IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.12.2009 CORAM THE HON'BLE MR. JUSTICE P.JYOTHIMANI W.P.Nos.28300 and 28301 of 2007 and M.P.Nos.1 & 2, 2 & 3 of 2007 M/s.Ramjee Leathers & Supplies rep. by its Partner R.Damodaran .. Petitioner in W.P.No.28300 of 2007 M/s.Indian Embroidery Company rep. By its Partner P.Sathish Gandhi .. Petitioner in W.P.No.28301 of 2007 Vs. 1.The Asst. Executive Engineer, Registration Department, O/o. The Deputy Inspector General of Registration, Chennai – 1. 2.The Sub Registrar, Ponneri, Ponneri – 601 204. Thiruvallur District. 3.Inspector General of Registration, 120, Santhome High Road, Chennai -28. .. Respondents in both the W.Ps Petitions under Article 226 of The Constitution of India praying for the issuance of a writ of certiorarified mandamus to call for the records and connected proceedings of the respondents particularly that of the second respondent under ref.Na.Ka.No.62/07 dated 28.06.2007 and quash the same as illegal, invalid and without jurisdiction and consequently direct the respondents to endorse the value of the land and building as stated in the document Nos.5027 and 5026 of 2007 dated 19.04.2007 on the file of the second respondent. For petitioners .. Mr.K.Moorthy in both the W.Ps For respondents .. Mr.P.S.Raman, Advocate General assisted by Mr.R.Murali, https://hcservices.ecourts.gov.in/hcservices/ Govt. Advocate in all the W.Ps COMMON ORDER All these cases are relating to the purchases made and documents registered by virtue of the sale effected by the official liquidator pursuant to the orders passed by the concerned Company Courts. 2.In W.P.No.28300 of 2007, the property measuring an extent of 7.48 acres together with building contained therein situated in Survey Nos.5/8, 5/15, 5/16, 5/20, 6/5, 7/3, 7/5, 7/6, 8/1 to 10 and 9/6, 9/7 at G.N.T. Road, Alinjivakkam Village, Ponneri Taluk was originally owned by M/s.Shree Jagannath Steels Limited incorporated as a company, having its registered office at Hyderabad, Andhra Pradesh. The said company was ordered to be wound up by the High Court of Andhra Pradesh in C.P.No.236 of 1998 by an order dated 07.09.1999 under Section 449 of the Companies Act. It is stated that pursuant to the said winding up order, the Official Liquidator of Andhra Pradesh took possession of the property and he has filed an application in C.A.No.1348 of 2005 in the said C.P.No.236 of 1998 on the file of High Court, Andhra Pradesh for sale of the above said land and building. The High Court of Andhra Pradesh by order dated 12.09.2006, authorised the official liquidator to sell the property of the petitioner company "as is where is" basis by giving advertisements in various news papers. It is stated that publications were effected in news papers and thereafter, the petitioner company has submitted its tender form in the prescribed manner and it was declared as a successful bidder for the composite offer of Rs.2.31 crores by an order of the High Court of Andhra Pradesh dated 27.10.2006 in C.A.No.1348 of 2005 in C.P.No.236 of 1998. The said offer was accepted and the sale was confirmed. The sale notice issued by the Official Liquidator of Andhra Pradesh High Court also denotes the sale offer at the rate of Rs.1.34 crores. Subsequently, after noticing certain disputes regarding a portion of the property, possession was handed over to the petitioner on 02.03.2007 as the total sale consideration has been paid. The Andhra Pradesh High Court has permitted the petitioner to purchase the portion of the property along with the sister concern viz., Indian Embroidery Company and the official liquidator was directed to classify two separate sale deeds, one in favour of the petitioner firm and another in favour of the Indian Embroidery Company and thereafter, a draft sale deed was also given to the official liquidator, which was approved and two sale deeds were executed, one for 3.32 acres as the land and building in favour of the petitioner and the balance for 2.60 acres in favour of Indian Embroidery Company on 19.04.2007 and they were registered as Document Nos.5026 and 5027 of 2007. When the sale deed was presented for registration, as insisted by the second respondent, Annexure Form 1A was also filed and the document registration number was given as 5026 and 5027 of 2007 respectively. Despite the registration of the documents, the https://hcservices.ecourts.gov.in/hcservices/ second respondent failed to release the documents. After repeated representations, the second respondent has passed the impugned order directing the payment of deficit stamp duty to the extent of Rs.1,17,950/- relating to both the documents and the same is challenged. 3.W.P.No.28301 of 2007 is filed by M/s.Indian Emboridery Company, who has purchased other portion of the property as stated above and the same was registered as Document No.5026 of 2007 on 19.04.2007 on the file of the second respondent/Sub Registrar. 