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4. In WP 45953/2001, petitioner has presented tour documents / sale deeds on 29.5.2001 for having purchased land in Sy No. 1/1B of Bramhapur of Gulbarga District, for registration. The 3rd respondent received the sale deeds and collected the registration fee vide P. Nos. 47, 48, 49, & 50/2001-02 and the Stamp Duty. Thereafter, the 3rd respondent has referred the matter to the Deputy Commissioner for Stamps alleging that there is under valuation of the property and he also issued notice as per Rule 4 of the Karnataka Stamp (Prevention of Under Valuation of Instruments) Rules, 1977. Petitioner filed objections on 23.7.2001. According to the petitioner, the land in question was a morass which required to be cleared of thorny bushes and he has fill up the muskeg by investing huge amount and the land was not being capable of being sold due to stagnation of drain water and further, the waste dumped was to be Page 0614 dealt and the said land cannot be compared with other lands in the area as such, having regard to the nature of the property, the market value of the property was properly set forth in the document for the purpose of sate consideration. It is also stated that there is no such under valuation as alleged by the respondent and that he has spent nearly Rs. 25 lakhs to clear the area and make the land as it is now. It is also stated that petitioner is also the owner of the neighboring non-agricultural land which was purchased in the year 1997 as per annexure Z1 and the land in question was also agreed to be purchased in the same year but the formalities could not be completed for several technical reasons including litigation, and there was postponement of the registration. According to the petitioner, the document which was earlier registered during 1977 should be the basis for fixing the market value and that should be compared with the document presented. When the petitioner made a request to release the original document/sale deed on 6.1.2001 for obtaining necessary sanction for future development of the property, an endorsement was given by the 2nd respondent on 8.10.2001 stating that the documents were not registered and as such, could not be returned. Further, it is stated that the 3rd respondent has referred the instrument to the 2nd respondent alleging that there is under valuation, without registering the document as per Section 45A of the Karnataka Stamp Act. According to the petitioner, as per the provisions of the Registration Act, 1908 the 3nd respondent was required to register the document, he had no authority to refuse and at the most, he could refuse registration only as per the provisions of Section 71 of the Registration Act and there was no reason to refuse registration or to keep the process of registration pending as contemplated under the Registration Act. It is also submitted that certain sate guards have been provided under Section 80A of the Registration Act to protect the State's revenue by way of stamp duty and registration charges. As such, non-registration of the instrument during pendency of enquiry by keeping the document pending registration and compelling the petitioner to pay stamp duty is arbitrary and unreasonable. Further, according to the petitioner, duty payable on the instrument has a first charge on the property, as per Section 46 of the Act and duty can be recovered as arrears of land revenue as per Section 80A of the Registration Act and when such being the position of law and the power vested under the authority, the amendment brought to Section 45A which compels the registering authority to keep the process of registration pending s unreasonable and arbitrary. The process of estimation of market value of the property as per Section 45B and compelling the parties to pay the stamp duty is arbitrary as the parties are deprived of an opportunity in the process of determining the value of the property as such, it causes hardship to the petitioner as, a citizen is required to pay stamp duty on the instrument on the basis of the consideration stated in the instrument. The authorities in the guise of estimating the market value of the property fix the price of the property without any basis and the said process is hypothetical and, compelling the citizen to pay the same is unreasonable and petitioner cannot be compelled to pay the stamp duty over and above the consideration. The payment of stamp duty on the basis of the notification cannot be sustained in the eye of law as such, he Page 0615 has sought for striking down Section 45A & 45B of the Act as void and arbitrary.

