Bombay High Court
Shree Krishna Realtors And 3 Ors vs The Chief Controlling Revenue ... on 1 August, 2022
Author: Bharati Dangre
Bench: Bharati Dangre
1 WP 2453-21.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2453 OF 2021
Messrs. Shree Krishna Realtors & Ors ... Petitioners
Versus
The Chief Controlling Revenue ... Respondents
Authority & Ors.
...
Mr. Mayur Khandeparkar with Mr. Mukul Taly, Mr. Aziz Mohd.,
Ms. Sayali Gharpute, & Ms. Paluck Bengali i/by S. Mahomedbhai
& Co., for the Petitioners.
Mr. Kedar Dighe, AGP, for the Respondents.
CORAM: BHARATI DANGRE, J.
RESERVED : 12th APRIL, 2022
PRONOUNCED : 1st AUGUST, 2022
JUDGMENT:-
1 Rule. Rule is made returnable forthwith & petition is taken up for final hearing at the stage of admission.
2 The present Writ Petition seek a relief of quashing and setting aside the order dated 16/9/2021 passed by the Chief Controller Revenue Authority, Pune, as well as the order dated 11/12/2018 passed by the Addl. Controller of Stamps, Mumbai Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 2 WP 2453-21.doc and also an order dated 31/7/2018, as well as the impugned interlocutory order dated 7/6/2018 passed by the District Collector of Stamps, Bandra (East), Mumbai.
3 By the impugned orders, the petitioner no.1 the partnership firm is held liable for payment of deficit stamp duty of Rs.1,89,53,000/-, on the instrument of deed of conveyance which was submitted for adjudication on 23/2/2018, pertaining to property admeasuring CTS No.4110, 5121.50 sq.m situated in Taluka Andheri. The District Collector of Stamps, Andheri, worked out the market value of the said property as Rs.55,00,50,000/- and determined the stamp duty payable under Schedule I, Article 25(B) of the Maharashtra Stamp Act, 1958 as Rs.2,75,03,000/-.
4 In order to appreciate the contention of the petitioner, in assailing the impugned order as well as the contention advanced on behalf of the Revenue Authorities competent to determine the market value and the stamp duty payable upon a conveyance, it would be appropriate to briefly refer to the factual scenario which gave rise to the said controversy.
5 The petitioner no.1 is the partnership firm registered under the provisions of Indian Partnership Act, 1932, having its principal place of business in Bandra (East), Mumbai, whereas the petitioner nos.2, 3 and 4 are the partners of petitioner no.1.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 3 WP 2453-21.doc One A.H. Wadia Trust (hereinafter referred to as 'the Trust') a public charitable trust registered under the provisions of the Public Trust Act, was the owner of an immovable property bearing Survey No.354, Hissa No.4 and Survey No.378 (Part) with CTS Nos.4110, 4110/1 to 115 of village of Kole Kalyan, Taluka Andheri, admeasuring 5,121.50 sq.m (hereinafter referred to 'the subject property').
The Trust resolved to alienate the subject property as it was fully encroached by slum dwellers and the Trust not being in a position to clear it. It published a public notice in daily newspaper on 6/8/2012 and invited offers from the public, for sale of the said property, by making sale subject to the sanction of the Charity Commissioner u/s.36(1) of the Bombay Public Trust Act and on AS IS WHERE IS and AS IT WHERE IT IS BASIS. It indicated in the notice that the substantial portion of the property is declared as 'Slum'.
6 In response, four parties submitted their offers and also deposited earnest money equivalent to 35% of their respective bid price as per the condition indicated in the public notice, the petitioner being one amongst them.
Initially, the Trust in it's meeting held on 18/9/2012, accepted the offer of M/s.Omkar Realtors and Developers Pvt.Ltd, being the highest bidder of Rs.15.00 crores. The Trust then filed an application on 17/12/2012 u/s.36 of the Trust Act Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 4 WP 2453-21.doc before the Charity Commissioner, for sanction of the sale of the subject property. The petitioner along with another bidder, Kara Properties Pvt.Ltd filed Intervention Application before the Charity Commissioner, seeking permission to submit fresh bid. The Intervention Application was allowed and the intervening parties were permitted to submit their respective bids and requisite Earnest Money Deposit (EMD). Accordingly, the petitioner no.1 submitted it's bid of 17.10 crores along with EMD of Rs.5.985 crore.
Though attempts were made by some other parties to offer higher bid and to intervene, subsequently, for some reason or other, they could not succeed.
7 The Charity Commissioner by it's order dated 20/6/2017, directed the Trust to publish fresh public notice, inviting fresh offers for sale and obtain fresh valuation report of the subject property.
In compliance, the Trust submitted fresh valuation vide it's report dated 17/6/2017 and published fresh public notices. This time two bids were submitted, one by the petitioner and one Avante Garde Properties Pvt.Ltd, but since it was not accompanied with the requisite EMD, it was declared invalid.
M/s.Kara Properties Pvt.Ltd was also permitted by the Charity Commissioner to participate in the bidding process but it refused to participate.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 5 WP 2453-21.doc 8 On going through the requisite process to fetch the best value of the subject property, the Charity Commissioner vide it's order dated 08/08/2017 granted sanction for sale of the property to the petitioner no.1 for consideration of Rs. 17.10 crores, subject to several conditions imposed in the order. The petitioners paid the full consideration amount of Rs. 17.10 crores to the Trust and in pursuance thereof, the Trust released it's draft of the Indenture of Conveyance for adjudication. On 07/12/2017, the draft was submitted for adjudication before District Collector of Stamps. However, since there was a time limit of six months prescribed in the order of the Charity Commissioner dated 08/08/2017 for execution of Indenture of Conveyance, the said draft came to be withdrawn by requesting the respondent no.3 to release the same.
9 The petitioners paid sum of Rs.85,50,000/- as stamp duty being 5% of the consideration amount of Rs.17.10 crore on 3/2/2018 and executed Indenture of Conveyance on 5/5/2018. The duly stamped and executed Indenture of Conveyance was was presented for adjudication before the Collector of Stamps on 23/2/2018.
10 On 7/6/2018, the respondent no.3 passed an interlocutory order by recording that the market value of the subject property is in the sum of Rs.55,00,50,000/- (Fifty Five Crore Fifty thousand) and adjudicated the stamp duty payable under Article 25(b) of the Schedule of the Stamp Act as Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 6 WP 2453-21.doc Rs.2,75,03,000/- (Rupees Two Crore Seventy Five lakhs Three thousand only).
11 The petitioners objected to the determination of the market value of the property by filing it's reply and by order dated 31/7/2018, the Collector maintained it's earlier adjudication by holding that the guideline No.26 of the market value rate chart lay down the procedure to value the property which is declared as 'Slum' and by considering the guidance note no.33 to the market value ready reckoner for the year 2017-18 and by referring to the proviso appended to Rule 4(6) of the Maharashtra Stamp (Determination) of true market value of property Rules 1995, the true market value of the property was assessed as Rs.55,00,50,000/-.
