IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 5.11.2008 CORAM:- THE HON'BLE MR. JUSTICE R. SUDHAKAR C.M.A.No. 2418 and 2419 of 2008 ........ Ezhilarasi .. Appellant/Petitioner (in CMA No. 2418/2008) C.T. Kaliaperumal .. Appellant/ Petitioner (in CMA No. 2419 of 2008) Vs. 1.The Inspector General of Registration, Chennai.28. 2.The Special Deputy Collector (Stamps), Cuddalore. 3.Joint Sub Registrar, Chidambaram. .. Respondents/Respondents ( both CMAs.No. 2418 & 2419/2008) Appeal filed under Section 47-A(10) of Indian Stamps Act against the order passed by the Inspector General of Registration, Chennai in order Nos.8522/N3/02-I and 8522/N3/02, dated 5.12.2006 confirming the order passed by the Special Deputy Collector, Cuddalore in No.2644/2001-2002 order dated 30.11.2001. For Appellant : Mr. Srinath Sridevan For Respondents: Mr. V. Srikanth Addl. Govt. Pleader (CS) https://hcservices.ecourts.gov.in/hcservices/ COMMON JUDGMENT Two appeals have been filed by the petitioners challenging the order of the first respondent upholding the order of the second respondent. 2. The brief facts are- as follows: C.M.A.No.2418 of 2008:- (i) The appellant Ezhilarasi purchased 0.68 cents of agricultural land in Chidambaram Town, Ward No.4, Block No.6, T.S.No.555 at the rate of Rs.6.75 per square foot = Rs.2,943/- per cent. The document was executed on 15.4.1998 and presented on the same date (i.e.) on 15.4.1998. It was registered as document No.484/2001 on 7.3.2001. The value as per the instrument was Rs.2,00,000/-. (ii) The respondent Department was of the view that the appellant has not set forth the true market value of the property in the instrument. Therefore, proceedings were initiated under Section 47A of the Indian Stamps Act read with Tamil Nadu Stamps (Prevention of Undervaluation of Instrument) Rules 1968 (herein after referred to as The Act and The Rules). Form-I notice was issued on 17.9.2001 in C.P.No.2644/2001-02. The Department initially contended that the guideline value was Rs.253.50 per square foot. Appellant submitted her objections to the Special Deputy Collector (Stamps) and pleaded that the true market value has been declared. Considering the objections raised, the Special Deputy Collector (Stamps) fixed the market value of the property at Rs.18,000/- per cent = Rs.41.28 per square foot. The deficit stamp duty was demanded on the differential value. (iii) Aggrieved by the order of Special Deputy Collector (Stamps), the second respondent herein, an appeal was filed to the first respondent, the Inspector General of Registration. When the appeal was pending before the authority, the appellate authority was of the view that the actual market value of the property was Rs.18,16,900/- per acre = Rs.18,169/- per cent. He was guided by the inspection report dated 7.6.2003 and the three documents of sale of the years 1995, 1996 and 2000. The District Registrar also opined that the market value of the property was Rs.18,16,900/- per acre = Rs.41.67 per square foot. Therefore, a notice dated 25.9.2003 was issued to the appellant to show-cause as to why the market value of the property should not be fixed at Rs.18,16,900/- per acre. A final notice was also issued to the appellant and the first respondent passed the impugned order fixing the market value of the property at Rs.18,16,900/- per acre = Rs.18,169/- per cent = Rs.41.67 per square https://hcservices.ecourts.gov.in/hcservices/ foot. On the differential value, stamp duty was demanded by the Department. Aggrieved thereby the Civil Miscellaneous Appeal has been filed. 3. C.M.A.No.2419 of 2008:- (i) The appellant Kaliaperumal, purchased the agricultural land to an extent of 0.53 cents in Kothangudi village in Survey No.11/3 and the property falls within the jurisdiction of the third respondent herein. The vendor signed and executed the sale document on 13.12.1997 and was presented for registration on 1.2.1998. The property was, however, registered on 20.6.2000 as document No.1485/2000. The value of the document was Rs.1,00,000/- = Rs.1,886/- per cent = Rs.4.33 per square foot. (ii) Proceedings were initiated by the Department in terms of Section 47-A of the Indian Stamps Act stating that the market value of the property has not been truly set forth in the instrument. Form-I notice was issued on 17.9.2001 in C.P.No.2643/2001-02. According to the Department, the guideline value of the property was Rs.25.70 per square foot. The appellant objected to the valuation as contended by the Department and the Special Deputy Collector (Stamps) fixed the value at Rs.20/- per square foot = Rs.8,720/- per cent or Rs.8,72,000/- per acre. As per the order of the Deputy Collector (Stamps), the market value of the property sought to be registered would be Rs.4,62,160/-. (iii) Aggrieved by the order of the Deputy Collector (Stamps), the second respondent, appellant filed an appeal before the Inspector General of Registration, the first respondent herein. The appellate authority had a doubt as regards market value of the property as determined by the authority below and also in the registered documents. Therefore, a notice dated 25.9.2003 was issued to the appellant to show-cause as to why the value of the property should not be fixed at Rs.12,70,000/- per acre. For issuing the notice, the first respondent was guided by the inspection report of the District Registrar and the guideline value taken in the previous case at Rs.18,16,900/-. The authority also took note of the report in which it is stated that the property and its location was difficult to access and needed substantial amount to levelling it for use. It is indicated that the property as such cannot be used as an house site. Taking into consideration the nature of property, its terrain and location, 30% reduction was granted and the value was sought to be fixed as Rs.12,70,000/- per acre as stated earlier. (iv) The appellant in both the cases appears to have challenged the notice dated 25.9.2003 and this Court directed them to submit their objections to the authority and the authorities to decide the issue on merits. Accordingly, the parties were granted opportunity https://hcservices.ecourts.gov.in/hcservices/ to submit their objections. (v) First respondent authority, in the case of appellant Kaliaperumal, taking note of the various factors set out in the show-cause notice fixed the value at Rs.12,70,000/- per acre = Rs.12,700/- per cent or Rs.29/- per square foot. The total market value of the property was fixed as Rs.6,73,100/-. The differential duty was demanded. Aggrieved thereby the present appeal has been filed. 