Karnataka High Court
Vivek Marla vs The District Registrar on 8 March, 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 08TH DAY OF MARCH, 2022
BEFORE
THE HON'BLE MR. JUSTICE P. KRISHNA BHAT
WRIT PETITION NO.271/2013(GM-ST/RN)
BETWEEN:
1. VIVEK MARLA
S/O KRISHNA MARLA
AGED ABOUT 50 YEARS
2. CHETANA MARLA
W/O VIVEK MARLA
AGED ABOUT 45 YEARS
BOTH ARE RESIDING AT NO.608
80 FEET ROAD,RMV II STAGE
III BLOCK
BANGALORE 560 094
... PETITIONERS
(BY SRI. ANIL KUMAR SHETTY, ADVOCATE FOR
SRI. S SHAKER SHETTY, ADVOCATE)
AND:
1. THE DISTRICT REGISTRAR
GANDHINAGAR REGISTRATION DISTRICT
NO.4, DODDA BYRAPPA ROAD
PALACE GUTTAHALLI
BANGALORE 560 003
2. THE DEPUTY INSPECTOR GENERAL
DEPARTMENT OF REGISTRATION & STAMP DUTY
KSRTC BUILDING, K H ROAD
BANGALORE 560027
... RESPONDENTS
(BY SRI. BALAJI N. AGA)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE
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ORDER PASSED BY THE R1 ON 31.8.10, AS PER ANN-H. ii) R2
PASSED IN STP APPEAL NO.58/10-11 ON 25.6.12 AFFIRMING
THE ORDER OF R1, AS PER ANN-J ACCORDING TO LAW AND
ETC.
THIS WRIT PETITION COMING ON FOR HEARING THIS
DAY, THROUGH VIDEO CONFERENCE/ PHYSICAL HEARING, THE
COURT MADE THE FOLLOWING:
ORDER
Petitioners are seeking the following releifs:
WHEREFORE, the Petitioner prays that this Hon'ble Court may be pleased to issue a writ of certiorari or any other like writ, thereby quash the order passed by
(i) Respondent No.1 in proceedings No.45-A[1]-
53/99-00 on 31.8.2010 as per Annexure-H.
(ii) Respondent No.2 passed in STP Appeal No.58/2010-11 on 25.06.2012 affirming the order of Respondent No.1 as per Annexure-J, according to law.
2. It is the case of the petitioners that by a registered sale deed dated 28.09.1998 registered as document No.3901/98-99 the petitioners purchased the site bearing registration No.608, 3rd Block, 2nd Stage, RMV Extension, Bangalore, from one Smt.Neena R. Shetty represented by her GPA holder for a total consideration of Rs.35,00,000/-. At the time of purchase of property there was a small shed measuring 300 sq.ft. built of bricks with sheet roof. After duly registering the sale deed, a reference 3 was made by the registering authority under Section 45-A(1) of the Karnataka Stamp Act, 1957 (for short 'the Act'), to the District Registrar and the competent authority alleging undervaluation of the instrument. The competent authority (respondent No.1) held the proceedings under Section 45-A of the Act and passed the impugned order dated 31.08.2010 (Annexure-H) holding that there was undervaluation of the instrument and petitioners were liable to pay Rs.26,87,575/- towards differential stamp duty and registration charges. Petitioners preferred the statutory appeal under Section 45- A(5) of the Act and after hearing, respondent No.2 passed an order dated 27.06.2012 (Annexure-J) dismissing the appeal.