The said order was subjected to a challenge in an Appeal before the Addl. Controller of Stamps, who was pleased to dismiss the Appeal.
Subsequent to this, the petitioner filed Revision Application being Misc. Application 65/2019 before the Respondent No.1, the Chief Controlling Revenue Authority Pune, who dismissed the same by order dated 16/9/2021, confirmed the order of the subordinate authorities, dated 11/12/2018 by the respondent no.2 and the order dated 31/7/2018 by the respondent no.3.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 7 WP 2453-21.doc The order passed by the respondent no.1 is subject matter of the present Writ Petition.
12 I have heard learned counsel Mr.Mayur Khandeparkar for the petitioner. He would submit that the impugned orders are ex-facie illegal as it lack application of mind and involve legal malafides. The learned counsel would submit that the sale of the property conducted under the aegis of the Charity Commissioner u/s.36 of the Public Trust Act, would fall within the categories of sale exempted by proviso to sub-rule (6) of Rule 4 of the Rules and ultimately, when the Charity Commissioner had permitted sale of the property by considering the best price, in the interest of the Trust, there is no reason for determination of the market value of the property. He would submit that the Charity Commissioner had permitted the auction process to be adhered to, and the Trust which was interested in disposing off the property, had made attempts for last two decades, since the property was full of encroachment and therefore, it chose to adopt the mode of public auction/open tender as prescribed by Section 36(1) of the Trust Act and conveyed the property to the petitioner no.1, after obtaining prior sanction of the Charity Commissioner. He would submit that after the Charity Commissioner had accorded it's sanction to the sale by public auction, the market value of the property ought to have been determined as the auction price and in no other manner, as is sought to be done by the authorities. In any case, Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 8 WP 2453-21.doc his submission is, since the property was sold in open market, it had fetched the price which it could have and since the maximum price for the property was offered as 17.10 crores, it ought to have been accepted as it's market value.
13 Mr.Khandeparkar placed reliance upon a decision of this Court in case of Crystal Construction Co. Vs. Addl. Collector of Stamps and ors (WP 714/2018), where it has been held that the sale of the property by the Charity Commissioner u/s.36 of the Trust Act, would attract the category of sale exempted by proviso to sub-rule (6) of Rule 4 and the price fixed by the Charity Commissioner for sale of trust property, shall be considered as the best price. He would also place reliance upon another decision of this Court in case of Pinak Bharat & Co & Bina V. Adani Vs. Anil Ramrao Naik in Commercial Execution Application No.22/2016, and according to him, the said decision would govern the sale of the trust property by Charity Commissioner u/s.36 of the Trust Act, when the procedure of auction process is adhered to. Reliance is also placed on a judgment of this Court in case of Akash Laviesh Leisure Pvt. Ltd vs. State of Maharashtra (Revision Application 4084/2009), where it has been held that the price which shows the market value of the property would be the price fixed by the Charity Commissioner.
Mr.Khandeparkar would also place reliance upon circulars issued by the respondent no.1 from time to time, and would submit that the value accepted by the Charity Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 9 WP 2453-21.doc Commissioner for the sale of the subject property in favour of the petitioners, was binding upon the authorities. He would submit that the fact that value of Rs.17 Crore 10 lakhs stated in the Indenture of Conveyance was fixed at a public auction after issuing public notice in two local newspapers, and on considering the offers received, by holding a bidding between competent bidders, he would submit that the circular dated 30/6/2005 has been completely ignored by the authorities. By relying upon the circular, his submission is, in it's terms, in case of orders granting sanction for sale, by Government/competent authority by public tender, stamp authority should accept the value determined/ sanctioned by such authority, and shall not use the ready reckoner valuation for the purpose of arriving at the market value of such property.
The learned counsel has also drawn my attention to the Deed of Conveyance and submits that it is for transfer of property by way of a sale under the provisions of Transfer of Property Act, 1882 and in absence of necessary approval from the competent authorities to develop the property under the Slums Act or under Regulation 33(10) of DCR as Slum Rehabilitation Area, it is not open to the respondents to hold that object of the petitioners is not sale of the immovable property, but sale of Floor Space Index (FSI) and the market value of the property should be determined by computation of 3.0 FSI. The argument advanced is that the respondents have purported to apply the valuation Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 10 WP 2453-21.doc principle that may apply (i) after obtaining the consent of eligible slum dwellers by the vendor and (ii) in cases where the development agreement is executed between the land owner and the developer.
It is submitted that there is no agreement for development of the said property between A.H. Wadia Trust and the petitioners, but it is a case of sale by public auction conducted by the Charity Commissioner on 'AS IS WHERE IS' and 'AS IS WHAT IS BASIS'. The invocation of guideline/circular No.26 for determination of market value of Slum property, according to Mr.Khandeparkar, is an impermissible exercise, as in a case where the sale has taken place by public auction/public tender u/s.36(1) of the Trust Act, under the order of Charity Commissioner, guideline 26 has no application.
14 Per contra, the learned AGP Mr.Dighe would rely upon the determination of the Stamp Duty payable on the documents as mentioned by the First Authority i.e. Collector of Stamps, Andheri, and he would submit that the market value in relation to any property is the price which such property would have fetched, if sold in open market and the date of execution of such instrument to, or the consideration stated in the instrument, whichever is higher. He would submit that since the subject property was declared as a slum, the market value of the property has to be calculated in accordance with the guidelines issued by the Corporation under the Development Regulation for the year Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 11 WP 2453-21.doc 2017-2018, and therefore, the objection raised by the petitioner came to be rejected. The learned AGP would fall back on guideline no.26 of the Annual Schedule of Rates (ASR) and by relying upon a specific statement made by the Collector of Stamps, Andheri, in the affidavit dated 8/4/2022, in compliance of the direction issued by this Court, seeking a clarification, he would submit that when any document, irrespective of it's mode of transfer, i.e. development agreement or deed of conveyance is lodged for adjudication, the following things are to be considered :-
"a) Whether the purchaser/developer is getting vacant possession of the land mentioned in the deed. If he is going to get vacant possession of land in question full potential of the land as per market rate is considered for valuing the land,
b) If in case he is not going to get vacant possession (there are tenants, slum, encroachment or some other occupants on the land in question) then the area under occupation of third parties may it be tenant or slum, encroachment or any other form of occupation is subtracted from the future potential of the land and the balance land is considered for ascertaining the value of the land, for stamp duty purpose."
15 The argument of Mr.Dighe is, in the particular case, the document is titled as "Conveyance Deed", but in the recital of the deed, there is a clear mention that the purchasers are desirous of developing an area declared as slum, under the Slum Rehabilitation Scheme, as prescribed under the guidelines Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 12 WP 2453-21.doc mentioned in Regulation 33(10) of the DCR of BMC, and when the purchaser is going to exploit the potential of the land in question by developing the same under Slum Rehabilitation Scheme, he must be subjected to ASR 26, which cover a development deed. He would also clarify, that for every SRA project, ASR 26 is followed and the guidelines contained therein, are used for adjudication of conveyance pertaining to SRA land and there are no other guidelines available as on date, for execution of such a document. He would submit that all such instruments are covered under Section 32A and are falling within the purview of concept of determination of market value and the valuation of the suit land for the purpose of stamp duty, is done strictly in accordance with ASR 26 and the Collector has already placed on record the statement of calculation.
