IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID MONDAY, THE 9TH JUNE 2008 / 19TH JYAISHTA 1930 CRP.No. 2058 of 2002() ---------------------- CMA.10/2000 of DiSTRICT COURT, ERNAKULAM .................... REVN. PETITIONER: ------------------ KAVITHA THEATRE, M.G.ROAD, ERNAKULAM A REGISTERED FIRM REPRESENTED BY ITS MANAGING PARTNER, E.M.JOHNY BY ADV. SRI.P.R.VENKETESH SRI.ABRAHAM GEORGE JACOB RESPONDENTS: ---------------- 1. THE DISTRICT REGISTRAR (AUDIT), ERNAKULAM. 2. THE SUB REGISTRAR, ERNAKULAM. BY ADVOCATE GENERAL FOR R1 & R2 GOVERNMENT PLEADER FOR R1 & R2 SRI.V.K.BEERAN, ADDL.ADVOCATE GENERAL THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON 09/06/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ORDER IN C.M.P NO. 5070 OF 2002 IN C.R.P. NO. 2058 OF 2002 DISMISSED 09.06.2008 SD/- HARUN-UL-RASHID, JUDGE HARUN-UL-RASHID, J. ------------------------------------------ C.R.P No. 2058 of 2002 ------------------------------------------- Dated this the 9th day of June 2008 ORDER This Civil Revision Petition is filed by the appellant in C.M.A No. 10/2000 on the file of the District Court, Ernakulam The Order under challenge in the said appeal is the order passed by the District Registrar (Audit) Ernakulam in the proceedings initiated under Section 45 B of the Kerala Stamp Act 1959. The learned Judge after considering the matter elaborately, set aside the order and directed the Registrar to continue the proceedings against the revision petitioner by passing a fresh provisional order under Rule 4 in accordance with law. 2. The District Registrar (Audit) Ernakulam by the order dated 13.10.1999 by invoking Section 45 B of the Kerala Stamp Act 1959 held that the consideration shown in document No. 3781/1998 executed by the vendor in favour of the revision petitioner is undervalued and he has to pay deficit stamp duty of Rs. 2,60, 37450/- and a deficit registration fee of Rs. 3,85, 7400/-. This order was set aside in appeal and the appellate court further directed the District Registrar to pass a revised provisional order. 3. The dispute in this revision petition relates to the registration of a sale document in respect of a cinema theatre by name and style Kavitha Theatre which is located in the heart of Ernakulam City . For the C.R.P No. 2058 of 2002 -2- last 32 years the the theatre which carrying on the business of exhibiting cinematographic films was being run as a proprietary concern. According to the revision petitioner the proprietary business was converted into a partnership business with effect from 14.8.1998 as per partnership deed dated 14.8.1998. The 1st partner out of nine partners is the original owner of the said theatre before the execution of the said deed. According to the revision petitioner the property brought in by the 1st partner ceased to be his property and it became a partnership property under section 14 of the Indian Partnership Act. According to the revision petitioner the partnership firm is in exclusive possession and enjoyment of the property. The firm was registered before the Registrar of firms Thiruvananthapuram under Section 58(i) of the Indian Partnership Act 1932. 4. It is submitted by the revision petitioner that the 1st partner who is the original owner of the partnership firm retired from the partnership firm with effect from 18.10.1998 and thereafter the firm was re-constituted by the remaining partners and they have inducted another person as a new partner. According to revision petitioner , though the property changed the character and becomes a property of the partnership firm, the nominal jenmom right as per revenue records stand in the 1st partner's name and that in order to effect mutation and to C.R.P No. 2058 of 2002 -3- change the name of the original owner in the revenue records a document was executed as document No. 3781/1998 for a total consideration of Rs. 1,00,000/- According to the revision petitioner the property once it is pooled into the partnership assets the original owner as the 1st partner of the partnership firm had lost his title over the property and from 14.8.1998, the property becomes the absolute property of the partnership firm. It is also submitted by him that only for the purpose of making suitable changes of entries in the revenue records document No. 3781/1998 was executed by fixing a total consideration of Rs. 1,00,000/- . 5. The District Registrar (Audit) Ernakulam on a perusal of the document No,. 