Gift Deed expressly records the consideration thereof being the
W.P.(C) No.13122/2009 & W.P.(C) No.13888/2009 Page 12 of 24
natural love and affection between the donor and the donee. Thepresumption drawn by the learned Additional District Judge of the donee
even if already being in possession of the property not delivering the same to
the purchaser of the property from the donor is directly contrary to the
express contents of the document. In the face of such bonhomie between the
donor and the donee, there was no occasion for presumption that the sale of
the property would have been without physical possession. Moreover, as
contended by the counsel for Ms. Seema Grover Seth, the Gift Deed
expressly records that the possession of the property as on that date was of
the donor and had been delivered to the donee in pursuance to the gift. The
same also belies the presumption of the donee being in possession of the
property.
12. Unfortunately, the only other material before the Collector of Stamps
and the Additional District Judge for determination of the market value of
the property was the circle rate which had come into force a little over one
year before the date of registration, and the report of the Tehsildar. The
Tehsildar also as aforesaid did not give any basis for the rates at which the
W.P.(C) No.13122/2009 & W.P.(C) No.13888/2009 Page 13 of 24
computation was made. The rate of construction of the year 2006considered by the Tehsildar in any case was an error when construction was
admittedly old.
13. The Additional District Judge also has rightly not taken the said report
into consideration and the Collector of Stamps has used the same only in
support of backward calculation done on the basis of the circle rates declared
subsequently.
14. Both counsels have cited a number of judgments on the aspect of
valuation; though I do not find the same to be of much relevance but to
complete the record, mention must be made thereof.
15. The counsel for Ms. Seema Grover Seth has referred to:
(i) Lal Chand Vs. Union of India (2009) 11 SCALE 627 though
on the aspect of determination of compensation for acquisition
of land but holding that circle rates when determined statutorily
and by expert committees constituted for the said purpose can
form the basis for determination of the market value unless
rebutted;
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(ii) Govt. of Andhra Pradesh Vs. Smt. P. Laxmi Devi AIR 2008
SC 1640 holding Section 47-A of the Stamp Act as applicable
in Andhra Pradesh imposing precondition for deposit of 50% of
the deficit duty before hearing the appeal to be not
unconstitutional. I may notice that it has been the contention of
the petitioners that the Collector and Additional District Judge
has committed an error in not directing Sh. Sanjay Grover to
deposit the 50% of the deficit stamp duty before hearing the
appeal. However there is no provision in this regard in Section
47-A as applicable to Delhi or in the Delhi Stamp (Provision of
Undervaluation of Instrument) Rules, 2007. Moreover, this
Court has been approached after the order of the Additional
District Judge in appeal and at which stage the said question has
no relevance;
(iii) U.P. Jal Nigam, Lucknow Vs. Kalra properties Pvt. Ltd. AIR
1996 SC 1170 again on the principles of market value of land
acquisition cases;
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(iv) Jawajee Nagnatham Vs. Revenue Divisional Officer,
Adilabad (1994) 4 SCC 595. The counsel has been unable to
show as to how the same is of any assistance;
(v) Duncans Industries Ltd. Vs. State of U.P. AIR 2000 SC 355
on the scope of judicial interference in the stamp duty
determined by the authorities under the Stamp Act;
(vi) R. Rajalakshmi Vs. The Revenue Divisional Officer AIR 1989
Madras 96 laying down that no presumption can be drawn in
the matter of valuation;
(vii) Kaka Singh Vs. The Additional Collector AIR 1986 Allahabad
107 also laying down that the Collector in exercise of power
under Section 47-A is not to levy any penalty;
(viii) Though the Guidelines for Valuation of Immovable Properties,
2009 of the Directorate of Income Tax are also filed but no
reliance thereon has been placed.
16. The counsel for Sh. Sanjay Grover referred to:
(i) V.N. Devadoss Vs. Chief Revenue Control Officer-cum-
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Inspector 2009 XI AD (SC) 608 laying down that for power
under Section 47-A to be invoked there must a reason to believe
that the market value of the property has not been truly set out
in the instrument and it is not a routine procedure to be
followed in respect of each and every document of conveyance
presented for registration; that without any evidence to show
lack of bona fides of the parties to the document or fraudulent
attempt to under value the subject of conveyance with a view to
evade payment of proper stamp duty and cause loss to the
revenue, power under Section 47-A cannot be exercised.
(ii) State of Punjab Vs. Mohabir Singh AIR 1996 SC 2994
holding that guidelines prescribed for valuation of property are
inconsistent to exercise the power under Section 47-A.
(iii) Sitaram Vs. The State of Madhya Pradesh AIR 1980 Madhya
Pradesh 4 holding that Section 47-A has no retrospective
operation.
(iv) Ponnavolu Sasidar Vs. Sub-Registrar, Hayatnagar AIR 1992
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Andhra Pradesh 198 relating to the local statute and having noapplication here.
(v) Abhinav Kumar Vs. State of Haryana 2001 (1) Punjab Law
Reporter 598 holding that reference under Section 47-A can be
made immediately after registration of the document and not
thereafter. However the present is not a case of reference but of
the Collector of Stamps taking up the matter on a complaint.
(vi) Mulakh Raj Vs. State of Haryana AIR 2001 Punjab and
Haryana 61 also relating to the local statute but laying down
that the Collector in exercise of power under Section 47-A has
to arrive at objective satisfaction and on reasonable belief that
the valuation set out in the instrument is not true.
(vii) Smt. Shanti Devi Prasad Vs. The State of Bihar AIR 2001
Patna 161 holding that powers under Section 47-A can be
exercised only in case of fraudulent evasion of payment of
stamp duty.
