Gujarat High Court
Kutch vs State on 13 June, 2011
Author: Anant S. Dave
Bench: Anant S. Dave
Gujarat High Court Case Information System
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C/SCA/6647/2008
JUDGEMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 6647 of 2008 FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE ANANT S. DAVE ============================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?2
To be referred to the Reporter or not ?3
Whether their Lordships wish to see the fair copy of the judgment ?4
Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?5
Whether it is to be circulated to the civil judge ?
============================================= KUTCH CONSTRUCTION INDUSTRIES & REHABILITATION FEDERATION &
43....Petitioner(s) Versus STATE FO GUJARAT & 1....Respondent(s) ============================================= Appearance:
MR GIRISH PATEL Ld. SR. ADV. with MR SHALIN N MEHTA as ADVOCATE for the Petitioner(s) No. 1-44 MR KAMAL TRIVEDI Ld. ADVOCATE GENERAL with MS. SANGEETA VISHEN Ld. AGP for the RESPONDENTS ============================================= CORAM:
HONOURABLE MR.JUSTICE ANANT S. DAVE Date : 13/06/2011 CAV JUDGEMENT
1. This petition under Article 226 of the Constitution of India is filed assailing the method and manner in which powers are exercised by the authority under various provisions of Bombay Stamp Act, 1958 (for short Act of 1958 ) and Bombay Stamp (Determination of Market Value of Property) Rules, 1984 (for short Rules of 1984 ) and challenges preparation and usage of the Final Annual Statement of Rates 2008 (ASR) (popularly known as Jantri ) published and made effective from 1.4.2008 in the State of Gujarat.
2. In para 24 of this petition, the petitioners have prayed to issue a writ of certiorari or any other appropriate writ, order or direction to quash and set aside the Final Annual Statement of Rates, 2008 published and made effective from 1.4.2008 by respondents for the area comprising of Bhuj Taluka, District: Kutch. The petitioners have further prayed that authorities under the provisions of the Act be directed to follow and adhere the statutory provisions under Bombay Stamp Act, 1958 and Rules made thereunder. Thus, the petitioners have prayed that the above Final Annual Statement of Rates, 2008 is to be declared as unconstitutional, null and void and being inconsistent and incompatible with Articles 14, 19 and 21 of the Constitution of India and also ultra vires the provisions of the Act and Rules made thereunder. The petitioner No.1 is a trust registered under the Indian Trust Act, 1985 and is also a society registered under the Society Registration Act, 1908. There are more than 100 individuals are members of the Federation and the petitioner No.1 is the President of the Federation and other petitioners are members of the said Federation.
3. Learned senior counsel for the petitioners would submit that the matter relating to Stamps and rates of Stamp duties in respect of instruments are regulated and governed by the provisions of the Act of 1958 and Rules made thereunder. Section 32A came to be inserted by Act of Gujarat 21 of 1982 and sub-section (1) of Section 32A came to be deleted by the Act of Gujarat 13 of 1994. Certain words were inserted by Act of Gujarat 19 of 2001 w.e.f. 1.9.2001 in the above sub-section (1) of Section 32 (A). Proviso to sub-section (1) was inserted by Act of Gujarat 18 of 2004 and the same will be referred to later on. According to learned senior counsel for the petitioners along with provisions of Section 32(A) sub-section (1) and sub-section (2) relevant rules are also framed for determining market value of the properties providing an elaborate procedure for determining the market value . That, Section 2 (na) defines market value of the property meaning thereby what price the property would fetch if sold in open market on the date of execution of such instrument. That, Rules 3, 4, 7 and 8 of Rules, 1984 are pertaining to statement to be furnished to the Registering Officer, procedure to be followed by the Collector for determining the true market value of the property which is the subject matter of the instrument, manner of service of notice and principles to be taken into consideration for determining market value. Thus, the above provisions, according to learned counsel for the petitioners deserve to be strictly adhered to by the authorities while determining the market value of the property in a given area.
3.1. Therefore, conjoint reading of the above provisions of the Act and Rules according to learned counsel for the petitioners cast a specific duty upon registering officer while registering the instrument on which the duty is chargeable on the market value of the property and in case if registering authority has reason to believe that market value of the property which is the subject matter of such instrument has not been correctly set forth in the instrument, in such circumstances, a reference is to be made to the Collector for determining of the market value of such property for proper duty payable thereon. Therefore, while arriving at a decision about true market value of the property in question, the registering officer must have certain material or intrinsic evidence so that he can arrive at an objective satisfaction. Formation of requisite belief is not a matter of subjective satisfaction but objective satisfaction and for reasons of formation of belief must have a rational connection with or relevant bearing on the formation of the belief.
Such rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of Registering Officer and the formation of his belief that the market value of the property has not been truly set forth or not. A prepared and predetermined Annual Statement of Rates (Jantri) would inhibit the Registering Authority from exercising such satisfaction of the true value of the property and, therefore, the decision of the Registering Authority stands vitiated if a sole reliance is placed on the Jantri.
3.2. Learned senior counsel would further submit that even ultimately decision on instrument referred to the Collector who will determine the market value under Section 32A upon receipt of instrument under sub-section (1), a reasonable opportunity of being heard is to be given to the parties and Rule 8 of the Rules, 1984 postulates various factors to be taken into consideration while determining market value of the property. It is further submitted that Collector while determining market value under Section 32A of the Act exercise adjudicatory powers and such powers are to be exercised only after following procedure laid down under Rule 4. In view of the above, it is not open for even Collector to be guided by Annual Statement of Rates which has no statutory base or foundation and therefore, exercise of such powers in a given case deserves to be interfered with and determination of market value of the property on the basis of Annual Statement of Rates (Jantri) is liable to be interfered by this Court.
3.3. Learned senior counsel also placed into service provisions of Section 47A by State of Andhra under the Indian Stamp Act, 1899 (for short Act of 1899 ) which is in pari materia with the provisions of Section 32A of the Act of 1958 and submitted that the Jantri acts like a ready-reckoner and it is not prepared on the basis of any scientific method and the same is based on random survey carried out by the authority. Learned counsel further submits that even objections invited by the authorities provided only 15 days time which was not sufficient though extended later on. That, draft Jantri 2006 was not given to the public and more than 3600 objections were raised by the people of Bhuj Taluka but same were decided hurriedly and, therefore, even decision making process to fix the rate of property by Jantri also stands vitiated. Learned counsel would submit that by an amendment carried out as per order dated 28.4.2008 passed by this Court para 20(A) was added which provide how procedure laid down under the Bombay Stamp Rules, particularly, Rules 3, 4, 7 and 8 is given go by, by a software prepared for calculation of stamp duties, has replaced the mind of Registering Authority and the stamp duty will be calculated automatically by the computer and there would be no application of mind of Registering Authority. Thus, even if Collector exercises powers such powers will be based on mechanized and computerized process to which it is unknown to the law and, therefore, the decision making process stands vitiated and deserves to be interfered by this Court.
3.4. Learned senior counsel for the petitioners further submitted that draft ASR-2008 based on the draft Jantri 2006 for the area comprising Bhuj Taluka deserves to be cancelled on the grounds of defects, anomalies inconsistencies, abnormalities and absurdities. It is submitted that the above ASR-2006 and 2008 for the area of Bhuj Taluka was not given wide publicity at all and people at large had no occasion to go through contents of Jantri/ASR. That draft Jantri/ASR 2006 was not published until February 2008 and it was published only in English and not in the vernacular, where a very small section of the public residing in Bhuj Taluka may be conversant with the English language could understand contents of it. Even, residents and other affected persons of Bhuj Taluka had no knowledge about operation of computerized and mechanical system adopted by respondents and had no idea of website. In view of the above, even method and manner of publication of draft Janti are arbitrary, unreasonable and discriminatory and exercise of such powers require to be quashed and set aside.
3.5. Learned counsel further submitted that the Full Bench of this Court considering aspect about ASR/Jantri in the case of Gorva Vibhag Co-operative Housing Societies Association and Anr. vs. State of Gujarat & Ors. [(1992) 1 GLR 654] (First Full Bench) had no occasion to consider usage of Jantri and basis of preparation of Jantri was only under the challenge. That computerized and mechanized process has replaced the application of mind by the authority and the word 'reason to believe' as reflected in sub-Rule (2) of Rule 3 of the Rules is given go by. Therefore, at the cost of repetition, it is reiterated by learned counsel for the petitioners that Section 32(1) of the Act operates at two stages namely at the time of registration of documents and while denying so such authority has to act objectively and the use of discretion is based on proper and correct assessment of the document presented for registration and market value is to be determined within four corners of provisions of the above sections of Rule made thereunder.
3.6. In support of the arguments and submissions learned counsel for the petitioners relied on decision in the case of Government of Uttar Pradesh and Others v. Raja Mohammad Amir Ahmad Khan [AIR 1961 SC 787] pertaining to impounding of documents in exercise of powers under Section 33 and decision of Division Bench of Orisa High Court in case of Gourang Naik v. State of Orissa and Ors. [AIR 1992 (Orrisa) 232] and it is submitted that in the above case guidelines issued by Board of Revenue or State Government to registered authority for valuation of land came to be quashed and set aside on the ground that such guidelines are bound to affect the minds of the Collector in making determination of the market value of the land in question. It is further submitted that the authority is binding to the Court only to the extent of the law laid down by such authority and not otherwise.
4. .
Kamal Trivedi, learned Advocate General appearing with Ms. Sangeeta Vishen, learned AGP for the respondents emphasied provisions with regard to Section 31(1) and 31(3) of the Act and submitted that both operate at different stages and circumstances and both the above sections are to be read with Section 32A of the Act. When the legality and validity of the ASR/Jantri is upheld by various Full Bench of this Court, it is not again open for the petitioners to challenge the same by contending that method of usage of Jantri and approach of the Registering Authority is contrary to Act and Rules. It is further submitted that there is a difference between Section 47A of (as amended by State of Andra Pradesh) Indian Stamp Act and Sections 31, 32 and 32A of the Bombay Stamp Act. It is further submitted that Registering Authority is not to adjudicate a lis but for formation of opinion so as to have an idea about market value of the property in question, reference is made to ASR, which cannot be said to be in any manner illegal or contrary to the Act or Rules made under the Act. Thus, it is submitted that even the affidavit filed by the concerned officer would also reveal that no person is compelled to pay market value simply on the basis of ASR/Jantri. A reference was made to affidavit in sur-rejoinder filed by Dy. Superintendent of Stamp of the Office of Department of Stamp and it is submitted that there is no element of compulsion in the implementation of rates prescribed in ASR and the Registering Authority independently applies its mind and after forming reasons for his belief as required under Section 32A (1) and Rule 3(2) and in case if the document does not proximate to real market value by applying his mind independently, the document will be referred to Dy. Collector (Stamp) for the purpose of valuation, as required under Section 31A (2) which comes into play at the said stage. It is further submitted that none of the provisions of Rules or Act is given go by.