The learned AGP would submit that while considering the offset price fixed by the Charity Commissioner, the valuation ought to have been worked out as per ASR 26, but instead, Architect and valuers, have inspected the property on 24/4/2010, and declared it's valuation on 17/6/2017, whereas, the Deed of Conveyance is executed on 5/2/2018. He would submit that since the market value of the subject property was determined as Rs.22 Crore 54 lakhs as on 17/6/2017, on the basis of the inspection carried out in the year 2010, the Charity Commissioner accepted the said value as the base price for the offer and accepted the bid of the petitioner, which was for an Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 13 WP 2453-21.doc amount of Rs.17 crore 10 lakhs. Mr.Dighe would submit that in the whole exercise, the Government is duped of it's revenue since the market value of the property has been incorrectly determined by the valuer of the Wadia Trust and the Charity Commissioner granted his sanction to the highest bid of the petitioner, which is obviously less than the offset price.
16 The factual aspect largely not being in dispute, suffice it to note that the petitioner entered into a Deed of Conveyance on 5/2/2018 with trustees of Testamentary Trust under last Will and Testament of Ardheshir Hormajee Wadia known as 'A.H. Wadia Trust', a public Trust, with an intention to transfer right, title and interest in the property referred to as the subject property for consideration of Rs.17,10,00,000/-. The petitioner submitted the application for adjudication in the office of Collector of Stamps, Andheri (respondent no.3) on 23/2/2018 u/s.31 of the Maharashtra Stamps Act, so as to ascertain the stamp duty chargeable on the instrument.
17 The Collector of Stamps determined the market value of the property as Rs.55,00,50,000/- and assessed the stamp duty of Rs.2,75,03,000/- paid under Article 25B of Schedule I of the Act and passed an order on 31/7/2018, asking the petitioner to pay deficit stamp duty of Rs.1,89,53,000/- on deducting an amount of Rs.85,50,000/-.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 14 WP 2453-21.doc It is this order which has been upheld by respondent no.2 as well as by respondent no.1 holding the petitioner to be liable for the deficit stamp duty on the basis of the valuation of the property arrived by the Collector of Stamps.
18 The question which arises for determination, before me is two-fold (a) whether the Charity Commissioner, Mumbai can be termed as competent authority for the purpose of Rule 4(6) of the Maharashtra Stamp (Determination) of True Market value of Property Rules, 1995 and (b) whether the Charity Commissioner, Mumbai has fixed the pre-determined price (offset price) for auction of property, by considering the ASR for fixing of offset price, and whether the market value of the property has been appropriately determined by the valuer of the Trust.
The Maharashtra Stamp (Determination of True Market Value of Property Rule) 1995 formulated on 14/8/1995, in exercise of the powers conferred by sub-section(1) and clause
(d) of sub-section (2) read with proviso to sub-section (3) of Section 69 and sub-section (3) of Section 31 in Rule 4, make a provision for Annual Statement of Rates of immovable property. The said section contemplate preparation of Annual Statement of Rates by the Joint Director of Town Planning and valuation (Maharashtra State) showing average rates of lands and buildings situated in every Tahsil, Municipal Corporation, with the help of such Officers, as may be appointed by the Government from time Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 15 WP 2453-21.doc to time and submit the same for approval to the Chief Controlling Revenue Authority, each year. It contemplate collation data in respect of average rates of lands and buildings, which shall be arranged in the ASR as far as possible in Ward wise/Zone wise manner in respect of urban properties as well as in respect of Rural properties. It would take into account the type of land, type of construction, it's location and situational advantages and disadvantages of the property. While working out the average rate of land and building, the concerned Officer is expected to take into account the established principles of valuation. The Chief Controlling Revenue Authority, by an order shall issue an annual statement of rates (ASR) showing average rate of lands and buildings, which shall be subjected to revision every year on 1st day of April, taking into account the average rate of lands and buildings, prepared and submitted to him by Joint Director of Town Planning and valuation. It is permissible to continue with the ASR of the preceding year, if it is not revised in consultation with the Joint Director of Town Planning and Valuation.
Sub-rule (6) of Rule 4 prescribe the manner in which the market value of the land shall be determined. It reads thus :-
"(6) Every registering officer shall, when the instrument is produced before him for registration, verify in each case the market value of land and buildings, etc., as the case may be, from the above statement and if he finds the market value as stated in the instrument, less than the minimum value, prescribed by the statement, he shall refer the same to the Collector of the District for determination of the true Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 :::
16 WP 2453-21.doc market value of the property which is the subject matter of the instrument and the property duty payable thereon; First proviso below Sub-Rule (6) of Rule 4 is as follows.-
"Provided that, if a property is sold or allotted by Government or Semi Government body or a Government Undertaking or a Local Authority on the basis of the predetermined price, then value determined by said bodies, shall be the true market value of the subject matter property.".
Similarly, second proviso below Sub-Rule (6) of Rule 4 read as under,-
"Provided further than, where the property is purchased or acquired or taken over by the Government, Semi- Government Body or a Government Undertaking or Local Authority, then the actual value determined as consideration by the said bodies as mentioned in the deed, shall be considered to be the true market value of the subject matter property.".
19 Reading of the aforesaid provision would lead to a proposition, that if a property is sold or allotted by Government or such authority on the basis of pre-determined price, then the value determined by such bodies shall be the true market value of the subject property. Further, if the property is purchased or acquired or taken over by the Government or like bodies, then the actual value determined as consideration by the said bodies, as mentioned in the deed, shall be considered as true market value of the subject property.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 17 WP 2453-21.doc 20 The respondent authorities, in the impugned order, has concluded that the Charity Commissioner, Mumbai cannot be termed as 'competent authority' for the purpose of the proviso, quoted above, and appended to Rule 4(6) of the Rules of 1995, the reason accorded, being that neither the authority sold out nor has it purchased the property.
At this juncture, it would be necessary to refer to Section 36 of the Maharashtra Public Trust Act, which deal it alienation of immovable property of public trust and sub-clause
(c) of sub-section (1) of Section 36 permit disposal of any immovable property of the Trust, if the Charity Commissioner is satisfied that in the interest of any public trust, the property should be disposed of and this can be done on an application of a trust/trustee, subject to any conditions as he may think fit to impose, from regard being had to the interest or benefit or protection of the Trust.
21 The proviso appended, empower the Charity Commissioner to modify the condition before the previous sanction is accorded by him. Sub-Section (5) of Section 36, contemplate an exposed facto sanction to the transfer of the Trust property in case of compelling necessity.
The paramount emphasis in the sanction being accorded by the Charity Commissioner, is the transfer being in Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 18 WP 2453-21.doc the interest of the Trust, and the reasonable effort on part of the trustees to secure its best price.
