Madras High Court
M/S.Aurolab Trust vs The Tamil Nadu Chief Revenue on 29 October, 2010
Author: C.S.Karnan
Bench: C.S.Karnan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.10.2010 CORAM THE HONOURABLE MR. JUSTICE. C.S.KARNAN C.M.A.No.1567 of 2005 and C.M.P.No.8803 of 2005 M/s.Aurolab Trust Rep.by its Secretary Thiru.G.Srinivasan Aravind Eye Hospital No.1, Anna Nagar Madurai-625 020 .. Appellant Vs 1.The Tamil Nadu Chief Revenue Controlling Authority-cum-Inspector General of Registration Santhome, Chennai-600 028 2.The Special Deputy Collector (Stamps) Collectorate Madurai-625 020 .. Respondents Appeal filed under Section 47(A)(1) of Indian Stamp Act, against the Order dated 14.01.2005, made in No.5861/N0.4/2004, on the file of the Tamil Nadu Chief Revenue Controlling Authority-cum-Inspector General of Registration, Chennai-600 028, served on the appellant on 15.04.2005, confirming the order of The Special Deputy Collector (Stamps), dated 26.12.2003, made in R.O.C.S.R.No.82/2002-Tallakulam District. For appellant : Mr.V.P.Sengottuvel For respondents : Mrs.Bhavani Subharayan Spl.G.P.(C.S.) J U D G M E N T
Sri Sai Baba Baktha Sabha, a registered society owned a landed property in T.S.No.456, measuring an extent of 3650 sq.ft., The property was gifted to the said Sri Sai Baba Baktha Sabha in the year 1962. Since the date of gifting, the property was not utilised by the said Sri Sai Baba Baktha Sabha by reason being there is no exclusive approach road for the said property situated in Shathamangalam Village, Madurai, North Town, Madurai District. So, the Managing Committee of the said Sabha had decided to dispose the property and to purchase another property with convenience such as building and temple with approach road for the devotees and general public. A meeting was conduced by the committee and resolution was passed on 20.09.2001. Thereafter, the representatives of the said Sabha had approached the Hon'ble Principal District Judge, Madurai for necessary permission under Section 34 of the Indian Trust Act.
2.The appellant/Aurolab had filed an affidavit before the learned District Judge, Madurai in Trust O.P.No.2 of 2002, stating that the said Sabha had offered to sell their land at a price of Rs.1,05,000/- per cent. The same was accepted by the appellant. After considering the petitioner's contention and third party affidavit, the Tribunal decided the case. While the case was pending, one of the objectors filed a memo for purchasing the property at a higher price, but he remained ex-parte. In the said transaction a publication was given and Tom Tom was arranged. Even though with these arrangements, no one had come forward to purchase the property at a higher price. The learned District Judge, after considering the facts and circumstances of the case and the legal issues and location of the property, agreed and permitted the said Sabha to sell the property at not less than Rs.1,05,000/- per cent. This order was passed on 03.04.2002. The learned District Judge also observed that the entire sale consideration is to be deposited to the custody of the Court until the petitioner/Sri Sai Baba Baktha Sabha arranges the purchase of another property for the benefit of the trust, this arrangement being crystal clear.
3.On the strength of the Court Order, the said Sabha had alienated the property, in favour of the appellant/Aurolab Trust for a sum of Rs.Rs.6,14,250/-, measuring an extent of 3650 sq.ft., comprised in T.S.No.456 of Sathamangalam Village, under a Sale Deed dated 19.06.2002, and registered as document No.1480 of 2002, on the file of the Sub-Registrar Office, Tallakulam, Madurai.
