IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 5-8-2010 CORAM THE HONOURABLE MR.JUSTICE N.PAUL VASANTHAKUMAR W.P.Nos.35439,35449 of 2004, 7937 of 2005 & 12161 of 2007 W.P.No.35439 of 2004 C. Gnanasekaran ... Petitioner Vs 1. The Inspector General of Registration, Santhome High Road, Chennai – 600 028. 2. The Special Deputy Collector (Stamps), O/o.The Collectorate, Thanjavur District. 3. The Sub Registrar, Tarangambadi, Mayiladuthurai Taluk, Nagapattinam District. ... Respondents (Cause Title regarding R-3 amended as per order of the Court dated 25.7.2005 in W.P.M.P.No.7918 of 2005) PRAYER: This writ petition is filed under Article 226 of the Constitution of India with a prayer to issue a writ of certiorarified mandamus calling for the records relating to the proceedings made in Tha.Pa.No.1041/2004/A2, dated 4.8.2004 issued by the second respondent and quash the same and forbear the second respondent from proceeding with the enquiry. W.P.No.35449 of 2004 C. Gnanasekaran ... Petitioner Vs 1. The Inspector General of Registration, Santhome High Road, Chennai – 600 028. https://hcservices.ecourts.gov.in/hcservices/ 2. The Special Deputy Collector (Stamps), O/o.The Collectorate, Thanjavur District. 3. The Sub Registrar, Sembanarkoil, Mayiladuthurai Taluk, Nagapattinam District. ... Respondents PRAYER: This writ petition is filed under Article 226 of the Constitution of India with a prayer to issue a writ of certiorarified mandamus calling for the records relating to the proceedings made in Tha.Pa.No.650/2004/A2, dated 17.5.2004 issued by the second respondent and quash the same and forbear the second respondent from proceeding with the enquiry. W.P.No.7937 of 2005 C.T.Senthilnathan Chettiar ... Petitioner Vs. Joint Sub Registrar No.1, Office of the District Registrar, Chennai Central, Chennai – 600 018. ... Respondent PRAYER: This writ petition is filed under Article 226 of the Constitution of India with a prayer to issue a writ of mandamus directing the respondent to register and release the sale deed document No.1205 of 2004 by accepting the stamp duty and registration fees at the prescribed rates on the value reflected in the document presented on 23.8.2004 for registration and consequently forbear from demanding stamp duty and registration fees on the basis of the guidelines valuation. W.P.No.12161 of 2007 K. Geetha ... Petitioner Vs. 1. The State of Tamil Nadu rep.by its Secretary to Government, Revenue Department, Fort St.George, Chennai. https://hcservices.ecourts.gov.in/hcservices/ 2. Inspector General of Registration, Office of the Inspector General of Registration, Registration Department, No.120, Santhome High Road, Santhome, Chennai – 4. 3. The Special Deputy Collector (Stamps), District Collectorate Office V Floor, M.Singaravelar Maligai, No.32, Rajaji Salai, Chennai -1. 4. The Sub Registrar, Purasawalkam Registrar's Office, Perambur Barracks Road, Chennai – 11. ... Respondents PRAYER: This writ petition is filed under Article 226 of the Constitution of India with a prayer to direct the 4th respondent to return the sale deed dated 15.3.2001 registered as Document No.1478/2001 without insisting on payment of further stamp duty of Rs.28,925/- and registration charges of Rs.2,225/- and also refund the excess stamp duty of Rs.31,070/- paid by the petitioner. For Petitioner in : Mr.G.Ethirajulu W.P.Nos.35439 & 35449/2004 For Petitioner in : Mr.R.Ravi W.P.No.7937/2005 For Petitioner in : Ms.Jayashree W.P.No.12161/2007 For Respondents in all : Mr.P.S.Raman, the writ petitions Advocate General, assisted by Ms.Pushpa Menon, G.A., Mr.R.Murali, G.A., COMMON ORDER The brief facts necessary for disposal of these writ petitions are as follows: (a) The petitioner in W.P.No.35439 of 2004 is that the petitioner entered into a sale agreement on 18.11.1998 with one Raju and Lakshmi to purchase the land to an extent of 0.04 cents, https://hcservices.ecourts.gov.in/hcservices/ comprised in Survey No.413/5, Thirukadayur Village, Tranqubar Taluk. The vendor refused to execute the sale deed. Hence the petitioner filed a suit in O.S.No.11 of 2002 before the Principal Sub Court, Myladuthurai, for specific performance of the agreement. The said suit was decreed on 4.3.2002. After filing execution petition, the learned Subordinate Judge executed the sale deed on 30.3.2004 in terms of the decree and the same was registered as Document No.147/2004 on the file of the Sub Registrar, Sembanarkoil. The third respondent returned the document after registration by