5. While opposing the relief prayed for by the petitioners, learned Advocate General would submit that various submissions made by learned senior counsel for the petitioners with regard to exercise of powers under Section 32A of the Act of 1958 and Rules made thereunder in 1984 are based on misconceived notion and incorrect interpretation of the provisions of the Act and Rules. It is submitted that a bare reading of Sections 31, 32, 32A of Bombay Stamp Act and Rules 3, 4, 7 and 8 do not require Registering Authority to adjudicate the issue. The Registering Authority considers Jantri to have a rough idea about approximate market value of the property and nothing beyond that. That, prepared rate of Jantri is an aid and assistance to the Registering Authority and it is in consonance with Rule 3 of the Rules. By relying on the affidavit filed by the authority it is submitted that Registering Authority follows the procedure and without admitting anything beyond some instance in a given case of minor deviation which cannot be generalized to hold exercise of power by the authority as illegal. It is further submitted that preparation of Jantri is based on proper survey, calculation and verification of various records by the authorities in a scientific manner, this Court would not like to interfere with such decision formed by the authority. It is further submitted that Section 47A of Indian Registration Act, 1899 and Section 32A of Bombay Stamp Act, 1958 are not in pari materia. Learned Advocate General has relied on Article 162 of Constitution of India with regard to Executive powers of the State Government about issuance of administrative directions.
5.1. However, according to learned Advocate General, the subject matter and the issues raised therein are no more res integra in view of three decisions viz. Two Full Bench decisions and a Larger Bench decision of this Court.
5.2. That the powers of the State and procedure to prepare final Annual Statement Rates (ASR) namely, Jantri was also upheld by this Court in the above decisions.
5.3. However, learned Advocate General broadly highlighted the procedure for preparing ASR as under.
That while preparing Jantri, property is classified namely (i) real estate and (ii) personal property keeping in mind the provisions of the Act and Rules. The exercise was undertaken by the State Government since 1999 and initially certain discrepancy were noticed and rates of Jantri for agricultural land was categorized as 'uttam' (best), 'madhyam' (medium) and 'kanishth' (low). That, a notification was issued being Government Resolution of Revenue Department dated 27.7.2005 for appointing requisite staff and technical establishment and other infrastructure to carry out the exercise namely, survey of land, survey of existing land used, site inspection, preparation of map, local inquiry and sale transaction data and also other details from various sources and thus, preparation of ASR is based on scientific method. It is further submitted that in the whole of the State of Gujarat to exercise preparation of Jantri was prepared after taking assistance of Centre for Environment Planning and Technology (CEPT). The authority has also considered various other aspects depending on the type of area i.e. Urban, semi-Urban, Rural and the whole State was divided into valuation zone for 124 towns and even objections were considered by a high level committee as per resolution dated 25.3.2008. That, draft Jantri was given vide publicity and sufficient time was given to the people at large and after considering objections received, the decision was finally taken and therefore, it cannot be said that even decision making process for issuance of ASR/Jantri is vitiated in any manner.
5.4. However with regard to submissions of non-application of mind to the objections lodged, it is submitted that about 2464 objections were in cyclostyle formate and, therefore, time taken by the authority to consider such objections is reasonable and publication of ASR cannot be said to be arbitrary, unreasonable or discriminator and in any manner violative of Articles 14, 19 and 21 of the Constitution of India.
5.5. Considering the above, it is submitted that the petition deserves to be rejected by this Court in exercise of powers under Article 226 of the Constitution of India.
6. In the backdrop of the above submissions of learned counsels for the parties respectively, it is necessary to refer to important provisions of the Act and Rules made thereunder.
Section 2(i) Instrument includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded but does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt;
[Explanation.- The term document also includes any electronic record as defined in clause (t) of sub-section (1) of Section 2 of the Information Technology Act, 2000.
Section 2 (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.
31. Adjudication as to proper stamps - (1) When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and not less than 2[fifty naye paise] as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable.
(2) For this purpose the Collector may require to be furnished with an abstract of the instrument, and also with such affidavit or other evidence as he may deem necessary to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or the amount of the duty with which it is chargeable, are fully and truly set forth therein, and may refuse to proceed upon any such application until such abstract and evidence have been furnished accordingly :
Provided that-
(a) no evidence furnished in pursuance of this section shall be used against any person in any civil proceedings except in an inquiry as to the duty with which the instrument to which it relates is chargeable; and
(b) every person by whom any such evidence is furnished shall, on payment of the full duty with which the instrument to which it relates is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the facts or circumstances aforesaid.(3)
Where an officer appointed as Collector under Clause (f) of Section 2 has reason to believe that the market value of the property, which is the subject matter of the instrument, received by him for adjudication, has not been truly set forth therein, he shall, before assessing the stamp duty under this section, refer the instrument to the Collector of such district in which either the whole or any part of the property is suitable, for determining, in accordance with the procedure laid down in section 32A, the true market value of such property and the proper duty payable on the instrument.] Section 32. Certificate by Collector:
(1) When an instrument brought to the Collector under Section 31, is in his opinion, one of a description chargeable with duty, and
(a) the Collector determines that it is already fully stamped, or
(b) the duty determined by the Collector under Section 31, or such a sum as, with the duty already paid in respect of the instrument, is equal to the duty so determined, has been paid, the Collector shall certify by endorsement on such instrument that the full duty (stating the amount) with which it is chargeable has been paid.
When such instrument is, in his opinion, not chargeable with duty, the Collector shall certify in manner aforesaid that such instrument is not so chargeable.
Any instrument upon which an endorsement has been made under this section, shall be deemed to be duly stamped or not chargeable with duty, as the case may be; and, if chargeable with duty, shall be receivable in evidence or otherwise, an may be acted upon and registered as if it has been originally duly stamped:
Provided that nothing in this section shall authorize the Collector to endorse
(a) any instrument executed or first executed in the State and brought to him after the expiration of one month from the date of its execution or first execution, as the same may be;
(b) any instrument executed or first executed out of the State and brought to him after the expiration of three months after it has been first received in this State; or
(c) any instrument chargeable with the duty of twenty naye paise or less when brought to him, after the drawing or execution thereof, on paper not duty stamped.
32A. Determination of market value of property which is the subject matter of conveyance, etc.:
(1) Instrument of conveyance, exchange, gift certificate of sale, partition, partnership, settlement or power of attorney or to sell immovable property when given for consideration or transfer of lease by way of assignment presented for registration under the provisions of Registration Act, 1908 shall be accompanied by a true copy thereof;
[and the statement in such form as may be prescribed by rules] and if an officer registering such instrument under the aforesaid Act or any person referred to in section 33 before whom such instrument is produced or comes in the performance of his functions, has reason to believe that the consideration set forth therein does not approximate to the market value of the property which is the subject matter of such instrument, or as the case may be, the market value of the property which is the subject matter of such instrument has not been truly set forth therein, he [shall before] registering the instrument or as the case may be, performing his functions in respect of such instrument refer the instrument or true copy thereof to the Collector of such district in which either the whole or any part of the property is situated for determining the true market value of such property and the proper duty payable on the instrument under this sections.] [Provided that for the purpose of this sub-section, the consideration set forth in an instrument executed by the State Government, the Central Government, a local authority, Gujarat Housing Board, Gujarat Slum Clearance Board or Gujarat Industrial Development Corporation, shall be deemed to be the true market value of the property which is the subject matter of such instrument;
(2) On receipt of the instrument under sub-section (3) of [section 31 or instrument or true copy of instrument under] sub-section (1) of this section, the Collector of the district shall, after giving the parties concerned a reasonable opportunity of being heard, and in accordance with the [rules made by the State Government in this behalf, determine the true market value of the property which is the subject matter of the instrument and the proper duty payable thereon.
(3) Upon such determination, the Collector of the district shall require the party liable to pay the duty, to make payment of such amount as is required to make up the difference between the amount of duty determined under this sub-section and the amount of duty already paid by him and shall also require such party to pay a penalty [of two hundred and fifty rupees [or the amount of the proper duty or of the deficient portion thereof whichever is less] and on such payment, return the instrument to the officer referred in sub-section (3) of section 31 or, as the case may be, sub-section (1) of this section :
(4) The Collector of the district may, suo motu or on receipt of information from any source, within [six years] from the date of registration of any instrument referred to in sub-section (1), (not being the instrument upon which as endorsement has been made under section 32 or the instrument in respect of which the proper duty has been determined b him under sub-section (3) or an instrument executed before the date of the commencement of the Bombay Stamp (Gujarat Amendment) Act, 1982) (Guj. 21 of 1982) call for examine the instrument for the purpose of satisfying himself as to the correctness of the consideration or of the market value of the property which is the subject matter of such instrument and th duty payable thereon; and if on such examination, he has reason to believe that the consideration does not approximate to the market value of such property or, as the case may be, market value of such property has not been truly and fully et forth in the instrument, he shall proceed as provided in sub-section (2) and (3).
Bombay Stamp (Determination of Market Value of Property) Rules, 1984.
3. Statement to be furnished to the Registering Officer:
Whenever any instrument is presented to any officer registering under the Registration Act, 1908 the person presenting the instrument for such registration shall alongwith the instrument furnish a true statement in Form-I as well as a certified coy of the valuation report, if any for the purpose of enabling the registering officer to determine whether the consideration set forth in the instrument approximate to the market value of the property which is the subject matter of such instrument or the market value of the property which is the subject matter of such instrument has been truly set forth therein, or not.
Where the registering officer after taking into consideration the information furnished in the statement and any other information available with him has reason to believe that the consideration set forth in the instrument does not approximate to the market value of the property which is the subject matter of such instrument or, as the case may be, the market value of the property which is the subject matter of such instrument has not been truly set forth therein, he [shall immediately after presentation of such instrument]give intimation of his belief to the person concerned.
Where person to whom intimation is given under Sub-rule (2), offers to the registering officer within a period of thirty days from the receipt of intimation, the amount required to make up the proper duty chargeable on the instrument, the registering officer shall accept the same, and register the instrument and makes endorsement on such instrument that the amount of stamp duty as per intimation notice under rule (3) has been paid.
Where a person to whom intimation is given under Sub-rule (2) does not offer the amount required to make up the proper duty on the instrument within a period of thirty days from the receipt of intimation, the registering officer shall before registering the instrument refer the instrument to the Collector under Sub-Section (1) of Section 32A.
