IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.T.SANKARAN FRIDAY, THE 22ND FEBRUARY 2008 / 3RD PHALGUNA 1929 CRP.No. 2341 of 2002 AGAINST THE ORDER DATED 05.09.2002 IN CMA.NO.20/2000 OF THE DISTRICT COURT, ERNAKULAM ARISING FROM THE ORDER DATED 10.1.2000 OF THE DISTRICT REGISTRAR (AUDIT), ERNAKULAM. REVN. PETITIONERS: APPELLANTS: 1. SMT.ALAMMA CHACKO, WIFE OF LATE K.C.CHACKO, BUSINESS, PETER VILLA, AIKKARANAD SOUTH VILLAGE, KUNNATHUNAD TALUK. 2. I.T.H. & COMPANY, C.C.NO.46/9635, M.G.ROAD, COCHIN-35, THRIKKANARVATTOM DESOM, ERNAKULAM VILLAGE, A REGISTERED FIRM REPRESENTED BY ITS MG.PARTNER SUNNY K.PETER. BY ADV. SRI.V.M.KURIAN SRI.A.V.THOMAS SRI.MATHEW B. KURIAN SRI.K.T.THOMAS RESPONDENTS: RESPONDENTS: 1. THE DISTRICT REGISTRAR (AUDIT), ERNAKULAM. 2. THE SUB REGISTRAR, ERNAKULAM. BY GOVERNMENT PLEADER SRI.S.DILEEP THIS CIVIL REVISION PETITION HAVING BEEN FINALLY HEARD ON 19/02/2008, THE COURT ON 22/02/2008, PASSED THE FOLLOWING: C.M.P.NO.5844/2002 IN C.R.P.NO.2341/2002 DISMISSED 22/02/2008 SD/- K.T.SANKARAN, JUDGE //TRUE COPY// AHZ/ K.T.SANKARAN, J. -------------------------------------------- C.R.P. NO. 2341 OF 2002 G -------------------------------------------- Dated this the 22nd February, 2008 O R D E R The petitioners challenge in this Revision the judgment dated 5.9.2002 in C.M.A.No.20 of 2000, on the file of the Court of the District Judge of Ernakulam, by which the court below allowed the appeal in part and set aside the order dated 10.1.2000 passed by the District Registrar (Audit), Ernakulam under Section 45(B) of the Kerala Stamp Act. The grievance of the petitioners is that the appeal filed by them was not allowed in full by the court below. 2. The second petitioner is a registered firm, namely, I.T.H. & Company. The partnership runs hotel business under the name and style “International Hotel” at Ernakulam. The first petitioner is one of the partners of the second petitioner firm. The contention of the petitioners, inter alia, are the following: Late K.C.Chacko, husband of the first petitioner, was carrying on the hotel business as a proprietary concern. On 1.4.1966, a partnership was formed in which K.C.Chacko and two other persons were partners. The property in question, namely, 72 cents of land in Sy.No.412/3 of Ernakulam Village, was brought in as the capital of K.C.Chacko in the firm. That property was acquired by K.C.Chacko as per sale deed Nos.326/1959 and 2645/1963, Sub Registrar's Office, C.R.P. NO.2341 OF 2002 :: 2 :: Ernakulam. The other two partners contributed cash as their capital. All the three persons were having equal shares in the net profit and loss of the firm. Since 1.4.1966 the firm became the owner of the property in question. Improvements were made and buildings were constructed in the property investing the funds of the firm. The jenm right of the property was purchased by the firm from the Jenmi in the year 1996. Basic tax was being paid by the firm in the firm name. The property ceased to be the property of K.C.Chacko and it became the property of the firm. 3. K.C.Chacko died on 3.12.1978. The firm was reconstituted on 14.12.1978. The first petitioner was taken in as a partner. In 1998, the legal heirs of K.C.Chacko partitioned the properties as per partition deed No.5246 of 1998, Sub Registrar's Office, Puthencruz. The nominal right of K.C.Chacko in the property in question was allotted to the share of the first petitioner, widow of K.C.Chacko. The nominal right of the first petitioner was transferred by gift deed No.2850 of 1999, valuing the same at Rs.One lakh. 4. It is stated that the first respondent, District Registrar, issued a notice dated 4.8.1999 to the first petitioner under Rule 4 of the Kerala Stamp (Prevention of Undervaluation of Instruments) Rules, 1968, wherein it was stated that the proper stamp duty would be Rs.13,36,500/- C.R.P. NO.2341 OF 2002 :: 3 :: and that a registration fee of Rs.1,98,000/- would be payable. Objections were filed by the first petitioner. It is alleged that without considering the objections, the first respondent issued a provisional order under Section 45(B) of the Kerala Stamp Act. In the said order value of the property was fixed at Rs.15,66,05,000/- and the stamp duty and registration fee payable were shown as Rs.2,11,28,175/- and Rs.31,30,100/- respectively. Objections were filed by the first petitioner. The first respondent passed an order dated 10.1.2000 confirming the provisional order. The order dated 10.1.2000 was challenged by the petitioners in C.M.A.No.20 of 2000, on the file of the District Court, Ernakulam. Learned District Judge disposed of the appeal by judgment dated 5.9.2000 setting aside the order passed by the District Registrar and directing the District Registrar to pass a fresh provisional order in accordance with law and in the light of the observations contained in the judgment. The judgment rendered by the court below is under challenge in this Revision. 5. Learned District Judge rejected the contention raised by the petitioners that there is no market value at all for the right transferred under the gift deed No.2850/1999. The court below held that even the petitioners had accepted that there is market value for C.R.P. NO.2341 OF 2002 :: 4 :: the property and it was assessed at Rs.One lakh. Therefore, it was held that there is no merit in the contention raised by the petitioners that there is no market value at all for the right transferred under the gift deed. The court below also rejected the contention raised by the learned Government Pleader that gift deed in question is not a bona fide one. It was also held that the property in question was the contribution of late K.C.Chacko as his capital in the firm. It was further held that for the gift deed, stamp duty had to be paid ad valorem on the value of the property transferred. It was held that the value of the property was not correctly ascertained. The court below held that the District Registrar had not followed the procedure