stating that after due inspection he will return the document and thereafter the registration having been made by not paying the proper market value, on the basis of the report sent by the third respondent, the second respondent initiated proceedings under Section 47A of the Indian Stamp Act, 1899, by serving notice on 4.8.2004, against which this writ petition is filed. (b) In W.P.No.35449 of 2004 the petitioner entered into sale agreement on 18.11.1998 with one Rahamathunnisa to purchase the land with an extent of 0.14 cents in S.No.157/1, Authur, Shakizar Street, Chidambaram Koil Pathu, Tranqubar and as the vendor refused to execute sale deed, petitioner filed O.S.No.11 of 2002 on the file of Principal Sub Court, Mayiladuthurai for specific performance of the agreement dated 18.11.1998 and the said suit was decreed on 4.3.2002. In spite of passing the decree in favour of the petitioner, the vendor did not execute the sale deed. Therefore the sale deed was executed through Court on 18.3.2004 as Document No.256/2004 on the file of the Sub Registrar, Sembanarkoil, Mayiladuthurai. After the registration of the document the same was not given to the petitioner and the second respondent issued a notice on 17.5.2004 calling upon the petitioner to submit explanation as to why he should not be called upon to pay a sum of Rs.15,448/- being difference of stamp duty. In the said notice the value of the said property was valued at Rs.3,33,066/-. Hence this writ petition. (c) Petitioner in W.P.No.7937 of 2005 was a partner in a partnership firm by name M/s.Gaity Theatre. The subject matter of the land is an extent of 13 grounds and 1908 sq.ft., comprised in R.S.No.3289 bearing Door No.1/L, Blackers Road, Mount Road, Chennai- 2, belonging to a wakf called "The Hajee Sir Ismail Sait Wakf Estate". The land owner namely the Wakf filed a civil suit in C.S.No.311 of 1989 before this Court and prayed for ejecting the tenant viz., M/s.Gaity Theatre from the said land. After receipt of the summons the tenant viz., the partnership firm filed an application in A.No.4447 of 1992 under Section 9(1)(a)(i) of the Tamil Nadu City Tenants Protection Act and prayed for a direction to the lessor to sell the lands to the firm based on its possession. The said ejectment suit was later on transferred to the City Civil Court, Chennai, and renumbered as O.S.No.3397 of 1997 and the application filed under section 9 of the Tamil Nadu City Tenants Protection Act was renumbered as I.A.No.18943 of 1998. The https://hcservices.ecourts.gov.in/hcservices/ partnership firm subsequently became a proprietory concern and the petitioner became the sole proprietor based on a family arrangement. A memo of compromise was entered into between the petitioner and the land owner and based on the compromise memo, the application filed under section 9(1)(a)(i) was allowed and a decree was passed in the said suit on 6.7.2000 directing the land owner to sell the aforesaid land at the rate of Rs.27,50,000/- per ground. The land owner thereafter executed a sale deed in favour of the petitioner on 23.8.2004, which was registered as Document No.1205 of 2004. The respondent issued a notice and directed the petitioner to pay 60% of the differential stamp duty under the Samadhan Scheme. Being aggrieved by the issuance of notice, the petitioner has filed this writ petition. (d) W.P.No.12161 of 2007 is filed by the petitioner seeking refund of alleged excess stamp duty of Rs.31,070/- by contending that a sale deed was executed in her favour pursuant to the decree made in O.S.No.3585 of 1984 on the file of the City Civil Court, Chennai, for specific performance and in E.P.No.3099 of 1996 based on an agreement dated 2.9.1983. The sale deed was executed on 15.3.2001 and registered as Document No.1478 of 2001 on the file of the Sub Registrar Office, Purasawalkam, Chennai-11. The 4th respondent refused to deliver the original sale deed and impounded the same and fixed the value at Rs.5,11,423/- and ascertained the additional stamp duty of Rs.66,495/- and directed to pay differential stamp duty of Rs.28,925/- and registration fee of Rs.2,225/-. The petitioner paid Rs.37,570/- and the value of the property according to the petitioner being Rs.50,000/- she is liable to pay only Rs.6,500/- and therefore she is claiming refund of Rs.31,070/-. 