Allahabad High Court
Northorn India Iron Press vs State Of U.P. on 15 April, 2015
Author: Devendra Kumar Arora
Bench: Devendra Kumar Arora
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 20 Case :- MISC. SINGLE No. - 4 of 1993 Petitioner :- Northorn India Iron Press Respondent :- State Of U.P. Counsel for Petitioner :- R.A.Shankhdhar,N.K.Seth Counsel for Respondent :- C.S.C. Hon'ble Dr. Devendra Kumar Arora,J.
Heard Sri N. K. Seth, learned Senior Advocate, assisted by Sri Ashish Chaturvedi and Sri Badrul Hasan, learned Addl. Chief Standing Counsel, appearing on behalf of opposite parties.
By means of present writ petition, the petitioner has prayed for a writ in the nature of certiorari for quashing of the impugned order dated 22nd September, 1992, passed by the Addl. District Magistrate (Finance & Revenue), Lucknow by which it was directed that since the petitioner is a company and purchased the land in question for industrial/commercial purposes, therefore, the proper value of the land should be at the rate of Rs. 13/- per square feet and not at the rate of Rs. 14,900/- per bigha, as claimed by the petitioner. After valuing the said land @ Rs. 13 per square feet, the learned Addl. District Magistrate (Finance & Revenue), Lucknow held that the market value of the said land is Rs. 12,56,203/- and the stamp duty should have been paid on such value of Rs. 14,68,519/- and, as such, petitioner was directed to deposit the deficit stamp duty of Rs. 1,48,075/- within ten days, otherwise, proceedings will be initiated against the petitioner under the provisions of Land Revenue Act.
Submission of learned counsel for the petitioner is that the petitioner is a Company under the provisions of Companies Act, 1956, having its registered office at Aishbagh, Lucknow. Amongst other objects of the petitioner-company one of the object was to carry on business of farming including dairy farming etc. and the same has been clearly mentioned in clause (c) of sub-clause 5 at page 4 of the Memorandum of Association of the petitioner-company.
Further submission of learned counsel for the petitioner-company is that Shri Ram Khelawan Singh was the owner of Khasra plot no. 855, measuring 3 bigha and 11 biswas in Mauja Udaipur, Pargana Nigohan, Tehsil Mohanlalganj, District- Lucknow in which he was carrying on farming. Shri Ram Khelawan Singh was interested in selling a piece of said land and the petitioner being interested in purchasing the same, offered a price of Rs. 71,000/- which he accepted and a sale- deed was executed by Shri Ram Khelawan Singh in favour of the petitioner-company in respect of the said plot of land on 30.1.1992 which was presented for registration before the Sub Registrar, Mohanlalganj, Lucknow.
It is also submitted by the learned counsel for the petitioner that the land purchased by the petitioner-company was 'Har-4 Matiyar". For the purposes of stamp duty and registration, the market value of the property is to be determined as per the rate notified by the Collector, Lucknow vide its order dated 24th January, 1990.
At the relevant time, Collector, Lucknow vide order dated 24th January, 1990 fixed the rate of the land of 'Har-4 Matiyar' as Rs. 12,500/- per bigha. On the basis of the said rate the total value of the land purchased by the petitioner comes to Rs. 53,256/-. It is also submitted that the Collector, Lucknow revised the said rate vide order dated 30.1.1992 w.e.f. 1.2.1992 and fixed rate as per Rs. 15,900/- per bigha and at such rate the total value of the land comes to Rs. 55,450/-. However, since the sale consideration was Rs. 71,000/-, stamp duty was paid by the petitioner on the said value of Rs. 71,000/- which was above the value of the land at the rate fixed by the Collector, Lucknow.
In view of the above, submission of learned counsel for the petitioner is that the petitioner complied all the provisions of Indian Stamp Act with respect to payment of stamp duty for the purposes of registration of the land.
Petitioner was asked to receive notice from opposite party no. 2 under section 47 (2) of the Stamp Act mentioning therein that the sale deed executed by Shri Ram Khelawan Singh in favour of the petitioner-company is under-stamped and the petitioner was required to show-cause as to why the deficit stamp duty and penalty be not realized from the petitioner. The petitioner filed objection dated 12th August, 1992 to the said notice dated 21st July, 1992 along with the affidavit of S/Sri Sushil Kumar Agarwal, Amit Kumar Gupta and Pravin Kumar Gupta, stating therein that the valuation of the land in question was in no case over Rs. 56,000/- but since the sale consideration agreed was Rs. 71,000/- stamp duty on the said value was paid and the sale deed in no case is under-stamped. In fact, the said land was purchased for the agricultural purposes and not for setting up a factory. It has further been stated that in Gosainganj, Lucknow there is no commercial complex and the fixation of the value of the land on commercial basis is absolutely illegal and arbitrary.
