C. Gnanasekaran vs The Inspector General Of ...

on 5 August, 2010

Madras High Court Madras High Court C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010 DATED : 5-8-2010 CORAM THE HONOURABLE MR.JUSTICE N.PAUL VASANTHAKUMAR W.P.Nos.35439,35449 of 2004, 7937 of 2005 & 12161 of 2007 W.P.No.35439 of 2004 C. Gnanasekaran ... Petitioner Vs 1. The Inspector General of Registration, Santhome High Road, Chennai 600 028.

2. The Special Deputy Collector (Stamps), O/o.The Collectorate, Thanjavur District. 3. The Sub Registrar, Tarangambadi, Mayiladuthurai Taluk, Nagapattinam District. ... Respondents (Cause Title regarding R-3 amended as per order of the Court dated 25.7.2005 in W.P.M.P.No.7918 of 2005) PRAYER: This writ petition is filed under Article 226 of the Constitution of India with a prayer to issue a writ of certiorarified mandamus calling for the records relating to the proceedings made in Tha.Pa.No.1041/2004/A2, dated 4.8.2004 issued by the second respondent and quash the same and forbear the second respondent from proceeding with the enquiry. W.P.No.35449 of 2004 C. Gnanasekaran ... Petitioner Vs 1. The Inspector General of Registration,
Indian Kanoon - http://indiankanoon.org/doc/101857/ 1

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

Santhome High Road, Chennai 600 028.

2. The Special Deputy Collector (Stamps), O/o.The Collectorate, Thanjavur District. 3. The Sub Registrar, Sembanarkoil, Mayiladuthurai Taluk, Nagapattinam District. ... Respondents PRAYER: This writ petition is filed under Article 226 of the Constitution of India with a prayer to issue a writ of certiorarified mandamus calling for the records relating to the proceedings made in Tha.Pa.No.650/2004/A2, dated 17.5.2004 issued by the second respondent and quash the same and forbear the second respondent from proceeding with the enquiry. W.P.No.7937 of 2005 C.T.Senthilnathan Chettiar ... Petitioner Vs. Joint Sub Registrar No.1, Office of the District Registrar, Chennai Central, Chennai 600 018. ... Respondent

PRAYER: This writ petition is filed under Article 226 of the Constitution of India with a prayer to issue a writ of mandamus directing the respondent to register and release the sale deed document No.1205 of 2004 by accepting the stamp duty and registration fees at the prescribed rates on the value reflected in the document presented on 23.8.2004 for registration and consequently forbear from demanding stamp duty and registration fees on the basis of the guidelines valuation. W.P.No.12161 of 2007 K. Geetha ... Petitioner Vs. 1. The State of Tamil Nadu rep.by its Secretary to Government,
Indian Kanoon - http://indiankanoon.org/doc/101857/ 2

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

Revenue Department, Fort St.George, Chennai. 2. Inspector General of Registration, Office of the Inspector General of Registration, Registration Department, No.120, Santhome High Road, Santhome, Chennai 4.

3. The Special Deputy Collector (Stamps), District Collectorate Office V Floor, M.Singaravelar Maligai, No.32, Rajaji Salai, Chennai -1. 4. The Sub Registrar, Purasawalkam Registrar's Office, Perambur Barracks Road, Chennai 11. ... Respondents

PRAYER: This writ petition is filed under Article 226 of the Constitution of India with a prayer to direct the 4th respondent to return the sale deed dated 15.3.2001 registered as Document No.1478/2001 without insisting on payment of further stamp duty of Rs.28,925/- and registration charges of Rs.2,225/- and also refund the excess stamp duty of Rs.31,070/- paid by the petitioner. For Petitioner in : Mr.G.Ethirajulu W.P.Nos.35439 & 35449/2004 For Petitioner in : Mr.R.Ravi W.P.No.7937/2005 For Petitioner in : Ms.Jayashree W.P.No.12161/2007
Indian Kanoon - http://indiankanoon.org/doc/101857/ 3