22 Sub-rule (6) of Rule 4 of 1995 carve out an exception in determining the market value of the property; if the property is sold or allotted by Government or semi- government body or a government undertaking or local authority on the basis of pre- determined price, in that contingency, the value determined by such bodies shall be taken as true market value or when the property is purchased or acquired or taken up by the said bodies, then the actual value determined as consideration, shall be considered to be the true market value of the subject property.
23 Section 2(na) of the Maharashtra Stamp Act define 'market value' as under :-
(na) "market value", in relation to any property which is the subject matter of an instrument, means the price which such property would have fetched if sold in open market on the date of execution of such instrument for the consideration stated in the instrument whichever is higher;
24 In the case in hand, it can be seen that the office of the Charity Commissioner, Maharashtra State, published a public notice in the background of Application No.1/2013 filed under 36(1)(a) in the matter of the public trust and invited bids for sale of the property described in the Schedule, subject to sanction of the Charity Commissioner u/s.36(1)(a) of the Maharashtra Public Trust Act, 1950. The base price for the offer was declared as Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 19 WP 2453-21.doc Rs.22,54,00,000/- The Superintendent of the office of the Charity Commissioner invited written offers for sale of the subject property of A.H. Wadia Trust.
On issuance of the said notice, the offer of the petitioner, being the highest, was accepted. The price of the bid of the petitioner was pitched against the valuation of the property of Rs.22 Crores 54 lakhs, since the Trust made it clear to the Charity Commissioner, that the property is encroached and is declared as a Slum Area, and as such, there is no likelihood of the Trust getting higher price, in comparison with the current market rate. Accordingly, the trustees agreed to sell the property and were satisfied with the price offered by the petitioner. The process conducted by the Charity Commissioner, on instituting the application u/s.36(1)(a) of the Maharashtra Public Trust Act, 1950, reveal that the sanction came to be granted on consideration of two pre-dominant factors, being (1) Is the trust in compelling need of selling the Trust property? and (2) Is the proposed transaction between the trust and Shrikrishna Realtors in the interest of the Trust?
The Charity Commissioner specifically recorded that the property to be sold is a slum area and the trustees have not been successful in recovering the possession from the occupants and in such circumstances, the decision of the trustees to sell the property at a maximum offer prices was held to be 'prudent', decision and it is also recorded, that the trustees are making Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 20 WP 2453-21.doc efforts to sell the property since 2012.
Relying upon the fresh valuation dated 17/6/2017, the offer of the petitioner was accepted and sanction was accorded to the Trustees of A.H. Wadia Trust to sell the property to the petitioner.
25 The finding recorded by the respondent no.1 to the effect that the Charity Commissioner, Mumbai cannot be termed as a competent authority for the purpose of proviso below Rule 4(6), for the reason that neither the authority has sold out or purchased the property, cannot be sustained as, if the procedure adopted by the Charity Commissioner is carefully perused, it can be seen that the property of the Trust, is sought to be sold by public auction conducted under the aegis of the Charity Commissioner and since the property belong to the Trust, it contemplated the followance of procedure u/s.36(1)(a) of the Trust Act, 1950.
In the past, when another property of A.H. Wadia Trust, located in village Marol was alienated, as there were encroachments over the property and the Trust was not in a position to remove the encroachment, and it had invited offers for the sale of the property. One M/s. Crystal Construction Co. was found to be the successful bidder and the Charity Commissioner was persuaded to accord sanction to the Trust to sell the property on 'AS IS WHERE IS' and 'AS IS WHAT IS BASIS ', to the Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 21 WP 2453-21.doc company for consideration of Rs. Two Crores Ten Lakhs. The Trust had obtained valuation report from a Government Approved Architect and valuer, who had estimated the price of the trust property at Rs.One Crore 28 lakhs. The document of conveyance being submitted for adjudication, the Collector of Stamps assessed the market value of the Trust Property at Rs.30,55,58,000/- and adjudicated the stamp duty at Rs.1,52,77,900/-
M/s Crystal Construction Company preferred an Appeal and the Appellate Authority held that the determination of value of the property by the Charity Commissioner did not fall within the proviso to sub-rule (6) of Rule 4 of the Rules of 1995 and the learned Single Judge of this Court extensively dealt with the said objection in Writ Petition No.714/2018.
After exhaustively referring to the procedure that was followed by the Charity Commissioner, in exercise of its power u/ s.36 of the Trust Act, it was held that the inquiry before the Charity Commissioner is unquestionably a quasi-judicial inquiry, and the Commissioner shall ensure that the property is alienated at a price or value which is in the best interest of the Trust.
Referring to a full bench decision of this Court in case of Shailesh developers & Anr. Vs Joint Charity Commissioner, Maharashtra & Ors. reported in 2007(3) Mh. L.J. 717 , the power in the Charity Commissioner was recognized as not a mere Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 22 WP 2453-21.doc administrative action, but it was held that the power is to be exercised after adhering to the principles of inviting an open offer, permitting competitive bidding and ensuring that the best value is fetched. Relying upon another decision of the Single Judge of this Court in case of Pinak Bharat & Co. & Bina V. Adani, which was dealing with a sale through a Court, where it was held that a sale through a Court stands on a higher pedestal than the sale by authorities envisaged by first proviso to sub-rule 6, the learned Single Judge (Justice. N. J. Jamadar) held as under :-
"21. The aforesaid pronouncements indicates as to how a sale through Court stands even on a higher pedestal than the sale by the authorities envisaged by the first proviso to sub-rule (6), namely, sale or allotment by the Government or Semi-government Body or a Government undertaking or a local authority on the basis of the predetermined price, when the method of auction sale is resorted to, which in itself provides for an open competitive bidding. In the event the process of sale through auction is preceded by obtaining a valuation certificate from an approved valuer and thereafter the open competitive bids are invited then the said process has all the trappings of a process which ensures the objective of fetching of a true market value of the property. The aforesaid pronouncement governs the sale of the trust property by the Charity Commissioner under section 36 of the Trust Act, 1950, provided the elements of prior valuation of the trust property and the sale of the trust property through auction process are adhered to.
22. There is another factor which has a significant bearing on the determination of the market value of the property sold through the aegis of the Charity Commissioner. The authorities were not justified in totally eschewing from consideration the factum of the sale of the trust property by Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 23 WP 2453-21.doc the Charity Commissioner by opining that the said sale by the Charity Commissioner does not fall within the categories of the sale exempted by the proviso to sub-rule (6) of Rule 4 of the Rules, 1995. The circular dated 13 th October, 2006, issued by the Controller of Stamps, State of Maharashtra, indicates that while determining the market value of the property sold by the orders of the Charity Commissioner, the adjudicating authorities shall call for certain information, namely, whether there was a public notice of auction, whether the value at which the property was sold was obtained in a public auction conducted by the Charity Commissioner. In case, the transaction is otherwise than by public auction it shall be ascertained as to how the Charity Commissioner arrived at the value of the trust property while according sanction for its sale. In the event no documents were forthcoming on the aforesaid points then the competent authorities shall determine the market value in accordance with the provisions contained in Sections 31, 32A and 33 of the Stamp Act, 1958."
