Case: V.N. Devadoss Vs. Chief Rev. Control Officer-Cum-Ins

3. The controversy lies within a very narrow compass.According to the appellant, an extent of 60.86 acres of land comprised in S. Nos. 330, 338, 473, 552 etc. situate at Ambattur Taluk, Tiruvallur District, which was previously owned by Dunlop India Limited, a Public Limited Company. The said Company became a sick industry and was declared so under the Provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (in short `1985 Act) Consequent to such declaration, for the purpose of rehabilitation, surplus properties and assets belonging to the said company were sought to be disposed of by the statutory authorities under the said Act such as Board For Industrial and Financial Reconstruction (BIFR) and Appellate Authority for industrial andFinancial Reconstruction (AIFR) by forming an Asset Sales Committee (ASC) consisting of members such as representatives of IDBI, Debenture Holders, Government of West Bengal and Special Director of BIFR. In compliance with the guidelines issued by the statutory authorities (BIFR & AIFR), the ASC made publications in Newspapers about its proposal to sell the above mentioned 60.86 acres of lands and invited tenders in sealed covers from interested persons. The appellant submitted his tender along with others and his offer of Rs.24,34,40,000/-, at the rate of Rs.40 lakh per acre, was the highest. Accordingly, his tender was accepted by the ASC as well as by the statutory authorities. The company was granted permission to execute the sale deed in favour of the appellant.It is the further case of the appellant that on receipt of the entire sale consideration of Rs.24,34,40,000/- from him, the said company executed a sale deed dated 17.06.2004, registered as Document. No.6939/2004 on the file of the Sub Registrar, Ambattur. The sale is not in between two private individuals, on the other hand, it is a sale in consonance with the conditions laid down under the 1985 Act. In such circumstances, one could visualize that there could be no question of any possibility of under valuation of the property warranting the proceedings under Section 47-A of the Act. Further, the sale was found to be valid in WP No.25962 of 2004 filed by the Dunlop Factory Employees Union.A reference was made by the Sub Registrar, Ambattur, to the second respondent District Revenue Officer (DRO) in respect of the sale transaction, based on which, the second respondent initiated proceedings under Section 47-A of the Act resulting in issuance of notice dated 18.08.2004 in Form No.1 of Rule 4 of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 (in short `Rules), calling upon the appellant to state his objections with regard to fixation of the market value of the property at Rs.154,69,88,168/- as against the sum of Rs.24,34,40 000/- for which sum, the property was purchased; and to show cause as to why he should not be called upon to pay the balance stamp duty of a sum of Rs.10,42,83,856/-.Apart from explaining and setting out the circumstances under which he purchased the property, the appellant also questioned the jurisdiction of the authorities to invoke Section 47-A of the Act. It is the specific case of the appellant that without affording personal hearing, the second respondent by order dated 11.04.2005, confirmed the market value of the land as Rs.465/- per sq. ft. and called upon him to pay the additional stamp duty. Aggrieved by the order of the second respondent, the appellant preferred an appeal before the first respondent on 13.04.2005. On 08.02.2006, the first respondent rejected his appeal, confirming the market value of the property as Rs.465/per sq, ft. The first respondent also directed the appellant to pay interest at the rate of 2% per month towards the demand made by the authorities. Aggrieved over the same, the appellant filed the appeal before the High Court under Section 47-A (10) of the Act.The High Court took the view that it was not a case of sale by the government or a transaction between the government organizations/bodies. It was held that statutory authorities like BIFR and AIFR acted as facilitators and, therefore, it was held that there was no scope for a different view to be taken regarding the market value and for this limited purpose the matter was remanded to the original authority for passing an appropriate order.

Court's reasoning:
7. A bare perusal of the rules make the position clear that sub-Rule (4) enumerates procedure on receipt of reference under Section 47-A. Rule 5 speaks about the principles for determination of market value. Sub-clause (a) refers to lands; (b) house sites; (c) buildings and (d) properties other than lands, house sites and buildings. 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 under value 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 47-A of the Act is willful under valuation of the subject of transfer with fraudulent intention to evade payment of proper stamp duty.8. In the instant case the factual scenario shows that the vendors of the appellant i.e. M/s Dunlop India Limited became a sick industry and was declared so under the provisions of 1985 Act. Consequent upon such declaration, surplus properties and assets belonging to the said company were disposed of on the basis of orders passed by BIFR and AIFR by forming an Assets Sales Committee.Market value is a changing concept. The explanation to sub-Rule (5) makes the position clear that 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 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 AIFR and that too on the basis of value fixed by ASG. The view 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 under valuation 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.