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

For Respondents in all : Mr.P.S.Raman, the writ petitions Advocate General, assisted by Ms.Pushpa Menon, G.A., Mr.R.Murali, G.A., COMMON ORDER The brief facts necessary for disposal of these writ petitions are as follows: (a) The petitioner in W.P.No.35439 of 2004 is that the petitioner entered into a sale agreement on 18.11.1998 with one Raju and Lakshmi to purchase the land to an extent of 0.04 cents, comprised in Survey No.413/5, Thirukadayur Village, Tranqubar Taluk. The vendor refused to execute the sale deed. Hence the petitioner filed a suit in O.S.No.11 of 2002 before the Principal Sub Court, Myladuthurai, for specific performance of the agreement. The said suit was decreed on 4.3.2002. After filing execution petition, the learned Subordinate Judge executed the sale deed on 30.3.2004 in terms of the decree and the same was registered as Document No.147/2004 on the file of the Sub Registrar, Sembanarkoil. The third respondent returned the document after registration by stating that after due inspection he will return the document and thereafter the registration having been made by not paying the proper market value, on the basis of the report sent by the third respondent, the second respondent initiated proceedings under Section 47A of the Indian Stamp Act, 1899, by serving notice on 4.8.2004, against which this writ petition is filed. (b) In W.P.No.35449 of 2004 the petitioner entered into sale agreement on 18.11.1998 with one Rahamathunnisa to purchase the land with an extent of 0.14 cents in S.No.157/1, Authur, Shakizar Street, Chidambaram Koil Pathu, Tranqubar and as the vendor refused to execute sale deed, petitioner filed O.S.No.11 of 2002 on the file of Principal Sub Court, Mayiladuthurai for specific performance of the agreement dated 18.11.1998 and the said suit was decreed on 4.3.2002. In spite of passing the decree in favour of the petitioner, the vendor did not execute the sale deed. Therefore the sale deed was executed through Court on 18.3.2004 as Document No.256/2004 on the file of the Sub Registrar, Sembanarkoil, Mayiladuthurai. After the registration of the document the same was not given to the petitioner and the second respondent issued a notice on 17.5.2004 calling upon the petitioner to submit explanation as to why he should not be called upon to pay a sum of Rs.15,448/- being difference of stamp duty. In the said notice the value of the said property was valued at Rs.3,33,066/-. Hence this writ petition. (c) Petitioner in W.P.No.7937 of 2005 was a partner in a partnership firm by name M/s.Gaity Theatre. The subject matter of the land is an extent of 13 grounds and 1908 sq.ft., comprised in R.S.No.3289 bearing Door No.1/L, Blackers Road, Mount Road, Chennai-2, belonging to a wakf called "The Hajee Sir Ismail Sait Wakf Estate". The land owner namely the Wakf filed a civil suit in C.S.No.311 of 1989 before this Court and prayed for ejecting the tenant viz., M/s.Gaity Theatre from the said land. After receipt of the summons the tenant viz., the partnership firm filed an application in A.No.4447 of 1992 under Section 9(1)(a)(i) of the Tamil Nadu City Tenants Protection Act and prayed for a direction to the lessor to sell the lands to the firm based on its possession. The said ejectment suit was later on transferred to the City Civil Court, Chennai, and renumbered as O.S.No.3397 of 1997 and the application filed under section 9 of the Tamil Nadu City Tenants Protection Act was renumbered as I.A.No.18943 of 1998. The partnership firm subsequently became a proprietory concern and the petitioner became the sole proprietor based on a family arrangement. A memo of compromise was entered into between the petitioner and the land owner and based on the compromise memo, the application filed under section 9(1)(a)(i) was allowed and a decree was passed in the said suit on 6.7.2000 directing the land owner to sell the aforesaid land at the rate of Rs.27,50,000/- per ground. The land owner thereafter executed a sale deed in favour of the petitioner on 23.8.2004, which was registered as Document No.1205 of 2004. The respondent issued a notice and directed the petitioner to pay 60% of the differential stamp duty under the Samadhan Scheme. Being aggrieved by the issuance of notice,
Indian Kanoon - http://indiankanoon.org/doc/101857/ 4

