IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19-11-2008 CORAM: THE HON'BLE MR.JUSTICE R.SUDHAKAR C.M.A.No.2573 of 2006 and M.P.Nos.1 and 2 of 2006 M/s R.V.Refractories represented by its Managing Partner R.Sathia Vageeswaran @ R.S.V.Eshwar ... Appellant/Claimant vs. 1.District Revenue officer(Stamps) Collectorate, Chennai. 2. Chief Revenue Officer and Inspector General of Registration, Chennai-600 028. ... Respondents/Respondents This Civil Miscellaneous Appeal is filed under Section 47-A(10) of the Indian Stamps Act, 1899, against the order dated 20.01.2003 in Proceedings No.657 of 2000 on the file of the District Revenue Officer(Stamps) Collectorate, Chennai against order dated 7.2.2006 of the Chief Revenue Officer and Inspector General of Registration at Chennai in his Proceedings Pa.Mu.No.13601/N1/2003. For Appellant : Mr.M.A.Abdul Wahab For respondents : Mr.R.Muthiah, Government Advocate (Civil Side) ----- J U D G M E N T The appeal has been filed by the auction purchaser challenging https://hcservices.ecourts.gov.in/hcservices/ the order of the second respondent confirming the order of the first respondent. 2. The appellant is the purchaser of the property viz., land and building measuring 0.1768 acres and building thereon in Shed No.387, SIDCO Industrial Estates, Ambattur, Madras-98, comprised in S.No.144 Part, 152 Part, 153 Part, 154 Part, 157 Part and 161 Part at SIDCO Industrial Estate, Ambattur, which was originally owned by United Beverages, a partnership firm. The said property was mortgaged to M/s.Tamil Nadu Industrial Investment Corporation Limited (hereinafter referred to as TIIC) and due to the default in payment of money, the land belonging to United Beverages was brought to auction by SIDCO by exercising the power under Section 29 of Financial Corporation Act, 1951. 3. In May, 1994, a public auction sale notice was notified by Tamil Nadu Industrial Investment Corporation and the date of auction was fixed as 10.6.1994. The appellant submitted the tender form on 8.6.1994 as per the procedure prescribed. The Industrial Investment Corporation accepted the tender/offer and by letter dated 25.11.1994 issued the following communication to the appellant:- "Further to our Auction Sale of the subject Land and Building held on 10.06.'94, we confirm that your offer for Rs.10,85,000/- (Rupees ten lakhs eighty five thousand only) is accepted. Therefore, you are advised to remit the balance bid amount of Rs.9,76,500/- within 30 days from the date of this communication failing which the confirmation of the above sale will be treated as concelled (cancelled – wrongly typed as concelled) and your 10% bid amount will also be forfeited." The appellant made some payment on 21.12.1994 and a small amount was due. On 14.9.1995, M/s.TIIC issued a letter demanding the balance of Rs.42,576/- and stated that after receiving the said amount, the land and building will be handed over. On 16.2.1996 M/s.TIIC handed over the land and building. The order of the Branch Manager of M/s.TIIC handing over the property reads as follows:- "The Land and Building Hypothecated by M/s. United Beverages, 387, SIDCO Industrial Estate, Ambattur, Madras-98 was put on Auction Sale on 10.06.94 and this was confirmed by us on 14.07.94 for a sale consideration of Rs.10,85,000/- (Rupees Ten Lakhs Eighty five Thousand only) of which already paid 10% bid amount of Rs.1,08,500/- on 10.6.94. Since you have paid the balance bid amount of Rs.10,19,136/- with interest (Rupees https://hcservices.ecourts.gov.in/hcservices/ Ten Lakhs Nineteen thousand one hundred and thirty six only) on 18.09.95. We hereby deliver the following Land and Building in as is where is condition. SIDCO SHED:387, SIDCO INDL. ESTATE, AMBATTUR, MADRAS – 600 098." SIDCO executed the sale deed in favour of the appellant on 23.1.1998. M/s.TIIC issued a letter dated 12.6.2000 to the Sub Registrar, Ambattur, for the purpose of the registration stating as follows:-- "With reference to the above we are to inform you that M/s.R V Refractories was the highest Bidder of the Auction sale for Land and Shed bearing No.387, SIDCO Industrial Estate, Ambattur, Chennai-98. Accordingly the corporation had conveyed the land and shed building alone bearing No.387 SIDCO Industrial Estate by way of sale deed dated 25.03.1998 and the same is presented to you by R V Refractories for registration. This is for your kind information." The document sale deed produced in the typed set of papers shows the date of execution as 23.1.1998 and not 25.3.1998. 