Opposite Party No. 2, without appreciating the objection raised by the petitioner, vide order dated 22.9.1992 directed the petitioner-company to pay difference of the stamp duty as petitioner is a company and had purchased the said land for industrial/commercial purposes, and, as such the proper value of the land should be at the rate of Rs. 13/- per square feet and not at the rate of Rs. 12,500/- per bigha, as claimed by the petitioner. As such, valuing the said land at the rate of Rs. 13/- per square feet the opposite party no. 2 held that the market value of the said land is Rs. 12,56,203/- and the stamp duty should have been paid on the said value and the petitioner was directed to pay deficit stamp duty of Rs. 1,48,075/-. The petitioner feeling aggrieved against the said order has approached this Court for setting aside the impugned order.
Shri N.K. Seth, learned counsel for the petitioner also submits that the land in question was purchased by the petitioner for agricultural purposes, which is also one of the object of the petitioner's company and, therefore, the contention of opposite party no. 2 that land was purchased by the petitioner for commercial purposes is absolutely misconceived. It is also submitted that at the relevant time there was no commercial complex in the area and fixation of the value of land on commercial basis is absolutely misconceived. It is very emphatically submitted that the land for the purposes of stamp duty cannot be valued considering its future land use. The land has to be valued considering its location etc. at the time of its purchase.
Further submission of learned counsel for the petitioner is that at the time of purchase, the land in question was agricultural land and was being used for agricultural purposes and specific averments to the same effect have been made in the writ petition and the said fact has not been disputed in the counter affidavit. Similarly, the type of land is Har-4-Matiyar and the same has also not been disputed by the opposite parties in the counter affidavit.
Learned counsel for the petitioner in support of his submissions placed reliance on the judgment and order rendered in following cases:
(1) ITC Ltd. Vs. State of U.P.; AIR 2009 Alld. Pg 31, Pr. 30, 31 and 32.
(2) Naresh Kumar Sonkar Vs. State of U.P. and others; 2008 (26) LCD Pg. 1590 Pr. 19, 20 and 21.
(3) Smt. Har Pyari and others Vs. District Registrar Aligarh; 1999 (90) RD Pg 521 Pr. 6 and 11.
(4) Kishore Chandra Agarwal v. State of U.P. and others; 2008 (104) RD Pg 235 Pr. 16, 23 and 25.
It is further submitted that the market value of the land cannot be determined with reference to the use of the land to which buyer intends to put it. The market value is what a general buyer may offer and what the officer may reasonably expect. In determining the market value, the potential of the land as on the date of sale alone can be taken into account and not what potential it may have in the distant future. Even subsequent improvement or change in the nature or use of the land, which may result into enhancement of the market value of the property, is not to be taken into account.
A counter affidavit has been filed on behalf of opposite parties, in which it has been stated that Sub-Registrar, Mohanlalganj, Lucknow submitted a reference/report that the purchaser of the land is an Industrial/Commercial Institution and at the time of execution of sale deed, the petitioner paid Stamp Duty at the agricultural rates. However, it would be at the rate of Rs. 13.00 per square feet. It is also submitted that in view of the report of Sub-Registrar, a Case No. 3137/Stamp, State Vs. Northern India Iron Press Works (Pvt.) Ltd. was registered against the petitioner under the Indian Stamp Act and during the time of proceedings of the case, the petitioner failed to submit any proof in its favour that the property in question has been under the agricultural uses. On the contrary, there was no evidence on record that the land will not be used for construction of Cement Factory. It is submitted that the competent court after examining the matter passed the order dated 22.09.1992 and directed the petitioner to make good the deficiency of the stamp duties.
A plea of alternative remedy to file an appeal has also been raised before the Chief Controlling Revenue Authority against the order dated 22.09.1992.
I have considered the submissions of learned counsel for the parties and gone through the record.
Before examining the facts of the present case, this Court examined various judgments on the issue of determination of stamp duty payable on property.
It is settled position that the Rule of Alternative Remedy does not oust the jurisdiction of the Court, if found necessary for promotion of justice and prevention of injustice.
In the case of Prakashwati Vs. Chief Controlling Revenue Authority , Board of Revenue; 1996 AWC 1331, the Apex Court had held that situation of a property in an area close to a decent colony not by itself would make it a part thereof and should not be a factor for approach of the authority in determining the market value. According to the said decision , Valuation has to be determined on constructive materials which could be made available before the authorities concerned."