3. Learned counsel for the petitioners submitted that order of competent authority as well as appellate authority are wholly arbitrary and against the provisions of the Act as well as Karnataka Stamp (Prevention of Undervaluation of Instruments) Rules, 1977 (for short 'Rules 1977'). He contended that respondent No.1 has failed to consider the fact that as on the date of sale deed namely, 28.09.1998, only a shed of dimension of 300 sq.ft. was in existence and value of land was also much lower and inspite of the same, respondent 4 No.1 has taken the valuation of land as well as built area existing at the time of proceedings held by them in the year 2010. He further submitted that there was no building of dimension of 12500 sq.ft. in the ground floor and against 12500 sq.ft. in the first floor in existence on the site at the time of its purchase. He further submitted that appellate authority -respondent No.2 has only reiterated the facts noted by respondent No.1 without application of mind and thereby confirmed the order passed by respondent No.1. He therefore submitted that entire proceedings initiated by respondent No.1 culminating in order passed by respondent No.2 are all vitiated and they are liable to be set aside.
4. Learned AGA while justifying the orders passed by respondent Nos.1 and 2 submitted that enquiry held by respondent No.1 clearly showed that there was gross undervaluation of the property which was the subject matter of conveyance and during the enquiry petitioners did not produce the relevant documents and therefore, petitioners are not entitled to any relief from this Court and accordingly, writ petition is liable to be dismissed.
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5. Before proceeding to consider the contentions advanced, it is necessary to advert to relevant provisions applicable whenever the registering authority or respondent No.1 has material to believe that there is undervaluation in registering of conveyance or any other instruments. Section 45-A of the Act states that registering authority has the power to refer the matter along with a copy of the instrument to respondent No.1 for determination of market value of the property and proper duty payable thereon. Section 45-A of the Act reads as follows:
"45A. Instrument 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,-
(a) Conveyance [Section 2(1)(d)];
(b) Gift [Article 28(a)];
(c) Exchange of property (Article 26);
(d) Settlement [Article 48-A(I)];
(e) Reconstitution of Partnership [Article 40-B(a)];
(f) Dissolution of Partnership [Article 40-C(a)];
(g) An agreement to sell covered under sub-clause (i) of clause (e) of Article 5;
[(h) a lease covered under item [(vi)] of Article 30;]
(i) A power of Attorney covered [under clause (e), clause (ea) and clause (eb)] of Article 41;
(j) Release [(Article 45-(a)];
(k) Conveyance under a decree or final order of any Civil Court has reason to believe.] [(l) Agreement [Article 5(f)] 6
(m) Award [Article 11(a)]
(n) Trust [Article 54(A)(iii)]
(o) Transferable development Rights (Article 20(7)).] having regard to the estimated market value published by the Committee constituted under section 45-B, if any, or otherwise, that the market value of the property which is the subject matter of such instrument has not been truly set forth, he shall after arriving at the estimated market value, communicate the same to the parties and unless the parties pay the duty on the basis of such valuation, shall keep pending the process of registration and refer the matter along with a copy of such instrument to the Deputy Commissioner for determination of the market value of property and the proper duty payable thereon.] (2) On receipt of a reference under sub-section (1), the Deputy Commissioner shall, after giving the parties a reasonable opportunity of being heard and after holding an inquiry in such manner as the State Government may by rules prescribe, determine by order [as for as may be within ninety days from the date of receipt of such reference] the market value of the property which is the [subject-matter of instrument specified in sub-section (1) and the duty payable thereon.] The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty. [with interest at twelve per cent per annum if he does not pay within ninety days from the date of order of the Deputy Commissioner]:
[Provided that the payment of interest is not applicable to instruments executed prior to 31 day of March, 2006.] st (3) The Deputy Commissioner may, suo motu within two years from the date of registration of [any instrument specified in sub-section (1)] 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 any instrument specified in sub- section (1) 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 by order the market value of such property and the duty payable thereon 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 [with interest at twelve percent per annum if he does not pay within ninety days from the date of order of the Deputy Commissioner]:
Provided that nothing in this sub-section shall apply to any instrument registered before the commencement of the Karnataka Stamp (Amendment) Act, 1975:7
[Provided further that the payment of interest is not applicable to instruments executed prior to 31st day of March 2006.] (4) The order of the Deputy Commissioner under sub-
section (2) or (3) shall be communicated to the person liable to pay the duty. A copy of every such order shall be sent to the registering officer concerned.