4. The stamp duty payable as per the instrument of sale was tendered along with the document at the time of registration before the competent registering authority. The Registering authority on registration issued notice dated 20.1.2000 in Form-I, in terms of Section 47-A of the Indian Stamp Act for determining the true market value and the stamp duty payable thereon. In this regard the data for fixing the market value was set out in the Form-I notice and it is as follows:- (1) Registration Sl.No. : 623/2000 (2) Document No. : 2740/2000 (3) Guideline value : Rs.40,05,959/- (4) Value as per document in dispute : Rs.10,85,000/- (5) Stamp duty payable : Rs.4,80720/- (6) Stamp duty paid : Rs.1,30,200/- (7) Payable differential stamp duty : Rs.3,50,520/- At the time of registration, a sum of Rs.1,30,200/- was paid on the basis of the value as per sale deed which is the auction purchase value. The registration department, however, demanded Rs.3,50,520/- as stamp duty on the enhanced market value. On 15.10.2000 an https://hcservices.ecourts.gov.in/hcservices/ explanation was submitted by appellant in response to the Form-I notice stating that the document has been properly valued and appropriate stamp duty has been paid. The authority was also informed about the orders passed by the Inspector General and Registration in Proceedings Ref.PA.Mu.No.47599/E3/93 dated 11.12.1997 to accept the value of property sold by public auction-cum-tender. 5. Since no order was passed by the respondents Department, a Writ Petition No.44484 of 2002 was filed. This Court by order dated 11.12.2002 directed the first respondent to pass appropriate orders. 6. On 27.12.2002, a provisional order was passed by the first respondent District Revenue Officer (Stamps), rejecting the appellant's plea, fixed the market value at Rs.365/- per square foot and communicated the same to the appellant along with Form-II notice. On receipt of the provisional order dated 27.12.2002, a reply was submitted objecting the assessment of market value and the determination of stamp duty. It was contended that the sale was by way of open auction bid and therefore, the market value is as set forth in the instrument of sale. The Special Deputy Collector (Stamps) thereafter passed a final order on 20.1.2003 confirming the provisional order and demanded the differential stamp duty. The market value of the land was fixed at Rs.365/- per square foot. As against the same, an appeal was filed before the second respondent Chief Revenue Officer and Inspector General of Registration and the second respondent by his order No.13601/N1/2003 dated 7.2.2006 rejected the appeal and confirmed the market value determined by the District Revenue Officer (Stamps) at Rs.365/- per square foot and demanded the differential stamp duty. 7. The department's contention is that the guideline value on the date of registration is Rs.365/- per square foot whereas the value of the property shown in the sale document registered is far less. The Department does not dispute that the property was purchased by the appellant in open auction conducted by M/s.TIIC, a government owned corporation. However, placing reliance on the proceedings of the Inspector General of Registration No.50589/C5/01 dated 1.11.2001, the second respondent appellate authority stated that even if the properties are purchased by open tender, the same cannot be taken as the market value. The second respondent Chief Revenue Officer and Inspector General of Registration based on the opinion of the Deputy Inspector General of Registration stated that as per the order No.50589/C5/01 dated 1.11.2001, the price of property purchased in open tender-cum-auction cannot be taken as the market value of the property. The second respondent further held that the District Revenue Officer, had visited the place and fixed the value as per the guideline value. Therefore, the second respondent accepted the order of the first respondent/District Revenue Officer(Stamps) fixing the value of the property at Rs.365/- https://hcservices.ecourts.gov.in/hcservices/ per square foot and accordingly the differential stamp duty was demanded. Aggrieved by this order, the above appeal has been filed. 8. Appellant referred to the various proceedings of M/s.TIIC, resulting in tender-cum-public auction in which the appellant being the highest bidder stated that appellant is entitled to get the sale registered on the basis of the sale value confirmed by M/s.TIIC and paid by appellant. Since M/s.TIIC, a Government owned department has conducted the open tender-cum-auction and the appellant being the highest bidder, the value declared in the document of sale should be taken as the true market value of the property for the purpose of registration. The document presented for registration on the basis of the price confirmed and paid pursuant to the tender-cum-auction should be the basis on which the stamp duty is payable. Since the appellant had paid the stamp duty in accordance with the document of sale executed, the respondent authority cannot fix a different market value solely on the basis of the guideline value which is the case here. 9. The learned Government Advocate (Civil Side) referred to the order of the second respondent confirming the order of the first respondent and stated that the guideline value alone has to be taken as the market value for the purpose of payment of stamp duty and that is the basis of the demand and order. He reiterated the finding of the respondent department. 