In Anirudha Kumar and Ashwini Kumar Vs. Chief Controlling Revenue Authority, (2000 (3) AWC 2587), this court has referred the aforesaid Prakashwati's case (supra) and observed as under :
"in the present case , the market value is to be determined on the basis of the value that would satisfy the vendor. Thus . The question of future potential cannot be a factor determining the market value of such a land for the purpose of stamp duty payable under the stamp act. The vendee pays the price that satisfies the vendor and,therefore, it is the utility of the land as on the date of transfer by the vendor and as such, if the land was an agricultural land, it has to be treated as such and the valuation has to be done accordingly. Whether in Future the purchaser puts the land into residential use or changes the character is immaterial for the purpose of payment of stamp duty. The principal that has been laid down in P. Ram Reddy (supra) can be attracted for the purpose of determining the market value only to the extent of potential as on the date of transfer and not beyond. Thus, the market value has to be determined according to the factors , which include the situation of the land, the amenities available in and around and various other factors, including close proximity of the residential area as well as any transfer made immediately before the transfer or after the transfer in close proximity if such documents are produced in respect of the area that similarly situated land by either of the parties."
In Rakesh Chandra Mittal and others vs. Additional District Magistrate (2004 (3) UPLBEC 2434, a Division Bench of this Court held-
" It is well settled that market value of the property has to be determined with reference to the date on which the document is executed. Market value as such keeps on varying and changing. Any subsequent improvement or change in the nature or user of the land, which may result into enhancement of the market value of the property, is not to be taken into account and it is only the value of the property on the date of execution of the document that is to be considered for the purpose of determination of proper stamp duty payable on the instrument."
In Shakumbari Sugar And Allied Industries Ltd. Vs. State of U.P. & others,(2007 (5) ADJ 602) some land was purchased through a Sale Deed dated 22.7.94. Since the land was agricultural in nature, the petitioner paid the stamp duty in accordance with the circle rate issued by the District Magistrate. On 13.2.1995, a notice under Section 47-A read With section 33(4) of the Stamp Act was issued to show cause , as to why the deficiency of stamp duty should not be levied. In the notice, it was alleged that the petitioner had purchased the land for industrial purposes and as such the stamp duty on the property is to be paid on the basis of market value of the land for industrial purpose. This court placing reliance on various citations has held that the market value of the property is to be determined with reference to the date on which the document is executed.
Apart from the above decisions, a Full Bench of this court in Shri Ramesh Chandra Srivastava, Kanpur vs. State of U.P. and others, 2007 U.P.T.C. 335 held that the market value of the property has to be determined with reference to the date of which the document is executed.
In the case of Sarva Hitkarini Sahkari Avas Samiti Allahabad and another Verses State of U.P and others. ,(2007(103)RD19) it has been observed that the rules framed for determining market value under the Stamp Act and circle rates circulated under said rules are relevant only for initiation of proceedings under section 47-A of Stamp Act. However, after initiation of the case the said rules become irrelevant and while deciding the case market value shall be determined on the basis of general principles for determining market value which are applicable to the land acquisition matters. Moreover, future use of the property is not decisive."
In the case of Kishore Chandra Agarwal; vs. State of U.P. & others, reported in 2008 (104) RD 235, this Court has held that the obligation to act fairly on the part of the administrative authorities was evolved to ensure the rule of law and to prevent failure of justice. This doctrine is complementary to the principles of natural justice, which the quasi-judicial authorities are bound to observe. An arbitrary action is ultra virus.
In the case of I.T.C. Ltd. vs. State of U.P. , reported in AIR 2009 Allahabad 31, this Court has held that market value cannot be determined with reference to use of land for which buyer intends to put it-stamp duty is payable on property as it stands on date of execution of deed. The relevant paras 30 to 32 of the judgment read as under:
Para 30. "Thus, the legal position which emerges out from the aforesaid cases is that the market value of the land cannot be determined with reference to the use of the land to which buyer intends to put it. The market value is what a general buyer may offer and what the officer may reasonably expect. In determining the market value, the potential of the land as on the date of sale alone can be taken into account and not what potential it may have in the distant future. Any subsequent improvement or change in the nature or user of the land, which may result into enhancement of the market value of the property, is not to be taken into account and it is only the value of the property on the date of execution of the document that is to be considered for the purpose of determination of proper stamp duty payable on the instrument.
Para 31 In addition to above legal proposition, it may be pointed out that the State Government has issued a Government Order dated 16.9.1999 to all the Divisional Commissioners, District Magistrates and Additional District Magistrates (Finance & Revenue), providing therein that while determining the valuation of the property under 1997 Rules, neither the future potential or use of the property nor the status of the purchaser (Organization, Society, Company etc.) will not be taken into consideration. ..