Procedure to be followed by the Collector for determining the true market value of the property which is the subject matter of the instrument:-
4(i) on receipt of the instrument under sub-section (3) of Section 31 or sub-section (10 of Section 32-A, the Collector of the District, where he thinks fit to do so, may for the purpose of his inquiry:-
(a) call for any information or record having bearing, on the question before him from any public office, officer or authority under the Central Government, State Government or any local authority;
(b) examine and record statement from any member of the public officer or the authority under the Central Government of State Government or any local authority, and
(c) inspect or empower any officer under him to inspect the property after due notice to the parties concerned.
(2) After examining the said information, records and evidence, if any, before him Collector of the District shall issue a notice showing the basis on which true market value of property and proper duty payable thereon has been provisionally determined by him, to every person to whom according to the provisions of Section 30 is liable to pay stamp duty in respect of such instrument requiring such person to submit within 15 days from the date of the service of the notice upon such person, his representation in writing alongwith all the evidence in support of such representation.
(3) The Collector of the District shall after considering the representation, if any, received by him under sub-rule(2) pass an order determining the true market value and the proper payable on the instrument.
7. Manner of service of notice under Rule 4. :-
Any notice or order under these rules shall be served in the following manner, namely:-
In the case of any company, society or association of individuals, whether incorporated or not, the notice or order shall be served,
(a) on the Secretary or any Director or other principal officer of the company, society or association of individuals, as the same may be, or
(b) by sending it by registered post with acknowledgment due, addressed to the company, society or association of individuals, as the case may be, as its registered office or if there is no registered office, then at the place where the company, society or association of individuals, as the case may be, carries on business.
(2) In the case of any firm, the notice or order shall be served,-
(a) upon any one or more of the partners; or
(b) at the principal place at which the partnership business is carried on, upon any person having control or management of the partnership business at the time of service.
(3) In the case of a family the notice or order shall be served upon the person in management of such family or of the property of such family, in the manner specified in clause (4) below.
(4) In the case of any individual person, the notice or order shall be served,--
(a) by delivering or tendering person, the notice or order shall be served,--
(b) by delivering or tendering the notice or order to some adult member of the family; or
(c) by sending the notice or order to the person concerned by registered post with acknowledgment due; or
(d) if none of the aforesaid modes of service is practicable, by affixing the notice or order in some conspicuous part of the last known place of residence or business of the person concerned.
8. Principles to be taken into consideration for determination of market value:
The Collector of the District shall while determining the true market value of a property which is the subject matter of an instrument take into consideration primarily the captilalized value of the property i.e. the amount of money whose annual interest at the highest prevailing interest at any given time is its net annual income, and also the following factors, namely:--
(a) in the case of agricultural land,--
(i)classification of land under the provisions of the Bombay Land Revenue Code, 1879:
(ii) the rate of the land revenue;
(iii) the nature of crops raised on the land;
(iv) average yeild from the land, its nearness to road and market its distance from village site road to land, facilities available for irrigation and also for transport of produce of such land;
(v) value of adjacent land or land in vicinity;
(vi) any factors mentioned in the instrument which is relevant for the purpose of determination of true market value;
(vii) any other factor which the Collector of the District thinks to have a bearing on the valuation of the land;
(b) in the case of non-agricultural land,--
(i) the general value of non-agricultural land in the vicinity;
(ii) facilities such as road, railway station, bus route, shops, market and the like available in the vicinity of the land;
(iii) amenities like public offices, hospitals and educational institutions available in the vicinity of the land;
(iv) development activities including, Development of industries in the vicinity of the land;
(v) any factors mentioned in the instrument which is relevant for the purpose of determination of true market value;
(vi) any other factor which the Collector of the District thinks, to have a bearing on the valuation of the non-agricultural land;
(c) in the case of buildings,--
(i) the area of construction;
(ii) the floor space index;
(iii) type and structure;
(iv) year of construction;
(v) kind of material used;
(vi) locality in which constructed;
(vii) rate of depreciation;
(viii) any factors mentioned in the instrument which is relevant for the purpose of determination of true market value;
(ix) any other factor which the Collector of the District thinks to have a bearing on the valuation of the building;
(d) in the case of any other property,--
(i) the nature and condition of the property;
(ii) purpose for which the property is being put to use;
(iii) any factors mentioned in the instrument which is relevant for the purpose of determination of true market value;
(iv) any other factor which the collector of the District thinks to have a bearing on the valuation of the property.
7. Since, various contentions raised by learned counsel for the petitioner about exercise of powers by the authority to determine market value of the properties which is the subject matter of the instrument to be charged and Final Annual Statement of Rates, 2008 being contrary to Articles 14, 19 and 21 of the Constitution of India and also ultra vires, provisions of the Act and Rules made therein it is necessary to refer to three important decisions of this Court as reported in the case of (1) Gorva Vibhag Co-operative Housing Societies Association and Anr. v. State of Gujarat & Ors. [(1992) 1 GLR 654] (for short a decision of the First Full Bench ) (2) Harshadrai P. Dave vs. Sub-Registrar and Ors. [(1994) 2 GLR 1222] (for short a decision of the Second Full Bench ) and (3) both the above decisions were again reconsidered in the case of Shailesh Jadavji Varia v. Sub-Registrar & Ors. [(1996) 3 GLR 783] (for short a decision by a larger bench consisting of five judges )
8. The decision of First Full Bench in the case of Gorva Bibhag Co-operative Housing Societies Association and Anr. (supra) to meet with various contentions raised including legislative competent of the State Legislature to enact Section 76 of the Bombay Stamp Act read with Schedule II so far as it repeal the Central Act (Indian Stamp Act 1899) and further to amend Section 32, 32A, 32B and Articles 20(a) and (b) of the First Schedule to the Bombay Stamp Act, 1958 as beyond the legislative competence of the State Legislature and also method of valuation of property as unreasonable, arbitrary and irrational and also Section 2(na) which defines the market value as illegal and arbitrary and the Full Bench considered all above aspects and held that Section 76 is neither illegal nor ultra vires the provisions of the Constitution and while answering other issues about determination of market value of the property, method prescribed therein the First Full Bench answered as under:
11. For appreciating the remaining contentions that amendment in the Bombay Stamp Act which provides for levy of stamp duty on the market value of the property which is conveyed and the method prescribed for its determination is illegal, arbitrary and irrational, it is necessary to refer to Sections 2(na), 32A, 32B and Article 20(a), (b) of the First Schedule of the Bombay Stamp Act and Rules 3, 4, 5, 6 and 8 of the Bombay Stamp (Determination of Market Value of Property) Rules, 1984.
Sections 2(na), 32A and 32B are as under:
2(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.
32A.
(1) If any officer registering under the Registration Act, 1908 an instrument of conveyance, exchange, gift, partition, partnership or settlement or power of attorney or any person referred to in Section 33, before whom such instrument is produced or comes in the performance of his functions, has reason to believe that the consideration set forth therein does not approximate to the market value of the properly which is the subject-matter of such instrument, or, as the case may be, the market value of the property which is the subject-matter of such instrument, has not been truly set forth therein, he may after registering the instrument or, as the case may be, performing his functions in respect of such instrument, refer the instrument to the Collector of such district in which either the whole or any part of the property is situated for determining of the true market value of such property and the proper duty payable on the instrument under this section.(2)
On receipt of the instrument under Sub-section (3) of Section 31 or Sub-section (1) of this section, the Collector of the district shall, after giving the parties concerned a reasonable opportunity of being heard, and in accordance with the rules made by the State Government in this behalf, determine the true market value of the property which is the subject-matter of the instrument and the proper duty payable thereon.
(3)Upon such determination, the Collector of the district shall require the party liable to pay the duty, to make payment of such amount as is required to make up the difference between the amount of duty determined under this sub-section and the amount of duty already paid by him and shall also require such party to pay a penalty which shall not be less than such difference and not more than twice the amount of such difference, and on such payment, return the instrument to the officer referred in Sub-section (5) of Section 31 or, as the case may be, Sub-section (1) of this section:
Provided that, no such party shall be required to pay any amount to make up the difference or to pay any penalty under this sub-section if the difference between the amount of the consideration or, as the case may be. the market value as set forth in the instrument and the market value as determined by the Collector of the district does not exceed ten per cent of the market value determined by the Collector of the district. (4) The Collector of the district, may suo motu or on receipt of information from any source, within two years from the date of registration of any instrument referred to in Sub-section (1), not being the instrument upon which an endorsement has been made under Section 32 or the instrument in respect of which the proper duty has been determined by him under Sub-section (3) or an instrument executed before the date of the commencement of the Bombay Stamp (Gujarat Amendment) Act, 1982 call for and examine the instrument Vibhag Co-Operative ... vs State Of Gujarat And Ors. on 5 May, 1992 for the purpose of satisfying himself as to the correctness of the consideration or of the market value of the property which is the subject-matter of such instrument and the duty payable thereon, and if on such examination, he has reason to believe that the consideration does not approximate to the market value of such property or, as the case may be, market value of such property has not been truly and fully set forth in the instrument, he shall proceed as provided in Sub-sections (2) and (3).
32B(1) Any person aggrieved by an order of the Collector determining the market value under Section 31 or, as the case may be, under Section 32A, may, after depositing with the Collector seventy-five per cent of the amount of duty or, as the case may be, the amount of the difference of duty payable by him by application presented within a period of sixty days from the date of such order and accompanied by a fee of one hundred rupees, require the Collector to draw up a statement of the case and refer it to the Chief Controlling Revenue Authority and the Collector shall, within sixty days of the receipt of such application, draw up a statement of the case and refer it to the Authority:
Provided that where in any particular case the Authority is of the opinion that the deposit of the amount by the applicant will cause undue hardship to him, the Authority may, in its discretion, either unconditionally or subject to such conditions as it may think fit to impose, dispense with a part of the amount deposited go however that the part of the amount so dispensed with shall not exceed fifty per cent of the amount deposited or required to be deposited.(2)
Such Authority shall consider the case and send a copy of its decision to the Collector who shall proceed to assess and charge the duty (if any) in conformity with such decision.
(3)The decision given by the Authority under Sub-section (2) shall be final.
18. In the affidavit-in-reply it is further pointed out that the Valuation Organisation Committee has started working in the month of October 1982. For the valuation of real properties it has resorted to established prevailing methods, that is.
(i) Comparative method;
(ii) Valuation based on cost known as land and building method;
(iii) Belting method; and
(iv) Abstractive method also known as residual theory or rental method or income capitalisation method.
For our purpose, further details which are given in the affidavit-in-reply how the Valuation Organisation Department determines the value of the property in different zones are not required to be narrated here.