26 Further, relying upon the circular dated 13/10/2006 issued by the controller of Stamps, the following reasoning supported the conclusion :
"23. The aforesaid circular thus equates the sale of the trust property by the orders of the Charity Commissioner with the sale and/or allotment of the property by the authorities enumerated in the first proviso to sub-rule (6) of Rule 4. The circular further envisages the procedure to be followed where the competent authorities entertain a genuine doubt about the correctness of the value of the property which is sold under the orders of the Charity Commissioner. The authorities in the instant case were thus not within their rights in totally discarding the determination of the value of the trust property by the learned Charity Commissioner on the premise that the said Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 24 WP 2453-21.doc 'authority' is not enumerated in the proviso to sub-rule (6) of Rule 4."
Since the Appellate Authority held that the order of the Charity Commissioner did not fall within the ambit of first proviso of sub-rule (6) of Rule 4, the impugned order was quashed and set aside and the matter was remanded to the Collector of Stamps to adjudicate the stamp duty on the instrument in question after providing an effective opportunity of hearing to all concerned.
27 The aforesaid decision, in case of M/s.Crystal Construction Co, therefore, make it clear that the sale by the Charity Commissioner would be covered within the purview of first proviso to sub-rule (6) of Rule 4, and since I am in agreement, with the view expressed in M/s.Crystal Construction Co, I need not deliberate on the said point further.
28 The second point which then fall for consideration is whether the Charity Commissioner has fixed the pre-determined price for the auction of the property, and whether it was justified in relying upon the valuation of the property, as projected by the trust, when the Revenue Authorities contend that the Charity Commissioner has not considered the ASR for fixing of the offset price.
The A.H. Wadia Trust when it sought sanction from the Charity Commissioner u/s.36(1)(a) of the Trust Act, Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 25 WP 2453-21.doc submitted the valuation report from C.D. Vaithy and Co., the Architect and Valuers and the report dated 17/6/2017, is based on the information furnished by the Trust or by their surveyor where the valuation of the property is estimated as Rs.22,54,00,000/-. The valuation report placed on record as Exhibit-G to the writ petition refer to the location of the plot and it also take note of the fact that the suit property is declared as 'slum'. It also note an essential fact, that on an Appeal being filed by the few hutment dwellers before the Maharashtra Slum Areas Tribunal, Mumbai, the order declaring the area as 'slum' is set aside, in respect of some portion of the property involved in the Appeals and out of total area of 5121.50 sq.m, an area of only 717.70 sq.m came to be de-notified.
The valuation, report has taken into account the area which was declared as Slum and it valued the property by taking into account the development of the property under Slum Rehabilitation Scheme to be carried out as per Regulation 33(10) of DCR for Greater Mumbai. The valuation report make a reference to the amendments in the DCR 33(10) and as per the amendment of 27/8/1996, it consider the increase in the market area of the residential tenements with an in situ FSI of 3.00. In absence of the station survey plan, the Architect and valuer relied upon the information given by the Surveyor of the Trust and the report considered that 225 huts occupied the said plot. Contemplating the requirement of consent for more than 70% of Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 26 WP 2453-21.doc the eligible hutment dwellers as per the D.C. Regulation before the Rehabilitation Scheme is approved by the SRA, it was assumed that the process will consume time of approximate 3 years, and hence the value of the property has been differed for the period of 3 years at the rate of 10% p.a. 29 The valuation report is in respect of area of 5121.50 sq.m and it take into account the computation of tenements density as well as computation of rehab FSI and rehab component and consider the total FSI for the project to be 3.0891 with the maximum permissible FSI of 3.00, it computed the value of the TDR available.
Considering the present value of sale proceeds plus the value of TDR, it arrived at a sum of Rs.1,06,11,58,145/-. The fair market value thereafter is derived in the following manner :-
"22, The total deferred investment of the Developer towards the cost of the rehab component, the sale component, the cost of transit accommodation and alternative accommodation for the first floor tenements comes to Rs. 45,21,21,158/-. Considering a 40% return on capital as the Developer's profit, the Developer's profit will work out to Rs. 18,08,48,463/- or say Rs. 18,08,00,000/-. Thus, the Owner's share will work out to Rs. 42,84,00,000/- (Rs. 60,90,00,000/- less Rs. 18,08,00,000/-).
23. In addition to the return on the aforementioned deferred investment of Rs. 45.21 Crores, the Developer will also expect a 20% return per annum on the investment made in purchasing the plot from the Trust. This amount will have to be deducted from the aforesaid Owner's share Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 27 WP 2453-21.doc of Rs. 42.82 crores. Thus, the Owner's share will work out to Rs. 22,53,68,421/- or say Rs. 22,54,00,000/- after factoring a 20% return per annum for a period of 4.5 years on the investment for the Developer towards the purchase price of the plot.
24. Thus, the fair market value of the plot bearing CTS Nos. 4110, 4110/1 to 115 of Village Kolekalyan, Taluka Andheri, M.S.D. belonging to the A. H. Wadia Trust, will be Rs. 22,54,00,000/- (Rupees twenty-two crores fifty-four lakhs only) as on date i.e. 17th June 2017."
30 In contrast, the District Collector of Stamps, has calculated the market value of the property, being declared as a slum by taking into account the guideline note of market value chart for the year 2017-2018, and considering the provisions of DCR for Greater Mumbai and the Circular dated 30/6/2005 and arrived at the following valuation:-
"Valuation Plot area = 5121.50 sq. mt.
Permissible FSI Under 33(10) = 3 sq. mt.
Total FSI on plot = 15364.5 sq. mt.
i) Rehab Component (50%) = 7682.25 sq. mt.
(15364.5 x 50%)
ii) State Component (50%) = 7682.25 sq. mt.
(15364.5 x 50%)
i) Value of Sale Component = Rs. 76,13,10,975/-
(7682.25 x 99100)
Less
Construction Cost for Rehab = Rs. (-) 21,12,61,875/-
(7682.25 x 99100)
Tilak
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Net Value = Rs. 55,00,49,100/-
Say + Rs. 55,00,50,000/-
The interim order dated 7/6/2018 of this office regarding the amount of stamp duty is confirmed.
Market Value Schedule Stamp duty Stamp duty Deficient Stamp entry Duty Rs.55,00,50,000/- 25(b) Rs. 2,75,03,000/- Rs.85,50,000/- Rs.1,89,53,000/-"
31 The Collector of Stamps has extensively relied upon the guidance note no.33 to the market value ready reckoner for the year 2017-18.
The learned AGP has placed on record the guidelines published by the Registration and Stamp Department, determining the ASR for the year 2018, which determine the ASR for various documents and the one relevant, here, is for determination of the Slum Rehabilitation Scheme, ASR 26 which read thus :-
"26: Issues to be considered for valuation while registering/ adjudicating instrument of development agreement in respect of slum rehabilitation scheme:-
a) Value of the constructed area to be received by the land owner as per the Annual Statement of Rates applicable for new construction + monetary and other consideration, the aggregate thereof;
b) Value of the constructed area/carpet area to be received by the developer at the land rates as per ASR less cost of construction for the construction of slum rehabilitation OR 50% value of the whole land at Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 29 WP 2453-21.doc land rate of ASR, whichever is higher;
Of the above value (a) and (b) whichever is higher should be considered as market value for levying stamp duty."
