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SCA/9888/2008 10/ 10 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 9888 of 2008
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SPENTEX
INDUSTRIES LTD - Petitioner(s)
Versus
STATE
OF GUJARAT & 3 - Respondent(s)
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Appearance :
MS
PJ DAVAWALA for Petitioner(s) : 1,
MR NEERAJ
SONI AGP for Respondent(s) : 1-3,
MR PRAFUL KHAKHKHAR for
Respondent(s) :
4,
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CORAM
:
HONOURABLE
MR.JUSTICE ANANT S. DAVE
Date
: 25/09/2008
ORAL
ORDER
Rule.
Mr.Neeraj Soni, learned AGP, waives service of notice of rule for
respondents Nos.1 to 3. Mr.Praful Khakhkhar waives service of notice
of rule for respondent No.4.
Challenge
in this petition under Articles 226 and 227 of the Constitution of
India is made to the orders dated 21.1.2008 passed by respondent
No.2 which came to be confirmed in appeal by an order dated 6.6.2008
of respondent No.1, on the ground that both the authorities have
passed orders dehors the provisions of principles of natural justice
and therefore orders deserve to be quashed and set aside.
It
is the case of the petitioner that the petitioner purchased the
property in question for which sale deed came to be executed between
Bank of India and the petitioner company for immovable properties on
13.3.2006. It is not in dispute that though the bank had made all
efforts to fetch the highest price of the property, but no bidder
came forward and ultimately the property of the company viz. Tai
Chiongbang Textile Industries Limited was purchased by the
petitioner company. The sale consideration, as disclosed by the
petitioner, was Rs.19.50 crores for purchase of the said property
exclusive of liabilities towards wages/salaries to workman, gratuity
/ other dues to Gujarat Electricity Board, Sales Tax, Excise duty.
Thus, on bifurcation of the value of the land and machinery for
which petitioner paid stamp duty of Rs.46,70,400/- on the instrument
of sale deed submitted for registration and the above payment of
stamp duty of the petitioner was on the basis of the the valuation
done by the bank as mentioned in the sale deed i.e. Rs.5,56,00,000/-
towards land.
A
show cause notice dated 30.4.2007 was issued by the Deputy
Collector, Stamp Duty Valuation, City Division-2, Ahmedabad under
Rule 4 of Bombay Stamp (Determination of Market Value of Property)
Rules, 1984 (for short Rules, 1984 ) and the petitioner was
called upon to furnish relevant material in the form of evidence in
support of payment of stamp duty and market price assessed by the
petitioner. It was further stated that the stamp duty paid by the
petitioner was not as per correct assessment of the market price of
the land, and therefore, the petitioner was asked to show cause as
to why Rs.1,91,63,450/- should not be recovered towards deficit
stamp duty on land and machinery and penalty.
Reply
dated 12.7.2007 was furnished by the petitioner and it was submitted
that the property in question was purchased by the petitioner after
undergoing negotiation with the respondent bank and as per the terms
and conditions of the agreement movable plant and machinery was sold
to the petitioner as per price mentioned in the sale deed.
However,
the competent authority i.e. The Deputy Collector Stamp Value,
Ahmedabad passed the order on 21.1.2008 observing that the
explanation rendered by the petitioner was not acceptable and report
dated 30.4.2007 of the Planning Assistant indicate market price of
the property, land and additional construction as Rs.11,82,55,800/-
and after considering the recommendation made by the Planning
Assistant in the report dated 30.4.2007, competent authority passed
an order directing the petitioner to pay Rs.1,05,60,000/- after
deducting the paid stamp duty at the time of presentation of the
document. It is to be noted that while passing the above order the
competent authority disagreed with the report of the Planning
Assistant with regard to deduction of 25% area of the total
measurement of the land and 5% deduction in the total valuation.
In
the appeal preferred by the petitioner various grounds were raised
including non-supply of the report of the Planning Assistant,
recital of the sale deed and price mentioned therein which was
determined after negotiations with the nationalized bank of
purchasing of the property by the petitioner. Relevance was placed
on various authorities of this Court. Next it was contended that
procedure under Rules 4 and 8 of the Rules, 1984 was not valid.
However, Appellate Authority confirmed the order passed by the
competent authority and the appeal preferred by the petitioner came
to be rejected. While rejecting the appeal, the Appellate Authority
believed that there was possibility under valuation of land, since
price of the machinery was four times more than the land. The
Appellate Authority even doubted procedure undertaken by the sister
concern of the petitioner and even decisions relied by the
appellant-petitioner were found not applicable.