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

the petitioner has filed this writ petition. (d) W.P.No.12161 of 2007 is filed by the petitioner seeking refund of alleged excess stamp duty of Rs.31,070/- by contending that a sale deed was executed in her favour pursuant to the decree made in O.S.No.3585 of 1984 on the file of the City Civil Court, Chennai, for specific performance and in E.P.No.3099 of 1996 based on an agreement dated 2.9.1983. The sale deed was executed on 15.3.2001 and registered as Document No.1478 of 2001 on the file of the Sub Registrar Office, Purasawalkam, Chennai-11. The 4th respondent refused to deliver the original sale deed and impounded the same and fixed the value at Rs.5,11,423/- and ascertained the additional stamp duty of Rs.66,495/- and directed to pay differential stamp duty of Rs.28,925/- and registration fee of Rs.2,225/-. The petitioner paid Rs.37,570/- and the value of the property according to the petitioner being Rs.50,000/- she is liable to pay only Rs.6,500/- and therefore she is claiming refund of Rs.31,070/-. 2. The above said prayers made in these writ petitions are opposed by the respondents by contending that merely because the sale deeds were executed pursuant to the decree for specific performance or otherwise, the stamp duty payable by the petitioners as per the market value on the date of registration is mandatory and the value of the property mentioned in the sale agreement or in the decree is immaterial as the petitioners are bound to pay stamp duty on the basis of the market value on the date of presentation of the document for registration. 3. The learned counsels for the petitioners submitted that the petitioners obtained sale deeds pursuant to the civil court decrees and got the sale deeds executed through Courts. Therefore there cannot be any suppression or under valuation in the documents, which was registered pursuant to Civil Court decrees. The learned counsels further submitted that the notices issued for initiation of action under Section 47A are without any material and also without recording any satisfaction and therefore the impugned orders are to be set aside. Insofar as the demand to avail Samadhan Scheme in one of the writ petition, which is the subject matter of challenge is concerned, the learned counsel for the petitioner submitted that the respondents cannot compel the petitioner to avail the Samadhan Scheme as they are not entitled to demand any higher stamp duty as the registration was made pursuant to the Court order. The learned counsel for the petitioner in W.P.No.12161 of 2007 prayed for refund of the stamp duty collected beyond the valuation mentioned in the document. The learned Counsels heavily relied on the decisions of the Supreme Court reported in (2009) 7 SCC 730 : 2009 (3) LW 236 (V.N.Devadoss v. Chief Revenue Control Officer-cum-Inspector); the Full Bench decision of this Court reported in 2008 (1) LW 47 (G.Karmegam v. The Joint Sub Registrar); and the Division Bench decisions of this Court reported in 2008 (6) CTC 759 (Hindustan Petroleum Corporation Ltd. v. The Inspector General of Registration) and (2009) 5 MLJ 391 (Government of Tamil Nadu v. S.Jayalakshmi). 4. The learned Advocate General submitted that merely because the sale deeds were executed pursuant to the orders of the Civil Court, the petitioners cannot avoid payment of correct stamp duty i.e., the market value of the property as on the date of its presentation for registration. The market value of the property was not the issue decided by the Civil Court and the State cannot sustain any loss towards stamp duty payable by the purchasers merely because there is a compromise entered into between the parties or on the basis of decree obtained by the purchasers in specific performance suits. The learned Advocate General also submitted that the value of the property mentioned in the documents would not always reflect the correct market value of the property and therefore the respondents are justified in initiating action under Section 47A of the Indian Stamp Act, 1899, to arrive at the correct valuation of the property and the stamp duty payable. The learned Advocate General cited a judgment of the Supreme Court reported in (2010) 4 CTC 350 (State of Haryana v. Manoj Kumar) in support of his contentions. Insofar as not recording of satisfaction by the Collector of Stamps is concerned, the learned Advocate General submitted that the matters may be remitted to issue fresh notice to the petitioners. 5. I have considered the rival submissions made by the respective learned counsels for the petitioners as well as learned Advocate General for the respondents.