2. The above said prayers made in these writ petitions are opposed by the respondents by contending that merely because the sale deeds were executed pursuant to the decree for specific performance or otherwise, the stamp duty payable by the petitioners as per the market value on the date of registration is mandatory and the value of the property mentioned in the sale agreement or in the decree is immaterial as the petitioners are bound to pay stamp duty on the basis of the market value on the date of presentation of the document for registration. 3. The learned counsels for the petitioners submitted that the petitioners obtained sale deeds pursuant to the civil court decrees and got the sale deeds executed through Courts. Therefore there cannot be any suppression or under valuation in the documents, which was registered pursuant to Civil Court decrees. The learned counsels further submitted that the notices issued for initiation of action under Section 47A are without any material and also without recording any satisfaction and therefore the impugned orders are to be set aside. Insofar as the demand to avail Samadhan Scheme in one of the writ petition, which is the subject matter of challenge is concerned, https://hcservices.ecourts.gov.in/hcservices/ the learned counsel for the petitioner submitted that the respondents cannot compel the petitioner to avail the Samadhan Scheme as they are not entitled to demand any higher stamp duty as the registration was made pursuant to the Court order. The learned counsel for the petitioner in W.P.No.12161 of 2007 prayed for refund of the stamp duty collected beyond the valuation mentioned in the document. The learned Counsels heavily relied on the decisions of the Supreme Court reported in (2009) 7 SCC 730 : 2009 (3) LW 236 (V.N.Devadoss v. Chief Revenue Control Officer-cum-Inspector); the Full Bench decision of this Court reported in 2008 (1) LW 47 (G.Karmegam v. The Joint Sub Registrar); and the Division Bench decisions of this Court reported in 2008 (6) CTC 759 (Hindustan Petroleum Corporation Ltd. v. The Inspector General of Registration) and (2009) 5 MLJ 391 (Government of Tamil Nadu v. S.Jayalakshmi). 4. The learned Advocate General submitted that merely because the sale deeds were executed pursuant to the orders of the Civil Court, the petitioners cannot avoid payment of correct stamp duty i.e., the market value of the property as on the date of its presentation for registration. The market value of the property was not the issue decided by the Civil Court and the State cannot sustain any loss towards stamp duty payable by the purchasers merely because there is a compromise entered into between the parties or on the basis of decree obtained by the purchasers in specific performance suits. The learned Advocate General also submitted that the value of the property mentioned in the documents would not always reflect the correct market value of the property and therefore the respondents are justified in initiating action under Section 47A of the Indian Stamp Act, 1899, to arrive at the correct valuation of the property and the stamp duty payable. The learned Advocate General cited a judgment of the Supreme Court reported in (2010) 4 CTC 350 (State of Haryana v. Manoj Kumar) in support of his contentions. Insofar as not recording of satisfaction by the Collector of Stamps is concerned, the learned Advocate General submitted that the matters may be remitted to issue fresh notice to the petitioners. 5. I have considered the rival submissions made by the respective learned counsels for the petitioners as well as learned Advocate General for the respondents. 6. The point for consideration in these writ petitions is whether the petitioners are entitled to contend/object the initiation of section 47A proceedings under the Indian Stamp Act, 1899, and demand refund of the stamp duty already paid. 7. In all the above four cases the sale deeds were executed pursuant to the orders of the Civil Court. The sale deeds were executed in the year 2004. The valuation of two properties were made on the basis of the agreement dated 11.11.1998 (W.P.Nos.35439 & 35449 of 2004); Compromise Memo dated 6.7.2000 insofar as W.P.No.7937 of https://hcservices.ecourts.gov.in/hcservices/ 2005; and Agreement dated 27.11.1983 as far as W.P.No.12161 of 2007. Thus, it is beyond doubt that the documents registered are on the basis of the valuation agreed between the parties long earlier, in three cases 20 years earlier and in one case four years earlier. 8. 