V.N. Devadoss Vs.
Chief Rev. Control Officer-Cum-Ins. & Ors  INSC 1017 (8 May 2009)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 3411 OF 2009 (Arising
out of SLP (C) No. 3920 of 2007) V.N. Devadoss ..Appellant Versus Chief Revenue
Dr. ARIJIT PASAYAT,
in this appeal is to the order passed by a Division Bench of the Madras High
Court in appeal filed under Section 47-A of the Indian Stamp Act, 1899 (in
short the `Act'). The appeal was filed against the order passed by Chief Revenue
Control Officer-cum-Inspector General of Registration, Chennai in proceedings
Pa.Mu.No.22947/NI/2005 dated 8.2.2006 confirming the order of the District
Revenue Officer (Stamps), Office of the District Collector, Chennai in
proceedings Na. K.C.
controversy lies within a very narrow compass.
According to the
appellant, an extent of 60.86 acres of land comprised in S. Nos. 330, 338, 473,
552 etc. situate at Ambattur Taluk, Tiruvallur District, which was previously
owned by Dunlop India Limited, a Public Limited Company. The said Company
became a sick industry and was declared so under the Provisions of Sick
Industrial Companies (Special Provisions) Act, 1985 (in short `1985 Act')
Consequent to such declaration, for the purpose of rehabilitation, surplus
properties and assets belonging to the said company were sought to be disposed
of by the statutory authorities under the said Act such as Board For Industrial
and Financial Reconstruction (BIFR) and Appellate Authority for industrial and
Financial Reconstruction (AIFR) by forming an Asset Sales Committee (ASC)
consisting of members such as representatives of IDBI, Debenture Holders,
Government of West Bengal and Special Director of BIFR. In compliance with the guidelines
issued by the statutory authorities (BIFR & AIFR), the ASC made
publications in Newspapers about its proposal to sell the above mentioned 60.86
acres of lands and invited tenders in sealed covers from interested persons.
The appellant submitted his tender along with others and his offer of
Rs.24,34,40,000/-, at the rate of Rs.40 lakh per acre, was the highest.
Accordingly, his tender was accepted by the ASC as well as by the statutory
authorities. The company was granted permission to execute the sale deed in
favour of the appellant.
It is the further
case of the appellant that on receipt of the entire sale consideration of
Rs.24,34,40,000/- from him, the said company executed a sale deed dated
17.06.2004, registered as Document. No.6939/2004 on the file of the Sub
Registrar, Ambattur. The sale is not in between two private individuals, on the
other hand, it is a sale in consonance with the conditions laid down under the
1985 Act. In such circumstances, one could visualize that there could be no question
of any possibility of under valuation of the property warranting the
proceedings under Section 47-A of the Act.
Further, the sale was
found to be valid in WP No.25962 of 2004 filed by the Dunlop Factory Employee's
A reference was made
by the Sub Registrar, Ambattur, to the second respondent District Revenue
Officer (DRO) in respect of the sale transaction, based on which, the second
respondent initiated proceedings under Section 47-A of the Act resulting in
issuance of notice dated 18.08.2004 in Form No.1 of Rule 4 of the Tamil Nadu
Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 (in short
`Rules'), calling upon the appellant to state his objections with regard to
fixation of the market value of the property at Rs.154,69,88,168/- as against
the sum of Rs.24,34,40 000/- for which sum, the property was purchased; and to
show cause as to why he should not be called upon to pay the balance stamp duty
of a sum of Rs.10,42,83,856/-.
4 Apart from
explaining and setting out the circumstances under which he purchased the
property, the appellant also questioned the jurisdiction of the authorities to
invoke Section 47-A of the Act. It is the specific case of the appellant that
without affording personal hearing, the second respondent by order dated
11.04.2005, confirmed the market value of the land as Rs.465/- per sq. ft. and
called upon him to pay the additional stamp duty.
Aggrieved by the
order of the second respondent, the appellant preferred an appeal before the
first respondent on 13.04.2005. On 08.02.2006, the first respondent rejected
his appeal, confirming the market value of the property as Rs.465/per sq, ft.
The first respondent also directed the appellant to pay interest at the rate of
2% per month towards the demand made by the authorities. Aggrieved over the
same, the appellant filed the appeal before the High Court under Section 47-A
(10) of the Act.
The High Court took
the view that it was not a case of sale by the government or a transaction
between the government organizations/bodies.