Indian Kanoon - http://indiankanoon.org/doc/101857/

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

6. The point for consideration in these writ petitions is whether the petitioners are entitled to contend/object the initiation of section 47A proceedings under the Indian Stamp Act, 1899, and demand refund of the stamp duty already paid. 7. In all the above four cases the sale deeds were executed pursuant to the orders of the Civil Court. The sale deeds were executed in the year 2004. The valuation of two properties were made on the basis of the agreement dated 11.11.1998 (W.P.Nos.35439 & 35449 of 2004); Compromise Memo dated 6.7.2000 insofar as W.P.No.7937 of 2005; and Agreement dated 27.11.1983 as far as W.P.No.12161 of 2007. Thus, it is beyond doubt that the documents registered are on the basis of the valuation agreed between the parties long earlier, in three cases 20 years earlier and in one case four years earlier. 8. Section 47-A of the Indian Stamp Act, 1899, reads as follows: "47-A. Instruments of conveyance etc., under-valued 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. (2) On receipt of a reference under sub-section (1), the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner as may be prescribed by rules made under this Act, determine the market value of the property which is the subject matter of conveyance, exchange, gift, release of benami right or settlement and the duty as aforesaid. The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty. (3) The Collector may, suo motu or otherwise, within five years from the date of registration of any instrument of conveyance, exchange, gift, release of benami right or settlement not already referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject matter of conveyance, exchange, gift, release of benami right or settlement and the duty payable thereon and if after such examination, he has reason to believe that the market value of the property has not been truly set forth in the instrument, he may determine the market value of such property and the duty as aforesaid in accordance with the procedure provided for in sub-section (2). The difference, if any in the amount of duty, shall be payable by the person liable to pay the duty." Whether the said agreed amount is the correct market value on the date of presentation of the document for registration or not can be verified by the Registering Officer and if he has got any doubt he can make reference for determination of the correct market value under section 47A of the Indian Stamp Act, 1899. 9. In the decision reported in (2010) 4 SCC 350 (State of Haryana v. Manoj Kumar) similar issue was considered by the Honourable Supreme Court and the Supreme Court set aside the order of the High Court, which interfered with the orders of the authorities under the Indian Stamp Act, 1899. In paragraphs 29 to 35 the Supreme Court held thus, "29. ............ The High Court erroneously observed that the the authenticity of the decree passed by the court cannot be questioned. Therefore, the genuineness of the sale price has to be presumed . This finding of the High Court cannot be sustained. It would have far-reaching ramifications and consequences. If the genuineness of the sale price entered into by the buyer and the seller cannot be questioned, then in majority of the cases it is unlikely that the State would ever receive the stamp duty according to the circle rate or the Collector rate. The approach of the High Court is totally unrealistic. 30. The High Court in the impugned judgment has also erroneously observed that there cannot be any opportunity with the vendee to fabricate an agreement of sale for showing the incorrect sale price because the litigating parties would not ordinarily reach such an agreement and sign the fabricated document .
Indian Kanoon - http://indiankanoon.org/doc/101857/ 6