4.In these cases, the common issue that has been raised by the learned counsel is that inasmuch as the sales have been effected at the supervision of this Court either the High Court of Madras or the High Court of Andhra Pradesh exercising the power under Companies Act, there is no question of any suppression of valuation. In fact, as per the Court order, the amount for which the property has been purchased in the public auction in the Court have been deposited in the Court and the High Court has confirmed the sale, based on which, the official liquidator has executed the sale deeds. 5.In such view of the matter, the contention of the learned counsel for the petitioners in these cases is that there is no suppression of the valuation and therefore Section 47A of Indian Stamp Act would not apply. He has also relied upon latest judgment of the Supreme Court in V.N.Devadoss Vs. Chief Revenue Control Officer cum Inspector and Others ((2009) 7 SCC 438) to substantiate the contention that for the purpose of invoking jurisdiction under Section 47A of the Act, the transfer must be for a fraudulent intention to evade payment of proper stamp duty. Therefore, according to the learned counsel, when once the sale has been effected under the supervision of the High Court, there is no question of any fraudulent intention to evade the payment of proper stamp duty and therefore, the entire proceedings under Section 47A are to be nullified. 6.On the other hand, Mr.P.S.Raman, learned Advocate General would submit that while it is true that the Supreme Court in the judgment rendered in V.N.Devadoss Vs. Chief Revenue Control Officer cum Inspector and Others (cited supra) has held that for the purpose of having jurisdiction under Section 47A, there must be a wilful and wanton intention. According to the learned Advocate General, Section 47A nowhere refers to the intention aspect of the parties in purchasing the properties for the purpose of undervaluation or evasion of stamp duty. When the stamp duty paid in an instrument has not disclosed the true value of the property in the mind of the registering authority, it is open to the registering authority to invoke his power under Section 47A. Therefore, according to the learned Advocate General, the aspect of intention is not required for the purpose of undervaluation under Section 47A. https://hcservices.ecourts.gov.in/hcservices/ 7.On the admitted facts and circumstances of the case, the cases are to be decided only based on the latest judgment of the Supreme Court referred to above, wherein, the Apex Court while dealing with the powers and jurisdiction of the registering authority under Section 47A (1) and 3 of the Tamil Nadu Amendment Act, 1967 has held that under Section 47(A) (1) and (3) the intention of the legislature should have been that while deciding about the cases where the market value of the property has not been truly set out in the instrument, the basis of the powers to be exercised by the registering authority should be to find out as to whether there is a wilful undervaluation or otherwise. It was held by the Apex Court unless there is a fraudulent intention to evade proper stamp duty, there is no power on the part of the registering authority to invoke jurisdiction under Section 47A. In fact, the Supreme Court has held about the market value which is changing concept and in cases where the property was offered for sale in an open market and bids were invited and in that case as per the direction of BIFR on the basis of the value fixed by the Assets Sales Committee, it was held that there was no possibility of any undervaluation and therefore the applicability of Section 47A was held invalid. 8.Some of the observations and findings of the supreme court which are relevant for the purpose of deciding these cases are as follows: "13.Sub-sections (1) and (3) of Section 47-A clearly reveal the intention of the legislature that there must be a reason to believe that the market value of the property which is the subject matter of the conveyance has not been truly set out in the instrument. It is not a routine procedure to be followed in respect of each and every document of conveyance presented for registration without any evidence to show lack of bona fides of the parties to the document by attempting fraudulently to undervalue the subject of conveyance with a view to evade payment of proper stamp duty and thereby cause loss to the revenue. Therefore, the basis for exercise of power under Section 47A of the Act is wilful undervaluation of the subject of transfer with fraudulent intention to evade payment of proper stamp duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.Market