IN THE HIGH COURT OF KERALA AT ERNAKULAM
CRP No. 2341 of 2002()
1. SMT.ALAMMA CHACKO,
... Petitioner
2. I.T.H. & COMPANY, C.C.NO.46/9635,
Vs
1. THE DISTRICT REGISTRAR (AUDIT),
... Respondent
2. THE SUB REGISTRAR, ERNAKULAM.
For Petitioner :SRI.V.M.KURIAN
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice K.T.SANKARAN
Dated :22/02/2008
O R D E R
K.T.SANKARAN, J.
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C.R.P. NO. 2341 OF 2002 G
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Dated this the 22nd February, 2008
O R D E R
The petitioners challenge in this Revision the judgment dated
5.9.2002 in C.M.A.No.20 of 2000, on the file of the Court of the District
Judge of Ernakulam, by which the court below allowed the appeal in part
and set aside the order dated 10.1.2000 passed by the District Registrar
(Audit), Ernakulam under Section 45(B) of the Kerala Stamp Act. The
grievance of the petitioners is that the appeal filed by them was not
allowed in full by the court below.
2. The second petitioner is a registered firm, namely, I.T.H. &
Company. The partnership runs hotel business under the name and style
“International Hotel” at Ernakulam. The first petitioner is one of the
partners of the second petitioner firm. The contention of the petitioners,
inter alia, are the following: Late K.C.Chacko, husband of the first
petitioner, was carrying on the hotel business as a proprietary concern.
On 1.4.1966, a partnership was formed in which K.C.Chacko and two
other persons were partners. The property in question, namely, 72 cents
of land in Sy.No.412/3 of Ernakulam Village, was brought in as the capital
of K.C.Chacko in the firm. That property was acquired by K.C.Chacko as
per sale deed Nos.326/1959 and 2645/1963, Sub Registrar’s Office,
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Ernakulam. The other two partners contributed cash as their capital. All
the three persons were having equal shares in the net profit and loss of
the firm. Since 1.4.1966 the firm became the owner of the property in
question. Improvements were made and buildings were constructed in
the property investing the funds of the firm. The jenm right of the property
was purchased by the firm from the Jenmi in the year 1996. Basic tax
was being paid by the firm in the firm name. The property ceased to be
the property of K.C.Chacko and it became the property of the firm.
3. K.C.Chacko died on 3.12.1978. The firm was reconstituted on
14.12.1978. The first petitioner was taken in as a partner. In 1998, the
legal heirs of K.C.Chacko partitioned the properties as per partition deed
No.5246 of 1998, Sub Registrar’s Office, Puthencruz. The nominal right
of K.C.Chacko in the property in question was allotted to the share of the
first petitioner, widow of K.C.Chacko. The nominal right of the first
petitioner was transferred by gift deed No.2850 of 1999, valuing the same
at Rs.One lakh.
4. It is stated that the first respondent, District Registrar, issued a
notice dated 4.8.1999 to the first petitioner under Rule 4 of the Kerala
Stamp (Prevention of Undervaluation of Instruments) Rules, 1968,
wherein it was stated that the proper stamp duty would be Rs.13,36,500/-
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and that a registration fee of Rs.1,98,000/- would be payable.
Objections were filed by the first petitioner. It is alleged that without
considering the objections, the first respondent issued a provisional
order under Section 45(B) of the Kerala Stamp Act. In the said order
value of the property was fixed at Rs.15,66,05,000/- and the stamp
duty and registration fee payable were shown as Rs.2,11,28,175/-
and Rs.31,30,100/- respectively. Objections were filed by the first
petitioner. The first respondent passed an order dated 10.1.2000
confirming the provisional order. The order dated 10.1.2000 was
challenged by the petitioners in C.M.A.No.20 of 2000, on the file of
the District Court, Ernakulam. Learned District Judge disposed of
the appeal by judgment dated 5.9.2000 setting aside the order
passed by the District Registrar and directing the District Registrar to
pass a fresh provisional order in accordance with law and in the light
of the observations contained in the judgment. The judgment
rendered by the court below is under challenge in this Revision.