(5) Any person aggrieved by an order of the Deputy Commissioner under sub-section (2) or sub-section (3) may, prefer an appeal before the [Regional Commissioner] and all such appeals shall be preferred within such time and be heard and disposed off in such manner as the State Government may by rules prescribe.] [Provided that no appeal shall be admitted unless the person aggrieved has deposited, in the prescribed manner, fifty per cent of the difference in the amount of duty as determined by the Deputy Commissioner under sub-section (2) or (3):
Provided further that whereafter the determination of the market value by the Appellate Authority or determined again by the Deputy Commissioner on a remand of the case the stamp duty borne is found to be sufficient, the amount deposited shall be returned to the person concerned:
[Provided also that such person shall pay the difference in duty along with interest at twelve per cent per annum if he does not pay with in ninety days from the date of order of the Deputy Commissioner or sixty days from the date of order of the Appellate Authority, so however, the payment of interest is not applicable to instruments executed prior to eighteenth day of August, 1999]."
6. Respondent No.1 - District Registrar has power either on reference from the registering authority or suo-motu to enquire into and determine whether there is any undervaluation in the registration of any instrument and if so, what is the differential stamp fee and registering fees that is actually payable for registering such an instrument. The 8 relevant rules namely, Rules 3 to 7 of the Rules, 1977, read as follows:
"3. Furnishing of statement of market value.-
(1) If an instrument relates to a number of items of properties, the market value shall be specified in respect of each item separately. For this purpose the party executing the document shall attach a separate statement to the instrument, furnishing therein information about the various items of properties involved and his own assessment of the market value of each of these items separately (in Form I).
Explanation.- (1) If an instrument covers land comprising several survey numbers of sub-division numbers, the market value shall be specified for the land covered by each survey number or sub-division number as the case may be separately.
(2) The registering officer shall, before registering an instrument, satisfy himself that the party has attached with the instrument a statement, giving the market value for each of the properties separately by sub-rule (1).
(3) The registering officer may, for the purpose of finding out whether the market value has been correctly furnished in the instrument, make such enquiries as he may deem fit. He may elicit from the parties concerned any information bearing on the subject and call for and examine any records kept with any public officer or authority.
(4) For the purpose of this rule, the statement of market value shall apply only to the instruments of conveyance, exchange or gift as mentioned in Section 45-A of the Karnataka Stamp Act, 1957 .
[3-A Communication of Value-The estimated market value arrived at by the Registering Officer under section 45-A shall be communicated to the parties in Form I-A].
4. Procedure on the receipt of reference under section 45-A- (1) On receipt of a reference under sub-section 45-A from a registering officer, the Deputy Commissioner shall issue a notice in Form II, -
(i) to every person by whom, and 9
(ii) to every person in whose favour the instrument has been executed, informing him of the receipt of the reference and asking him to submit to him, his representation if any, in writing to show that the market value of the property has been truly set forth in the instrument, and also to produce all evidence that he has in support of his representation, within 21 days from the date of service of the notice.
(2) The Deputy Commissioner may, if he thinks, fit, record a statement from any person to whom a notice under sub-rule (1) has been issued.
(3) The Deputy Commissioner may for the purpose of his enquiry, -
(i) call for any information or record from any public office, officer or authority under the Government or any local authority;
(ii) examine and record statements from any member of the public, officer or authority under the Government or the local authority; and
(iii) inspect the property after due notice to the parties concerned.
[(4) ]. Xxxxxx (Omitted.)