4. Learned counsel for the appellants submitted that the documents were executed by the vendors on a particular date and presented for registration in the year 1998 itself in both the cases. However, it was the respondents, who kept the matter pending for a long period of time and registered the documents in the case of Ezhilarasi in March 2001 and in the case of Kaliaperumal in June 2000. There was no delay on the part of the appellants. It was further contended that the documents were signed by the parties and presented in April 1998 and February 1998 respectively. The execution of the instrument of sale was completed in the year 1998 itself. Therefore, the relevant date for determination of the market value will be 1998 only. The authorities have proceeded to refix the market value on the basis of the guideline value and documents which have no relevance to the facts of the appellants case. In any event, the guideline value cannot form the sole basis for determining the market value. Further, the authorities/ Deputy Collector of stamps, who passed the order at the first instance, placed reliance on the data documents viz., sale deeds executed in the year 1995, 1996 and 2000 which is not comparable and not contemporaneous. The details of the sale in the documents referred to are vague and in any event related to sale of individual house plots. The respondents proceeded on the premise that the property in question is capable of fetching higher value if sold as house sites as some of the nearby lands are residential sites. The respondents failed to note that the sale of the land in the present cases is agricultural lands and not house plots. This is a basic error in the approach of the authority. 5. Without prejudice, it was contended that even if the guideline value is to be taken as one of the para meters, the relevant date should have been in the year 1998 and not in the year 2000. On this premise, the order of the respondents are challenged. 6. Mr. V. Sreekanth, learned Additional Government Pleader appearing for the respondents submitted that even on the date of the execution of the documents, the guideline value is higher than the value shown in the documents. He reiterated the findings of the authority stating that it is based on documentary evidence and after inspection. https://hcservices.ecourts.gov.in/hcservices/ 7. In this case, a doubt has crept into the mind of the authority that the market value of the property has not been truly set forth in the instrument of conveyance and the proper duty payable has not been paid. The Act and the Rules prescribe the basis on which such proceedings can be initiated and the manner it should be done. The provision of the Tamil Nadu Stamp Act Section 47 A (1) (2) and explanation to Section 47-A of the Act which are relevant to the case reads thus:- " 47-A. Instruments of conveyance etc., undervalued 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 or 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 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 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." 8. The Tamil nadu Stamp (Prevention of Undervaluation of Instruments) Rules 1968, provides the manner and method in which the market value has to be determined if the department has reason to believe that the market value of the property has not been truly set forth in the instrument. Rule 3 and 5 of the Tamil nadu Stamp (Prevention of Undervaluation of Instruments) Rules 1968 which is relevant for this case reads as follows:- Rule (3) furnishing of statement of market value: https://hcservices.ecourts.gov.in/hcservices/ "(2) the registering officer shall, before registering an instrument, satisfy himself that the party or his legal representative, assignee or authorised agent has attached with the instrument a statement (attached with the instrument duly signed by the party executing the instrument) giving the market value for each of the properties separately as required by sub rules (1) and (1-A) (2-A) If the market value of the property as required by section 27 of the Indian Stamp Act, 1899 (Central Act II of 1899) is not set forth in the instrument where the property dealt with therein is a single item or the statement giving the market value of each property separately as required by sub rules (1) and (1-A) above is not attached to the instrument (duly signed by the party executing the instrument) the registering officer shall refuse the registration of the document. (3) The registering officer may, for the purpose of finding out whether the market value has been correctly furnished in the instrument, make such enquiries as he may deem fit. He may elicit from the parties concerned any information bearing on the subject and call for and examine any records kept with any public officer or authority. (4) The registering officer may also look into the "Guidelines Register" containing the value of properties supplied to them for the purpose of verifying the market value. 