IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:27.04.2010 CORAM: THE HON'BLE MR.JUSTICE P.JYOTHIMANI WRIT PETITION No.41808 OF 2002 Smt.Vasundhra .. Petitioner vs. 1.Government of Tamil Nadu, represented by Secretary, Revenue Department, Fort St. George, Chennai-9. 2.The Inspector General of Registration, Santhome, Chennai. 3.The Sub Registrar, T.Nagar, Chennai-600 017 .. Respondents Writ Petition filed under Article 226 of the Constitution of India praying for issuance of a Writ of Mandamus, directing the 3rd respondent to refund the excess stamp duty of Rs.3,05,407/- collected by him from the petitioner, in respect of Sale Deed registered on 16.05.2002 vide Doc.No.1117 of 2002 to the petitioner in respect of property situated at Door No.5 (Old No.3), Balaji Avenue I Street, T.Nagar, Chennai – 600 017. For petitioner : Mr.S.R.Rajagopal For respondents : Mr.P.S.Raman, Advocate General. ORDER The writ petition is for a direction against the third respondent, the Sub Registrar, T.Nagar, to refund of excess stamp duty of Rs.3,05,407/- collected from the petitioner in respect of sale deed registered on 16.05.2002 as document No.1117/2002 relating to the property situated at Door No.5(old No.3), Balaji Avenue I Street, T.Nagar, Chennai 600 017. https://hcservices.ecourts.gov.in/hcservices/ 2.The petitioner has purchased the above said property in a public auction conducted by a M/s.Park Town Benefit Fund Limited as a mortgagee exercising powers under Section 69 of the Transfer of Property Act for a consideration of Rs.45 lakhs as a highest bidder. The Benefit Fund Limited being mortgagee has executed a sale deed in favour of the petitioner on 16.05.2002 which was registered as stated above and the said value has also been approved by the Income-tax Department. 3.It is stated that the third respondent has demanded further amount of stamp duty of Rs.4,48,981/- based on the guideline value maintained by him. Ultimately, the petitioner was asked to pay Rs.3,05,407/- on the guideline value while the value for which he has purchased in the open auction was only Rs.45 lakhs for which necessary stamp duty has been paid. It is stated that the petitioner was forced to pay a sum of Rs.3,05,407/- subsequent to the additional demand of Rs.4,48,981/- for the purpose of getting the release of the document. Thereafter, the petitioner has caused a legal notice to the third respondent on 25.07.2002 and filed the present writ petition. The writ petition is filed on the ground that he was the highest bidder in a public auction from the M/s.Park Town Benefit Fund Limited who has brought the property by exercising its power under Section 69 of the Transfer of Property Act, 1882 for the value of Rs.45 lakhs. Therefore, the value for the assessment of stamp duty and the application of the guideline value is not proper and that inasmuch as the petitioner has purchased in a public auction, there is no possibility of suppression of value and therefore, the levy of stamp duty, based on the guideline value prescribed by the third respondent registering authority is not valid in law. 4.In the counter affidavit filed by the third respondent while it is admitted that the petitioner has purchased the property in an auction which was held as per Section 69 of the Transfer of Property Act by the mortgagee M/s.Park Town Benefit Fund Limited for Rs.45 lakhs, on a verification from the guideline register, it was found that the value of the property is much more and therefore, based on the guideline value, the stamp duty was arrived at and on that basis, the petitioner has also paid the value. Simply because the Income-tax Department has approved the value, it does not mean that it is equal to guideline value. Therefore, it is stated by the third respondent that the value of the property on the basis of the guideline value arrived at by the registering authority is perfectly valid in law and the guideline register supplied to assist the registering authority to decide as to whether the value has been properly and truly set out in the document. It is also stated that the auction conducted by the mortgagee by virtue of the power under Section 69 of the Transfer of Property Act cannot be equated to that of a public auction in respect of by the authorities like that of the housing board etc., https://hcservices.ecourts.gov.in/hcservices/ 5.It is stated that the matter was referred under Section 47-A (1) of the Indian Stamp Act for proper valuation and the procedure contemplated under the Tamil Nadu Stamp (Prevention of Under Valuation of Instruments) Rules, 1968 were followed and notice in Form-I was sent and served to the petitioner on 25.06.2002 and final order came to be passed by the Special Deputy Collector (Stamps), Chennai on 25.06.2002 directing the petitioner to pay Rs.2,83,517/- as deficit stamp duty. The market value was fixed at the rate of Rs.1,285/- per square feet and the petitioner has not raised any objection. It is also stated that the petitioner having paid deficit stamp duty as demanded by the third respondent on 25.06.2002 after a statutory enquiry was conducted, cannot claim refund of the said amount. If only the petitioner was aggrieved by the fixation of the market value under Section 47-A(1) of the Indian Stamp Act and as per Rule 9 of the Tamil Nadu Stamp (Prevention of undervaluation of Instruments) Rules, 1968, she had a right of appeal, under Section 47-A(5) of the Indian Stamp Act and