4.The said document was referred to the Special Deputy Collector (Stamps), Collectorate, the second respondent herein, who issued notice to the appellant and demanded a sum of Rs.96,914/- as deficit of stamp duty, at the rate of Rs.367/- per sq.ft., vide R.O.C.S.R.No.82/2002. Aggrieved by this Order, the appellant filed their objections stating that the property being located in the interior and with no approach road, besides there being no water supply and drainage system. Further, the property value also considered by the learned District Judge. After receiving the objection, the second respondent confirmed the value and fixed at Rs.310/- per sq.ft., Aggrieved by this Order the appellant filed an appeal on the following grounds:
"This land was owned by the Sai Baba Baktha Sabha Trust. There is no approach road to this property and so they could not build temple there and they approached the Court for selling the land at the market rate and the District Court issued proclamation and it was published by beat of tom tom in the vicinity duly affixing the signatures in token of its publication for the sale of this property at the appropriate cost. The sale of property was also published in Newspaper. Nobody came forward to purchase except Aurolab Trust at the rate given and so finally the Principal District Judge, Madurai ordered to sell this to us by Sai Baba Baktha Sabha Trust at Rs.1,05,000/- per cent.
There is no approach for the site from the Corporation road except 3 feet wide pathway. No feasibility for vehicular movement.
The property can be approached only through Ramakrishna Ashramam, it can be seen from the rough sketch filed.
There is no drinking water facility available in that area.
There is no drainage facility.
Chances for construction of buildings on this site are bleak as the transport facility (movement of materials) is not possible.
This site is situated between the slum dwellings in the western and south eastern sides and the rear side walls of the houses of Jawahar and Kuruvikaran Salai streets in the northern and eastern sides.
We purchased this site only on the reason that this is adjacent to our other property.
This property was purchased so as to enable to use the property already purchased as an approach to this property.
This site cannot be treated either with Jawahar Street or with Kuruvikaran Salai and also it cannot be treated with North Vaigai Street, since this site is not covered in any one of these streets.
This site cannot be compared with other lands as this has got very many defects.
When valuation is made by Court, the sale deed need not be sent for determination under Section 47(A) of the Stamp Act. After determination of value by Court, it cannot be said that there is reason for registrar to believe that valuation is not correctly made. Registrar is bout by that valuation and has to act upon it (Nitya Hari Hu Vs State of W.B. AIR 2001, cul 76).
The Chairman Town Planning and Development standing Committee, Madurai Corporation in his testimony dated 01.06.2004 has certified that the rate of Rs.1,05,000/- per cent to this site as decided by the District Court, Madurai is genuine and real prevailing market rate."
5.After considering the appeal, the first respondent/Chief Revenue Controlling Authority-cum-Inspector General of Registration confirmed the order of the Special Deputy Collector (Stamps), Madurai stating that the price of the land at Rs.310/- per sq.ft., Aggrieved by the said order, the above appeal has been filed by the appellant to set aside the order of the first respondent/Chief Revenue Controlling Authority, dated 14.01.2005, made in 5861/N0.4/2004, confirmed the order of the second respondent/Special Deputy Collector (Stamps), Madurai, dated 26.12.2003, made in R.O.C.S.R.No.82 of 2002, Thallakulam, Madurai.
6.Learned counsel appearing for the appellant has raised the following objections on the following grounds:
"The first respondent erred in passing the order in the above appeal on 14.01.2005, when the appeal was heard by Pratheep Yadav the then Tamil Nadu Chief Revenue Controlling Authority-cum-The Inspector General of Registration on 20.12.2004. In other words, the first respondent appellate authority passed orders without hearing the counsel for the appellant thereby violating the principles of natural justice.
The first respondent ought to have seen that the personal hearing enables the authority concerned to watch the demeanour of the witnesses, to enable him to decide the matter by proper application of mind to understand the proper perspective the issue involved and to clear up his doubts during the course of the arguments and the party appearing to pursued the authority by recent argument to accept his point of view. If one person hears and another decides, then personal hearing becomes an empty formality. Therefore, the said procedure adopted in the present case offends the basic principle of judicial procedure.
The respondents ought to have seen that the vendors of the sale deed bearing document No.1480 of 2002, dated 19.06.2002, on the file of the Sub-Registrar, Tallakulam, is none other than the Sri Sai Baba Baktha Sabha a registered Society. The said Society had filed a petition under Section 34 of the Indian Trust Act before the competent Court of law namely the Principal District Court, Madurai in Trust O.P.No.2/2001, praying to permit them to sell their property, at the rate of 1,05,000/- per cent, being the market value, at which the appellant offered to purchase, there being no other offer from willing to purchase to pay the higher price.