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. " Rule 5 :- Principles for determination of market value:- The Collector shall, as far as possible, have also regard to the following points in arriving, at the provisional market value,- https://hcservices.ecourts.gov.in/hcservices/ (a) In the case of lands- (i) classification of the land as dry, manavari, wet and the like; (ii) classification under various tarams in the settlement register and accounts; (iii)the rate of revenue assessment for each classification; (iv) other factors which influence the valuation of the land in question; (v) points, if any, mentioned by the parties to the instrument or any other person which requires special consideration; (vi) value of adjacent lands or lands in the vicinity; (vii) average yield from the land, nearness to road and market, distance from village site, level of land, transport facilities, facilities available for irrigation such as tank, wells and pumpsets; (viii) the nature of crops raised on the land; and ((ix) the use of land, domestic, commercial, industrial or agricultural purposes and also the appreciation in value when an agricultural land is being converted to a residential, commercial or an industrial land, ) (b) In the case of house sites-- (i) the general value of house sites in the locality; (ii) nearness to roads, railway station, bus route; (iii) nearness to market, shops and the like; (iv) amenities available in the place like public offices, hospitals and educational institutions; (v) development activities, industrial improvements in the vicinity; (vi) land tax valuation of sites with reference to taxation records of the local authorities concerned; (vii) any other features having a special bearing on the valuation of the site; and (viii) any special feature of the case represented by the parties. 9. On going through the impugned order of the first respondent in both the cases, it is apparent that the authority has proceeded to refix the market value mainly on the basis of the guide line value. Though reference is made to certain documents which are bereft of details and particulars, the main stay of the departments case is the guideline value. The Guideline value, as such, cannot https://hcservices.ecourts.gov.in/hcservices/ be the market value and the respondents have proceeded on that wrong premise. As to the relevance of the guideline value in determining the market value, the following decision need to be considered. Collector of Nilgiris v. M/s.Mahavir Plantations Pvt. Ltd., reported in A.I.R. 1982 Madras 138, it is held as follows:- "The valuation guidelines prepared by the 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 reported in 1997 (II) C.T.C. 617, 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." 10. In R.Sai Bharathi – vs. - J.Jayalalitha and others reported https://hcservices.ecourts.gov.in/hcservices/ in 2003-4 L.W. 825, the relevance of guideline value was considered by the Apex Court and stated that guideline value alone is not a factor to fix the market value of the property. The relevant portion in the said decision reads thus:- "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 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 https://hcservices.ecourts.gov.in/hcservices/ 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 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." 11. On a reading of the provisions of the Indian Stamp Act and the Rules and the decisions of the Court as stated above, it is clear that the guideline value, which forms the main plank of the Department's contention in this case, is only a guiding factor to ascertain the market value prima facie, if there is a doubt that the market value has not been truly set forth in the instrument. It has been clearly stated by the Apex Court that guideline value is not a final authority on the market value of the property. The Department will have to go by the various parameters set down in the Rules for determination of the market value if they have a reasonable belief that the market value of the property has not been truly set forth in the instrument. In other words the data land which is sought to be compared in this case should contain details which will throw light as to how the data land, its nature, extent and value is comparable to that of the property which is subject matter of registration. The onus is on the Department to establish that the market value of the property has not been truly set forth and the market value as claimed by the Department is contemporaneous to the document tendered for https://hcservices.ecourts.gov.in/hcservices/ registration. In the present case, the main plank of the Department appears to be the guideline value and that too it is of the year 2000. The date of presentation in both the cases is of the year 1998. Therefore, taking the guideline value of the year 2000 may not be justified, in view of the Apex Court's decision in State of Rajasthan & others – v. - Khandaka Jain Jewellers reported in 2008(1) CTC 60,. Further, the Department has proceeded on the guideline value, which is not final as held by the apex Court in R.Sai Bharathi – vs. - J.Jayalalitha and others (203 (4) L.W. 825) cited supra. It is only a prima facie material for determination of the true market value. 12. In this case, the respondent Department has relied upon a few documents in both the cases stating that the market value of the property in and around the property which is the subject matter of registration and stated that the market value is higher. However, in the impugned order except stating the number of document, year of registration and the square foot value, no other details are found. It is not clear whether the land which is sought to be compared to the present one are agricultural land or house sites. The extent is also not stated. There is no discussion as to how the data land is comparable to the land which is the subject matter of the lis in the present case. Since the respondent Department have taken into consideration the documents which are bereft of details, vague in particulars and on the basis of the guideline value of the period subsequent to the date of presentation for registration, the whole exercise appears to be arbitrary. There is no proper application of mind. 13. The respondent department has proceeded to determine the market value of the instrument on a subsequent date, in view of the delay caused in registering the documents. In this case, the date of submission of the