32 By applying the said guideline to the Deed of Conveyance which was placed for adjudication, the Collector of Stamps has calculated the market value in the following manner :
Land Rate Const. Cost Resi. Rate
ADJ- 194-2018 99100 27500 162600
Plot Area = 5121.50
1 S.R.A. Plot area = 5121.50
2 Facultative FSI under = 5121.50 x 3 = 15364.5
scheme of SRA
3 Rehab Area 50% (as per = 15364.5 x 0.05 = 7682.25
DC Rule 33(10)
4 Sale Area 50% (as per DC = 15364.5 x 0.05 = 7682.25
Rule 33(10)
According to Guideline
Instructions No. 26 (A)
annual cost rate available
to the landholder as per
newly constructed rate.
Consideration 171,000,000
Total 171,000,000
remune
ration
cost
5 Permissible area per
Occupant (As per DC
Rules 33(10)
6 According to guideline
No. 26(B), valuation to be
arrived at by deducting
cost of construction from
the valuation of
Tilak
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30 WP 2453-21.doc
construction/FSI.
7 Assessment of sale area = 7682.25 x 99100 = 761310975
8 Construction cost of = 7682.25 x 27500 = 211261875
Rehab area
9 Net assessment (7-8) = 761310975 x 211261875 = 550049100
Market 550,050,000 B-
value 1
According to Guideline
No.26(b) or 50%
assessment of land
according to land cost.
Market value (as per
assessment of instruction
no.26 B)
S.R.A Land area = 5121.50
Total Assessment of land = 51321.50 x 99100 = 507540650
50% of total cost = 507540650 x 0.50 = 253770325
Market Value 253,771,000
Market Value 253,771,000 B-
Cost B- II II
As per above market .......
value, as for B-I Rs.
55,00,50,000/- is more
than market value of B-II
Rs.25,37,71,000/- and
hence, market value is
Rs.55,00,50,000/-.
Market Value A = = 550,050,000
Stamp duty 0.05
payable
27,502,500
Total Payable 27,503,000
Stamp Duty
Tilak
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33 The Collector of Stamps in her affidavit, filed on
9/3/2022, has made a following statement.
"7. I say that the Petitioner along with A. H. Wadia Trust has for reason best known to them mislead the Charity Commissioner, Mumbai and Government authorities thereby grossly undervaluing the property in question which amounts to fraud. The mis-representation amounting to fraud played by A H Wadia Trust is in details elaborated hereunder:
a) I say and submit that the whole property (herein after mentioned as the larger plot of land admeasuring 5121.50 sq. Mtrs.) was notified as Slum vide notification dated 14th July, 1977. As per Annual Statement of Rate (ASR) published annually by State Government has specific Guideline No. 26 clearly prescribes the manner in which the Slum notified land has to be valued. I say and submit that this guidelines are standard guidelines and binding on all valuers in the State. I say that these guidelines are to be followed to arrive at correct value of the property in question (Rule 4 of The Maharashtra Stamp (Determination of True Market Value of property) Rules, 1995. In this case there is total deviation from these ASR guidelines by the Ld. Valuer. I say that in case of valuation of property there is no scope for presumptions and assumptions. However, here the total valuation report is based on presumptions and assumptions."
Another objection is raised in the said affidavit by stating that the valuer has inspected the property in the year 2010 and has given the valuation report in the year 2017 and this gap Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 32 WP 2453-21.doc of 7 long years make the valuation unreliable, unrealistic and doubtful.
34 Another objection to the valuation report submitted by the valuer of the AH Wadia Trust is, the valuer in his valuation report, has considered the plot from the view of development agreement and has unduly devalued the property and he has failed to consider the basic guideline no.26 of ASR which is statutorily binding. The flaw in the report of the valuer has been highlighted in the affidavits filed by the Collector in the following note :
"d) I say and submit that the Ld. Valuer has valued the true and correct market value of the property to Rs.
106,11,58,145/- then he proceeded to deduct certain imaginary values under some or the other head for instance 'Computation of Rehab FSI', 'Computation of rehab component' 'Builtup area permissible onsite' 'builtup area available for TDR' 'Cost of rehab component' 'period of 4 years for obtaining permission' Cost of Alternate Accommodation, Cost of transit accommodation, deferring the value for next 4 years etc and brought down the value of the property to Rs. 22.54 Cr. It is submitted that all these deductions are never considered in valuation of property for sale of SLUM land. Further the Ld Valuer has considered future value of next 4 years and deducted the same from saleable component all this is alien to concept of valuation and no property is valued in this fashion. It is because of this absurd, unprofessional and misguided manner of valuation the value of property worth 55 crores (as per respondents) and Rs. 106,11,58,145/- (as per Ld. Valuer) is valued as 22.54 crores. There are several other flaws in the valuation report which are alien and unknown to the normal standard practice of valuation followed all over the Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 33 WP 2453-21.doc Country. I state that the same are adopted to undervalue the property in question, thus fraud is played with the Judicial authorities. I say and submit that the Ld. Valuer has proceeded on the basis of nature of land and alone on the basis of nature of land valued the property. This manner of valuation is in gross violation of well established principles of valuation which are upheld by the Apex Court. Thus deliberately with malafide intentions of fraud and evasion of stamp duty undervalued valuation report is placed before the Ld. Charity Commissioner. In the valuation done by the Ld. Valuer market value of the property was wrongly fraudulently reduced by more than 50% of actual market value of the plot of land which is Rs. 55 Crores."
35 On close scrutiny of the valuation report of the Trust, it indicate that the inspection of the land was carried out in the year 2010 and the report valued the land without having the benefit of considering the station survey plan. The registered valuer has given the following Declaration:
Part III- Declaration:
I hereby declare that -
a) The information furnished in Part-I is true and correct to the best of my knowledge and belief.
b) I have no direct or indirect interest in the property valued.
c) The property was inspected on 24th April 2010.
d) Wherever it is stated in the report that the information has been furnished to us by the A.H. Wadia Trust or by their Surveyor, the same is believed to be reliable but the valuer accepts no responsibility if this should prove not to be so.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 34 WP 2453-21.doc Further, the report also include the Recital:-
(I) (1) Under introduction from the A.H. Wadia Trust, I have inspected their land situated at Kolekalyan, M.S.D, Mumbai, for the purposes of determining the market value of the same as on date i.e. 17th June 2017.
V (12) In view of the aforesaid, the said land belonging to the A.H. Wadia Trust, will have to be valued based on the Slum Rehabilitation Scheme, which was prepared and finalised by the Slum Rehabilitation Scheme (SRA) under Section 3B of the said Slum Areas (Improvement, Clearance & Redevelopment) Act, 1971, as modified till date.