31. In our view, the contention that the method of valuation of property is unreasonable, arbitrary and invalid, is raised without referring to the detailed statutory provisions prescribed under the Act and the Rules. On the face of it, in our view, the said procedure is scientific, reasonable and cannot be termed as irrational by any standard. Sections 32A and 32 Belong with the Rules provide for exhaustive detailed procedures for determining the market value of the property. They also provide for giving adequate reasonable opportunity of hearing to the concerned person at every stage. The said procedures can be divided into the following parts;
1. (a) When the instrument is presented for registration, if the concerned officer has reason to believe that the consideration set forth therein does not approximate to the market value of the property which is the subject-matter of such instrument, he may after registering the instrument refer the instrument to the Collector for determining true market value of the property and the proper duty payable on the instrument [Section 32(I)];
The expression 'reason to believe' contemplates belief and existence of reasons for that belief, Belief must be held in good faith. It cannot be merely a pretence. The expression does not mean a purely subjective satisfaction of the registering officer or of the Collector.
(b) Before referring such instrument to the Collector for determination of proper market value and stamp duty, under the Bombay Stamp (Determination of Market Value of Property) Rules, 1984 (hereinafter referred to as 'the Rules') the registering officer is required to give intimation of his belief to the concerned person that market value stated in the instrument does not approximate to the market value of the property. For this purpose, he must have reason to believe that the consideration set forth in the instrument does not approximate to the market value of the property. This would be based upon the information furnished in the instrument by the person producing document for registration and any other information available withhim [Rule 3(2)]; Information which would be available with the registering officer would be on the basis of information supplied by the Valuation Department. The Valuation Department is required to work out 'minimum values' in respect of different kinds and different localities in all cities and towns. These 'minimum values' would in fact be constructively estimated market values and would become the norms that would be given to the registering officers (as per the affidavit-in-reply). Normally, the concerned person would pay stamp duty without any hesitation on the minimum market value unless there are genuine circumstances to point out that the consideration mentioned in the instrument is truly set forth;
(c) After receipt of intimation, the person presenting document for registration offers to the registering officer the amount required to make up the proper duty chargeable on the instrument, the registering officer is required to accept the same and to proceed to register the document as provided in Section 40 of the Stamp Act [Rule 3(3)];
(d) If the person concerned does not offer the amount required to make up the proper duty on the instrument, the registering officer is required to make reference to the Collector under Sub-section (1) of Section 32A [Rule 3(3)]; Secondly for determining the true market value the Collector is also required to follow the following exhausive procedure prescribed under the Rules.
(a) He is required to issue notice in form D to the concerned person who is liable to pay stamp duty in respect of such instrument and ask him to submit within 30 days from the date of service of notice his representation in writing along with evidence in support of such representation [Rule 4(1)];
(b) If no representation is received, the Collector is required to serve notice upon the concerned person to make a statement before the Collector which he is required to record [Rule 4(2)]; Vibhag Co-Operative ... vs State Of Gujarat And Ors. on 5 May, 1992
(c) After considering the representation or statement, if any, and after examining the information on record or information, if any, called by him, he is required to make a provisional order in writing determining the true market value of the property in accordance with the principles laid down in Rule 8 and proper duty payable thereon [Rule 4(4)];
(d) That provisional order is required to be communicated to the concerned person along with a notice informing him that against that provisional order he can make a represention [Rule 5];
(e) After considering the represention, if any, against the provisional order, the Collector is required to pass the final order determining the true market value and the proper stamp duty payable on the instrument [Rule 6];
(f) After determination of the market value, the Collector is required to direct the party liable to pay duty to make payment of difference of stamp duty and penalty which shall not be less than such duty and not more than twice the amount of such duty. Further, no party would be required to pay any amount to make up difference or to pay any penalty if difference between the amount of consideration or the market value set forth in the instrument and the market value determined by the Collector does not exceed 10% of the market value determined by the Collector.
(g) Against the order passed by the Collector, the aggrieved person is entitled to file an application to the Collector for referring it to the Chief Controlling Revenue Authority for determination of proper duty [Section 32B(1)];
32. Considering the aforesaid elaborate procedures prescribed and the opportunities which are required to be given to the concerned person, the contention of the learned counsel for the petitioners that the procedure prescribed for determining the market value is irrational and illegal requires to be rejected without any further discussion.
33. Apart from the aforesaid elaborate procedures of giving opportunity of hearing to the concerned person even for determining the market value, detailed criteria are laid down in Rule 8 of the Rules. Rule 8 is as under:
8.
Principles to be taken into consideration for determination of market value The Collector of the District shall while determining the market value of a property which is the subject-matter of an instrument take into consideration primarily the capitalized value of the property, i.e, the amount of money whose annual interest at the highest prevailing interest at any given time is its net annual income, and also the following factors, namely:
(a) in the case of agricultural land,-
(i) classification of land under the provisions of the Bombay Land Revenue Code, 1879;
(ii) the rate of the land revenue;
(iii) the nature of crops raised on the land;
(iv) average yield from the land, its nearness to road and market, its distance from the village site road to land, facilities available for irrigation and also for transport of produce of such land;
(v) value of adjacent land or land in vicinity;
(vi) any factors mentioned in the instrument which is relevant for the purpose of determination of the true market value;
(vii) any other factor which the Collector of the District thinks to have a bearing on the value of the land;
(b) in the case of non-agricultural land,
(i) the general value of non-agricultural land in the vicinity;
(ii) facilities such as road, railway station, bus route, shops, market and the like available in the vicinity of the land;
(iii) amenities like public offices, hospitals and educational institutions available in the vicinity of the land;
(iv) development activities including development of industries in the vicinity of the land;
(v) any factor mentioned in the instrument which is relevant for the purpose of determination of true market value',
(vi) any other factor which the Collector of the District thinks to have a bearing on the valuation of the non-agricultural land',
(c) in the case of buildings,
(i) the area of construction;
(ii) the floor space index;
(iii) type and structure;
(iv) year of construction;
(v) kind of material used;
(vi) locality in which constructed;
(vii) rate of depreciation;
(viii) any factor mentioned in the instrument which is relevant for the purpose of determination of true market value;
(ix) any other factor which the Collector of the District thinks to have a bearing on the valuation of the building
(d) in the case of any other property,
(i) the nature and condition of the property;
(ii) purpose for which the property is being put to use;
(iii) any factor mentioned in the instrument which is relevant for the purpose of determination of the property.
The aforesaid principles of determining the market value can be said to be most reasonable and scientific by any standard. Further it is specially provided that any factor mentioned in the instrument which is relevant for the purpose of determination of true market value is required to be taken into consideration by the Collector. Therefore, the contention of the learned counsel for the petitioners that as Section 2(na) of the Act provides for determination of market value of the property on the date of execution of instrument, it is arbitrary and irrational, requires to be rejected because for determining the market value the Collector is required to take into consideration the factors such as agreement to sell executed on a particular date (if it is a genuine one), the orders passed by the statutory authorities determining the price of the land or property, or such other relevant factors including the factor that the property is let out and the tenant occupying the lands or building is protected either under the Bombay Tenancy and Agricultural Lands Act or under the Bombay Rent Act. Not only this, it is also provided that the Collector is required to take into consideration any other factor which he considers to have a bearing on the valuation of the land or building. Therefore, in Section 2(na) it is rightly provided that market value in relation to any property which is 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. If a property transferred is mortgaged with possession, then in the said set of circumstances the market value of the said property is to be determined after taking into consideration the fact that it is mortgaged with possession and for getting possession of the property the purchaser is required to redeem the property and also in some cases there may be litigation. Therefore, this factor would have to be taken into consideration before determining its market value. Similarly, if there are sitting tenants over a land or a building, then such property would not fetch the same market value as the one over which there are no sitting tenants. Similarly, if agreement to sell is executed, which is a genuine one, then the Collector is bound to take into consideration the facts mentioned in the agreement to sell. But in the agreement to sell itself if consideration is understated or that the agreement to sell is not a genuine one, then he can discard it. All these and such other factors which have bearing on the market value are required to be considered by the Collector in each and every case while determining the market price of the property conveyed. Therefore, the Legislature has wisely used the phrase 'price which such property would have fetched if sold in open market on the date of execution of such instrument'. If the property is encumbered or charged or there are tenants over it, then it would not fetch the same market price as the property which is free from any such encumbrances. Hence, it cannot be said that Section 2(na) is in any manner illegal, arbitrary or irrational.
37. In the result, from the aforesaid discussion, following conclusions emerge:
I. (a) Sections 32A, 32B, 76 and Article 20(a) and (b) are neither illegal nor ultra vires any of the provisions of the Constitution of India In view of Entry 63 List II-State List and Entry 44 List III-Concurrent List, the State Legislature is competent to enact a law which provides for rates of stamp duty in respect of documents other than those specified in Entry 91 of List I-Union List;
(b) Article 372 of the Constitution empowers the State Legislature to alter or repeal or amend any law in force in the territories of India immediately before commencement of the Constitution for the subjects for which it is competent to legislate;
(c) even if there is no express provision repealing the existing law, the same result would be achieved in view of Article 254 (2) as the Bombay Stamp Act, 1958, was enacted after receiving the assent of the President.
II.
(a) Sections 32A, 32B and Article 20(a) and (b) are enacted in pursuance of the suggestions made by various committees including the Gujarat Taxation Inquiry Commission constituted by the State Government in 1978 to review the State taxes. The Commission has suggested for levy of stamp duty on the basis of market value of the property involved in the instrument of conveyance and for having Statewise valuation organisation to be set up for making a continuous valuation of agricultural and non-agricultural properties. The Valuation Department is required to workout 'minimum values' for properties of different kinds in different localities in all the cities and towns. These 'minimum values' would in effect be conservatively estimated market values and would become the norms that would be given to registering officers. It is stated that for valuation of the real properties the Valuation Organisation Department has resorted to established prevailing methods of valuing the real properties including, (i) comparative method, (ii) valuation based on cost known as land and building method, (iii) belting method, and (iv) abstractive method also known as residual theory or rental method or income capitalisation method. The Valuation Organisation Department determines the value of the property in different zones and that valuation also would be subject to revision after lapse of certain time. It cannot be said that this exercise by the State Government is in any way illegal or arbitrary. (b) The aforesaid stringent provisions of recovering proper stamp duty on the basis of market value are enacted so as to avoid loopholes in the Stamp Act and to prevent understatement of considertion in the instrument for avoiding payment of proper stamp duty. There is specific provision that the consideration and all other facts and circumstances affecting chargeability of any instrument with duty are required to be fully and truly set forth in the intrument and yet there was no provision empoweiing the authority to make an independent inquiry of the value of the propeny conveyed for determining the proper stamp duty. (c) The procedure prescribed under Section 32A read with Rules 3 to 8 of the Rules provides for giving adequate reasonable opportunity of hearing to the concerned person at different stages. The consideration before the registering officer is mainly based upon the 'minimum market value' determined for different properties in different localities as per the guidelines issued by the Valuation Organisation Department. Normally, the concerned person would pay difference of duty (if any) without any hesitation on the minimum market value (unless there are genuine circumstances to point out that the consideration mentioned in the instrument is truly set forth).