8. In respect of the latter petition, statement of objections has been tiled by the State contending that the writ petition is misconceived and is liable to be dismissed. It is stated mat the petitioner has not questioned the legislative competency to amend the Karnataka Stamp Act and it is not necessary to go into that question. It is further stated that before the Amended Act 24/1999, the Sub-Registrar used to register the document and then refer the same to the District Registrar for determination of the market value of the property, as a result, mere was evading of payment of stamp duty by not attending to the proceedings pending before the Deputy Commissioner and because of the non-cooperation such matters were kept pending for more than ten years and there are about 40,000 such cases pending involving more than Rs. 161 crores and that, in order to avoid the delay in collecting proper revenue at the initial stage itself, amendment was brought in as such, the object sought to be achieved is to collect revenue at the initial stage and to have a check against people who have a tendency to evade stamp duty by deliberately undervaluing the property. It is also stated that no such unilateral or arbitrary powers are conferred on the Registering Authorities and the Registering Officer is guided by the estimated market value published by a Committee constituted under Section 45B of the Stamp Act, 1957 to determine the market value and there is no scope for exercising arbitrary powers and that he is bound to Page 0617 exercise power as per law and according to the rules set forth and detailed locationwise guidelines are framed in respect of each taluk and urban areas taking into consideration not only the geographical locations but also availability of civic amenities. It is further stated that the averments made in the petition that Section 45A and 45B runs counter to Section 52, 59, 60 and 62 of the Registration Act is baseless and untenable and rather, if the document is duly stamped and presented for registration to the registering authority, they are bound to register the same as provided under Section 52(1)(c) and that the Stamp Act is a tax law and the Registration Act 1908 is a procedural law. The Registration Act only mentions the procedure to be followed for registering the document whereas the Stamp Act states the amount of stamp duty to be paid and the instrument duty stamped should be stamped with the same not only of the amount requited by law but also in the manner prescribed by law. Section 45A(1) of the Act enables the Registering Authority to keep pending the process of registration if the market value of the property is not truly set forth in the instrument. The Sub-Registrar is required to follow the provisions of both the Registration Act and the Stamp Act in the process of registering the document and there is no error in collecting the registration fee as per the Registration Act and thereafter referring the same to the District Registrar for determination of the correct market value. The words 'duly stamped' as defined in Section 2(1)(e) of the Stamp Act is clear that all instruments must bear the stamp in accordance with law for the time being in force and also as per Section 2(1)(mm) 'market value' has been defined as market value in relation to any property which is the subject matter of the instrument means the price which such property would have fetched if sold in open market on the date of execution of such instrument or the consideration stated in the instrument, whichever is higher. Hence, the market value is not necessarily the market value set forth in the document. It is also further stated that the documents can be kept pending subject to determination by the Deputy Commissioner and as per Section 45A(2), the District Registrar is required to dispose of the matter expeditiously as possible within ninety days as such, the Government has safeguarded the interest of the general public and required measures are taken to avoid unnecessary delay and also hardship to the general public. As per Rule 9 of the Karnataka Stamps (Prevention of Under valuation of Instruments) Amendment Rules, 1999 read with Section 45A(5) of the Stamp Act, the amount deposited at the time of tiling of the appeal will be adjusted alter the appeal is disposed of. In case, no amount is required to be paid by the appellant, the amount will be refunded. As a condition precedent to avoid frivolous appeals, deposit of 50% of the deficit stamp duty payable is imposed by virtue of the amendment. There is a provision for adjusting or refund of the deposit as the case may be.

2. The committee shall follow such procedures as may be prescribed.

15. In the decision in the case of Safeguard Packaging Systems Private limited v. State of Karnataka and Ors. 1995(2) KLJ 442, this Court with reference to under valuation and also with reference to the unamended provision of Section 45A of the Stamp Act, has held mat in the tint category there is under valuation in the real and accepted sense i.e., deliberate suppression of consideration with an intention to evade stamp duty or tax. In the second category, though there may not be intentional suppression of the market price, with the intention of evading stamp duty or tax nevertheless there may be under valuation on determination of the market value as specified in the Rules. In the third and fourth categories, under valuation is created by the fiction of law, this is because sale price or consideration has ceased to be the basis for payment of the stamp duty in the case of conveyance. In its place, the market value of the property has been made the basis for calculating the stamp duty payable. Article 20 in the Schedule to the Stamp Act provides the stamp duty on instruments of conveyance, as it Page 0621 originally stood, that the instruments of conveyance are chargeable to stamp duty at the rates specified on the amount or value of consideration for such conveyance as set forth therein. The Karnataka Stamp (Amendment) Act of 1975, amended Article 20 by substituting the words 'market value of the property which is the subject matter of conveyance' in the place of the words "amount or value of consideration for such conveyance as set forth therein'. Accordingly, It was held that as per Article 20, the stamp duty is chargeable on the market value of the property and not the sale price. By the very same amendment, Section 45A is also introduced, the explanation of which provides mat the market value of property shall be estimated to be the price which the property would fetch if sold in the open market on the date of execution of the instrument Accordingly, it is held that the stamp duty is payable on the market value of the property on the date of execution of the sale and not on the consideration mentioned in the instrument of conveyance. This ratio laid down in the said decision would answer the argument canvassed by the petitioners that as per the Registration Act, it is for the Sub-Registrar to compulsorily register the same irrespective of the value/consideration of the property mentioned in the Deed.

23. A clear reading of Section 45A would make it clear that having regard to the estimated market value published by the committee constituted under Section 45B, if the market value of the property which is the subject matter of such instrument has not been truly set form, the Sub-Registrar shall have to arrive at the estimated market value and communicate the same to the parties and unless the parties pay the duty on the basis of such valuation, shall keep pending the process of registration and refer the matter along with a copy of the instrument to the Deputy Commissioner for determination of the market value of the property and in turn, as per Section 45A of the Act itself, an obligation is cast on the Deputy Commissioner to hold a proper enquiry alter affording reasonable opportunity and then to fix the market value. It appears, enough sate guard is provided under the amended Section 45A as well as Section 45B of the Act. Even the guidelines provided does not emphasise on the Sub-Registrar being the registering authority, to accept the guidelines and to determine the market value rather the discretion has been given to the Sub-Registrar whenever a paper is presented for registration and if he is of the opinion that the document is Page 0624 under valued, then it is for him to consider the market value published by the Committee or otherwise and also give his opinion whenever such instrument does not truly set forth the proper market value expressing what is the estimated market value. In the circumstances, question of predetermination of the market value does not arise.