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

31. The High Court gravely erred in not properly comprehending the facts of this case in proper perspective and which has led to grave miscarriage of justice. 32. It is not disputed that the commercial plot of 788 sq yd located at Delhi-Mathura Road, Village Mewla Maharajpur, Faridabad was valued by the circle rate at Rs.4200 per square yard fixed by the Collector of Faridabad meaning thereby that after the notification, no sale deed can be registered for an amount lesser than Rs.4200 per square yard. It may be pertinent to mention that, in order to ensure that there is no evasion of stamp duty, circle rates are fixed from time to time and the notification is issued to that effect. The issuance of the said notification has become imperative to arrest the tendency of evading the payment of actual stamp duty. It is a matter of common knowledge that usually the circle rate or the Collector rate is lower than the prevalent actual market rate but to ensure registration of sale deeds at least at the circle rates or the Collector rates such notifications are issued from time to time by the appellants. 33. In the impugned judgment, the High Court has not properly construed the observations of the District Collector, Faridabad in which he has clearly stated as under: It appears that the suit has been filed in the civil court and decree passed with the intention to avoid tax and stamp duty to be paid to the Government, because when the respondent had paid entire sale consideration to the vendor, then he should have got the sale deed also executed at that time, whereas the same has not been done. Therefore, keeping into consideration the above facts, I come to this conclusion that Sale Deed No. 11200 dated 9-2-2001 has been executed in respect of land measuring 788 sq yd situated in Village Mewla Maharajpur, which abuts Delhi-Mathura Road. This plot is commercial and this fact has been concealed by the respondent. The sale deed had been registered for less value. The market value of the land in dispute as per Collector rate is Rs.33,09,600 on which a total stamp duty of Rs.5,13,050 was payable whereas the respondent has affixed stamp duty of Rs.31,000. In this manner on the above deed, the stamp duty of Rs.4,82,050 is payable, which is ordered to be recovered from the respondent in accordance with law. 34. This order was upheld by the Commissioner. The High Court while exercising its jurisdiction under Article 227 has set aside the orders passed by the District Collector, Faridabad and upheld by the Commissioner, Gurgaon without any basis or rationale. Apart from the jurisdiction, even what is factually stated in the order of the District Collector, Faridabad as upheld by the Commissioner, Gurgaon is unexceptionable and any interference was totally unwarranted. 35. In the facts and circumstances of the case, the impugned judgment of the High Court cannot be sustained and is accordingly set aside and the order passed by the District Collector, Faridabad which was upheld by the Commissioner, Gurgaon is restored. The respondent is directed to pay the balance stamp duty within four weeks from the date of this judgment, otherwise the appellants would be at liberty to take appropriate steps in accordance with law." (Emphasis Supplied) Same was the view taken by the Supreme Court in its earlier decision reported in (2007) 14 SCC 339 : 2008 (1) LW 705 (State of Rajasthan v. Khandaka Jain Jewellers). In paragraphs 18 to 26 (in SCC) it is held as follows: "18. The contention of the learned counsel for the State that as per Section 17 of the Act, the market value has to be taken into consideration because Section 17 stipulates that all the instruments chargeable with duty and executed by person of India shall be stamped before or at the time of execution . The word execution has been defined in Section 2(12) of the Act which says that execution used with reference to the instruments, mean signed and signature . Therefore, it shows that the document which is sought to be registered has to be signed by both the parties. Till that time the document does not become an instrument for registration. A reading of Section 2(12) with Section 17 clearly contemplates that the document should be complete in all respects when both the parties should have signed it with regard to the transfer of the immovable property. It is irrelevant whether the matter had gone in for litigation.