(d) If the person concerned does not offer the amount required to make up the proper duty on the instrument, the registering officer is required to make reference to the Collector under Sub-section (1) of Section 32A read with Rule 3(3). The Collector is also required to follow exhaustive procedure prescribed under the Rules before determining the market value. It provides for giving ample opportunity to the concerned person to establish his case, that is, of making represention in writing with evidence in support of such representation within 30 days from the date of receipt of notice [Rule 4(1)] or of making statement [Rule 4(2)]. The Collector is required to consider the representation or the statement and examine the information on record. He is required to make provisional order in writing determining the true market value of the instrument in accordance with the principles laid down in Rule 8 for determination of the market value. Thereafter, he is required to make the provisional order and communicate to the concerned person by a notice informing him that against that order he can make representation. The Collector is further required to consider the representation, if any, against the provisional order and to pass the final order.
III.
(i) Section 3 of the Bombay Stamp Act, 1958, provides for levy of stamp duty on the instrument. The chargeable event is the execution of the instrument. The basis for computation of stamp duty can be different and it is to be determined by the Legislature. It can be levied on the basis of the consideration mentioned in the instrument or on the market value of the property transferred or fixed amount can be prescribed. This is provided in Schedule I to the Bombay Stamp Act, 1958.
(ii) The principles laid down in Rule 8 for determination of market value are exhaustive, reasonable and scientific by any standard. Apart from other factors, it authorizes him to take into consideration.
(a) any factor mentioned in the instrument which is relevant for the purpose of determination of true market value, and
(b) any other factor which the Collector considers to have bearing on valuation of the property.
(iii) This would empower the Collector to take into consideration all the relevant factors for determination of market value including the factor that the property is sold after obtaining permission from the Competent Authority under the provisions of any other enactment or that the market value is determined by the statutory authority or that the property is sold subject to rights of tenant, who is protected under the provisions of any statutory law or that there is encroachment or encumbrance on the land or the property.
(iv) Power under Section 32A is to be exercised within a reasonable period.
8.1. The above decision of the First Full Bench in the case of Gorva Vibhag Co-operative Housing Societies Association and Anr. (supra) under the interpretation of the judgment of about what is the reasonable period fell into consideration before another Second Full Bench and following question was raised for determination by the Second Full Bench. The question that arises before this Full Bench is whether the period of two years mentioned by the earlier Full Bench is the rigid and maximum period being reasonable period or whether it is open to the authority to point out facts justify delay before two years and while considering the above issue in para 19 in the case of Harshadrai P. Dave v. Sub-Registrar, Rajkot [1994(2) GLR 1222] (Second Full Bench), about the argument of lack of competence State Legislature to legislature regarding the rates of Stamp duty under Entry 63 of State list was negatived as under:
19. Even otherwise, the argument of lack of competence of the State Legislature is not tenable. The State Legislature is competent to legislate regarding the rates of stamp duty under Entry 63 of State List. The prescribing of the rates of duty on the basis of market value is a subject within the exclusive jurisdiction of the State Legislature and it is not in the Concurrent List Entry No.44 which relates to stamp duty. Conveyance is the subject matter of stamp duty, but the rate of the stamp duty and the basis of that rate is within the exclusive jurisdiction of the State Legislature under Entry 63 of the State List. Therefore, there is not merit in the contention that there is any lack of competence in the State Legislature to pass the impugned Amendment Act of 1984.
8.2. Both the above decisions of the First Full Bench as well as Second Full Bench were referred to larger bench consisting of five judges in the case of Shailesh Jadavji Varia vs. Sub-Registrar & Ors.
[(1996) 3 GLR 783] and two questions formulated by learned Single Judge in para 4 for consideration of larger Bench (1) Whether the Registering Officer under Section 32A (1) or the Collector under Section 32A (4) can exercise the respective powers beyond the period of two years even a fact justifying the delay? And (2) Whether Rule 3(2) and Rule 4(2) of amended rules are mandatory in nature and non-compliance vitiates the entire proceedings under Section 32A? After considering arguments of learned counsel for the petitioner in para 21 and learned counsels for the respondent in para 22 as reproduced herein below.
21. The learned Counsel for the petitioners raised the following contentions:
(1) Power under Sub-section (1) of Section 32-A of the Act must be exercised by registering officer within a reasonable period of three months. In no case, however, such period can exceed two years inasmuch as the Collector exercising revisional jurisdiction under Sub-section (4) has no jurisdiction to go beyond a period of two years. If the Higher authority on whom the competent legislature has conferred suo motu power cannot exercise the said power beyond two years, lower authorities cannot exercise the power to refer the instrument at any time at his sweet will.(2)
While upholding constitutional validity of the Act, the Full Bench of this Court considered relevant provisions as also various circulars issued by the Government and a solemn statement made by the Advocate General at the Bar that the power under Section 32-A(l) would be exercised within a stipulated period. It is not open to the State Government now either to withdraw the said statement or to contend that power under Section 32-A (1) can be exercised at any time.
(3)Even if circulars are in the nature of administrative instructions not having the force of law, they are issued by the State Government in exercise of administrative powers declaring policy of the State Government. It is not open to the State Government to ignore it. Such an action would be arbitrary, unreasonable and violative of Articles 14 and 19 of the Constitution of India.
(4)In Gorva Vibhag Cooperative Housing Society Association (supra) the First Full Bench of this Court held that power under Section 32-A(l) must be exercised within reasonable period of two years. The decision was rendered by M.B. Shah, J. (as he then was). In Spl. C.A. No. 7144 of 1992 and cognate matters decided on 23rd December 1992, a Division Bench presided over by M.B. Shah, J. (as he then was) author of the decision of the First Full Bench held that power under Section 32-A(l) can be exercised latest within a period of two years and not more. Thereafter, it was not open to other Division Bench (R.A. Mehta and R.K. Abichandani, JJ.) to refer the matter to Full Bench for interpretation of the judgment of the First Full Bench. It was equally not open to the Second Full Bench to take a different view than the one taken by the First Full Bench.
(5)If this Court holds that the second Division Bench had power to refer the matter to a Full Bench for interpretation of the decision of the First Full Bench, then also the view taken by the Second Full Bench in Harshad P. Dave (supra) is erroneous, contrary to law and requires to be upset.
(6)Even if it is assumed that reasonable period can be extended in appropriate cases, in the facts and circumstances, no case has been made out by the authorities for extension of time. In 1984, only partial interim relief was granted by this Court. In spite of such relief, the authorities could have proceeded further with inquiry and could have passed appropriate orders in accordance with law, which was not done. There was default, negligence and carelessness on their part. The authorities cannot be allowed to take undue advantage of their own inaction causing serious prejudice and gross injustice to petitioners.
(7)The function to be exercised by registering officer under Sub-section (1) of Section 32-A is quasi-judicial in nature and not administrative. Hence, before taking any action or passing any order, it was incumbent on his part to comply with principles of natural justice.
(8)Section 32-A of the Act pertains to imposition of stamp duty which is in the nature of tax and not fee. As per settled law, such provisions must be construed strictly in favour of subjects and if two interpretations are possible one which is favourable to subjects must be accepted than the other which may prejudicially affect them.
(9)Non-compliance with the provisions of Section 32-A would result not only in payment of deficit stamp duty but also imposition of penalty. Sub-section (3) of Section 32-A enjoins the Collector to require defaulting party to pay duty as well as penalty. This provision is mandatory in nature. If the provisions of Rules 3 and 4 are held to be directory, a person would be condemned unheard and would be liable to pay deficit stamp duty and penalty without observing principles of natural justice.
(10)The Amendment Act of 1994 cannot have retrospective operation. The amendment relates to a substantive law. All substantive laws are presumed to be prospective unless retrospective effect is given by a competent legislature either expressly or by necessary implication. In absence of such intention, the provisions of Sub-section (4) of Section 32-A cannot apply to pending cases.
22. Mr. S.N. Shelat, on the other hand, supported the order passed by the authorities. He submitted that the contentions raised by the petitioners are not well founded and cannot be upheld for the following reasons:
(1)Constitutional validity of the Act and the Rules has been upheld by the Full Bench and the provisions are held to be intra vires and constitutional.(2)
Circulars issued by the Government are not for general public. They are not policy decisions. They are in the nature of inter-departmental communications. No right flows from such circulars, much less a justiciable right so as to invoke extraordinary jurisdiction of this Court under Article 226 of the Constitution of India.(3)
Even if it is assumed that circulars lay down administrative guidelines, they cannot curtail or take away the power conferred on statutory authorities by competent legislature. A legislative enactment cannot be challenged on the ground that it is contrary to administrative instructions issued by Government.(4)
The function exercised by Registering Officer under Sub-section (1) of Section 32-A is administrative pure and simple and not quasi-judicial. Principles of natural justice have no place in exercise of executive functions. It is, therefore, not necessary to issue notice, call for explanation or afford opportunity of hearing by Registering Officer before making reference under Section 32-A(l).(5)
Formation of opinion under Sub-section (1) of Section 32-A of the Act by Registering Officer is on the basis of objective facts before him when he has 'reason to believe' that consideration set forth in instrument does not approximate market value of the property which is the subject-matter of instrument. Formation of opinion based on objective facts cannot be held arbitrary or irrational.(6)
Provisions of Rules 3 and 4 are directory and not mandatory. Non-compliance thereof would not invalidate or vitiate an action.(7)
According to the First Full Bench, the power under Section 32-A(l) must be exercised within reasonable period. In fixing reasonable period, it is not open to the Court to prescribe any outer limit. No straight-jacket formula can be adopted by a Court of law. It depends on the facts and circumstances of each case and in every case, the Court will have to decide whether the power was exercised within reasonable period.(8)
When the First Full Bench held that the power under Section 32A(1) can be exercised within reasonable period and that such power ordinarily be exercised within two years "unless the facts justifying delay are pointed out", it was not open to a Division Bench to hold that exercise of power beyond two years would be ultra vires. It was, therefore, open to another Division Bench to refer the matter to Full Bench and it was equally open to Full Bench to hold that the power could be exercised within reasonable period, without prescribing maximum or outer time-limit.(9)
When a decision is taken after issuing notice, calling for explanation and affording opportunity of being heard, no objection can be raised against such action. Adjudication may result in payment of deficit stamp duty and penalty. Since the action is in consonance with law, consequences would necessarily ensue.(10)
In present cases, no prejudice is caused to the petitioners inasmuch as even though notices under Rule 4 were issued to show cause why they should not be ordered to pay proper stamp duty in accordance with law, they have neither remained present nor sufficient material supplied and the orders were passed. The orders, therefore, cannot be said to be bad in law.(11)
In earlier petitions, interim relief was granted by this Court. Though 'Jantri' (Valuation Tables) was one of the important modes for deciding market value of property, the authorities were restrained from taking into account that material. If in these circumstances, the authorities could not decide lacs of cases, it cannot be said that there was inaction, carelessness or negligence on their part.(12)
From the record, it is clearly established that lacs of documents were accumulated with the respondent authorities. It was, therefore, humanly impossible to dispose of all the cases after the proceedings were finalised.