Ms.P.J.Davawala,
learned counsel for the petitioner, submitted that exercise of power
by the Competent as well as Appellate authorities is not in
consonance with principles of natural justice and contrary to law
laid down by this Court in two cases viz. (1) Buthabhai
Merabhai Bharwad v. State of Gujarat reported in 2004(0) GLHEL
201925 and (2) Nandadevi Dineshkumar Sharma v. Chief
Controlling Revenue Authority reported in 2006(2) GLH 775,
where this Court found that burden of proof is upon the stamp duty
valuation authority while justifying fixation of higher market value
than revealed in the Deed of Conveyance. It is further held in the
above decisions that Rules 4 and 8 of the Rules, 1984 and procedure
prescribed therein is mandatory. Learned counsel for the petitioner
submitted that reliance was placed on the report dated 30.4.2007
while passing order by the competent authority on 21.1.2008, but the
same was never supplied to the petitioner. No rational or
justification put-forth by the authority for enhancing market value
of the property. Thus, according to learned counsel for the
petitioner, the order of competent authority was contrary to law
laid down by this Court and while confirming the same the Appellate
Authority committed grave error by not even dealing with various
grounds raised by the petitioner in appeal and arrived at a
conclusion on the basis of wrong presumption and assessment about
transaction which took place between the petitioner and the
nationalized bank by which the property in question came to be
purchased by way of private negotiation. It is next contended that
purchase of property in question by the petitioner was after
exhausting all efforts by the respondent bank to sell the property
of the company and since no bidder approached the bank even after
public advertisement in two widely circulated vernacular and English
newspapers, the bank was constrained to enter into private
negotiation and any doubt expressed by the Appellate Authority is
based on surmises and conjectures. Even merger of CLC Global
Limited and the petitioner company was likely to take place
immediately. Lastly, it is submitted that both the authorities viz.
Competent and appellate failed to take into consideration the nature
of recital in the sale deed and therefore the impugned orders
deserve to be quashed and set aside.
Learned
AGP relying on the report submitted by the Planning Assistant for
valuation of the property in question and submitted that since the
property was under-valued and stamp duty paid by the petitioner was
not in accordance with the schedule fixed for such kind of
conveyance, and the competent authority has passed the order after
following procedure viz. issuance of show cause notice and hearing
the petitioner and same was confirmed in appeal, do not deserve any
interference in exercise of power under Articles 226 and/or of the
Constitution of India.
Having
heard learned counsel for the parties and perusing the record of the
case, including impugned orders, I am inclined to accept the
submissions of learned counsel for the petitioner that there is
breach of principles of natural justice inasmuch as when the show
cause dated 30.4.2007 was issued to the petitioner, the petitioner
was asked to furnish proof in support of market value as assessed by
the petitioner and revealed in the deed of conveyance, which is
quite contrary to provisions of Rules 4 and 7 of the Rules, 1984 and
against the law laid down by this Court in cases of Buthabhai
Merabhai Bharwad and Nandadevi Dineshkumar Sharma
(supra) where learned Single Judges have held as under :-
7. Rule 4 of the Rules reads as under :
4(1) on receipt of the instrument under
sub-section (3) of section 31 or sub-section (1)
of section 32A, the Collector of the District,
where he things fit to do so, may for the purpose
of his inquiry :-
(a) call for any information or record having
bearing, on the question before him from any
public office, officer or authority under the
Central Government, State Government or any local
authority ;
(b) examine and record statements from any member
of the public, officer or the authority under the
Central Government or State Government or any
local authority, and
(c) inspect or empower any officer under him to
inspect the property after due notice to the
parties concerned.
(2) After examining the said information, records
and evidence, if any before him the Collector of
the District shall issue a notice showing he
basis on which true market value of property and
proper duty payable thereon has been
provisionally determined by him, to every person
to whom according to the provisions of section 30
is liable to pay stamp duty in respect of such
instrument requiring such person to submit within
15 days from the date of the service of the
notice upon such person, his representation in
writing alongwith all the evidence in support of
such representation.