5. Learned District Judge rejected the contention raised by
the petitioners that there is no market value at all for the right
transferred under the gift deed No.2850/1999. The court below held
that even the petitioners had accepted that there is market value for
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the property and it was assessed at Rs.One lakh. Therefore, it was
held that there is no merit in the contention raised by the petitioners
that there is no market value at all for the right transferred under the
gift deed. The court below also rejected the contention raised by the
learned Government Pleader that gift deed in question is not a bona
fide one. It was also held that the property in question was the
contribution of late K.C.Chacko as his capital in the firm. It was
further held that for the gift deed, stamp duty had to be paid ad
valorem on the value of the property transferred. It was held that the
value of the property was not correctly ascertained. The court below
held that the District Registrar had not followed the procedure under
Rules 4 and 5 of the Kerala Stamp (Prevention of Undervaluation of
Instruments) Rules, 1968 and that it is impossible to ascertain the
basis on which the District Registrar came to the conclusion that the
value of the right transferred under the gift deed was
Rs.15,66,05,000/-. On these findings, the order passed by the
District Registrar was set aside and he was directed to pass a fresh
provisional order in accordance with Rule 5. The District Registrar
was directed to afford an opportunity to the petitioners to make their
submissions against the provisional order and to pass a considered
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order under Section 45(B) of the Kerala Stamp Act.
6. The contentions raised by the petitioners are the following:
a) There is no undervaluation. b) There is no conveyance/transfer of the property as per the
document in question and what is transferred is only the nominal
jenm right.
c) The property was already owned by the partnership and it was in
the possession of the firm.
d) The value was correctly shown in the document. In the
proceedings under Section 33, it was found that the value was
correctly stated in the document and, therefore, a different
conclusion is not possible thereafter.
e) After 1.4.1966, K.C.Chacko had no ownership or possession over
the property under Section 14 of the Indian Partnership Act. The
court below was not right in holding that the first petitioner had
rights in the partnership property including the property in question.
What was gifted was only the right which remained with late
K.C.Chacko.
f) At the time of transfer, the transferor, namely, the first petitioner,
had no title or right over the property.
g) The instrument is not a conveyance.
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h) On retirement, a partner ceased to have any right or interest in the
property and his right is only to recover what is due on settlement
of accounts. Therefore, at the time when the document in question
was executed, the first petitioner had no right or interest over the
property.
i) What was sought to be transferred was the nominal right of the first
petitioner, her name being there in the Revenue records and other
official records, so as to make the assignee’s name to be entered
in the official records.
j) The court below should have allowed the appeal in its entirety and
should have set aside the entire proceedings of the District
Registrar.
7. The learned Government Pleader, on the other hand,
contended that the order passed by the District Registrar is a legal and
proper one. It was also submitted by the learned Government Pleader
that the finding of the court below that the landed property was
contributed as the capital of the firm by K.C.Chacko is not correct on the
face of the partnership deed. He also submitted that the document in
question is not a bona fide transaction and that stamp duty and
registration fee are payable on the market value of the property. On
dissolution of the firm, the property of the partnership would vest in all the
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partners of the firm and a partner can assign his rights in the firm to any
one. However, the transferee is not entitled to be a partner in the firm.
On a transfer so made by a partner in the property of the firm, the value of
such interest transferred shall be the market value of his due share for the
purpose of stamp duty and registration fee. The property was
undervalued to evade payment of stamp duty and registration fee.
8. After carefully considering the contentions raised by the parties,
the order and judgment, as well as the records of the case, I am of the
view that the direction issued by the learned District Judge to consider the
matter afresh was only legal and proper. I agree with the reasoning and
conclusion made by the learned District Judge that there was infraction of
Rules 4 and 5 and that the procedure was not properly followed by the
District Registrar. However, I am of the view that the learned District
Judge should have directed the District Registrar to consider all the
contentions raised by both the parties afresh. Whether the property in
question became the partnership property, whether the value shown in
the document is legal and proper, whether the transaction is genuine and
whether only the nominal rights were transferred as contended by the
petitioners are all matters forming a series of circumstances which should
be considered while deciding the case. I am of the view that the learned
District Judge need not have arrived at a finding that the property was not
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properly valued in the document and that the property was transferred to
the firm as capital of late K.C.Chacko. These findings are also vacated.
The entire case is remanded for fresh consideration by the District
Registrar. The District Registrar shall consider all the objections and
contentions raised by both the parties and dispose of the case afresh.
The District Registrar shall pass a reasoned order touching upon all the
contentions raised by both the parties.
In the result, the Civil Revision Petition is allowed in part and the
judgment impugned is set aside in so far as it relates to the concluded
findings rendered by the learned District Judge except those which are
confirmed as per this order. It is made clear that the finding that the
District Registrar had not complied with the procedural formalities and that
there was no proper disposal of the case by the District Registrar is
confirmed. The direction to pass a fresh provisional order as indicated in
paragraph 10 of the judgment impugned and the other directions in
paragraph 10, are also confirmed. The District Registrar shall dispose of
the matter afresh in the manner indicated above. No order as to costs.
(K.T.SANKARAN)
Judge
ahz/
K.T.SANKARAN, J.
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C.R.P.NO. 2341 OF 2002 G
O R D E R
22nd February, 2008
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