Upholding of contention of the petitioners would result in depriving the authorities of their obligation to act in consonance with law.
(13) Provision of Sub-section (4) of Section 32-A of the Act as amended by 1994 Act is procedural and not substantive. Procedural laws are always retrospective operation and not prospective. Sub-section (4) of Section 32-A, therefore, will apply to all pending cases.
The larger bench in paras 25, 26, and 27 noticed certain findings of time limit of exercise of powers by registering officers and in paras 47, 50, 54, 55, 71 and 72 discussed issues related to exercise of powers within reasonable period in the context of Section 32A (4) and Rules 3 and 4 of Rules.
25. Regarding time-limit for exercise of power by registering officers, the Court negatives the contention that such powers could be exercised at any time at the sweet will of the officers. Considering the circulars issued by the State Government and the statement made by the learned counsel General, speaking for the Full Bench, M.B. Shah, J. (as he then was) observed in para 36:
It was also contended that, as no time-limit is prescribed for initiating the action by the registering officer, it gives arbitrary powers to the registering officer to initiate proceedings after lapse of unreasonable time and to harass the concerned person by misusing the provisions contained under Section 32A. In our view, this contention requires to be rejected because it is a settled law that the powers under the statutory provisions are to be exercised within the reasonable period. The reasonable period varies in the facts and circumstances of each case and various provisions of the Act. It should be noted that under Section 32A (4) the Legislature has prescribed maximum period of two years from the date of registration of any instrument for initiating suo motu proceedings by the Collector for examining the instrument for the purpose of satisfying himself as to the correctness of the consideration or the market value of the property which is subject-matter of the conveyance and the duty payable thereon. Therefore, in no set of circumstances the registering officer can exercise his power of referring the instrument to the Collector beyond the reasonable period (under Section 32A). Not only this, the learned counsel General stated that the Superintendent of Stamps and Inspector General of Registration, Gujarat State, has issued a Circular dated 7th December, 1991 to the effect that the registering officer should issue a notice within one month from the date of presentation of the document for registration for payment of the amount of difference in stamp duty within one month from the date of receipt of the notice. If the difference in stamp duty is not paid he should immediately refer the case to the concerned Deputy Collector (Stamp Duty - Valuation Department). The learned counsel General further stated that the Deputy Secretary, Revenue Department, has informed that in Rules 3(2), 4(2) and (3) appropriate time-limit ranging from one month to three months would be prescribed. Considering the aforesaid statement made by the learned counsel General and the amended provisions of the Act, in our view, even prior to issuance of Circular dt. 7th December, 1991 by the Superintendent of Stamps and Inspector General of Registration, Gujarat State, three months period can be considered to be the reasonable period for issuance of notice by the registering officer under Section 32A(1) read with Rule 3, Clause (2) of the Bombay Stamp (Determination of Market Value of Property) Rules, 1984. If the power is exercised beyond that period, then the order can be set aside unless the facts justifying delay are pointed out.
(emphasis supplied)
26. Then came the decision dt. December 23, 1992 of a Division Bench of M.B. Shah J. (as he then was) and D.G. Karia J. in Spl. C.A. No. 7144 of 1992 and cognate matters. Following Gorva (supra) and quoting with approval the observations in para 36 from that judgment extracted hereinabove, the Bench through M.B. Shah, J. (as the then was) observed:
The observation made in the aforesaid judgment that "if the power is exercised beyond that period then the order can be set aside unless facts justifying the delay are pointed out" pertains only to the cases where the registering officer has exercised his powers of issuing a notice after the period of three months and within the period of two years. But there is no question of justifying the delay beyond the period of two years because the maximum period which is prescribed under the Act for suo motu exercise of powers by the Collector under Section 32A(4) is two years. Therefore, in these petitions there is no question of explaining the delay. Such type of delay in exercise of jurisdiction under Section 32A of the Act is on the face of it unreasonable and initiation of the proceedings on the basis of the said show-cause notice is illegal. Hence, the proceedings initiated on the basis of such notices deserve to be quashed and set aside. (emphasis supplied)
27. Thus, according to the Division Bench, the observations of the Full Bench in Gorva (supra) must be read to mean that the power must be exercised by Registering Officer between three months and two years. There was, however, no question justifying delay beyond a period of two years inasmuch as the maximum period prescribed for suo motu exercise of power by Collector was two years. Exercise of power beyond two years would ipso facto be unreasonable and ex-facie bad. Explanation of delay would be wholly immaterial and the action must be quashed.
47. Now, let us apply the above test to the case on hand. As observed by the Second Full Bench in H.P. Dave (supra), the Registering Officers were deprived of the most important and scientific tool in the nature of Jantri (Valuation Tables) for fixing market value of property because of the interim order passed by this Court. Virtually, therefore, 'their hands and wings were cut off. They were totally handicapped and disabled. It is on record that lacs of documents had accumulated. When the cases were in very large number, they could not be disposed of in view of interim orders. In these circumstances, could it be said that delay in making reference is not explained or is not justified and references are bad on account of so-called delay? In our considered opinion, the reply must be in the negative.
50. The Second Full Bench also considered the contention raised before us that if no time-limit is prescribed for exercise of power, it would be open to the authority to exercise the said power at its sweet will after ten, twenty or thirty years. The Bench negatived the contention by stating:
The learned Counsel for the petitioners submitted that if no time-limit is prescribed, the authority may exercise power after lapse of several years and it can be exercised after 10, 20 or 30 years and there will be a hanging sword over the head of every citizen executing a document. There is no basis for this argument. The earlier Full Bench has clearly laid down that the power has to be exercised within a reasonable period and, therefore, if the power is exercised beyond reasonable period, the orders can be set aside. What is "reasonable period" would depend upon the facts and circumstances of each case. If a delay of few months cannot be explained, it would be beyond reasonable period. If a delay of years can be explained and justified, it would be "within reasonable period". When the power is exercised "within reasonable period", it cannot be successfully attacked When this power of reasonableness is read into the provision, the provision does not become unreasonable or arbitrary. (emphasis supplied)
54. In our opinion, the first Full Bench in Gorva (supra) correctly decided that the power under Sub-section (1) of Section 32A should be exercised within reasonable time. In our view, the Full Bench was also right in holding that ordinarily, such power must be exercised between three months and two years. But the facts and circumstances justifying delay can be shown or exhibited to satisfy the Court that the power could not be exercised within the said period. According to us, the Second Full Bench in H.P. Dave (supra) rightly held that the length of reasonable period cannot be fixed as it would depend upon the facts and circumstances of each case. The Second Full Bench, therefore, in our considered view, rightly over-ruled the Division Bench judgment in Special Civil Application No. 7144 of 1992 and cognate matters wherein it was held that outer limit of exercise of revisional power would be two years and if the power is exercised beyond that period, exercise of power per se will be bad and it will not be open to show the circumstances as to why revisional power could not be exercised within that period.
55. According to us, the First Full Bench has not laid down such a rule of universal application in Gorva (supra) and it was not open to a Division Bench to read or interprete the decision of the Full Bench as laying down a rigid rule applicable to all cases in all situations. We must frankly admit that we are not at all impressed by the argument and could not persuade ourselves that since a subsequent Division Bench judgment was also delivered by the author of the First Full Bench decision, the Division Bench judgment could be said to be of the same efficacy and could not have been overruled by a Bench of three Judges. In our opinion, a decision of a Division Bench remains to be a decision of a Division Bench for all purposes. To us, the view of the Division Bench was contrary to and inconsistent with the view of the First Full Bench and, therefore, it could be overruled by the Second Full Bench. This contention, therefore, also has no merit and is, therefore, rejected.
71. the Act and Rules 3 and 4 of the Rules must be held to be mandatory. It was submitted that since Rule 3 contemplates making of reference by Registering Officer only in those cases where person concerned does not offer the amount required to make up proper duty on the instrument, it is incumbent on the part of Registering Officer to issue notice and to afford opportunity to such person by calling upon him to make deficit payment. Such provision which is in consonance with the principles of natural justice and provides opportunity to the person to make payment must be held to be obligatory and non-compliance thereof must vitiate the action. Likewise, provisions of Rule 4 which enjoin the Collector to issue notice and to give opportunity of hearing before adjudicating the lis and before passing an order against the person concerned must be held to be mandatory.
Such reading would be in consonance with the provisions of Sub-section (3) of Section 32-A which mandates that upon determination regarding proper payment of stamp duty, the Collector shall require the party to pay not only the deficit stamp duty but also penalty which shall not be less than a particular amount. True it is that the amount of penalty is not substantially high. But penalty is after all penalty. It is a punitive act. It casts stigma on a person. It can be imposed only when a person is held guilty of committing breach of law. A note to that effect will remain on record. As per settled law, such action cannot be taken against any person unless he has been given a notice to show cause against the proposed action, his explanation is sought and he is afforded opportunity of hearing. Hence, even in absence of a provision regarding observance of natural justice, the Court would read such a requirement as part of natural justice.
72. The question, therefore, is whether the provisions of Sub-sections (2) and (3) of Section 32A of the Act and Rules 3 and 4 of the Rules are directory or mandatory. Legal position:
In paras 73 to 79 the larger bench also considered nature of enactment and interpretation of provisions in the context of duties cast upon the authorities and creating pubic duties and principles of interpretation to be applied therein in the context of various decisions of the Apex Court and in paras 80 to 85 Court laid down certain principles:
73. A number of decisions have been cited at the Bar by both the sides. We do not intend to burden our order by referring to all those decisions. We may, however, observe that the following principles appear to be well settled:
The general rule is, that an absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially. (Maxwell on Interpretation of Statutes, Eleventh Edition, at p. 364).
74. In Craies' Statute Law, (Seventh edition at p. 250) it is stated:
The question whether the provisions in a statute are directory or imperative has frequently arisen in this country, but it has been said that no general rule can be laid down and that in every case the object of the statute must be looked at.... When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in respect of this duty would work serious general inconvenience of injustice to persons who have no control over the main object of the legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable not affecting the validity of acts done.
75. In Dattatraya v. State of Bombay , the Supreme Court stated:
Generally speaking the provisions of a statute creating public duties are directory and those conferring private rights are imperative. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the legislature, it has been the practice of the Courts to hold such provisions to be directory only, the neglect of them not affecting the validity of the acts done.