as per Rule 9 of the Tamil Nadu Stamp (Prevention of undervaluation of Instruments) Rules, 1968 within the time stipulated and without availing such remedy, the petitioner has filed the present writ petition for recovery of the said amount, which is not maintainable in law. 6.Mr.S.R.Rajagopal, the learned counsel for the petitioner would vehemently contend that the sale effected by the mortgagee under Section 69 of the Transfer of Property Act should be treated as that of the sale effected by a public authority for the reason that in both the sales there is no possibility of suppression of value. It is his submission that inasmuch as the petitioner was the highest bidder in an open auction for a sum of Rs.45 lakhs, there is no reason for the third respondent to apply the guideline value for the purpose of imposing stamp duty. The reference for the purpose of valuation under Section 47-A(1) of the Indian Stamp Act would arise only in cases where there is a suspicion about the under valuation. In cases of public auction under Section 69 of the Transfer of Property Act where many people are participating, there is no possibility of any suppression or it is not even the case of the mortgagor that his property has been sold for a lower value and in such circumstances, it is not open to the registering authority to raise such issue. The registering authority cannot act as a mortgagor. It is his submission that the deficit claim was made only as reminder and that cannot be put against the petitioner. He has also referred to the Blacks Law Dictionary for the meaning of market value. It is his contention that as a bona fide purchaser for valuable consideration, the petitioner cannot be made to suffer and mere payment of stamp duty by the petitioner under compulsion cannot be put against her. It is also submitted that when the original mortgagor who is the owner of the property for whose failure, the mortgagee brought the property for sale under Section 69 of the Act himself has not raised any objection about the validity or otherwise of the sale, the claim of the third respondent for exorbitant amount of stamp duty is not permissible in https://hcservices.ecourts.gov.in/hcservices/ law. He also relied upon the following judgments: “i)The Government of Tamil Nadu Vs.S.Jayalakshmi reported in 2009 (1) CTC 305 ii)The Special Deputy Collector (Stamp) Vs.Chemicals and Plastics Ltd., reported in 2004(1) CTC 187 iii)M/s.Sri Bharatia Pulverisers Private Limited, Adilabad District, A.P. rep by its Authorised Signatory and Manager Mr.N.Sanjay Vs. Sub Registrar of Assurances and another reported in 1997 (6) ALT 801” to substantiate his contention that the writ petition under Article 226 of the Constitution of India is maintainable. 7.On the other hand, Mr.P.S.Raman, learned Advocate General has submitted that when once the procedure contemplated under Section 47- A(1) of the Indian Stamp Act has been followed and an enquiry conducted and Form-I notice has also been given to the petitioner in which the petitioner has participated and valuation has been fixed and it is after payment of such amount, it is not open to the petitioner to come to this Court by filing a writ petition under Article 226 of the Constitution of India for recovery of amount. It is his submission that the petitioner having failed to exercise her right of appeal under Section 47-A(5) of the Indian Stamp Act is estopped now from making claim for refund of the amount. It is his further submission that the sale effected by the public authority in respect of the Government properties cannot be equated to that of the private sale effected by virtue of the power under Section 69 of the Transfer of Property Act. He would also submit that the judgments relied upon by the learned counsel for the petitioner are not applicable to the facts and circumstances of the case and therefore, it is submitted that entertaining such writ petition will make the statutory provision under Section 47-A(5) futile. Such futile writ petition cannot be entertained. He would also rely upon the judgment of the Hon'ble Supreme Court reported in 2009(7) SCC 438 (V.N.Devadoss Vs. Chief Revenue Control Officer-cum-Inspector and others). 8.I have considered the submissions made on either side and perused the entire materials available on record and also given my anxious thought to the issue involved in this case. 9.On fact it is clear that the petitioner has purchased the property for a consideration of Rs.45 lakhs in an auction conducted by M/s.Park Town Benefit Fund Limited being the mortgagee of the property by exercising its powers under Section 69 of the Transfer of Property Act. Under Section 69 of the Transfer of Property Act it enables the mortgagee to sell the property which is the subject https://hcservices.ecourts.gov.in/hcservices/ matter of mortgage in cases of default committed by the mortgagor in repayment of the mortgaged money and recover the money by the said sale without intervention of the Court. Section 69 of the Transfer of Property Act which is as follows: “69.Power of sale when valid:-[1]A mortgagee, or any person acting on his behalf, shall, subject to the provisions of this section have power to sell or concur in selling the mortgaged property or any part thereof, in default, in the following cases and in no others, namely:] a)where the mortgage is an English mortgage, and neither the mortgagor nor the mortgagee is a Hindu, Muhammadan