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 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 https://hcservices.ecourts.gov.in/hcservices/ 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 person liable to pay the duty." Whether the said agreed amount is the correct market value on the date of presentation of the document for registration or not can be verified by the Registering Officer and if he has got any doubt he can make reference for determination of the correct market value under section 47A of the Indian Stamp Act, 1899. 9. In the decision reported in (2010) 4 SCC 350 (State of Haryana v. Manoj Kumar) similar issue was considered by the Honourable Supreme Court and the Supreme Court set aside the order of the High Court, which interfered with the orders of the authorities under the Indian Stamp Act, 1899. In paragraphs 29 to 35 the Supreme Court held thus, "29. ............ The High Court erroneously observed that the “the authenticity of the decree passed by the court cannot be questioned. Therefore, the genuineness of the sale price has to be presumed”. This finding of the High Court cannot be sustained. It would have far-reaching ramifications and consequences. If the genuineness of the sale price entered into by the buyer and the seller cannot be questioned, then in majority of the cases it is unlikely that the State would ever receive the stamp duty according to the circle rate or the Collector rate. The approach of the High Court is totally unrealistic. 30. The High Court in the impugned judgment has also erroneously observed that “there cannot be any opportunity with the vendee to fabricate an agreement of sale for showing the incorrect sale price because the litigating parties would not ordinarily reach such an agreement and sign the fabricated document”. 31. The High Court gravely erred in not properly comprehending the facts of this case in proper perspective and which has led to grave miscarriage of justice. 32. It is not disputed that the commercial plot of 788 sq yd located at Delhi-Mathura Road, Village Mewla Maharajpur, Faridabad was valued by the circle rate at Rs.4200 per square yard fixed https://hcservices.ecourts.gov.in/hcservices/ by the Collector of Faridabad meaning thereby that after the notification, no sale deed can be registered for an amount lesser than Rs.4200 per square yard. It may be pertinent to mention that, in order to ensure that there is no evasion of stamp duty, circle rates are fixed from time to time and the notification is issued to that effect. The issuance of the said notification has become imperative to arrest the tendency of evading the payment of actual stamp duty. It is a matter of common knowledge that usually the circle rate or the Collector rate is lower than the prevalent actual market rate but to ensure registration of sale deeds at least at the circle rates or the Collector rates such notifications are issued from time to time by the appellants. 33. In the impugned judgment, the High Court has not properly construed the observations of the District Collector, Faridabad in which he has clearly stated as under: “It appears that the suit has been filed in the civil court and decree passed with the intention to avoid tax and stamp duty to be paid to the Government, because when the respondent had paid entire sale consideration to the vendor, then he should have got the sale deed also executed at that time, whereas the same has not been done. Therefore, keeping into consideration the above facts, I come to this conclusion that Sale Deed No. 11200 dated 9-2-2001 has been executed in respect of land measuring 788 sq yd situated in Village Mewla Maharajpur, which abuts Delhi-Mathura Road. This plot is commercial and this fact has been concealed by the respondent. The sale deed had been registered for less value. The market value of the land in dispute as per Collector rate is Rs.33,09,600 on which a total stamp duty of Rs.5,13,050 was payable whereas the respondent has affixed stamp duty of Rs.31,000. In this manner on the above deed, the stamp duty of Rs.4,82,050 is payable, which is ordered to be recovered from the respondent in accordance with law.” https://hcservices.ecourts.gov.in/hcservices/ 34. This order was upheld by the Commissioner. The High Court while exercising its jurisdiction under Article 227 has set aside the orders passed by the District Collector, Faridabad and upheld by the Commissioner, Gurgaon without any basis or rationale. Apart from the jurisdiction, even what is factually stated in the order of the District Collector, Faridabad as upheld by the Commissioner, Gurgaon is unexceptionable and any interference was totally unwarranted. 