Madras High Court
The Bharat Petroleum Corporation Ltd vs The Principal Revenue on 26 August, 2015
Author: K.B.K.Vasuki
Bench: K.B.K.Vasuki
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 26.08.2015
CORAM :
THE HONOURABLE MS.JUSTICE K.B.K.VASUKI
CMA.No.2840 of 2008
and MP.No.1 of 2008
The Bharat Petroleum Corporation Ltd,
1, Ranganathan Gardens
Off, 11th main road,
Anna Nagar, Chennai-600040. ... Appellant
Vs
1.The Principal Revenue
Control Authority and
Inspector General of Registration,
100, Santhome High Road,
Chennai 600 028.
2.The Special Deputy Collector (Stamps)
District Collector Office,
Rajaji Salai
Chennai-1
3.The District Revenue Officer (Stamps)
Singaravelar Maligai,
5th Floor, Rajaji Salai
Chennai 1.
4.The Sub Registrar
Sub Registrar's Office
Thousand Lights
Chennai-6
5.The Tahsildar,
Egmore Nungambakkam Taluk
Chennai -31. ... Respondents
Prayer:- Civil Miscellaneous Appeal is filed under Section 47-A(10) of The Indian Stamp Act, to call for the records culminating in the order of the Inspector General of Registration under Reference No.60197/No.4/2003 dated 23.12.2004 confirming the order of the Deputy Collector Stamps dated 29.10.2003 made in reference No.96/1999.
For Appellant : Mr.O.R.Santhanakrishnan
For Respondents : No appearance.
JUDGMENT
The appeal is filed by the appellant/purchaser against the order of the first respondent/Inspector General of Registration confirming the order of the third defendant/District Revenue Officer (stamps) fixing the value of the property purchased by the appellant/M/s.Bharat petroleum Corporation Limited at Rs.3,045/- per sq.ft and in demanding Rs.36,94,015/- as deficit stamp duty from the appellant.
2.The appellant herein is a Government of India Undertaking coming under the Ministry of Petroleum and Natural Gas carrying on business in the sale and distribution of petroleum products. The appellant corporation for the business purpose purchased a property measuring an extent of 6 grounds and 1500sq.ft of vacant land from one M/s.P.S.Educational Society, Chennai for sale consideration of Rs.2,00,00,000/-. The sale deed was prepared and the stamp papers valued at 13% for the aforesaid sale price and the same was presented for registration before the fourth respondent/Sub Registrar on 10.01.1997 with requisite registration fee of Rs.2,00,000/- and the same was registered as document No.568 of 1999 by the fourth respondent/Sub Registrar. However, the document was not released by the fourth respondent/Sub Registrar demanding additional stamp duty. In the meanwhile, the document was referred to the third respondent/District Revenue Officer (stamps) under Section 47A(1) read with Rules 4 to 6 of the Tamil Nadu stamps (prevention of under valuation instruments) Rules 1968 for determination of market value of the property and proper duty payable thereon. Thereafter, the appellant was issued notice dated 26.07.1999 by the second respondent/Special Deputy Collector (stamps) fixing the value of the property on the basis of the guideline value at Rs.4,84,15,500/- and demanding additional stamp duty and the appellant was also called upon to file their objections within 21days from the date of receipt of notice with supporting documents, to the third respondent/District Revenue Officer (stamps). Accordingly the appellant filed their written objection and also made oral representation during personal hearing. The third respondent has by order dated 28.05.2003 confirmed the market value of the property determined at Rs.3,045/- per sq.ft and demanded additional stamp duty of Rs.36,94,015/- payable within two months failing which payable with interest at 2% per month for the entire period. Aggrieved against the same, the appellant preferred an appeal under Rule 9 of Rules 1968 before the first respondent/Inspector General of Registration.
3.The first respondent entertained the appeal and issued notice to the appellant for personal appearance and hearing on 20.12.2004 on which date the appellant, who appeared before the first respondent was personally heard. Thereafter, the appellant did not receive any final order from the first respondent. However, the appellant received notice of demand from the third respondent/District Revenue Officer (stamps) calling upon the appellant to pay the additional stamp duty of Rs.36,01,000/- within two months, failing which to initiate the proceedings under Revenue Recovery Act, for recovery of the amount.
4.Immediately on receipt of the same, the appellant approached the first respondent regarding non receipt of any final order from the first respondent. The appellant also filed WP.No.38840 of 2006 before this Court for setting aside the impugned demand notice of the third respondent dated 25.08.2006. The appellant also filed WP.No.38841 of 2006 for directing the first respondent to dispose of his appeal. Both the writ petitions were disposed of by this Court on 29.07.2008 after recording the fact that the appellant was not served with any order of the first respondent in his appeal and the copy of the order of the appeal was furnished to the appellant only during the pendency of the writ petitions. This Court while disposing of the writ petitions gave liberty to him to prefer an appeal against the order passed under Section 47(A) of the Indian Stamp Act. Hence, this Civil Miscellaneous Appeal under Section 47-A(10) by the purchaser/appellant before this court.