10. Before we proceed further in the matter, the relevant provisions of the Indian Stamp Act, 1899 needs to be considered. Sub-Section (1) and (2) read with Explanation to Section 47-(A)of the Indian Stamp Act, 1899 reads as follows:- "47-A. Instruments of conveyance etc., under- valued how to be dealt with:- (1) If the registering officer appointed under the Indian Registration Act, 1908 (Central Act XVI of 1908) while registering any instrument of conveyance, exchange, gift, release of benami right of settlement has reason to believe that the market value of the property of which is the subject matter of conveyance, exchange, gift, release of benami right or settlement, has not been truly set forth in the instrument he may, after registering such instrument, refer the same to the Collector for determination of the market value of such property and the proper duty payable thereon." (2) On receipt of a reference under sub- section (1), the Collector shall, after giving the parties a reasonable opportunity of being https://hcservices.ecourts.gov.in/hcservices/ heard and after holding an enquiry in such manner as may be prescribed by rules made under this Act, determine the market value of the property which is the subject matter of conveyance, exchange, gift, release of benami right or settlement, and the duty as aforesaid. The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty. Explanation:- For the purpose of this Act, market value of any property shall be estimated to be the price which, in the opinion of the Collector or the Chief Controlling Authority or the High Court, as the case may be, such property would have fetched or would fetch, if sold in the open market on the date of execution of the instrument of conveyance, exchange, gift, release of benami right or settlement." In the case, the property was brought to auction in May 1994 and the appellant submitted his tender offer on 8.6.1994 and the auction was held on 10.6.1994. The auction was confirmed on 24.11.1994. Then on 16.2.1996 the property was handed over to the appellant. On 23.1.1998, the sale deed was executed in favour of the appellant and on the same day the sale deed was presented for registration. Thereafter, proceedings were taken by the respondent authorities. From the above narration of events, it is clear that the M/s.TIIC, a State owned financial corporation has auctioned the property and has confirmed the same in favour of the appellant, who is the highest bidder. Nowhere, in the notice issued in Form-I or in the order of the first respondent, as confirmed by the second respondent, there is allegation that the appellant has attempted to evade payment of proper stamp duty. There is no whisper that the authority had reason to believe that the value declared is not correct. There is no allegation that the market value of the property has not been truly set forth. Merely because the guideline value in this case is different from the value shown in the document which is as per the value in public auction, the department cannot disbelieve the transaction value of the property. The value set forth in the document is the bid value and accepted by the said State owned Financial Corporation. The registering authority has not shown any material as to how they came to the conclusion that the market value has not been truly set forth or that there is reason to believe that the market value of the property has not been truly set forth with the intention to evade payment of proper stamp duty. The ingredients of Section 47-A(1) of the Indian Stamp Act, 1899 has not been satisfied in the present case. https://hcservices.ecourts.gov.in/hcservices/ 11. The scope of power of the authority while proceeding under section 47-A of the Indian Stamp Act was considered by the Division Bench of this Court in Padmavathi, S.P. - v. - State of Tamil Nadu reported in 1997(II) CTC 617 and it reads as follows:- "21. Expression "Instruments" is defined in Sec.2(14) of the Act. According to that definition, "Instrument" includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. Section 6 is not relevant of our purpose, as it only deals with the instruments coming within the several description in schedule I and further provides that in such a situation the instrument shall be chargeable only with the highest of such duties. Such a situation does not arise in the instant case. Section 17 of the Stamp Act provides that all instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution. This section also does not suggest that the market value on the date of the execution should alone be the basis for Stamp duty. Clause (12) of Sec.2 of the Act defines the words "executed" and "Execution" "Executed" and "execution" used with reference to instruments, means "signed" and "signature". Thus, from the definition of this expression read with Sec. 17 of the Act, it is not possible to hold that the only inference possible from this provision that it is the market value of the property on the date of execution of the deed alone should be basis for the stamp duty. 22. It is not in each and every case, the Registering Officer is expected to deal with the instrument under Sec.47-A of the Act, but it is only when the instrument has been undervalued or has not been truly set forth in the instrument. In the case of instrument executed pursuant to the decree, there is no scope for doubting the bona fides of the parties. Of course, we do not rule out the possibility of unscrupulous persons, with a view to evade payment of proper stamp duty, creating agreements to sell for a very low sum and then approaching the Court for specific performance by mutual consent or without much contest, and thereafter presenting the documents for registration pursuant to the decree https://hcservices.ecourts.gov.in/hcservices/ passed for specific performance. In such cases, under valuation would be apparent and it would also be open to the Registering Officer, after being satisfied as to lack of bona fides and fraudulent attempt on the part of the parties to undervalue the subject of transfer, to invoke the power under Section 47A of the Act. But such a process or proceedings cannot, in the normal course, be pursued in all cases. It is only if the Registering Officer has reason to believe that the consideration about has not been truly set forth in the document. 23. We have already pointed out that, in the instant case, there is not such plea raised by the respondents or even by the Registering Officer, who had passed the order under Sec. 47-A of the Act. There is no finding recorded that there was lack of bona fides or any reason to believe that there was under-valuation. The Registering Officer has purported to exercise his power in the instant case under Sec.47A of the Act to determine the market value only on the ground that there is a time gap between the agreement of sale and the date of execution of the sale deed and in the meanwhile the value of the property has gone up, without there being no lack of bona fides on the part of the parties to the document and no attempt on their part to fraudulently evade payment of proper stamp duty. 24. This aspect may be viewed from another angle. It may be that the consideration mentioned in the document does not conform to the market value of the property as on the date of execution of the sale deed. But in the case where the value of the property goes down, it would not be open to the parties to mention a lesser sum than the one for which they agreed to purchase. This aspect is also important to determine whether the chargeable event is the instrument or the market value." 12. Guideline value, as such, cannot be the market value. This view is emphasized vide judgment of this Court in Collector of Nilgiris v. M/s.Mahavir Plantations Pvt. Ltd., reported in A.I.R. 1982 Madras 138, relevant portion reads thus:- "The valuation guidelines prepared by the https://hcservices.ecourts.gov.in/hcservices/ Revenue Officials at the instance of the Board of Revenue were a vowedly intended merely to assist the Sub-Registrars to find out, prima facie, whether the market value set out in the instruments had been set forth correctly. The guidelines were not intended as a substitute for market value or to foreclose the inquiry by the Collector which he is under a duty to make under Sec.47-A. The valuation guidelines were not prepared on the basis of any open hearing of the parties concerned or of any documents. They were based on date gathered broadly with reference to classification of lands, grouping of lands and the like. This being so, the Collector acting under Section 47-A cannot regard the valuation guidelines as the last word on subject market value. To do so would be to surrender his statutory obligation to determine market value on the basis of evidence which is a judicial or a quasi judicial function which he has to perform" In S.P.Padmavathi's case cited supra in para 17 it is held as follows:- "It is also further held that the market value under Section 47-A would not be the market value, as determined under the Land Acquisition Act. Open market is an objective standard which lays down that the market value to be adopted by the Collector and the market value which the parties are required to adopt in their instruments must be a fair market value in the sense that there are no economic shackles or inhibitions of any kind which prevent the price level from finding its level. Thus the conception of open market rules out, at one end, fancy prices, and at the other end, distress sales. Economic equilibrium is the hall mark of open market." 