35. In the facts and circumstances of the case, the impugned judgment of the High Court cannot be sustained and is accordingly set aside and the order passed by the District Collector, Faridabad which was upheld by the Commissioner, Gurgaon is restored. The respondent is directed to pay the balance stamp duty within four weeks from the date of this judgment, otherwise the appellants would be at liberty to take appropriate steps in accordance with law." (Emphasis Supplied) Same was the view taken by the Supreme Court in its earlier decision reported in (2007) 14 SCC 339 : 2008 (1) LW 705 (State of Rajasthan v. Khandaka Jain Jewellers). In paragraphs 18 to 26 (in SCC) it is held as follows: "18. The contention of the learned counsel for the State that as per Section 17 of the Act, the market value has to be taken into consideration because Section 17 stipulates that all the instruments chargeable with duty and executed by person of India shall be stamped before or “at the time of execution”. The word “execution” has been defined in Section 2(12) of the Act which says that “execution” used with reference to the instruments, mean “signed” and “signature”. Therefore, it shows that the document which is sought to be registered has to be signed by both the parties. Till that time the document does not become an instrument for registration. A reading of Section 2(12) with Section 17 clearly contemplates that the document should be complete in all respects when both the parties should have signed it with regard to the transfer of the immovable property. It is irrelevant whether the matter had gone in for litigation. https://hcservices.ecourts.gov.in/hcservices/ 19. It may be mentioned that there is a difference between an agreement to sell and a sale. Stamp duty on a sale has to be assessed on the market value of the property at the time of the sale, and not at the time of the prior agreement to sell, nor at the time of filing of the suit. This is evident from Section 17 of the Act. It is true that as per Section 3, the instrument is to be registered on the basis of the valuation disclosed therein. But Section 47-A of the Rajasthan (Amendment) Stamp Duty Act contemplates that in case it is found that properties are undervalued then it is open for the Collector (Stamps) to assess the correct market value. Therefore, in the present case when the registering authority found that valuation of the property was not correct as mentioned in the instrument, it sent the document to the Collector for ascertaining the correct market value of the property. 20. The expression “execution” read with Section 17 leaves no manner of doubt that the current valuation is to be seen when the instrument is sought to be registered. The Stamp Act is in the nature of a taxing statute, and a taxing statute is not dependent on any contingency. Since the word “execution” read with Section 17 clearly says that the instrument has to be seen at the time when it is sought to be registered and in that if it is found that the instrument has been undervalued then it is open for the registering authority to enquire into its correct market value. The learned Single Judge as well as the Division Bench in the present case had taken into consideration that the agreement to sell was entered into but it was not executed. Therefore, the incumbent had to file a suit for seeking a decree for execution of the agreement and that took a long time. Therefore, the courts below concluded that the valuation which was in the instrument should be taken into account. In our opinion this is not a correct approach. Even the valuation at the time of the decree is also not relevant. What is relevant in fact is the actual valuation of the property at the time of the sale. The crucial expression used in Section 17 is “at the time of execution”. Therefore, the market value of the instrument has to be seen at https://hcservices.ecourts.gov.in/hcservices/ the time of the execution of the sale deed, and not at the time when agreement to sale was entered into. An agreement to sell is not a sale. An agreement to sell becomes a sale after both the parties sign the sale deed. A taxing statute is not contingent on the inconvenience of the parties. It is needless to emphasise that a taxing statute has to be construed strictly and considerations of hardship or equity have no role to play in its construction. ........... 21. The same view was expressed by Hon’ble Bhagwati, J. in A.V. Fernandez v. State of Kerala. The