3781/1998 finds that the property is thoroughly undervalued. According to the Registrar the asset conveyed by the said document is Kavitha Theatre plus 88.740 Cents of land in the heart of Ernakulam city which was valued at Rs. 1,00,000/- only. Finding that the determination of the value of the property for the purpose of registration is inadequate and nominal the Registrar initiated proceedings under Section 45 B of the Kerala Stamp Act read with Rule 4 of the Kerala Stamp (Prevention of Undervaluation of Instruments) Rules 1968 . 6. The revision petitioner firm raised objections against the proceedings of the Registrar. According to the revision petitioner the C.R.P No. 2058 of 2002 -4- District Registrar without considering the objections, passed orders fixing a deficit stamp duty of Rs. 2,60,37,450 and a deficit registration fee of Rs. 38,57,400/-. 7. The appellate court held that the partnership agreement is a sham document and that the value of the property cannot be reckoned as Rs. 1,00,000/- The appellate court further held that the District Registrar did not assess the sale consideration correctly in accordance with the principles of Rule 5 of the Kerala Stamp (Prevention of Under valuation of instruments) Rules 1968 The counsel for the revision petitioner submitted that he had produced 11 documents in support of his contentions. But the appellate court did not examine those documents or re-appreciate the evidence and therefore the findings arrived at is not in accordance with Rule 12 of the Kerala Stamp (Prevention of under valuation of Instruments) Rules 1968 It is also submitted by the revision petitioner that the appellate court has no power to remand the case. He referred to Rules 12 of the Kerala Stamp (Prevention of under valuantion of Instruments) Rules, which mandatorily says that the Appellate Authority shall determine the value or consideration and the duty payable on the instrument. According to him the duty to determine the value of the transaction is on the Appellate Authority and the Appellate Authority has no authority to relegate that power to the Registrar. The learned counsel for the revision petitioner contended that the decision of the Appellate court C.R.P No. 2058 of 2002 -5- that the constitution of partnership is with the assignor as a partner on 14.8.1998. the registration of the firm, subsequent retirement of the 1st partner and execution of document No. 3781/1998 are only part of a transparent and calculated attempt with the sole intention of avoiding liability to pay stamp duty to the revenue Department. It is submitted that the said finding is based on no facts and the appellate court has no jurisidction to decide the said question. According to him, the District Court has got jurisdiction to decide whether a particular document is executed by paying correct Stamp duty under the Act or not, and the genuineness of the past transactions done by the existing partners or erstwhile owners in respect of the property, and whether such transactions are genuine or not, are not questions to be adjudicated in the proceedings under Section 45 B of the Kerala Stamp Act and therefore those findings are without jurisdiction. The counsel also submitted that even in the exercise of jurisdiction the District Court failed to go into the actual questions and objectively decided the issue. The reasons stated are only appellate judge's assumptions and imaginations without proof and therefore such findings cannot stand. It is also submitted by the learned counsel for the revision petitioner that since the property has already been conveyed to the partnership firm , the proceedings under Section 45 B is also unsustainable in law Therefore the findings arrived at by the appellate court that the partnership agreement is a sham C.R.P No. 2058 of 2002 -6- agreement with the transparent intention of defeating the interest of the revenue authorities cannot stand. From the facts and circumstances discussed above, I am of the view that all objections raised against the proceedings now initiated by the Registrar shall be considered and a decision shall be taken one by one. Going by the Rules, there is a mandate to the District court to decide the question in accordance with Rule 12 of the Kerala Stamp (Prevention of undervaluation of instruments) Rules. Hence I direct the District Court to decide the case afresh after giving an opportunity to both sides to substantiate their case and to adduce further evidence if any . In the result, the order under challenge in this C..R.P is set aside This C.R.P is partly allowed. There will be no order as to costs. HARUN-UL-RASHID, JUDGE es