5.The main grievance raised by the appellant in this appeal is that Section 47-A of the Indian Stamp Act (hereinafter referred to as Act) provides for the manner in which the undervalued conveyance dealt with and as per the Act the registering authority while exercising the powers under Section 47-A(1) before referring the matter for Collector stamps for determination of the market value of the property and the proper duty payable thereon and the collector stamps before exercising suo-moto power under Section 47-A(3) for the determination of the market value of the property and duty payable thereon has to record the reasons to believe that the purchaser has not set out the correct value of the property in the documents and the failure on the part of the Registering Authority or the Special Deputy Collector (stamps) to comply with such mandatory requirement renders the reference made and the enquiry followed and the impugned orders passed thereon to be null and void and unenforceable.
6.For better appreciation, the relevant provisions of law under Section 47-A (1) (2) and (3) are extracted as below :
47-A. Instruments of conveyance, etc., Undervalued how to be dealt with (1)if the registering officer appointed under the 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 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 sub-section (1) the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an inquiry 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 in conveyance [exchange, gift, release of benami right or settlement], not already referred to him under sub-section (1) call for and 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 such 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 person liable to pay the duty.
7.The plain reading of the relevant provisions of law would support such stand taken by the learned counsel for the appellant. The same stand is also fortified by the Hon'ble Apex Court and the three judges Full Bench and Division Bench of our High Court in the judgments reported in (i)(2009) 7 SCC 438 V.N.Devadoss v. Chief Revenue Control officer-cum-Inspector General of Registration and others (ii)2007 (5) CTC 737 Full Bench G.Karmegam and others V. The Joint Sub Registrar, IV, Madurai (iii)(2001) 2 MLJ 458 The District Collector, Erode District, Erode and others V. M.Ponnusamy and unreported single judge judgments in CMA.No.1415 of 2004 dated 24.04.2009 and CMA.No.1863 of 2004 dated 04.03.2010.
8.In all the cases cited above, the Hon'ble Apex Court and our High Court have clearly laid down that the registration of document precedes reference to Collector and the Registrar cannot refuse registration even if document is undervalued and the Registering Officer cannot conduct roving enquiry to form an opinion on undervaluation but has to give reasons for his conclusions on undervaluation.
9.The Hon'ble Supreme Court has in the judgment cited above (2009) 7 SCC 438 V.N.Devadoss v. Chief Revenue Control officer-cum-Inspector General of Registration and others has after extracting the relevant provisions of law observed that 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.
10.The Full Bench of our High Court has in para 7 of its decision reported in 2007 (5) CTC 737 Full Bench G.Karmegam and others V. The Joint Sub Registrar, IV, Madurai held thus :
7. ..... The Registering Officer cannot make a roving enquiry to ascertain the correct market value of the property by examining the parties. However, it is expected that he has to give reasons for his conclusion for undervaluation, however short they may be. He can neither delay nor refuse registration of the instrument, merely because the document does not reflect the real market value of the property. In order to reach a conclusion, there is no bar for the Registering Officer to gather information from other sources, including official or public record. Valuation guidelines, prepared by the revenue officials, periodically, are intended with an avowed object of assisting the Registering Officer to find out prima facie whether the market value set out in the instrument has been set forth correctly.
11.The learned brother judge of this court who is also one of the parties in the Full Bench in para 14 of the judgment reported in CDJ 2010 MHC 6496 Tata Coffee Limited v. The State of Tamil Nadu rep by its Secretary to Government, Commercial Taxes and Registration and others following the Full Bench judgment held that recording of reasons by the second respondent for initiation of proceedings under Section 47A of the Indian Stamp Act, 1899, referring the matter for finding out the correct value of the property mentioned in the document, to the third respondent is mandatory. The learned brother by following another judgment reported in 2010 (4) TLNJ 170 (civil) G.Gunasekaran V. The Inspector General of Registration, Chennai-28 further held that the third respondent/District revenue officer (stamps) being a quasi judicial authority, must state resons while issuing notice calling for explanation from the person in whose favour the document is registered. The learned brother judge RPSJ in the same unreported judgment in MANU/TN/3105/2011 CMA.No.29 of 2009 - Ceebros Developers rep by its Managing Partner C.Subba Reddy V. The State of Tamil Nadu rep by its Inspector General of Registration has referred to another judgmnt of this court reported in 2008 (5) CTC 239 Mapillai Mohadeen V. The Sub Registrar, Registration Department wherein it is held that power under Section 47A can only be exercised when the Registering Officer has no reason to believe that the market value of the property which is the subject of conveyance has not be truly set forth, with a view to fraudulently evade payment of property stamp duty. Unless there is fraudulent attempt on the part of the parties to the document, the authority cannot exercise his power arbitrarily without any basis and such power should be exercised with great caution and care.