76. In the leading decision in Raza Buland Sugar Co. Ltd. Rampur v. The Municipal Board, Rampur speaking for the majority, Vanchoo, J. (as he then was) observed:
The question whether a particular provision of a statute which on the face of it appears mandatory inasmuch as it uses the word "shall" as in the present case - or is merely directory cannot be resolved by laying down any general rule and depends upon the facts of each case and for that purpose the object of the statute in making the provision is the determining factor. The purpose for which the provision has been made and its nature, the intention of the legislature in making the provision, the serious general inconvenience or injustice to persons resulting from whether the provision is read one way or the other, the relation of the particular provision to other provisions dealing with the same subject and other considerations which may arise on the facts of a particular case including the language of the provision, have all to be taken into account in arriving at the conclusion whether a particular provision is mandatory or directory.
77. In State of Uttar Pradesh and Ors. v. Baburam Upadhya , Subba Rao J. (as he then was) referred to relevant Rules of interpretation thus:
The relevant Rules of interpretation may be briefly stated thus: When a statute uses the word "shall", prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of the statute. For ascertaining the real intention of the legislature the Court may consider, inter alia, the nature and the design of the statute, and the consequences which would follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered.
78. In Dalchandv. Municipal Corporation, Bhopal holding the provisions of Rule 9(j) of the Prevention of Food Adulteration Rules as directory, the Supreme Court observed:
There are no ready tests or invariable formula to determine whether a provision is mandatory or directory. The broad purpose of the statute is important. The object of the particular provision must be considered. The link between the two is most important. The weighing of the consequence of holding a provision to be mandatory or directory is vital and, more often than not, determinative of the very question whether the provision is mandatory or directory. Where the design of the statute is the avoidance or prevention of public mischief, but the enforcement of a particular provision literally to its letter will tend to defeat that design, the provision must be held to be directory, so that proof of prejudice in addition to non-compliance of the provision is necessary to invalidate the act complained of. It is well to remember that quite often many rules, though couched in language which appears to be imperative, are no more than mere instructions to those entrusted with the task of discharging statutory duties for public benefit. The negligence of those to whom public duties are entrusted cannot by statutory interpretation be allowed to promote public mischief and cause public inconvenience and defeat the main object of the statute. It is as well to realise that every prescription of a period within which an act must be done, is not the prescription of a period of limitation with painful consequences if the act is not done within that period.
79. In this connection, it may be profitable to refer to a recent decision of the Hon'ble Supreme Court in State Bank of Patiala and Ors. v. S.K. Sharma . In that case, the respondent was working as a Branch Manager of the appellant Bank. Departmental inquiry was instituted in connection with irregularities said to have been committed by him. He was found guilty and punished. That action was challenged inter alia, on the ground of violation of natural justice. It was contended that preliminary inquiry was instituted against the respondent before holding regular departmental inquiry. Statements of some officers were recorded at preliminary inquiry but the copies thereof were not supplied to the delinquent. Similarly, copies of some of the documents were not given. At the time of regular inquiry, however, delinquent was permitted to peruse the statements recorded at the preliminary inquiry as also the documents. The question before the Hon'ble Supreme Court was as to whether non-supply of statements and documents vitiated the order as violative of the principles of natural justice. Relying on several decisions, the Court observed that a provision may be substantive or procedural. If the provision is of a substantive nature, normally, it has to be complied with strictly. But if it is a procedural one, strict compliance need not be insisted upon and substantial compliance may be held sufficient. In case of mandatory provision, if it is procedural, non-compliance thereof will not ipso facto vitiate the action. The rest in such cases is to see whether prejudice has been caused to the person who makes complaint of non-compliance. It was indicated that whenever penalty is imposed on an employee consequent upon an inquiry in violation of rules, regulations or statutory provisions governing such inquiry it may not be set aside automatically. Before setting aside the order, the Court should inquire and ascertain whether the provision said to have been violated is substantive or merely procedural. Violation of any and every procedural provision does not automatically vitiate the action and the complaint of violation thereof has to be examined from the point of view of prejudice.
The Court then laid down the following principles in paras 80 to 85 as under:
80. The Court then laid down the following principles:
(1) Regulations which are of a substantive nature have to be complied with and in case of such provisions, the theory of substantial compliance would not be available.(2)
Even among procedural provisions, there may be some provisions of a fundamental nature which have to be complied with and in whose case, the theory of substantial compliance may not be available.
(3)In respect of procedural provisions other than of a fundamental nature, the theory of substantial compliance would be available. In such cases, complaint/ objection in this score have to be judged on the touchstone of prejudice, as explained later in this judgment. In other words, the test is: All things taken together whether the delinquent officer/employee had or did not have a fair hearing. We may clarify that which provision falls in which of the aforesaid categories is a matter to be decided in each case having regard to the nature and character of the relevant provision, (emphasis supplied) Application of law
81. Applying the above well settled principles to instant cases, we are of the opinion that what the Act and the Rules contemplate is to afford opportunity of hearing to person concerned before a final decision is taken by the Collector that he has not paid sufficient stamp duty. It is not disputed, and in our opinion, cannot be disputed that a decision that a person has or has not paid sufficient stamp duty involves lis, and it cannot be arrived at before notice is issued, explanation is sought and hearing is afforded to the party concerned. Apart from Rule 4, the parent Act itself provides for observance of natural justice by the Collector. Sub-section (2) of Section 32A in no uncertain terms provides that on receipt of instrument under Sub-section (3) of Section 31 or Sub-section (1) of Section 32A, the Collector shall afford reasonable opportunity of being heard to the party concerned in accordance with the Rules framed by the State Government and only then, he can determine the true market value of the property and proper duty payable on the instrument. In our opinion, therefore, Sub-section (2) of Section 32A as well as Rule 4(2) of the Rules in so far as they provide for the fundamental requirement of affording an opportunity of hearing and observance of natural justice must be held to be mandatory and we hold accordingly. When such opportunity is given, it necessarily includes an opportunity to ask for further and better particulars on the basis of the notice. However, every word and every part of Rule 4 cannot be said to be mandatory and non-compliance thereof does not ipso facto vitiate the decision.
82. When no notice under Rule 4 is issued or served, the order will fall, leaving the Collector free to proceed afresh in accordance with law, to answer and decide the Reference made to him. If the notice is defective, the matter can proceed from that stage by curing the defect, provided the defect was objected to and not waived. If the objection is not taken before the authority, it cannot be taken for the first time in a writ petition.
83. Rule 3 of the Rules, however, deals with a totally different situation. It merely prescribes procedure to be followed by the Registering Officer for making the Reference to the Collector, if he has reason to believe that the consideration set forth in an instrument does not approximate value of the property which is the subject-matter of the instrument. As already observed by us, in making a Reference, the function performed by the Registering Officer is administrative, pure and simple. He is not exercising judicial or quasi-judicial power. In fact, he has no power to adjudicate a lis or decide whether proper stamp duty is paid.
84. The matter can be looked at from a different angle also. The parent Act (Sub-section (1) of Section 32A) does not provide for issuance of notice and opportunity of hearing by the Registering Officer before a Reference is made to the Collector. Hence, even if Rule 3 provides for notice or opportunity of hearing this Court will not read the provision as mandatory or obligatory. Ultimately, Rule 3 is in the nature of delegated, subordinate or child legislation. A Court of law will interpret and read subordinate legislation in conformity with the primary legislation. Reading of Rule 3 in its proper perspective leaves no room of doubt that it is directory and not mandatory particularly when the function of the Registering Officer is held to be administrative and executive. In our view, therefore, failure to give intimation to a person under Rule 3 cannot vitiate the action taken by the Registering Officer. Re: Nature of function.
85. The Second Full Bench in H.P. Dave (supra), held that the Registering Officer is not exercising quasi-judicial function while exercising power under Sub-section (1) of Section 32A and in making Reference to Collector. It is the Collecor who adjudicates lis and thus exercises quasi-judicial power. It is the Collector who adjudicates the dispute and resolves lis between the parties. The Collector, therefore, exercises quasi-judicial powers and, hence, he has to follow the principles of natural justice and fair play.
The larger bench also noticed the decision of the Apex Court in the case of State of Punjab and Ors. V. Mohabir Singh and Ors .[(1996) 1 SCC 609] in the context of Section 47(A) of the Punjab Stamp Act, 1982 and found that the above decision on the contrary supported the argument of the authority with the registering officer while making a reference under Section 32A (1) cannot be said to be acting quasi-judicially.
9. Having held so, about nature of duties and decision taken by the registering officer as administrative one, larger bench in para 88 considered the aspect about observance of natural justice and in paras 88 and 89 held as under:
88. It was strenuously argued that before making Reference to the Collector, the Registering Officer must comply with the principles of natural justice and fair play. As observed by us earlier, in making Reference, the Registering Officer is not performing any quasi-judicial function.
The act of Registering Officer under sub-Section (1) of Section 32A read with Rule 3 is administrative and executive. He has no power to adjudicate or decide any controversy. In fact, there is no lis between the parties. These provisions cannot be put on par with sub-Section (4) of Section 32A read with Rule 4. The question of observance of the principles on natural justice, therefore, at the stage of making Reference does not arise.
89. In this connection, it would be profitable to compare the phraseology used by the rule making authority in Rules 3 and 4. The difference is eloquent and significant. Whereas Rule 4 provides for issuance of notice, Rule 3 merely speaks of giving of intimation. It neither envisages issuance of notice nor calling for explanation nor affording opportunity of hearing. Giving of intimation in our considered opinion, cannot be equated with issuing notice , calling for explanation or affording opportunity of hearing. Even with regard to intimation, Sub-rule (2) merely enables the Registering Officer to intimate the person before making a Reference to the Collector about his reason to believe that the consideration set forth in the instrument does not approximate the market value of the property . The rule making authority has advisedly used the expression may and not shall for this enabling provision. To us, power of making Reference flows from the parent Act (Sub-section (1) of Section 32A) and not from the subordinate legislation (Sub-rule (2) of Rule 3). Likewise, the condition precedent or jurisdictional fact for exercise of power is not giving of intimation , but reason to believe . If the competent legislature has invested the Registering Officer with power to make Reference when he has reason to believe that the consideration set forth in the instrument does not approximate to the market value of the property which is the subject-matter of such instrument , he cannot be deprived of that power by rule making authority on the ground that he has not intimated the person concerned about his reason to believe. We, therefore, fail to appreciate how Reference made by the Registering Officer in exercise of power under Section 32A(1) can be held to be illegal or unlawful or proceedings taken pursuant to such Reference as without jurisdiction merely on the ground that intimation of such reference as provided in Rule 3(2) has not been given to the person concerned. The contention, therefore, has not merit and is rejected.
Thus two questions formulated by learned Single Judge were answered in para 94 as under:
94. For the reasons aforesaid, our answers to the questions referred to us by the learned Single Judge are as under:
Question No.1:
First part of Question No.1 is replied in the affirmative, namely, the Registering Officer under Sub-Section (1) of Section 32A can exercise powers beyond two years on facts justifying delay.