It was held that
statutory authorities like BIFR and AIFR acted as facilitators and, therefore,
it was held that there was no scope for a different view to be taken regarding
the market value and for this limited purpose the matter was remanded to the
original authority for passing an appropriate order.
counsel for the appellant submitted that the aforesaid view of the High Court
is clearly erroneous. It was a case where the sale was conducted under the
orders of the statutory authority i.e. BIFR. There are several instances, it is
submitted, where the official liquidator is involved to take a decision in the
matter of acceptance of the bid made.
counsel for the respondents on the other hand submitted that the High Court is
correct in holding that it was essentially not a matter between State or a
party and the role of the BIFR is that of mediator.
appreciate the rival stands Section 47-A and Rules 3 and 4 of Rules need to be
noted. The said rules have been framed in exercise of powers conferred under
Sections 47-A and 75 of the Act. Rule 4 and Section 47-A so far as relevant
read as follows:
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 reasons to believe that the market value of
the property of 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.
(2) On receipt of a
reference under subsection (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 this Act, determine the market
value of the property which is the subject matter of conveyance, exchange,
gift, release of benami right or settlement, and the duty as aforesaid. The
difference, if any, in the amount of duty,- shall be payable by the person
liable to pay the duty.
(3) The Collector
may, suo motu or otherwise, within five years from the date of registration of
any instrument of conveyance, exchange, gift, release of benami right or
settlement, not already referred to him under sub-section (1), call for the
examine the instrument for the purpose of satisfying himself as to the
correctness of the market value of the property which is the subject matter of
conveyance, exchange, gift, release of benami, right or settlement, and the
duty payable thereon and if after such examination, he has reason to believe
that the market value of the property has not been truly set forth in the
instrument, he may determine the market value of such property and the duty as
aforesaid in accordance with the procedure provided for in sub-section (2). The
difference, if any, in the amount of duty, shall be payable by the persons
liable to pay the duty:
Provided that nothing
in this subsection shall apply to any instrument registered before the date of
commencement of the Indian Stamp (Tamil Nadu Amendment) Act, 1967.
(5) Any person
aggrieved by an order of the Collector under sub-section (2) or sub section
(3), may appeal to such authority as may be prescribed in this behalf. All such
appeals shall be preferred within such time, and shall be heard and disposed of
in such manner, as may be prescribed by rules made under this Act.
(10) Any person
aggrieved by an order of the authority prescribed under subsection (5) or the
Chief Controlling Revenue Authority under sub-section (6) may, within such time
and in such manner, as may be prescribed by rules made under this Act, appeal
to the High Court."
Procedure on receipt of reference under Section 47A:
(4) After considering
the representations, if any, received from the person to whom notice under
sub-rule (1) has been issued, and after examining the records and evidence
before him, the Collector shall pass an order in writing provisionally
determining the market value of the properties and the duty payable. The basis
on which the provisional market value was arrived at shall be clearly indicated
in the order."
bare perusal of the rules make the position clear that sub-Rule (4) enumerates
procedure on receipt of reference under Section 47-A. Rule 5 speaks about the
principles for determination of market value. Sub-clause (a) refers to lands;
(b) house sites; (c) buildings and (d) properties other than lands, house sites
and buildings. 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 under value 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
47-A of the Act is willful under valuation of the subject of transfer with
fraudulent intention to evade payment of proper stamp duty.
the instant case the factual scenario shows that the vendors of the appellant
i.e. M/s Dunlop India Limited became a sick industry and was declared so under
the provisions of 1985 Act. Consequent upon such declaration, surplus
properties and assets belonging to the said company were disposed of on the
basis of orders passed by BIFR and AIFR by forming an Assets Sales Committee.
The appellant submitted that his tender alongwith others and his offer of
Rs.24.34 crores approximately was the highest, and the same was accepted by the
Assets Sales Committee and also by the statutory authorities. The company was
granted permission to execute the sale deed in favour of the appellant.
of the State is that what has been disclosed is clearly a sale value and the
same cannot be termed as market value. There is fallacy in this argument.
value is a changing concept. The explanation to sub-Rule (5) makes the position
clear that 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 AIFR and that too on the basis of value fixed by ASG. The
view 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 under
valuation 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.
has been defined under Section 54 of the Transfer of Property Act, 1882 (in
short the `TP Act'). Although the Act has not included the definition of sale,
Section 2(10) of the Act defines conveyance as including a conveyance on sale,
every instrument and every decree or final order of any Civil Court by which
property whether immovable or moveable or any estate or interest in any
property is transferred to, or vested in or declared to be of any other person,
inter vivos, and which is not otherwise specifically provided for by Schedule I
or Schedule 1-A, as the case may be.
the facts of the case it cannot be said that Section 47-A has any application
because there is no scope for entertaining a doubt that there was any under
valuation. 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
47-A 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
appeal is allowed. There will be no order as to costs.
(Dr. ARIJIT PASAYAT)