(3) The Collector of the District shall after
considering the representation, if any, received
by him under sub-rule(2) pass an order
determining the true market value and the proper
duty payable on the instrument.]While determining the true market value of the property,
the Collector is required to consider so many aspects
which are reflected in Rule 8 of the Rules. Rule 8 of
the rules reads as under :
8. Principles to be taken into consideration for
determination of market value – The Collector of
the District shall while determining the true
market value of a property which is the subject
matter of an instrument take into consideration
primarily the capitalized value of the property
i.e. the amount of money whose annual interest
at the highest prevailing interest at any given
time is its net annual income, and also the
following factors, namely :-
a) in the case of agricultural land,
(i) classification of land under the provisions
of the Bombay Land Revenue Code, 1879 ;
(ii) the rate of the land revenue ;
(iii) the nature of crops raised on the land ;
(iv) average yield from the land, its nearness to
road and market, its distance from village site
road to land, facilities available for irrigation
and also for transport of produce of such land ;
(v) value of adjacent land or land in vicinity ;
(vi) any factors mentioned in the instrument
which is relevant for the purpose of
determination of true market value ;
(vii) any other factor which the Collector of the
District things to have a bearing on the
valuation of the land ;
(b) in the case of non-agricultural land, –
(i) the general value of non-agricultural land in
the vicinity ;
(ii) facilities such as road, railway station,
bus route, shops, market and the like available
in the vicinity of the land ;
(iii) amenities like public offices, hospitals
and educational institutions available in the
vicinity of the land ;
(iv) development activities including Development
of industries in the vicinity of the land ;
(v) any factors mentioned in the instrument which
is relevant for the purpose of determination of
true market value ;
(vi) any other factor which the Collector of the
District thinks to have a bearing on the
valuation of the non-agricultural land ;
(c) in the case of buildings, –
(i) the area of construction ;
(ii) the floor space index ;
(iii) type and structure ;
(iv) year of construction ;
(v) kind of material used ;
(vi) locality in which constructed ;
(vii) rate of depreciation ;
(viii) any factors mentioned in the instrument
which is relevant for the purpose of
determination of true market value ;
(ix) any other factor which the Collector of the
District thinks to have a bearing on the
valuation of the building ;
(d) in the case of any other property, –
(i) the nature and condition of the property ;
(ii) purpose for which the property is being put
to use ;
(iii) any factors mentioned in the instrument
which is relevant for the purpose of
determination of true market value ;
(iv) any other factor which the Collector of the
District things to have a bearing on the
valuation of the property;
Now considering Rule 4 of the Rules, on receipt
of the instrument under sub-section 3 of Section 31 or
sub-section 1 of section 32-A, the Collector of the
District may for the purpose of his inquiry call for
information or record and examine the record and
thereafter under sub-rule 2 of Rule 4, after examining
the aforesaid information, record and evidence, if any,
before him the Collector of the District shall issue
notice showing the basis on which true market value of
the property and the proper duty payable thereon has been
provisionally determined by him to every person to whom
according to provisions of Section 30 is liable to pay
stamp duty in respect of such instrument requiring such
person to submit within 15 days from the date of service
of the notice upon such person, his representation in
writing along with all the evidence of such
representation and considering the representation, if
any, the Collector is required to pass appropriate order
determining the true market value. As stated above while
considering and determining the true market value, the
Collector is required to consider the principles which
are enumerated in Rule 8. Thus, considering the
aforesaid provisions, it is the duty of the Collector to
issue notice showing the basis on which provisional
market value of the property has been determined by him
on inquiry held by him under Rule 4(1) of the Rules. In
the present case, no basis have been shown by the
Dy.Collector while determining the provisional market
value and the onus is shifted on the petitioner to
produce evidence which is contrary to Rule 4 of the Rules
itself. The petitioner is not made aware of the basis
determining the provisional market value of the property
in question fixed by him. Thus, no opportunity has been
given to the petitioner to meet with the basis or
evidence with the Dy.Collector while determining the
provisional market value. Thus, the impugned order
itself passed by the respondent no. 2 which is based
upon the notice under Rules is itself defective and
contrary to Rule 4 and is required to be quashed and set
aside .
Thus,
the above aspect of furnishing proof of market value as revealed in
the deed of conveyance was wrongly considered and the Appellate
Authority also did not apply its mind about mandatory requirement of
Rules 4 and 8 of the Rules, 1984, therefore, the impugned orders
deserve to be quashed and set aside.
It
is to be noted that report of the Planning Assistant and show cause
notice issued to the petitioner were on the same date i.e.
30.4.2007. That heavy reliance was placed on the report of the
Planning Assistant and copy of the same was never supplied to the
petitioner. Thus, on this ground also impugned orders deserve to be
quashed and set aside.
So
far as reasoning of the Appellate Authority with regard to
under-valuation of land and over-valuation of the machinery is
concerned, there is no basis for arriving at such a conclusion and
the same is based on surmises and conjectures. The transaction
which has taken place between the petitioner and the nationalized
bank-respondent No.4 herein was in accordance with law and after
following procedure, as envisaged and as a last resort when no
bidder put forth its claim pursuant to the public advertisement in
two newspapers.
In
the above circumstances, orders dated 6.6.2008 passed by the
respondent No.1 and order dated 21.1.2008 passed by respondent No.2
are quashed and set aside and the authority concerned is directed to
take fresh decision in the matter after affording opportunity of
hearing to the petitioner and considering the law laid down by this
Court in various decisions including the above two decisions, within
a period of 3 months from the date of the receipt of the writ of
this order.
Rule
is made absolute to the aforesaid extent only.
(ANANT S. DAVE, J.)
*pvv
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