Gujarat High Court
Chanasma Commericial Cooperative Bank ... vs State Of Gujarat Thro Secretary & 2 on 12 February, 2016
Author: N.V.Anjaria
Bench: N.V.Anjaria
C/SCA/7105/2012 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 7105 of 2012
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE N.V.ANJARIA
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of No
the judgment ?
4 Whether this case involves a substantial question of No
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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CHANASMA COMMERICIAL COOPERATIVE BANK LTD & 1....Petitioner(s)
Versus
STATE OF GUJARAT THRO SECRETARY & 2....Respondent(s)
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Appearance:
MR BS PATEL, ADVOCATE for the Petitioner(s) No. 1 - 2
MR BHARAT VYAS, AGP for the Respondent(s) No. 1 - 3
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CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA
Date : 12/02/2016
ORAL JUDGMENT
By means of the present petition, the petitioner- Cooperative Bank has challenged order dated 15.02.2012 passed by the Chief Controlling Revenue Authority- respondent No.2 herein, as well as order dated 21.04.2010 of the Deputy Collector, Stamp Duty Valuation-respondent No.3 herein.
2. By the aforesaid order of the Deputy Collector, Page 1 of 6 HC-NIC Page 1 of 6 Created On Sun Feb 28 01:00:56 IST 2016 C/SCA/7105/2012 JUDGMENT Stamp Duty confirmed by the Chief Controlling Revenue Authority, the petitioner bank was asked to pay stamp duty of Rs.46,530/- plus penalty of Rs.3,470/- aggregating Rs.50,000/-. The stamp duty was demanded by the stamp authority on the ground that the petitioner bank while taking possession of the mortgaged property, did not execute the conveyance deed, therefore the bank was required to pay the stamp duty on the amount realized towards sale price while auctioning the property.
3. The facts stated in nutshell, property being land bearing Survey No.28 admeasuring 100.20Sq. mtrs. situated at Village Chanasma, Taluka Chanasma District Patan, was mortgaged with the bank by the original owner who had obtained finance against the said mortgage. The borrower defaulted in making the repayment. The petitioner bank filed Lawad case before the Board of Nominees. The Lawad case came to be decreed in favour of the bank, pursuant to which the bank proceeded to sell the property by auction for realization of its dues. Upon completion of the auction process, the petitioner bank and auction- purchaser entered into a sale deed No. 571 dated 01.09.2006 which was registered and requisite stamp duty thereon was paid.
3.1 It appears that after the completion of the transaction pursuant to the auction as above, respondent No.3 issued notices dated 02.09.2009 and others, to the petitioner under Section 39(1)(b) asking the petitioner to explain about non payment of Page 2 of 6 HC-NIC Page 2 of 6 Created On Sun Feb 28 01:00:56 IST 2016 C/SCA/7105/2012 JUDGMENT the stamp duty in respect of the transaction between the bank and the original owner. According to the authorities under the Stamp Act, the transaction of bank taking possession of the property from the defaulting borrower was a "conveyance" falling within the purview of Section 2(g) of the Act defining conveyance, therefore stamp duty was payable under Article 20 of Schedule-I to the Act. The order passed by the Deputy Collector recorded that it was the objection by the auditor that at the time when the bank took possession of the property from the defaulter, the bank was required to execute a conveyance deed and to pay Rs.46,530/- towards stamp duty, before putting the property to auction.
4. Heard learned advocate Mr. Patel for the petitioner and learned Assistant Government Pleader Ms. Jyoti Bhatt for the respondent authorities.
5. The question which arises for consideration is whether when the petitioner-Bank took possession of the property of the borrower pursuant to decree passed in Lawad Suit for the purpose of selling the property and realising the dues, the same amounted to a "conveyance" within the definition of Section 2(g) of the Stamp Act and whether the said action on part of the petitioner-Bank was a transaction which the title in the property passed-on to the Bank to become chargeable to stamp duty. The issue is answered by Division Bench of this Court in Canara Bank Vs Collector of Stamps [2013 (3) GLH 205] in which the Division relied on its another decision in Canara Bank Page 3 of 6 HC-NIC Page 3 of 6 Created On Sun Feb 28 01:00:56 IST 2016 C/SCA/7105/2012 JUDGMENT Vs Palco Recycling Industries Limited [AIR 2013 (Guj.) 50] to hold that secured creditor on taking of possession, merely gets right to sell the property. In Palco Recycling Industries Limited (supra) possession of the properties were taken pursuant to action initiated under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. After discussing the law laid down in the said decision, in Canara Bank(supra), the Court rejected the contention that on taking possession of the property, the title of the debtor extinguished. It was held that the title would not vest in secured creditor when the secured creditor takes over the possession. On taking possession it is only a right to sell the property in question on behalf of the debtor, is acquired by the secured creditor. The sale made by the secured creditor is deemed to be a sale made by the debtor himself. In the present case, it was upon the decree passed by the Board of Nominees that the petitioner-Bank became entitled to proceed against the defaulter-borrower and put the properties to auction. It is for such purpose that the petitioner-Bank took possession of the properties.
5.1 The Deputy Collector in the impugned order as well as the Chief Controlling Revenue Authority while confirming the order of the Deputy Collector misdirected themselves in law in taking view that the act of the Bank in taking possession of the borrower was a transaction in which title passed. As held by this Court in the above-referred decisions, it is only right to sell the property to realise the proceeds for Page 4 of 6 HC-NIC Page 4 of 6 Created On Sun Feb 28 01:00:56 IST 2016 C/SCA/7105/2012 JUDGMENT satisfaction of the dues that became available to the petitioner-Bank. The title cannot be said to have been passed so as to treat the transaction, namely of taking over possession, as a "conveyance" within the definition of Section 2(g) of the Act. Neither it was a conveyance, nor title was transferred in eye of law. Therefore on the count of such transaction, Deputy Collector could not have sought to levy a stamp duty. The orders impugned are manifestly rendered illegal, liable to be quashed.
5.2 At the time of preferring appeal before the Chief Controlling Revenue Authority, the petitioner had paid 25% of the adjudicated demand of stamp duty as per the condition for preferring appeal prescribed under Section 53 of the Act. As the appeal was dismissed, attachment warrant was issued. This court while issuing rule in the petition and granting interim relief by order dated 21.09.2012 directed the petitioner bank to deposit on or before 15.12.2012, sum equivalent to the amount adjudicated by the authority, that is, Rs.21,000/- less the amount already deposited at the time of preferring the revision/appeal and on such deposit being made, the order of attachment was stayed.
6. For the foregoing reasons and discussion, the impugned order dated 21.04.2010 passed by the Deputy Collector-respondent No.3 herein and the order dated 15.02.2012 of the Chief Controlling Revenue Authority confirming the first mentioned order, are hereby set aside, holding that the petitioner bank is not liable Page 5 of 6 HC-NIC Page 5 of 6 Created On Sun Feb 28 01:00:56 IST 2016 C/SCA/7105/2012 JUDGMENT to pay stamp duty demanded in the said orders. Since the orders are set aside, entire action stands obliterated in law which would entitle the petitioner to receive back the amount deposited in compliance of condition for interim relief. The respondents are accordingly directed to refund such amount.
7. The petition is allowed. Rule is made absolute, however with no orders as to the costs.
(N.V.ANJARIA, J.) chandrashekhar Page 6 of 6 HC-NIC Page 6 of 6 Created On Sun Feb 28 01:00:56 IST 2016