The respondents failed to consider that after following the procedures contemplated under the Trust Act and after considering both the oral and documentary evidence, the Principal District Court by its order dated 03.04.2002 and particularly by order dated 02.05.2002 permitted the petitioners therein to sell the petition mentioned property for not less than Rs.1,05,000/- to the appellant trust.
The respondents went wrong in taking proceedings under Section 47(A) of the Indian Stamp Act when the value shown by the vendor trust was accepted by the Principal District Court, Madurai in Trust O.P.No.2 of 2001 and particularly after the Court granted permission to sell the above mentioned property at the rate of Rs.1,05,000/- per cent to the appellant trust. It is submitted that when the price fixed was approved by the competent Court of law the respondents cannot have any reason to believe that the appellant has under valued the property mentioned therein.
The first respondent failed to consider the number of decisions of this Hon'ble Court and other Courts cited by the appellant holding that the authorities under Section 47A of the Indian Stamp Act are not competent to re-fix or re-value the value fixed or approved by the Courts. In other words after determination of value of the land by the Court it cannot be said that there is a reason for the authorities to believe that the valuation is not correctly done.
The respondents failed to see that the appellant M/s.Aurolab Trust, which is not profit making organisation as it has dedicated to supply the quality products and services to Eye Care providers, which is a sister concern of Goval Trust, which is running the world renounced Aravind Hospital at Madurai and other places. Therefore, it has no reason or necessity to under value the above said instrument that too when it is purchasing the above property from another trust which offered to sell the property after following in the procedures contemplated under the Trust Act.
The respondents ought to have seen that the land purchased by the appellant has no motorable road and does not have any proper approach road from the Corporation road. On the other hand it has only a 3 feet foot path from the Corporation road and it was only because of that the vendor trust was not in a position to build a temple there. Further, the said land does not have any drainage facility or water facility and the chances of constructing a building on the site is very bleak as the movement of construction materials into the site is not possible.
The respondents ought to have seen that the land mentioned in the above said sale deed is situated between the slum dwellings on the western, and south eastern sides and the rear side walls of the houses on Jawahar Street and Kurivikaran Salai on the Northern and Eastern Sides. Therefore, the site cannot be treated as either being situate in Jawahar Street or in Kurivikaran Salai.
The respondents ought to have seen that the appellant trust offered to purchase the above said property for Rs.1,05,000/- per cent since it is owning the adjacent property and therefore the value of the property, which was already belonging to the appellant trust cannot be taken into consideration for the property purchased in the above said sale deed, which is situated in a Land Locked Area.
The respondents ought to have seen that as held by this Hon'ble Court in a Judgment reported in 2002(1) Law Weekly 194 it was confirmed by the Hon'ble Supreme Court of India in the Judgment reported in 2003(4) Law Weekly 825, the market value of the land can be fixed only by taking into consideration several factors, like potentiality of a plot for development, shape of the plot, frontage and depth, modification for depth, value in the sense of value to the owner, value in the sense of replacement cost, value in the sense of additional cost less depreciation and the most important factors, which a valuer should study in respect of a property are advantages to the property and disadvantages to the property.
The respondents ought to have seen that the authorities while fixing the Guideline value failed to see that the real market value of the properties had gone down from the year 1996 to 2003. On the other hand, the authorities increased the guide line value by 10% every year without taking into consideration the decrease in the value of the property.
The first respondent went wrong in awarding interest @ 24% per annum for the differential stamp duty while the Reserve Bank of India has fixed prime lending rate below 10% per annum for the loans to be advanced by the Banks and for the fixed deposits. Therefore, fixing rate of interest at 24% per annum is arbitrary and unreasonable.
The other reasons assigned by the respondents for fixing at the rate of Rs.310/- per sq.ft., as the value of the land purchased by the appellant unsustainable.
The respondents erred in not considering and demanding stamp duty on the said amount is the documents and the sketch furnished by the appellant.
In any event the orders passed by both the respondents are untenable, unsustainable, irregular, improper and is without jurisdiction, hence liable to be set aside."