We express no opinion on the second part of Question No.1, namely, whether the Collector can suo motu exercise power under Sub-section (4) of Section 32A beyond two years (or six years).
Question No.2:
Rule 3(2) is directory and non-compliance thereof will not vitiate the proceedings.
Rule 4(2) inso far as it requires giving reasonable opportunity of hearing before deciding the question of payment of proper stamp duty on an instrument is mandatory and non-compliance thereof will vitiate the order but the Collector can proceed afresh in accordance with law to decide and answer the Reference made to him.
Question No.3:
We express no opinion whether Sub-section (4) of Section 32A as amended by the Bombay Stamp (Gujarat Amendment ) Act, 1994 has retrospective operation.
We also express no opinion whether the said provision is substantive in nature or merely procedural. No such question arises in present cases.
Reference is accordingly disposed of. The office is now directed to place all these matters before the learned Single Judge for disposal in accordance with law.
10. Since Section 32A(4) is amended subsequently, in this case, issue about reasonable period does not arise and it is not even raised by the petitioners.
11. That the relevant paragraphs reproduced herein above of two Full Benches and one Larger Bench of this Court would go to show that contentions raised by learned Counsel for the petitioners as recorded in paragraphs 2 to 3.5 of this judgment do not require any detail scrutiny inasmuch as issue about valuation method and power of State Government to prepare Annual Statement of Rates (ASR) - Jantri is upheld by the First Full Bench and the said Bench has in detail examined provisions of Section 32A (1) (2) (3) and rules namely Rules 3, 4, 6 and 8 of the Rules and in no uncertain terms held in para 31 that the method of valuation of property cannot be said to be unreasonable, arbitrary and invalid and contentions was raised without referring to statutory provisions prescribed under the Act and Rules. The Bench further held that the said procedure is scientific, reasonable and cannot be termed as irrational by any standard. Besides, the First Full Bench after examining the Rules governing the determination of the market value in para 37 concluded the procedure prescribed under Section 32A read with Rules 2 to 8 of the Rules provides in giving adequate and reasonable opportunity of hearing to the concerned person at different stages and the consideration before the Registering Officer is mainly based upon the minimum market value determined for different properties in different localities as per the guidelines issued by the Valuation Organization Department and the principle laid down in Rule 8 for determination of market value are exhaustive, reasonable and scientific and, therefore, with the above declaration of law about power of the Government to prepare ASR and procedure adopted by the authority being fair, reasonable and non-arbitrary and in the fact of this case, Dy. Inspector General of Registration and In-charge Dy.
Superintendent of Stamp by filing affidavit and affidavit-in-sur-rejoinder have explained in no uncertain terms about method of preparation of Jantri , factors taken into consideration, extensive and elaborate exercise undertaken by Employees of Stamp Valuation Department with able and expert guidance and knowledge rendered by Centre for Environment Planning and Technology (CEPT), Bhaskaracharya Institute for Space Applications & Geo-Informatics (BISAG), Institute of Science & Technology for Advanced Studies & Research (ISTAR) for survey of land, existing land used, site inspection and preparation of map, local inquiry etc. and after completing the task in valuation zone for 124 towns of the State, a brief summary was placed before the competent authority and Department of Revenue had appointed a high level committee for considering the objection receiving publication of the proposed draft Jantri, which examined such objections with due deliberation and thereafter decision was taken cannot be said to be the exercise undertaken by the authority in arbitrary manner and contentions of the learned counsel for the petitioners about ASR being illegal and invalid deserves to be rejected at the outset. Even if insignificant lacuna or aberration on the part of authority in identifying nature and usage of land or property while undertaking such huge exercise will not make whole procedure and decision illegal.
12. That the contentions about usage of the above Jantri by the registering officer while applying the mind so as to form an opinion and reason to believe about setting forth true market value of the property being vitiated by compulsive use of Jantri is also misconceived. The Competent Officer of the Department/authority in the affidavit-in-reply have stated in no uncertain terms about no such compulsion or pressure being exerted by registering authority and upon presentation of instrument to be stamped ASR is used as a guide for comparing the proper market value and learned Advocate General emphasized and reiterated that provisions of Section 32A and Rules 3, 4 and 8 are not given go by at any stage under any circumstances and in case of registering officer forms an opinion and has reason to believe about insufficiency of the stamp duty, such registering officer has to refer such instrument/document to the Collector as per Rule 3(4) and after following procedure laid down in Rule 4 and factors provided in Rule 8 about principles to be taken into consideration for determination of market value by the Collector the decision is taken after opportunity is given to affected person and, therefore, the contention about compulsory usage of ASR is ill founded and it is neither arbitrary nor unreasonable and argument deserves to be rejected.
13. The Larger Bench in Shaileshbhi Jadavji Varia (supra) considered Rule 4 of the Rules and found that apart from Rule 4, the parent Act itself provides for observance of natural justice by Collector as provided under sub-Section (2) of Section 32A that on receipt of instrument under sub-Section (3) of Section 31 or sub-Section (1) of Section 32A the Collector shall provide reasonable opportunity of being heard to a party concerned in accordance with the Rule and, therefore, in the opinion of the Larger Bench sub-Section (2) of Section 32A as well as Rule 4(2) of the Rule in so far as it provide for an opportunity of hearing and observance of natural justice it was held to be mandatory. However, the Larger Bench also noticed that every word and every part of Rule 4 cannot be said to be mandatory and non-compliance thereof would not ipso facto vitiate the decision.
14. The Larger Bench in the case of Shailesh Jadavji Varia (supra) also considered decisions of earlier two Full Bench and ultimately held in the context. Rule 3 of the Rules as held in para 83, that it merely prescribed procedure to be followed by the registering officer for making reference to the Collector in case he has reason to believe that the consideration set forth in an instrument does not proximate value of the property which is the subject matter of the instrument and function of such registering officer as administrative, pure and simple and he is not exercising judicial or quasi judicial power and in para 84 it was further held that Rule 3 is in nature of delegated, subordinate or child legislation and reading of Rule 3 in its proper perspective leaves no room of doubt that it is directory or not mandatory particularly, when the function of the Registering Officer is held to be administrative or executive and in view of Larger Bench, failure to give intimation to a person under Rule 3 cannot vitiate the action taken by the Registering Officer and in absence of any other material or ground of challenge such decision cannot be termed as illegal.
15. In view of the above, contentions of learned counsel for the petitioners about usage of ASR as sole and exclusive criteria to determine by market value of the property has no merit and ASR works as a guide or a table which gives an idea to registering officer about proximate market value of the property and nothing beyond that. That aid and assistance of computer by itself cannot be said to be a replacement of application of mind by mechanised process and registering authority has to deal with large number of instruments from different areas of town and city computerised process of comparing the market value of the property shown in the document with any available standard of market value of the property in a concerned area so as to have an idea about approximate market value of the property cannot be said to be abdication of function by registering authority contrary to Rule or any provisions of the Act. No such administrative or executive communication or instruction is brought to the notice of this Court mandating registering officer to follow ASR exclusively and, therefore, in absence of any material and record this Court would not like to draw any conclusion on the basis of submissions made by learned counsel for the petitioners and, therefore, this contention also fails. In view of the above submissions of learned Advocate General on Executive powers of State Government under Article 162 of Constitution of India do not require any discussion. ASR 2008 is not ultravires to Articles 14, 19 or 21 of the Constitution of India or Act or Rules.
16. That, so far as binding decision and principle laid down about applicability of such binding decision, I am of the opinion that decision of the two Full Bench and a Larger Bench with regard to interpretation of Sections 31, 32A , 32 and Rules 3, 4, 7 and 8 of the Rules are binding to this Court, since the issues raised in this petition were also the subject matter of the cases decided by this Court in the above decisions and,therefore, various paragraphs of the aforementioned Benches have been produced extensively in this judgment. Government of Uttar Pradesh and Ors. v. Raja Mohammad Amir Ahmad Khan [AIR 1961 SC 787] is about Section 33 of the Act and explains the stages of exercise of power by the authority for impounding document. So far as decision relied on by learned counsel for the petitioners of Division Bench of the High Court of Orissa is concerned, the said decision was rendered by Division Bench of the said Court in the backdrop of specific executive inspections issued to the Registering Officer and Collector to solely and exclusively rely on the basic statement of valuation and keeping in mind provisions of Section 47A of the Stamp Act of the State. It was held by Division Bench that such exclusive reliance would vitiate procedure of determining market value by the authority and, therefore, it was held to be illegal. In the facts of this case, what is discussed herein above and held by two decisions of Full Bench and Larger Bench of this Court about legality and validity of ASR and its effective and proper functioning since last 10 years, law laid down by the Division Bench of Orrisa High Court has no applicability and contentions based on the said decision is rejected.
17. With regard to wide and effective publication of draft Jantri and lack of opportunity to the objectors in the facts of this case, it is factually incorrect and draft Jantri was infact published in daily newspapers having sufficient circulation in the District of Kutch namely 'Divya Bhaskar' and 'Sandesh' two daily vernacular newspapers of the State and in addition to above it was also displayed at various offices of the authority in the District along with website, where 75% of the population of the State has access to the computer with connectivity in as many as 13,000 village panchayat out of 18,000 village panchayat in the State. The above aspect would go to show that proper and wide publicity is given to draft Jantri so as to invite objections and 30 days were given to lodge objections and as noticed earlier objections raised in 2464 cases were in cyclostyle formate and inspite of the above fact the authority had considered the same and, therefore, the contentions raised on lack of wide publicity and opportunity not given to the petitioners is also misconceived and the above exercise of preparation of ASR is a part of effective implementation of fiscal enactment like Bombay Stamp Act which do not envisage any further elaborate exercise of inviting objections of prescribing stamp duties for various instruments. The procedure as above followed by the authority reveal fair and transparent process of decision making viz. Preparation and publication of ASR 2008. The above exercise is administrative exercise and within the competence of the State authority cannot be said to be in any manner unreasonable, arbitrary, discriminatory or contrary to law or inconsistent or incompatible and violative of Articles 14, 19 and 21 of the Constitution of India, Act or Rules.
18. However, grievance made about difficulties faced by parties or a person at the time of registration of a conveyance/documents can be properly ventilated before the concerned authority and such individual grievance can be looked into on merit of each case by the authority so as to obviate the difficulty if any arise during the time of registration of the conveyance/documents.
19. In view of the above discussions and what is held herein above, none of the contentions raised by learned counsel for the petitioners persuade this Court to uphold the same and in absence of merit this petition fails. Rule is discharged with no order as to costs.
[ANANT S. DAVE, J.] //smita// Page 45 of 51 Top