13. In R.Sai Bharathi – vs. - J.Jayalalitha and others reported in 2003-4 L.W. 825, the relevance of guideline value was discussed and held as follows:- "23. The guideline value has relevance only in the context of Section 47-A of the Indian Stamp Act (as amended by TN Act 24 of 1967) which provides for dealing with instruments of conveyance which are undervalued. The guideline value is a rate fixed by authorities under the https://hcservices.ecourts.gov.in/hcservices/ Stamp Act for purposes of determining the true market value of the property disclosed in an instrument requiring payment of stamp duty. Thus the guideline value fixed is not final but only a prima facie rate prevailing in an area. It is open to the registering authority as well as the person seeking registration to prove the actual market value of property. The authorities cannot regard the guideline valuation as the last word on the subject of market value. This position is made clear in the explanation to Rule 3 of Prevention of Undervaluation of Instruments Rules. The said Explanation reads as follows: "Explanation – the 'Guidelines Register' supplied to the officers is intended merely to assist them to ascertain prima facie, whether the market value has been truly set forth in the instruments. The entries made therein regarding the value of properties cannot be a substitute for market price. Such entries will not foreclose the enquiry of the Collector under Section 47-A of the Act or fetter the discretion of the authorities concerned to satisfy themselves on the reasonableness or otherwise of the value expressed in the documents." 24. This explanation also will have to be read in conjunction with explanation to Section 47-A of the Indian Stamp Act (as amended by TN Act 24 of 1967) which reads: "Explanation – For the purpose of this Act, market value of any property shall be estimated to be the price which, in the opinion of the Collector or the Chief Controlling Revenue Authority or the High Court, as the case may be, such property would have fetched or would fetch, if sold in the open market on the date of execution of the instrument of conveyance, exchange gift, release of benami right or settlement." 25. This Scheme of the enactment and Rules contemplate that guideline value will only afford https://hcservices.ecourts.gov.in/hcservices/ a prima facie basis to ascertain the true or correct market value undue emphasis on the guideline value without reference to the setting in which it is to be viewed will obscure the issue for consideration. It is clear, therefore, that guideline value is not sacrosanct as urged on behalf of the appellant, but only a factor to be taken note of if at all available in respect of an area in which the property transferred lies. In any event, therefore, if for the purpose of Stamp Act guideline value alone is not a factor to determine the value of property, its worth will not be any higher in the context of assessing the true market value of properties in question to ascertain whether the transaction has resulted in any offence so as to give a pecuniary advantage to one party or the other." Therefore, the whole case of the department determining the market value based on the guideline value has no basis and the case of the appellant deserves to be considered on merits. 14. Before going into the merits of the contention on either side, on going through through the various proceedings of the respondent department, the following matters need to be placed on record for better appreciation of the appeal:- (a) In the Form-I notice dated 20.1.2000, while giving the details of the property which is registered by the present appellant, the District Revenue Officer has furnished only one detail for the purpose of redetermination of the market value i.e., the so- called guideline value. According to the department, the guideline value is around Rs.40 lakhs. Department has not relied upon any comparable data, details of property registered, document number, date of registration, extent, value, etc., that may be relevant to fix the market value. No such document was furnished. (b) Form-I notice is bereft of details and reasons on a printed form. (c) The provisional order dated 27.12.2002 is a printed form, which except the printed matter and the entry regarding the valuation, does not contain any other details. It, on the contrary, states that the property was inspected and based on the reference under Section 47-A, the value per