7.Further, the learned counsel in support of his contentions has cited the following Judgments made in 1997 (II) CTC 617, Padmavathi, S.P. v. State of Tamil Nadu, the relevant head notes of which are as follows:
"Stamp Act, 1899, Section 47-A Market value of property Instrument of conveyance executed pursuant to decree for specific performance passed by civil court No allegation of under valuation or lack of bonafide Mere time gap between agreement of sale and execution of instrument of conveyance would not enable registering officer to invoke provision of Section 47-A, unless there are reasons to believe that there is attempt to deliberately undervalue the subject of transfer to evade payment of proper stamp duty."
2002-1-L.W.194, J.Jayalalitha, etc. & others v. State, etc. this Court held as follows:
"The market value of a land can be fixed only by taking into consideration several factors, like potentiality of a plot for development, shape of the plot, frontage and depth, modification for depth, value in the sense of value to the owner, value in the sense of replacement cost, value in the sense of additional cost less depreciation and the most important factors which a valuer should study in respondent of a property are (1) advantages to the property and (2) disadvantages to the property.
2003-4-L.W. R.Sai Bharathi v. J.Jayalalitha and others, this held as follows:
"This scheme of the enactment and Rules contemplate that guideline value will only afford a prima facie basis to ascertain the true or correct market value undue emphasis on the guideline value without reference to the setting in which it is to be viewed will obscure the issue for consideration. It is clear, therefore, that guideline value is not sacrosanct as urged on behalf of the appellants, but only a factor to be taken note of it at all available in respect of an area in which the property transferred lies. In any event, therefore, if for the purpose of Stamp Act guideline value alone is not a factor to determine the value of property, its worth will not be any higher in the context of assessing the true market value of properties in question to ascertain whether the transaction has resulted in any offence so as to give a pecuniary advantage to one party or the other.
In ascertaining the true value, the High Court has taken note of several features. Firstly, the price has been offered by the firm of A-1 and A-2 in a tender process pursuant to an advertisement issued in a newspaper. A tender process by the TANSI not being shown to be or demonstrated to be vitiated is a transparent and good piece of evidence to indicate the real price of the properties in question. In the result, we dismiss these appeals and special leave petition."
2009 (1) CTC 305, The Government of Tamil Nadu V. S.Jayalakshmi, this Court held as follows:
"............and the latest decision of the Hon'ble Supreme Court of India reported in State of Rajasthan v. Khandaka Jain Jewellers, 2008(1) CTC 6 has held that unless there is an under valuation of the subject matter with fraudulent intention to evade proper payment of stamp duty, the respondents cannot impose such a heavy stamp duty on the petitioner with regard to the document in question and hence, the value fixed by the Public Authority in the Public auction cannot be doubted after reference under Section 47-A(1)."
(2009) 7 SCC 438, the Hon'ble Supreme Court has held as follows:
"In terms of Sections 47-A(1) and (3) of the Stamp Act, 1899 there must be a reason to believe that the market value of the property has not been truly set out in the instrument. It is not a routine procedure to be followed in respect of each and every document of conveyance presented for registration without any evidence to show lack of bona fides of the parties to the document by attempting fraudulently to undervalue the subject of conveyance with a view to evade payment of proper stamp duty and thereby cause loss to the Revenue. The basis for exercise of power under Section 47-A of the Stamp Act is wilful undervaluation of the subject of transfer with fraudulent intention to evade payment of proper stamp duty.
The stand of the State that what has been disclosed is sale value and the same cannot be termed as market value, is fallacious. The Explanation to Rule 5 of the 1968 Rules makes the position clear that market value would be such as would have fetched or would fetch if sold in the open market on the date of execution of the instrument of conveyance. The property in the present case was offered for sale in the open market and bids were invited. That being so, there is no question of any intention to defraud the Revenue or non-disclosure of the correct price.........."
2007 (5) CTC 60, the relevant head notes and this Court held as follows:
"Stamp Act, 1899 (2 of 1899), Section 47-A(1) Amount fixed in Court auction sale shall be market value of property as it is arrived at after offer is given and same is accepted by Court Registering Authority is bound by such valuation Demanding stamp duty on value higher than that is contrary to law.