or Buddhist or Buddhist [or a member of any other race, sect, tribe or class from time to time specified in this behalf by [the State Government], in the Official Gazette]; b)where [a power of sale without the intervention of the Court is expressly conferred on the mortgagee by the mortgagee by the mortgage-deed and] the mortgagee is [the Government]; c)where [a power of sale without the intervention of the Court is expressly conferred on the mortgagee by the mortgage-deed and] the mortgaged property or any part thereof [was, on the date of the execution of the mortgage- deed], situate within the towns of Calcutta, Madras, Bombay, [***] [or in any other town or area which the State Government may, by notification in the official Gazette, specify in this behalf.] [(2)] [***] No such power shall be exercised unless and until_ (a)notice in writing requiring payment of the principal money has been served on the mortgagor, or on one of several mortgagors, and default has been made in payment of the principal money, or of that thereof, for three months after such service; or (b)some interest under the mortgage amounting at least to five hundred rupees is in arrear and unpaid for three months after becoming due. [3)when a sale has been made in professed exercise of such a power, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale, or that due notice was not given, or that the power was otherwise improperly or irregularly https://hcservices.ecourts.gov.in/hcservices/ exercised; but any person damnified by an unauthorised or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power. [(4)]The money which is received by the mortgagee, arising from the sale, after discharge of prior encumbrances, if any, to which the sale is not made subject, or after payment into Court under Section 57 of a sum to meet any prior encumbrance, shall, in the absence of a contract to the contrary, be held by him in trust to be applied by him, first, in payment of all costs, charges and expenses properly incurred by him as incident to the sale or any attempted sale; and, secondly, in discharge of the mortgage-money and costs and other money, if any, due under the mortgage; and the residue of the money so received shall be paid to the person entitled to the mortgaged property, or authorised to give receipts for the proceeds of the sale thereof. [(5)Nothing in this section or in section 69-A applies to powers conferred before the first day of July, 1882]” makes it abundantly clear that such right has been conferred to the mortgagee to sell the property to recover the amount due to him. Inasmuch as there is a failure on the part of the mortgagor to make repayment and that power has been conferred without intervention of the Court which means that the sale is not effected at the supervision of the Court like in cases where the Company Court while selling the property of the Company which is the subject matter of liquidation pending before it at its supervision and Court confirms the sale. In such circumstances, when the Court brings the property of the company in liquidation for sale by public auction, the concern of the Court is about the larger number of the creditors of the company and a judicial check is imposed and in such circumstances, there are no possibility for the sale of the property for an under valuation. 10.On the other hand, the various procedures to be followed for the purpose of effecting the private sale under Section 69 of the Act as it is seen in Section 69(2) of the Act only contemplates that notice to be given to the mortgagor requiring him to pay the principal money or part thereof and that cannot be said to be a sufficient safeguard from selling the property on undervaluation. The sale effected under Section 69 of the Transfer of Property Act is at the instance of the mortgagee whose individual intention is to recover the amount due to him from the mortgagor who has committed default in repayment of the amount. That can never be equated to that of sale effected like that of the Company Court as stated above. 11.Section 47-A of the Indian Stamp Act 1899 which is as follows: https://hcservices.ecourts.gov.in/hcservices/ “47-A.Instruments of conveyance, etc. undervalued how to be dealt with.—(1) If the registering officer appointed under the Indian Registration Act, 1908 (16 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 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. (3)The Collector may, suo motu or otherwise, within five years from the date of registration of any instrument of conveyance, exchange, gift, release of benami right or settlement, not already referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject-matter of conveyance, exchange, gift, release of benami right or settlement, and the duty payable thereon and if after such examination, he has reason to believe that the market value of the property has not been truly set forth in the instrument, he may determine the market value of such property and the duty as aforesaid in accordance with the procedure provided for in sub-section (2). The difference, if any, in the amount of duty, shall be payable by the persons liable to pay the duty: Provided that nothing in this sub-section shall apply to any instrument registered before the date of commencement of the Indian Stamp (Tamil Nadu Amendment) Act, 1967. (4)Every person liable to pay the difference in the amount of duty under sub-section (2) or sub-section (3) shall, pay such duty within such period as may be prescribed. In default of such payment, such amount of duty outstanding on the date of default shall be a charge on the property affected in such instrument. On any amount https://hcservices.ecourts.gov.in/hcservices/ remaining unpaid after the date specified for its payment, the person liable to pay the duty shall pay, in addition to the amount due, interest at two per cent per month on such amount for the entire period of default. (5)Any person aggrieved by an order of the Collector under sub-section (2) or sub-section (3), may appeal to such authority as may be prescribed in this behalf. All such appeals shall be preferred within such time, and shall be heard and disposed of in such manner, as may be prescribed by rules made under this Act. (6)The Chief Controlling Revenue Authority may, suo motu, call for and examine an order passed under sub-section (2) or sub-section 93) and if such order is prejudicial to the interests of revenue, he may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may initiate proceedings to revise, modify or set aside such order and may pass such order thereon as he thinks fit. (7)The Chief Controlling Revenue Authority shall not initiate proceedings against any order passed under sub- section(2) or sub-section (3) if,- (a)the time for appeal against that order has not expired; or (b)more than five years have expired after the passing of such order. (8)No order under sub-section (6) adversely affecting a person shall be passed unless that person has had a reasonable opportunity of being heard. (9)In computing the period referred to in clause (b) of sub-section (7), the time during which the proceedings before the Chief Controlling Revenue Authority remained stayed under the order of a Court shall be excluded. (10)Any person aggrieved by an order of the authority prescribed under sub-section (5) or the Chief Controlling Revenue Authority under sub-section (6) may, within such time and in such manner, as may be prescribed by rules made under this Act, appeal to the High Court.” 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, https://hcservices.ecourts.gov.in/hcservices/ 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”. it contemplates that when the registering authority has reason to believe that the market value of the property, subject matter of conveyance has not been truly set forth in the instrument, he can refer the same to the Collector for determination of the market value of such property. The Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 framed as per the powers conferred to the State Government under Section 47-A and Section 75 of the Indian Stamp Act, in Rule 3 of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 enables a procedure to be followed by the registering authority for the purpose of arriving at a conclusion as to whether the market value has been properly and correctly furnished in the document by enabling the registering authority to refer to the guideline register also which is narrated in the explanation to Rule 3 (4) of the said Rules. For a better appreciation of the said duty of the registering authority, it is relevant to refer to Rule 3 (3) and 3(4) along with explanation which are as follows: “3(3)The registering officer may, for the purpose of finding out whether the market value has been correctly furnishing 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. 3(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 of fetter the discretion of the authorities concerned to satisfy themselves on the reasonableness or otherwise of the value expressed in the documents]” 12.Rule 4 which speaks about the procedure on receipt of reference under Section 47-A empowers the Collector to follow the procedure initially by sending notice in Form-I to the person who has presented the document for registration. https://hcservices.ecourts.gov.in/hcservices/ 13.Rule 4 of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 is as follows: “4.Procedure on receipt of reference under Section 47- A:-1) on receipt of a reference under sub section (1) of section 47-A, from a registering officer, the Collector shall issue a notice in Form I, a)to every person by whom, and b) to every person in whose favour the instrument has been executed, informing him of the receipt of the reference and asking him to submit to him his representations, if any, in writing to show that the market value of the property has been truly set forth in the instrument, and also to produce all evidence that he has in support of his representation, within 21 days from the date of service of the notice. (2)The Collector may, if he thinks fit, record a statement from any person to whom a notice under sub rule (1) has been issued. 3)The Collector may for the purpose of his enquiry- a)call for any information or record from any public office, officer or authority under the Government or any local authority; b)examine and record statements from any member of the public, officer or authority under the Government or the local authority; and c)inspect the property after due notice to the parties concerned. 4)After considering the representations, if any, received from the person to whom notice under sub-rule (1) has been issued, and after examining the records and evidence before him, the Collector shall pass an order in writing provisionally determining the market value of the properties and the