value is a changing concept. The explanation to sub-rule (5) makes the position clear that (sic market) value would be such as would have fetched or would fetch if sold in the open market on the date of execution of the instrument of conveyance. Here, the property was offered for sale in the open market and bids were invited. That https://hcservices.ecourts.gov.in/hcservices/ being so, there is no question of any intention to defraud the revenue or non-disclosure of the correct price. The factual scenario as indicated above goes to show that the properties were disposed of by the orders of BIFR and AAIFR and that too on the basis of value fixed by Assets Sales Committee. The view was expressed by the Assets Sales Committee which consisted of members such as representatives of IDBI, debenture-holders, Government of West Bengal and Special Director of BIFR. That being so, there is no possibility of any undervaluation and therefore, Section 47-A of the Act has no application. It is not correct as observed by the High Court that BIFR was only a mediator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.On the facts of the case it cannot be said that Section 47A has any application because there is no scope for entertaining a doubt that there was any undervaluation. That being so, the High Court's order is clearly unsustainable and is set aside. The registration shall be done at the price disclosed in the document of conveyance. There is no scope for exercising power under Section 47A of the Act as there is no basis for even entertaining a belief that the market value of the property which is the subject matter of conveyance has not been truly set forth with a view to fraudulently evade payment of proper stamp duty." 9.Even though it is the vehement contention of the learned Advocate General that under Section 47A, nowhere the term intention of the parties to evade payment has been used and therefore, the word intention is not the necessary ingredient for the purpose of invoking jurisdiction under Section 47A. The Apex Court in no uncertain term has made it clear that the undervaluation should be with a fraudulent intention so as to enable the registering authority to invoke power under Section 47A. A bare reading of Section 47A is as follows: "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 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." https://hcservices.ecourts.gov.in/hcservices/ 10.The term used is that the registering authority should have reason to believe that the market value has not been truly setforth in the instrument and there is no specific mention about the wilful intention or fraudulent intention of the parties. There may be cases where the parties with wilful intention of evading payment of proper stamp duty may give undervaluation. But it cannot be stated especially in the light of the judgment of the Supreme Court that aspect has not been considered. In fact as elicited above in para 13 of the said judgment the Supreme Court has considered about the market value truly set out in the instrument and ultimately it was decided that the basis for exercise of powers under Section 47A is wilful undervaluation of the property which is the subject matter of transfer with fraudulent intention to evade payment of proper stamp duty. 11.In such view of the matter, the contention of the learned Advocate General to the contra is not acceptable. Based on the judgment of the Supreme Court, the writ petitions are allowed and the impugned orders are set aside with a direction to the registering authority to release the documents concerned within a period of four weeks from the date of receipt of a copy of this order. No costs. Consequently, connected miscellaneous petitions are closed. 12.In W.P.No.28301 of 2007, the petitioner is stated to have paid the amount demanded by the registering authority for availing loan and therefore he has filed an application in M.P.No.1 of 2008 for amendment of the prayer which includes a direction against the second respondent to refund the excess stamp duty of Rs.64,767/- collected from the petitioner vide Receipt Nos.133 and 200857. The respondents are directed to refund the excess stamp duty said to have been paid by the petitioner. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar mmi To 1.The Asst. Executive Engineer, Registration Department, O/o. The Deputy Inspector General of Registration, Chennai – 1. https://hcservices.ecourts.gov.in/hcservices/ 2.The Sub Registrar, Ponneri, Ponneri – 601 204. Thiruvallur District. 3.The Inspector General of Registration, 120, Santhome High Road, Chennai -28. 2 cc To Mr.K.Moorthy, Advocate, SR.70530. 1 cc To The Government Pleader, SR.70799. W.P.Nos.28300 and 28301 of 2007 SP(CO) RVL 19.01.2010 https://hcservices.ecourts.gov.in/hcservices/