under Rules 4 and 5 of the Kerala Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 and that it is impossible to ascertain the basis on which the District Registrar came to the conclusion that the value of the right transferred under the gift deed was Rs.15,66,05,000/-. On these findings, the order passed by the District Registrar was set aside and he was directed to pass a fresh provisional order in accordance with Rule 5. The District Registrar was directed to afford an opportunity to the petitioners to make their submissions against the provisional order and to pass a considered C.R.P. NO.2341 OF 2002 :: 5 :: order under Section 45(B) of the Kerala Stamp Act. 6. The contentions raised by the petitioners are the following: a) There is no undervaluation. b) There is no conveyance/transfer of the property as per the document in question and what is transferred is only the nominal jenm right. c) The property was already owned by the partnership and it was in the possession of the firm. d) The value was correctly shown in the document. In the proceedings under Section 33, it was found that the value was correctly stated in the document and, therefore, a different conclusion is not possible thereafter. e) After 1.4.1966, K.C.Chacko had no ownership or possession over the property under Section 14 of the Indian Partnership Act. The court below was not right in holding that the first petitioner had rights in the partnership property including the property in question. What was gifted was only the right which remained with late K.C.Chacko. f) At the time of transfer, the transferor, namely, the first petitioner, had no title or right over the property. g) The instrument is not a conveyance. C.R.P. NO.2341 OF 2002 :: 6 :: h) On retirement, a partner ceased to have any right or interest in the property and his right is only to recover what is due on settlement of accounts. Therefore, at the time when the document in question was executed, the first petitioner had no right or interest over the property. i) What was sought to be transferred was the nominal right of the first petitioner, her name being there in the Revenue records and other official records, so as to make the assignee's name to be entered in the official records. j) The court below should have allowed the appeal in its entirety and should have set aside the entire proceedings of the District Registrar. 7. The learned Government Pleader, on the other hand, contended that the order passed by the District Registrar is a legal and proper one. It was also submitted by the learned Government Pleader that the finding of the court below that the landed property was contributed as the capital of the firm by K.C.Chacko is not correct on the face of the partnership deed. He also submitted that the document in question is not a bona fide transaction and that stamp duty and registration fee are payable on the market value of the property. On dissolution of the firm, the property of the partnership would vest in all the C.R.P. NO.2341 OF 2002 :: 7 :: partners of the firm and a partner can assign his rights in the firm to any one. However, the transferee is not entitled to be a partner in the firm. On a transfer so made by a partner in the property of the firm, the value of such interest transferred shall be the market value of his due share for the purpose of stamp duty and registration fee. The property was undervalued to evade payment of stamp duty and registration fee. 8. After carefully considering the contentions raised by the parties, the order and judgment, as well as the records of the case, I am of the view that the direction issued by the learned District Judge to consider the matter afresh was only legal and proper. I agree with the reasoning and conclusion made by the learned District Judge that there was infraction of Rules 4 and 5 and that the procedure was not properly followed by the District Registrar. However, I am of the view that the learned District Judge should have directed the District Registrar to consider all the contentions raised by both the parties afresh. Whether the property in question became the partnership property, whether the value shown in the document is legal and proper, whether the transaction is genuine and whether only the nominal rights were transferred as contended by the petitioners are all matters forming a series of circumstances which should be considered while deciding the case. I am of the view that the learned District Judge need not have arrived at a finding that the property was not C.R.P. NO.2341 OF 2002 :: 8 :: properly valued in the document and that the property was transferred to the firm as capital of late K.C.Chacko. These findings are also vacated. The entire case is remanded for fresh consideration by the District Registrar. The District Registrar shall consider all the objections and contentions raised by both the parties and dispose of the case afresh. The District Registrar shall pass a reasoned order touching upon all the contentions raised by both the parties. In the result, the Civil Revision Petition is allowed in part and the judgment impugned is set aside in so far as it relates to the concluded findings rendered by the learned District Judge except those which are confirmed as per this order. It is made clear that the finding that the District Registrar had not complied with the procedural formalities and that there was no proper disposal of the case by the District Registrar is confirmed. The direction to pass a fresh provisional order as indicated in paragraph 10 of the judgment impugned and the other directions in paragraph 10, are also confirmed. The District Registrar shall dispose of the matter afresh in the manner indicated above. No order as to costs. (K.T.SANKARAN) Judge ahz/ K.T.SANKARAN, J. ------------------------------------------- ------------------------------------------- C.R.P.NO. 2341 OF 2002 G O R D E R 22nd February, 2008 -------------------------------------------