.....Power under Section 47-A of the Act can only be exercised when the Registering Officer has reason to believe that the market value of the property, which is the subject of conveyance, has not been truly set forth, with a view to fraudulently evade payment of proper stamp duty........"
2008 (5) CTC 239, A.J.Mapillai Mohadeen v. The Sub-Registrar, Registration Department, the relevant head notes of which are as follows:
"Stamp Act, 1899 (2 of 1899), Section 47-A(1) Section 47-A can be pressed into service only when Registering Officer has reason to believe that market value of property which is subject matter of conveyance has not been truly set forth and it is so done with intent to fraudulently evade payment of proper stamp duty Authority cannot press into service Section 47-A unless fraudulent attempt on part of parties to document to evade payment of proper stamp duty is manifest and document has been undervalued in opinion of authority Property sold in auction in terms of statutory power and where terms of bargain are open and clear such fraudulent attempt cannot be presumed and order demanding higher stamp duty is liable to be set aside."
8.The learned Special Government Pleader appearing for the respondents vehemently argued that the property is situated in the Madurai Municipal City, at Ward No.10, this property being very close to be Madurai Collectorate, considered a prime location. The respondents have claimed a deficit of stamp duty on the basis of the guideline value. There is no error in accessing the value of the property, but the sale consideration was undervalued, in order to evade the stamp duty. There is no discrepancy in the order passed by the respondents, hence the claim against the deficit stamp duty is bonafide and fair. Further, the learned counsel specifically argued that the claim for deficit of stamp duty will not so against the order of the learned District Judge. As such, the above appeal is not maintainable.
9.In view of the facts and circumstances of the case, arguments advanced by the learned counsel appearing on either side and the orders of the both respondents, this Court is of the view that i. The transaction of the sale was open by being crystal clear ie.arranging publication and tom tom. Despite such elaborate arrangements, no one came forward to purchase the property, ii. The learned District Judge had fixed the value at a sum of Rs.1,05,000/- per cent, this finding given by the judicial forum. Hence, it is apparent that there is no way of fraudulent transaction.
iii. The transaction took place between two trusts namely religious oriented trust and a medical oriented trust. Therefore, there is no grounds for any fraudulence in order to evade stamp duty and incur revenue loss to the Government.
iv. The sale consideration amount is with the Court custody to purchase an alternative property for religious and public utilisation.
v. It is an admitted fact that the vendor/Sri Sai Baba Trust was constrained to sell the property due to inadequacy of basic amenities especially an approach road to the plot, resultantly the property was not utilised for many years, this main requirement of infrastructure is absolutely imperative, therefore the property was not developed even though being in the municipality limit.
10.Therefore, there is no scope for exercising power under Section 47(A) of the Indian Stamp Act to claim any deficit of stamp duty against the appellant. Hence, the impugned Order dated 14.01.2005, made in No.5861/N0.4/2004, passed by the first respondent/Tamil Nadu Chief Revenue Controlling Authority-cum-Inspector General of Registration, Chennai-600 028 is set aside and further this Court directs the respondents to release the document bearing registration No.1480 of 2002, dated 19.06.2002, on the file of the Sub-registrar Office Thallakulam, Madurai, within a period of thirty days from the date of receipt of a copy of this order.
11.In the result, this Civil Miscellaneous Appeal is allowed and the Order dated 14.01.2005, made in No.5861/N0.4/2004, passed by the Tamil Nadu Chief Revenue Controlling Authority-cum-Inspector General of Registration, Chennai-600 028, confirming the order of The Special Deputy Collector (Stamps), dated 26.12.2003, made in R.O.C.S.R.No.82/2002-Tallakulam District is set aside. Consequently, connected miscellaneous petition is closed. No costs.
29.10.2010 Index: Yes/No Internet: Yes/No krk To
1.The Tamil Nadu Chief Revenue Controlling Authority-cum-Inspector General of Registration Santhome, Chennai-600 028
2.The Special Deputy Collector (Stamps) Collectorate Madurai-625 020
3. The Section Officer, VR Section, High Court, Madras.
C.S.KARNAN, J.
krk Pre-delivery Order in C.M.A.No.1567 of 2005 29.10.2010