(14) The Government of Maharashtra in Urban Development Department sanctioned the Development Control Regulation (DCR) for Greater Mumbai under M.R. & T.P. ACT, 1966 and the same have been made operative with effect from 25th March 1991. Under DCR No.33(10), redevelopment of slums through promoters like owners/developers/co-operative housing societies of slum dwellers/non-governmental organizations (NGO) was made permissible for censused slums or such slums whose structures and inhabitant's name appeared in the electoral roll of 1985, with Floor Space Index (FS() upto 2.5.
(15) Thereafter, in order to make the scheme more transparent and pragmatic and to accommodate the slum dwellers whose names appeared in the electoral roll of 1 st January 1995, a study group was formed under the Chairmanship of the Ex.Chief Secretary, Shri Dinesh Afzulpurkar and based on the recommendations of the study group, the Government in Urban Development Department, by their Notification No. DCR- 1095/1209/CR-273/1995/UD-11 dated 27th August 1996, published amendments to DCR No.33(10) that have since been made final with effect from 15 th October Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 35 WP 2453-21.doc 1977. As per the modified DCR No.33(10) the carpet area of the residential tenements to be given to the hutment dwellers whose names appear in the electoral roll of 1st January 1995, has been increased to 269 sq.ft ith an in situ FSI of 3.00.
36 The valuer who worked out the valuation of property admit that the land will have to be valued bared on Slum Rehabilitation scheme, which was prepared & finalized by SRA under Section 33 of the Slum Area Act, 1971, as modified till date, but failed to apply the Guideline Published by the Government.
ASR Guideline No.26 is the statutory mandate whenever a property has to be developed as slum and the Collector has made a specific statement on affidavit that ASR Guideline No.26 is invoked/applied all over Mumbai and Suburban district for valuation of SRA property for determination of stamp duty. The Collector also make a specific statement that at the time of execution of the document in question, i.e. in the year 2018, the ASR guideline no.26 was in force and was expected to be considered while evaluating any document pertaining to SRA land, may be a development agreement or a conveyance deed.
37 The learned counsel for the petitioner Mr. Khandeparkar has made a feeble attempt to submit that the deed of conveyance presented for adjudication of stamp duty is an out- sale document and not a development agreement.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 36 WP 2453-21.doc 38 I have considered the said contention by referring to the clauses of the Deed of Conveyance dated 5/2/2018 executed between the Trust and the petitioner firm through its partners, described as purchaser.
38 The said document after referring to the manner in which the Charity Commissioner sanctioned the proposed sale of the property in favour of the petitioner record that total area admeasuring 5121.50 sq.m forming part of the said property, has been declared as Slum Rehabilitation Area u/s.3(c)(i) of the Maharashtra Slum Area (Improvement) Clearance and Rehabilitation Act, 1971. The recitals of the said deed specifically record that the entire area forming part of the said property is declared as 'Slum Rehabilitation Area' and the same is in occupation of Slum dwellers. The recital in the Indenture is mentioned to form an integral part of the instrument of conveyance in terms of Article 25(b)(i) of Schedule-I of the Maharashtra Stamp Act, 1958.
Recording that in pursuance of the agreement and in consideration of Rs.17 crore 10 lakhs being full and final consideration payable by the purchaser to the vendors, the vendors sell, convey, transfer, and assure unto the purchasers all that piece and parcel of land with the description set out in the conveyance. An important recital in the said deed record thus :-
"AND the Purchasers are desirous for developing the Slum declared area as more particularly mentioned in Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:39 ::: 37 WP 2453-21.doc Notifications No. SRA/CTS/Desk-1/T-S1/3C/Jay Shree Krishna nagar/2014/728 dated 27th May, 2014 and No. SRA/Dy.Coll/3C/Jai Shri Krishna/2017/384 dated 16th May, 2017 under the Slum Rehabilitation Scheme as prescribed under the guidelines mentioned in Regulation 33(10) of the Development Control Regulations of Brihanmumbai Mahanagarpalika and undertakes not to hold the Vendors responsible if the scheme is not implemented on the slum declared area."
39 The document in form of the deed of conveyance dated 5/2/2018 clearly specify that the petitioners/purchasers are developing the slum declared area as notified by the notification dated 27/5/2014 and 16/5/2017 under the Slum Rehabilitation Scheme as prescribed under the guidelines mentioned in regulation 33(10) of DCR of Brihan Mumbai.
The above clause make it amply clear that the land was purchased for the purpose of rehabilitation of the Slum, since the property was covered by hutments and the Trust was unable to clear the encroachments. The petitioner, which is a partnership firm, has purchased the property belonging to the Trust, already declared as a Slum for the purpose of developing the slum under the Slum Rehabilitation Scheme. Necessarily, it will contemplate adherence to the guidelines mentioned in Regulation 33(10) of DCR and the Collector, has emphatically relied upon the ASR 26 for the year 2017-18, and has rightly determined the valuation of the property while adjudicating the instrument titled as 'Deed of Conveyance' in respect of Slum Rehabilitation Scheme by Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:40 ::: 38 WP 2453-21.doc invoking ASR 26 and arrived at the market value for levying stamp duty.
The learned counsel for the petitioner may be right in submitting that the Charity Commissioner has carried out the entire exercise of determining the valuation of the property, but the price at which the property has been purchased by the petitioner on the basis of the incorrect valuation by the valuer do not determine its true market value. The Collector of Stamps has therefore, computed the true market value as per ASR 26 and worked out a deficit stamp duty and directed the petitioner to deposit the same.
40 The Charity Commissioner, while according it's sanction to sell the property of the Trust, had before it the current market price of property inform of the valuation report dated 17/06/2017, which determined the fair market value as Rs, 22,54,00,000/-, as on date of the Report.
Accepting it to be the fair market value, offers were invited and the order record its satisfaction in accepting the bid of the petitioner by recording as under:
"If permission is refused because the offer is below the market rate as estimated by the Valuer of Rs. 22,54,00,000/-, the trust is not likely to be benefitted because there is a reasonable probability of either this property being acquired by the Government under its Scheme for making the city clean and smart or by the Slum Authorities for its development under the SRA Act.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:40 ::: 39 WP 2453-21.doc In these contingencies, the trust is not likely to get even this much consideration. I am therefore satisfied that the decision of the trustees to sell the property to Shree Krishna Realtors at Rs.17,10,00,000/- as prudent."
41 The Price accepted for the property is even less than its market value & hence it fail to consider the paramount factor of according sanction, in exercise of the statutory duty cast on the Charity Commissioner under section 36(1) of the Trust Act, by securing the interest of the Trust. Not only this, by estimating the lesser value of the property which is proposed to be developed under a Slum Rehabilitation Scheme, the gout is also deprived of Courts revenue, by undervaluation of the property. By applying the current ASR of year 2017-18, when the property is to be sold, the Collector has valued the property at Rs.55,00,55,000/-. In any case, the Charity Commissioner has received a Valuation Report of the market price and has accepted the offer of the petitioners as the highest bid. The valuation which was taken as a lease for inviting the offer itself, is premised on an incorrect report, as the valuer did not consider ASR 26, which would give the true market value as in 2017-18.