5. Principles for determination of market value-The Deputy Commissioner shall, as far as possible, have also regard to the following points in arriving at the [xxx] market value : -
(1) In the case of lands, -
(i) classification of the land as dry, garden, wet
and the like ;
(ii) classification under various classes of soil in the
survey records ;
(iii) the rate of revenue assessment for each
classification ;
(iv) other factors which influence the valuation of
the land in question;
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(v) points, if any, mentioned by the parties to the
instrument or any other person which require special consideration ;
(vi) value of adjacent land or lands in the vicinity ;
(vii) average annual yield from the land for five consecutive years till the determination and nearness to road and market, distance from village site, its location in general, level of land, transport facilities, facilities available for irrigation, such as tanks, wells and pumpsets;
(viii) the nature of crops raised on the land. (2) In the case of house sites.-
(i) the general value of house sites in the locality ;
(ii) nearness to road, railway station, bus route ;
(iii) nearness to market, shops and the like ;
(iv) amenities available in the place like public offices, hospitals and educational institutions ;
(v) development activities, industrial improvements in the vicinity ;
(vi) land tax and valuation of sites with reference to taxation records of the local authorities concerned;
(vii) any other features having a special bearing on the valuation of the site; and
(viii) any special features of the case represented by the parties.
(3) In the case of buildings.-
(i) area of the land;
(ii) plinth area and built up portion in each of the
storeys;
(iii) year of construction;
(iv) material of the wall and material of the roofing;
(v) locality in which constructed;
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(vi) amenities provided such as water supply,
electric supply (ordinary or all electric), sewerage, well and garage;
(vii) rate of depreciation;
(viii) fluctuation in rates;
(ix) any other features that have a bearing on the
value;
(x) property tax with reference to taxation records
of local authority concerned ;
(xi) the purpose for which the building is being used
and the income, if any, by way of rent per
annum secured on the building; and
(xii) any other special feature having bearing on the
valuation.
(4) Properties other than lands, house-sites and
buildings, -
(i) the nature and conditions of the property ;
(ii) purpose for which the property is being put to
use; and
(iii) any other special features having a bearing on
the valuation of the property.
6. Procedure after arriving at provisional
market value.-xxxxx (Omitted)
7. [Order] determining the market value.-(1) The Deputy Commissioner shall after considering the representations received in writing and those urged at the time of the hearing and after a careful consideration of all the relevant factors and evidence placed before him, pass an order, determining the market value of the properties and the duty payable on the instrument, communicate the order to the parties (xxx) (2) A copy of the order shall be communicated to the Registering Officer concerned [to take steps to collect the difference in the amount of stamp duty, if any and register the document]."
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7. The above provisions clearly disclose that when an instrument is presented for registration before the registering authority under the Act, he is required to examine the instrument and make a prima facie conclusion as to whether market value disclosed on the instrument is genuine and if he has any reason to believe that such disclosure has not been made properly or there is likelihood of undervaluation of the property subject matter of the instrument and in such an event he should keep the registration pending and refer the instrument to the District Registrar (competent authority) for determination of market value of the property and proper duty payable thereon.
8. Rule 3-A of Rules 1977 requires that when the registering authority is making such reference, he shall communicate to the parties in Form I-A the estimated market value arrived at by him in regard to the instrument. On receiving such a reference or suo-motu (if it is suo-motu, the District Registrar is required to initiate proceedings within two years from the date of registration of instruments), the District Registrar shall issue a notice in Form II to the parties concerned calling upon them to submit their representation in 13 writing showing the market value of property duly set forth in the instrument and further directing to produce all evidence that they have in support of their representation. The rule further provides for the District Registrar to record statement from any person to whom notice has been issued by him. The District Registrar may also call for any information or record from any public office, officer or authority under the Government or any local authority. Similarly, he is also empowered to record statement of any member of the public, officer or authority under the Government or any local authority and inspect the property after due notice to the parties concerned.
9. Rule 5 of Rules 1977 speaks about the principles for determination of market value in regard to the house site, as in this particular case. The District Registrar may for the purpose of enquiry collect the general value of house-sites in the locality, proximity of the house-sites under the instrument to the road, railway station, bus route, market, shops, etc. and also he should have due regard to the amenities available for the house site like public offices, hospitals and educational institutions, etc. He should also have regard to the 14 development activities, industrial units in the vicinity, land tax and valuation of sites with reference to taxation records of the local authorities concerned and any other features having a special bearing on valuation of the site. He must also give due attention to any special features of the case represented by the parties. In the case of buildings, the District Registrar should bear in mind the area of land, plinth area and built up portion in storeys, year of construction, material of wall and material of roofing, locality in which it is constructed and the amenities provided to the buildings namely, water supply, electric supply, sewage, well and garage, rate of depreciation, fluctuation in rates and any other features that have a bearing on the value.