Para 32. Having considered the submissions made by the learned Counsel for the parties and the materials placed before this Court, it appears that the authority had proceeded to determine the value on the presumption that though the land is agricultural land but it has not been purchased for the said purpose. The said presumption does not appear to be sound and reasonable."
Admittedly, the petitioner is a Company under the provisions of Companies Act, 1956 and as per Memorandum of Association of the petitioner-company, amongst other objects, one of the object for which the company was established, was to carry on business of farming including dairy farming etc., which has been mentioned in Clause (c) (sub clause-5 at page 4 of the memorandum of association of the petitioner. The same reads as under:
"To carry on the business of farming including as dairymen, fruit, farmers livestock breeders, poultry farmers, timber growers, horticulturists, seed merchants, processors of agricultural proceeds and generally to manage improve, farm cultivate, acquire, lease undertake, exchange, purchase, sell or otherwise deal with or dispose of agricultural lands and generally to carry on the business of advisers on problems relating to the administration, organization and work of farms, training of personnel thereof, of system or process relating to the production, storage, distribution, marketing and sale thereof and/ or relating to the rendering of service in connection therewith."
The petitioner purchased a piece of land of Khasra plot no. 855 measuring 3 Bigha and 11 Biswas in Mauza Udaipur, Pargana Nigohan, Tehsil Mohanlalganj, District-Lucknow at the price of Rs. 71,000/- and the sale-deed was executed on 30.01.1992. As per submission of learned counsel for the petitioner, the type of land is Har-4-matiyar. As per circle rate fixed by the Collector, Lucknow, the value of the land comes to Rs. 53,256/-, since the sale consideration was Rs. 71,000/-, therefore, stamp duty was paid by the petitioner at the rate of Rs. 71,000/-, which was above the value of land as well as was fixed by the Collector, Lucknow.
It appears that subsequently on the basis of some complaint made by some local residents, Sub-Registrar, Mohanlalganj submitted a report on the basis of which Case No. 3137/Stamp, State Vs. Northern India Iron Press Works (Pvt.) Ltd. was registered against the petitioner under the provisions of Stamp Act and notice was issued to the petitioner. After examining the reply of the petitioner, impugned order dated 22.09.1992 was passed, holding that the land in question was purchased for establishment of Cement Factory and, therefore, petitioner's company was required to pay stamp duty at the circle rate fixed for commercial purposes and the same being Rs. 13/- per square feet, the value of land was assessed as Rs. 12,56, 203/- and deficiency of stamp duty of Rs. 1,48,075/- was raised against the petitioner.
This Court has examined the impugned order dated 22.09.1992 and from the perusal of the same, it appears that the opposite party no. 2 while examining the matter of deficiency in stamp duty in registration of document, observed that the purchaser of land in question is an industrial/commercial institution and will establish industry on the same and this fact has been confirmed by one Shri Suresh Kumar and other local residents of the area vide their complaint dated 22.09.1992 to the effect that on the land in question Cement Factory will be established and on this ground, opposite party no. 2 came to the conclusion that the land in question has not been purchased for agriculture, as no evidence has been produced with respect to agricultural activities being carried out, therefore, stamp duty is to be paid on the basis of industrial/ commercial rates and accordingly passed the impugned order.
This is very surprising that opposite party no. 2, on the basis of some complaint, came to the conclusion that cement factory will be established on the land in question, whereas except that complaint there is no evidence on record, which establishes that the petitioner intends to establish a cement factory. It is settled legal position that stamp duty is to be paid on the basis of the use of the land at the time of registration of document and no inference can be drawn for changing the nature of the land in future by the purchaser.
Thus, the legal position is that the market value of the land cannot be determined with reference to the use of the land to which buyer intends to put it. The market value is what a general buyer may offer and what the officer may reasonably expect. In determining the market value, the potential of the land as on the date of sale alone can be taken into account and not what potential it may have in the distant future. Any subsequent improvement or change in the nature or user of the land, which may result into enhancement of the market value of the property, is not to be taken into account and it is only the value of the property on the date of execution of the document that is to be considered for the purpose of determination of proper stamp duty payable on the instrument.
In view of the above, the writ petition is allowed. The order dated 22.09.1992 passed by the Addl. District Magistrate (Finance & Revenue), Lucknow is hereby quashed.
It has been informed by learned counsel for the petitioner that original sale-deed has been impounded by the opposite party no. 2. Accordingly, opposite party no. 2 is hereby directed to release the sale-deed within a period of one month from the date of receipt of a certified copy of this order.
Order Date :- 15.4.2015 Tanveer/-