The Collector and the two authorities have rightly held in favour of the Revenue by applying the correct Guideline No.26 which provide for the factor, on the basis of which market value for relying stamp duty, shall be considered.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:40 ::: 40 WP 2453-21.doc 42 The Hon'ble Apex Court recently on 31/1/2022, while dealing with a Special Leave Petition filed by the land owners, who had received the compensation of land acquired, had an opportunity to deal with the factors that have to be looked into while determining the market value of the land by the Reference Court and recorded as under :-
"11 The evidence produced by the landowners is that the acquired land is close to Educational Institutions, Banks, Tahsil Office etc whereas there is no evidence that the irrigated agricultural land has the potential of use for either residential or commercial purposes. It is not the nature of land which alone is determinative of the market value of the land. The market value must be determined keeping in view the various factors including proximity to the developed area and the road etc. As per the evidence led by the landowners, the land acquired is ½ km from the road. The land is close to developed residential or commercial or institutional area. On the other hand, there is no evidence that Exh.31 and Exh.32 are in any way comparable to the land acquired. The High Court has erred in law in holding that since the land of the sale exemplars Exh.31 and Exh.32 is of irrigated agricultural land whereas the land acquired is unirrigated, is not the reasonable yardstick to determine market value of the land as the land in question is close to already developed area.
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43 Dealing with the power of the Charity Commissioner u/s.36 of the Public Trust Act, the Hon'ble Apex court in case of Shri Ambadevi Sanstha and Ors Vs. Joint Charity Commissioner & Ors, (Civil Appeal No.9936/2018, Special Leave Petition (C) No.35049/2013), has once again reiterated the duty imposed on the Charity Commissioner u/s.36 of the Act. It reiterated that the interest, benefit and protection of the Trust are the three classic requirements to be considered by the Charity Commissioner, and the power extends to inviting offers from members of public and directing the trustees to sell or transfer the property to a person whose bid or quotation is best. The observation made by Their Lordship in para 10 are of utmost importance and I deem it appropriate to reproduce.
"10. In Chenchu Rami Reddy vs. Govt. of Andhra Pradesh, (1986) 3 SCC 391, it was observed that there has to be full application of mind while granting permission to sell by the competent authority and the disposal of public property should normally be done by public auction. The public minded citizens have to show exemplary vigilance and the property of religious and charitable institutions or endowment must be jealously protected. Property should be sold by public auction after fixing reserve price. This Court observed :-
"10 We cannot conclude without observing that property of such institutions or endowments must be jealously protected. It must be protected, for. a large segment of the community has beneficial interest in it (that is the raison d'etre of the Act itself). The authorities exercising the powers under the Act must not only be most Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:40 ::: 42 WP 2453-21.doc alert and vigilant in such matters but also show awareness of the ways of the present day world as also the ugly realities of the world of today. They cannot afford to take things at their face value or make a less than the closest-and-best attention approach to guard against all pitfalls. The approving authority must be aware that in such matters the trustees, or persons authorized to sell by private negotiations, can, in a given case, enter into secret or invisible underhand deal or a understanding with the purchasers at the cost of the concerned institution. Those who are willing to purchase by private negotiations can also bid at a public auction. Why would they feel shy or be deterred from bidding at a public auction? Why then permit sale by private negotiations which will not be visible to the public eye and may even give rise to public suspicion unless there are special reasons to justify doing so? And care must be taken to fix a reserve price after ascertaining the market value for the sake of safeguarding the interest of the endowment. With these words of caution we close the matter." (emphasis supplied)
44 Apart from this, reliance is also placed upon a decision in case of R. Venugopala Naidu Vs. Venkatarayulu Naidu Charities, 1989 Supp(2) SCC 356, and the observations came to be quoted as under :-
"13. The subordinate court and the High Court did not go into the merits of the case as the appellants were non- suited on the ground of locus standi. We would have normally remanded the case for decision on merits but in the facts and circumstances of this case we are satisfied that the value of the property which the trust got was not the market value. Two persons namely S.M. Mohamed Yaaseen ad S.N.M. Ubayadully have filed affidavit offering Rs. 9 lakhs and Rs. 10 lakhs respectively for these Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:40 ::: 43 WP 2453-21.doc properties. In support of their bona fides they have deposited 10 per cent of the offer in this Court. This Court in Chenchu Ram Reddy v. Government of Andhra Pradesh, (1986) 3 SCC 391, has held that the property of religious and charitable endowments or institutions must be jealously protected because a large segment of the community has beneficial interest therein. Sale by private negotiations which is not visible to the public eye and may even give rise to public suspicion should not, therefore, be permitted unless there are special reasons to justify the same. It has further been held that care must be taken to fix the reserve price after ascertaining the market value for safeguarding the interest of the endowment"
The permission issued by the Charity Commissioner was set aside by recording as under :-
"15. The reserved price of various properties was also not fixed in the instant matter and the Joint Charity Commissioner has failed to consider what was the actual price as on the date of grant of permission and when transactions were entered into. The permission to sell the properties had been granted in mechanical manner ignoring illegality of transactions. The action of the Trust seeking permission to sell after accepting the earnest money was wholly improper and impermissible. The transactions could not have been finalised nor possession could have been handed over before filing application to Joint Charity Commissioner under Section 36 of the Act of 1950. Prior sanction was necessary to create any right in the properties.
16. The offers were invited for land in 1994 and the applications were filed in the year 1997-98 for grant Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:40 ::: 44 WP 2453-21.doc of permission to sell the properties of the Trust. The prices of 1994, thus, could not have been considered to be the value as on the date the permission was applied for. Apart from that, no serious efforts were made by the Joint Charity Commissioner to ascertain the value of the properties in the years 1990, 1994 or 1998. After the advertisement inviting offer was issued in respect to lands, it is apparent that the offer of Mr. M.K. Lakde was for Rs.9,000/- per acre for a part of land, nonetheless it was much more than the value accepted by the Joint Charity Commissioner. Merely on the ground that Trust had accepted the earnest money from Mr. Jaikishore Karwa of Rs.21,000/-. no equity was created in his favour to purchase the property. It was not open to the Joint Charity Commissioner to permit the sale on the ground of receipt of earnest money in illegal manner. Before permission to sell no such agreement could have been entered into. The same indicated predisposition of Trust to sell it in illegal manner. The valuation report from Talathi was based on ipse dixit indicated the value of the land as Rs.8,000/- per acre. The offer could not have been accepted in view of the available higher offers. The Joint Charity Commissioner has failed to protect the interest of the Trust."
45 For the aforesaid reasons, the impugned order determining the market value of the property purchased by the petitioner is upheld. The petitioner is liable to pay the deficit stamp duty as directed by the Collector of Stamps in it's order dated 31/7/2018.
Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:40 ::: 45 WP 2453-21.doc 46 Rule is discharged.
Writ Petition is dismissed.
(SMT.BHARATI DANGRE, J) Tilak ::: Uploaded on - 22/08/2022 ::: Downloaded on - 06/01/2023 14:47:40 :::