10. In this case, even though learned AGA submits that initiation of proceedings by the District Registrar was on account of reference made by registering authority under sub- section (1) of Section 45-A, it is apparent that Registrar has proceeded to register the instrument even though he was proposing to make a reference for undervaluation. Learned AGA was not in a position to furnish the date of reference order made by registering authority. Rule 3-A of Rules 1977 15 makes it mandatory for the registering authority while making a reference to communicate to parties in Form I-A the estimated market value arrived at by him and records do not disclose that such a communication has been made in this case.
11. The District Registrar in the impugned order has come to the conclusion as follows:
"DzÉñÀ ¥ÀæwªÁ¢UÀ¼À ªÀQîgÀÄ ªÀÄAr¹gÀĪÀ ªÁzÀ, ¸À°è¹gÀĪÀ °TvÀ DPÉëÃ¥ÀuÉ, ¸ÀܼÀ ¥Àj²Ã®£É ªÀgÀ¢, zÁR¯ÉUÀ¼ÀÄ ºÁUÀÆ ¸ÀéwÛUÉ EgÀĪÀ C£ÀÄPÀÆ®vÉ ºÁUÀÆ C£Á£ÀÄPÀÆ®vÉUÀó¼À£ÀÄß UÀªÀÄ£ÀzÀ°èlÄÖPÉÆAqÀÄ PÀ£ÁðlPÀ ¸Á×A¥ï (C¥ÀªÀiË®å vÀqÉUÀlÄÖ«PÉ) ¤AiÀĪÀÄUÀ¼ÀÄ, 1977 ¤AiÀĪÀÄ 5gÀ°è£À CA±ÀUÀ¼À£ÀÄß UÀªÀÄ£ÀzÀ°èlÄPÉÆAqÀÄ ¤AiÀĪÀÄ 7gÀ£ÀéAiÀÄ ¸ÀzÀj D¹ÛAiÀÄ ªÀiÁgÀÄPÀmÉÖ ¨É¯ÉAiÀÄ£ÀÄß F PɼÀPÀAqÀAvÉ ¯ÉPÀÌ ºÁPÀ¯ÁVzÉ.
1 ¤ªÉñÀ£ÀzÀ ¨É¯É ZÀzÀgÀ Cr 1PÉÌ gÀÆ.3,000 zÀAvÉ 4520 ZÀzÀgÀ CrUÀ½UÉ gÀÆ. 1,35,60,000-00 2 £É® CAvÀ¹Û£À ¨É¯É ZÀzÀgÀ Cr 1PÉÌ gÀÆ.300 zÀAvÉ 12500 ZÀzÀgÀ CrUÀ½UÉ gÀÆ. 37,50,000-00 3 ªÉÆzÀ®£É CAvÀ¹Û£À ¨É¯É ZÀzÀgÀ Cr 1PÉÌ gÀÆ.300 zÀAvÉ 12500 ZÀzÀgÀ CrUÀ½UÉ gÀÆ. 37,50,000-00 4 PÀlÖqÀzÀ MlÄÖ ¤ªÀé¼À ¨É¯É gÀÆ. 75,00,000-00 5 «±ÉõÀ ¸ÀªÀ®vÀÄÛUÀ½UÁV ±ÉÃPÀqÁ 13 gÀAvÉ gÀÆ. 9,75,000-00 6 µÉqÀÆå¯ï ¸ÀéwÛ£À MlÄÖ ªÀiÁgÀÄPÀmÉÖ ¨É¯É gÀÆ. 2,20,35,000-00 7 zÀ¸ÁÛªÉÃf£À°è vÉÆÃj¹gÀĪÀ ªÀiË®å gÀÆ. 35,00,000-00 8 ¨É¯ÉAiÀÄ°è£À ªÀåvÁå¸À gÀÆ. 1,85,35,000-00 9 ¥ÁªÀw¸À¨ÉÃPÁzÀ ªÀÄÄzÁæAPÀ ±ÀÄ®Ì ±ÉÃPÀqÁ 12.5 gÀAvÉ gÀÆ. 23,16,875-00 10 ¥ÁªÀw¸À¨ÉÃPÁzÀ £ÉÆÃzÀuÉ ±ÀÄ®Ì ±ÉÃPÀqÁ 2 gÀAvÉ gÀÆ. 3,70,700-00 11 MlÄÖ ¥ÁªÀw¸À¨ÉÃPÁzÀ ±ÀÄ®Ì gÀÆ. 26,87,575-00 and accordingly, he has held that petitioners are liable to pay Rs.26,87,575/- towards the differential stamp duty and registration charges. The table prepared by him shows that according to respondent No.1 the site was of the dimension of 4520 sq.ft. and the ground floor admeasured 12500 sq.ft. and 16 first floor admeasured 12500 sq.ft. It is impossible to conceive that in a house site measuring hardly 4,520 sq.ft. a building with ground and first floor each measuring 12,500 sq.ft. could be constructed. This alone shows that respondent No.1 was arbitrary in passing the impugned order dated 31.08.2010 (Annexure-H). Apart from the same, he should have noticed that sale deed is dated 28.09.1998 and it referred to a construction of dimension of 300 sq.ft. which was in the nature of storage shed.