(viii) S. Jayalakshmi Vs. Government of Tamil Nadu AIR 2003
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Madras 142 laying down that without any material to indicateundervaluation or fraudulent evasion of stamp duty power
under Section 47-A cannot be invoked.
(ix) State of M.P. Vs. P.B. Menon AIR 2004 Madhya Pradesh 117
holding that the Court in exercise of power under Articles 226
& 227 cannot substitute valuation unless it is shown to be
wholly perverse and unrealistic.
(x) S.R. Sengotavelu Vs. District Collector, Namakkal AIR 2004
Madras 233 holding the guidelines for valuation as maintained
in that State to be not statutory.
(xi) Sarvahitkarini Sahkari Awas Samiti Ltd. Vs. State of Uttar
Pradesh AIR 2006 Allahabad 29 holding that market value has
to be determined on the date of transaction and not on the basis
of subsequent events.
(xii) Brij Nandan Singh Vs. State of Bihar AIR 2007 Patna 4 also
on the aspect of valuation to be of the date of transaction.
(xiii) Vijaya Vs. The Inspector General of Registration AIR 2007
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Madras 276 not at all relevant to the controversy.
(xiv) Shailendra Vs. Chief Controlling Revenue Authority AIR
2007 (NOC) 174 Allahabad also laying down that in exercise of
power under Section 47-A no penalty can be levied.
17. In the aforesaid state of affairs, the option of setting aside both, the
order of the Additional District Judge as well as of the Collector of Stamps
has been considered. However the Supreme Court recently in State of
Uttaranchal Vs. Sunil Kumar Vaish 2011 (9) SCALE 131 has criticized the
practice of Courts remanding the matters and has laid down that an
endeavour should be made to decide the controversy finally. I have
therefore proceeded to consider the matter.
18. The Collector of Stamps in the present case held the valuation of `19
lacs on which stamp duty was paid to be grossly inadequate in the light of
the circle rates which had come into force a little over one year after the date
of registration in the present case. The Registrar also gave a rebate at the
rate of 20% per year for two years in such valuation though the transaction
as aforesaid was only a little over one year old. Such mode of valuation is
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not unknown. The whole purpose of prescribing the circle rates was to
address the malaise of undervaluation of properties. Sh. Sanjay Grover has
not challenged the said circle rates. It is an admitted fact that with effect
from the circle rates coming into force the instruments are being accepted
for registration at valuation not below the said circle rates. The Additional
District Judge has not given any reason whatsoever for disagreeing with the
said formula applied by the Collector of Stamps. It cannot be lost sight of
that the Collector of Stamps is the statutory body empowered to determine
the valuation. Though the appeals against the orders of the Collector of
Stamps have been provided under Section 47-A to the District Court but the
District Court ought not to interfere lightly with the findings of such expert.
The Additional District Judge in the present case has given only the reason
of the donee being in possession of the property for disagreeing with the
valuation arrived at by the Collector of Stamps. It can also not be lost sight
of that even the Tehsildar, though without giving any basis arrived at about
the same valuation as arrived at by such backward calculation from the date
of coming into force of the circle rates.
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19. The judgments aforesaid relied upon by the counsel for Sh. Sanjay
Grover to contend that the power under Section 47-A are to be exercised
only in case of fraudulent undervaluation turn on their own facts. The same
were transactions either of public auction or by government bodies and in
which context the Court observed that there was no material to show that the
valuation was not genuine. The same is not the position here. The averment
of Ms. Seema Grover Seth is that Sh. Sanjay Grover illegally got the Gift
Deed executed from the father shortly before the demise of the father. A gift
even otherwise is a transaction in which the two parties are not adversarial
but are in unison. An endevour to save on the stamp duty is not uncommon
and judicial notice thereof can be taken. From the fact that the respondent
Sh. Sanjay Grover got the Gift Deed executed from his father shortly before
his demise on payment of stamp duty by incurring stamp duty shows that he
was expecting trouble from Ms. Seema Grover Seth. In the circumstances,
an attempt at undervaluation cannot be ruled out.
20. I may notice that it was the case of Ms. Seema Grover Seth in the year
2008 that the market value of the property was over `3 crores and she had
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offered to pay `1,50,00,000/- to Sh. Sanjay Grover towards his 50% (as per
Ms. Seema Grover Seth) share in the same. The same also according is a
reliable indice of the market value of the property and which has been
ignored by the Additional District Judge. The Additional District Judge
without reaching any finding that the market value of the property was
anything lower than that determined by the Collector of Stamps ought not to
have set aside the same.
22. The petitions therefore partly succeed; the order of the Additional
District Judge insofar as setting aside the order of the Collector of Stamps
qua deficiency in stamp duty is set aside and Sh. Sanjay Grover is directed to
within one month hereof deposit the deficient stamp duty of `4,52,480/- with
the Collector of Stamps together with interest at the rate of 10% per annum
from 1st May, 2006 and till the date of payment, failing which the Collector
of Stamps shall proceed in accordance with law.
21. As far as the order of the Additional District Judge dismissing the
appeal preferred by Ms. Seema Grover Seth is concerned, she has been
unable to bring any material before the Court to justify that the valuation
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was anything more than as determined by the Collector. Her offer of `3
crores alone, when she is litigating with Sh. Sanjay Grover cannot be a
ground for interfering with the order of the Collector of Stamps.
No order as to costs.
RAJIV SAHAI ENDLAW
(JUDGE)
NOVEMBER 08, 2011
bs
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