12.Similar view is also expressed in other two judgments in CMA.No.1863 of 2004 and CMA.No.1415 of 2004 by the learned brother judges Justice A.Arumughasamy and Justice R.Subbiah and CMAs are filed by the same appellant Bharat Petroleum Corporation Limited against identical orders. As a matter of fact, the learned brother judge Justice R.Subbiah has in para 8 of his judgment in CMA.No.1415 of 2004 referred to the earlier Supreme Court decisions expressing the view that if one of the parties is the Corporation being Government of India enterprise, then there is no reason to believe or doubt the bonafide of the valuation set forth in the respective instrument and the reference by doubting the bonafide of the valuation set forth in the instrument is not proper.
13.In the present case also, it is strenuously argued before this court that neither the Registering Authority nor the Special Deputy Collector (stamps) have in compliance with the mandatory requirement of the Act as stated above recorded their reasons to believe that the value set forth in the document is not proper.
14.As a matter of fact, the file relating to the reference cited proceedings does not contain any order in writing by the fourth respondent/Sub Registrar for reaching a decision that the property is not properly valued and for referring the matter to Special Deputy Collector (stamps) for determination of the correct market value of the property. In view of the same, it is sought to be argued that the Special Deputy Collector (Stamps) has called for the documents in question in exercise of suo-moto power vested under Section 47-A(3). There also, the Special Deputy Collector (stamps) is bound to record his reasons as required for the Registering Authority under Section 47A(1). Here again, the file does not disclose any material in writing containing the reasons for the Collector to say that the document is under-valued. There is absolutely no record to show that the authorities either suo-moto or otherwise initiated the proceedings for determination of the market value of the property after recording any reasons to believe that it is under valued and to say such under valuation is with a fraudulent intention to evade payment of correct stamp duty. Further, the view of the learned single judge in the other judgment referred to above having the same Corporation as appellant can also be applied to the facts of the present case that there is no reason to doubt the valuation given in the document as not reflecting the correct value of the property.
15.Thus, the failure on the part of the authorities to record one such reasoning to initiate proceedings for valuation of the property is contrary to the procedure laid down under law and is exfacie illegal, as such, the proceedings initiated for fixation of the value and the outcome of such proceedings fixing the value of the property more than double times than the value mentioned in the document and in demanding additional stamp duty is hence arbitrary and bad in law and is null and void.
16.On merits, the order of the third respondent does not contain the basis on which the market value was fixed at Rs.3,045/- per sq.ft. except stating that the market value was fixed so on the basis of the personal inspection and having regard to the location and the nature of the property and the value as specified by the Sub Registrar. It is more or less non speaking order for want of any other particulars. The main factor which influenced the third respondent in confirming the amount mentioned in the notice dated 26.07.1999 is only the failure of the appellant to prefer any appeal against the same and there is no independent application of mind and no other material based on which such valuation is arrived at.
17.As far as the order of the first respondent/Inspector General of Registration is concerned, his order is based on the report of the Deputy Inspector of Registration which is in turn based on the report of the District Registrar about the location and nature of the property and also the valuation fixed in the document registered earlier relating to the same area. The perusal of the District Registrar report would reveal that the Registrar relied on the oral representation regarding the value of the property at Rs.3,000/- per sq.ft on the date of registration of the document. However, the report does not reveal the person who made such oral representation and the document if any relied on by the District Registrar. In short, the District Registrar, the Deputy Inspector of Registration and the Inspector General of Registration have arrived at particular valuation merely on assumption. There is absolutely no basis for the District Registrar to value the property at such rate. The appellant is also not furnished with the copy of such report to have his say and the failure to furnish him the copy is in violation of principles of natural justice. That being the manner in which the valuation of the third respondent is confirmed by the first respondent, such order is also indicative of non application of mind and is bad in law.
18.Viewing from any angle, the impugned orders are contrary to law and suffer from legal infirmity and are arbitrary, baseless and unfounded and are hence liable to be set aside and accordingly set aside.
19.In the result, the Civil Miscellaneous Appeal is allowed by setting aside the order of the respondents 1 to 3, with further direction issued to the fourth respondent to release the document No.568 of 1999 to the appellant within one week from the date of receipt of the copy of this judgment. No costs. Consequently, connected miscellaneous petition is closed.
26.08.2015 Internet : Yes/No Index : Yes/No tsh To The Principal Revenue Control Authority and Inspector General of Registration, 100, Santhome High Road, Chennai 600 028.
2.The Special Deputy Collector (Stamps) District Collector Office, Rajaji Salai Chennai-1
3.The District Revenue Officer (Stamps) Singaravelar Maligai, 5th Floor, Rajaji Salai Chennai 1.
4.The Sub Registrar Sub Registrar's Office Thousand Lights Chennai-6
5.The Tahsildar, Egmore Nungambakkam Taluk Chennai -31.
K.B.K.VASUKI, J tsh CMA.No.2840 of 2008 26.08.2015.