CWP No. 8034 of 2011 -1- In the High Court for the States of Punjab and Haryana at Chandigarh CWP No. 8034 of 2011(O&M) Date of decision: 21.11.2011 Amritsar Property Dealers Association, Majitha Road, Amritsar ...... Petitioner Versus State of Punjab & others ...... Respondents Coram: Hon’ble Mr. Justice M.M. Kumar Hon'ble Mr. Justice Rajiv Narain Raina **** Present : Mr. Parminder Prashar, Advocate for Mr. N.K. Banka, Advocate for the petitioner. Mr. Suvir Sehgal, Addl. A.G., Punjab. **** 1. To be referred to the reporters or not ? 2. Whether the judgment should be reported in the digest? Rajiv Narain Raina,J. 1. Price fixation is normally a matter beyond judicial review. The Court is ill equipped to consider issues of valuation of stamp duty to be levied on the registration of documents under the Indian Stamp Act, 1899. Circle Rates of properties are required to be updated with changing times and market prices. It is the business of the authorities enforcing the provisions of the Indian Stamp Act, 1899 or the Punjab Stamp (Dealing with Undervalued Instruments) Rules, 1983 (for brevity '1983 Rules') to levy appropriate stamp duty on registration of sale deeds to plug revenue loss. In this petition filed under Articles 226/227 of the Constitution of India by the Amritsar Property Dealers’ Association, the fixation of circle rates of properties in Amritsar has been questioned and the Association has CWP No. 8034 of 2011 -2- consequently impugned the notification dated 31.3.2011 (P6). The Deputy Commissioner acting as Collector, Amritsar has revised/ amended the Collector Rates in exercise of powers under Rule 3-A of the 1983 Rules to bring them close to ground realities commensurate with the phenomenal rise in the value of properties. This exercise has been carried out for the year 2011-12. The impugned communication refers to the Government notification dated 23.8.2002 amending Rule 3-A. The complaint of the association is that the stamp duty is excessive and that the business of the association is suffering badly. It is stated in para 14 of the petition that ordinary residents are not able to get their properties registered and people are resorting to other avenues like buying properties through power of attorneys etc. which have caused loss to the revenue of the Government. Amritsar is said to be divided into two parts for collection of revenue and registration of documents (sale deeds) i.e. Tehsil Amritsar-I and Tehsil Amritsar-2. An example has been given in the petition that in the Hall Gate area of Amritsar City if the minimum Collector Rate is Rs. 55000/- per square yard for the purpose of stamp duty, the same rate is applicable in the narrower street in the market where the value of the shop is far less than in the area of Hall Gate Amritsar. It has been further contended that no expert Committee was constituted as required under Rule 3-A of the notification dated 23.8.2002 issued under the 1983 Rules. There was no involvement of the Gram Panchayat or any other department in the decision making process. 2. In the reply by way of affidavit of the Deputy Commissioner, Amritsar, it has been pointed out that the revision and fixation of rates have been made area-wise and not market-wise. It is said that the rates cannot be fixed by considering the exact location of each and every property. Violation of procedure laid down in Rule 3-A of the 2002 notification CWP No. 8034 of 2011 -3- pleaded in the petition is denied that no expert committee was constituted by 4th respondent, or that there was no consultation with Gram Panchayat and other departments. 3. We have heard the learned counsel for the parties at length. 4. We find no legitimate ground to quash the notification dated 23.8.2002 (P2) issued in exercise of powers conferred under Sections 47-A and 75 of the Indian Stamp Act, 1899 making the First Amendment Rules, 2002 to the 1983 Rules. The amended Rules lay down various price determination factors to be kept in mind in case of agricultural land and non-agricultural land, building, gardens etc. The amended provisions say that these factors are indicative but not exhaustive. Collector Rates once fixed are to be revised by the Collector once a year and as far as possible in the month of March and to be effective from 1st April of each year or after one month of its fixation and such fixation would be notified across board to all concerned including the implementing revenue authorities. The Collector Rates as fixed or revised as the case may be shall be deemed to be price which the property would have fetched if sold in public auction. Therefore, it can be said that the Collector Rate is the auction price. Moreover the adoption of power of attorney as a device to avoid payment of revenue would no longer be available as Hon'ble the Supreme Court in a recent judgment dated 11.10.2011 rendered in Special Leave Petition (Civil) No. 13917 of 2009 titled Suraj Lamp & Industries Pvt. Ltd. V. State of Haryana has held that sale of immovable properties through Power of Attorneys commonly called 'General Power of Attorney Sales' through the medium of Sale Agreement/General Power of Attorney/Will transfers are kinds of transactions evolved to avoid prohibitions/conditions regarding certain transfers, to avoid payment of stamp duty and registration charges on deeds of conveyance, to avoid payment of capital gains on CWP No. 8034 of 2011 -4- transfers, to invest unaccounted money ('black money') and to avoid payment of 'unearned increases' due towards Development Authorities on transfer. Recourse to such methods has been castigated in the following words :- “Whatever be the intention, the consequences are disturbing and far reaching, adversely affecting the economy, civil society and law and order. Firstly, it enables large scale evasion of income tax, wealth tax, stamp duty and registration fees thereby denying the benefit of such revenue to the government and the public. Secondly, such transactions enable persons with undisclosed wealth/income to invest their black money and also earn profit/income, thereby encouraging circulation of black money and corruption. This kind of transactions has disastrous collateral effects also. For example, when the market value increases, many vendors (who effected power of attorney sales without registration) are tempted to resell the property taking advantage of the fact that there is no registered instrument or record in any public office thereby cheating the purchaser. When the purchaser under such `power of attorney sales' comes to know about the vendors action, he invariably tries to take the help of musclemen to `sort out' the issue and protect his rights. On the other hand, real estate mafia many a time purchase properties which are already subject to power of attorney sale and then threaten the previous `Power of Attorney Sale' purchasers from asserting their rights. Either way, such power of attorney sales indirectly lead to growth of real estate mafia and criminalization of real estate transactions.” It also makes title verification and certification of title, which is an integral part of orderly conduct of transactions relating to immovable property, difficult, if not impossible, giving nightmares to bonafide purchasers wanting to own a property with an assurance of good and marketable title.” CWP No. 8034 of 2011 -5- 5. This puts paid to the anxiety of the petitioning property dealers association of resort being had to property buying through power of attorneys or such devices. 6. We do not find anything illegal or arbitrary in any action of the Collector, Amritsar in fixing minimum Collector Rates of properties and the stamp duty to be levied on their sale. In our considered view there is no merit in this petition and the challenge to the notification dated 23.8.2002 (P2) is rejected. 7. Dismissed. (M.M.KUMAR) (RAJIV NARAIN RAINA) JUDGE JUDGE November 21, 2011 ‘sp’