12. There is absolutely nothing appearing in the order of the District Registrar that he had any material to satisfy himself that building of the dimension stated by him in the impugned order was in existence at the time of registration of the instrument dated 28.09.1998. According to him he had obtained a report from the Assistant Engineer who had visited site on 11.06.2002 i.e., 4 years after of registration of instrument. On the other hand, document produced by the petitioner along with writ petition dated 30.06.1998 (Annexure-B) shows that it is the building licence obtained by the vendor of the petitioner for construction on site No.608 the subject matter of conveyance in question. Said 17 sanctioned plan showed that it was valid for a period of 30.06.1998 and 29.06.2000. The impugned order (Annexure- H) extracts the representation given by the petitioners on 13.02.2007 and there is a specific reference in the same that construction was commenced in November 1998 and completed during September 2000. There is no reference to the same (Annexure-B) by respondent No.1 in the impugned order. The representation of petitioners extracted at para 25 of the impugned order (Annexure-H) clearly shows that petitioners had produced document No.1 which is the sale deed executed by BDA in favour of their vendor, the penalty imposed by BDA for the failure of vendor of the petitioners to put up any construction in 1998, the sanctioned plan for construction on site No.608 dated 30.06.1998 etc. Inspite of the same, District Registrar as well as appellate authority - respondent No.2 have blindly stated that petitioners have failed to produce necessary documents in support of their contentions. It is therefore evident that respondent No.1 has not at all held proper enquiry in accordance with Rules 3 to 7 of Rules 1977 and further he has failed to apply his mind to 18 the relevant documents produced before him, and therefore, his order is wholly perverse arbitrary and it is illegal.
13. Similarly, the appeal filed before respondent No.2 came to be rejected by the authority who did not apply his mind to the facts of case and also blindly proceeded to state that relevant documents were not produced by the petitioners which is contrary to the recital at para 25 of the order of respondent No.1 (Annexure-H). In that view of the matter, impugned orders are arbitrary and liable to be set aside and accordingly, they are set aside. Writ petition is accordingly allowed and impugned orders dated 31.08.2010 (Annexure-H) and 27.06.2012 (Annexure-J) are quashed.
Sd/-
JUDGE DR