Indian Kanoon - http://indiankanoon.org/doc/101857/

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

19. It may be mentioned that there is a difference between an agreement to sell and a sale. Stamp duty on a sale has to be assessed on the market value of the property at the time of the sale, and not at the time of the prior agreement to sell, nor at the time of filing of the suit. This is evident from Section 17 of the Act. It is true that as per Section 3, the instrument is to be registered on the basis of the valuation disclosed therein. But Section 47-A of the Rajasthan (Amendment) Stamp Duty Act contemplates that in case it is found that properties are undervalued then it is open for the Collector (Stamps) to assess the correct market value. Therefore, in the present case when the registering authority found that valuation of the property was not correct as mentioned in the instrument, it sent the document to the Collector for ascertaining the correct market value of the property. 20. The expression execution read with Section 17 leaves no manner of doubt that the current valuation is to be seen when the instrument is sought to be registered. The Stamp Act is in the nature of a taxing statute, and a taxing statute is not dependent on any contingency. Since the word execution read with Section 17 clearly says that the instrument has to be seen at the time when it is sought to be registered and in that if it is found that the instrument has been undervalued then it is open for the registering authority to enquire into its correct market value. The learned Single Judge as well as the Division Bench in the present case had taken into consideration that the agreement to sell was entered into but it was not executed. Therefore, the incumbent had to file a suit for seeking a decree for execution of the agreement and that took a long time. Therefore, the courts below concluded that the valuation which was in the instrument should be taken into account. In our opinion this is not a correct approach. Even the valuation at the time of the decree is also not relevant. What is relevant in fact is the actual valuation of the property at the time of the sale. The crucial expression used in Section 17 is at the time of execution . Therefore, the market value of the instrument has to be seen at the time of the execution of the sale deed, and not at the time when agreement to sale was entered into. An agreement to sell is not a sale. An agreement to sell becomes a sale after both the parties sign the sale deed. A taxing statute is not contingent on the inconvenience of the parties. It is needless to emphasise that a taxing statute has to be construed strictly and considerations of hardship or equity have no role to play in its construction. ........... 21. The same view was expressed by Hon ble Bhagwati, J. in A.V. Fernandez v. State of Kerala. The principle is as follows: (AIR p.661, para 29) 9. in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. 22. .... if we construe Section 17 read with Section 2(12) then there is no manner of doubt that at the time of registration, the registering authority is under an obligation to ascertain the correct market value at that time, and should not go by the value mentioned in the instrument. 23. Learned counsel for the respondent submitted that if we construe Section 3 read with Section 27 of the Act then the registering authority is under an obligation to only see the value mentioned in the instrument. In our opinion Section 3 which is the charging section cannot be read in isolation but has to be read along with Section 17 of the Act. From a composite reading of Sections 3, 17 and 27, it becomes abundantly clear that the valuation given in an instrument is not conclusive. If any doubt arises in the mind of the registering authority that the instrument is undervalued then as per Section 47-A of the Rajasthan (Amendment) Act the instrument can be sent to the Collector for determination of the correct market value. Under Section 47-A read with Sections 3, 17 and 27, it becomes clear that the registering authority has to ascertain the correct valuation given in the instrument regarding market value of the property at the time of the sale.
Indian Kanoon - http://indiankanoon.org/doc/101857/ 8

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

24. ........... A taxing statute has to be construed as it is; all these contingencies that the matter was under litigation and the value of the property by that time shot up cannot be taken into account for interpreting the provisions of a taxing statute. As already mentioned above a taxing statute has to be construed strictly and if it is construed strictly then the plea that the incumbent took a long time to get a decree for execution against the vendor that consideration cannot weigh with the court for interpreting the provisions of the taxing statutes. Therefore, simply because the matter has been in the litigation for a long time that cannot be a consideration to accept the market value of the instrument when the agreement to sale was entered. As per Section 17, it clearly says at the time when registration is made, the valuation is to be seen on that basis. 25. In Sub-Registrar, Kodad Town and Mandal the learned Single Judge of the Andhra Pradesh High Court felt persuaded on account of 30 years long litigation and, therefore, declined to send the papers back to the Collector for valuation at the market value. With great respect, the view taken by the learned Single Judge is against the principles of interpretation of a taxing statute. Therefore, we are of the opinion that the view taken by the learned Single Judge of the Andhra Pradesh High Court is not correct. 26. Accordingly, we are of the opinion that the view taken by the learned Single Judge as well as by the Division Bench cannot be sustained and the same is set aside. The Collector shall determine the valuation of the instrument on the basis of the market value of the property at the date when the document was tendered by the respondent for registration, and the respondent shall pay the stamp duty charges and surcharge, if any, as assessed by the Collector as per the provisions of the Act. The appeal of the State is allowed. No order as to costs." (Emphasis Supplied) 10. The decision of the Supreme Court relied on by the learned counsel for the petitioners, reported in (2009) 7 SCC 730 : 2009 (3) LW 236 (V.N.Devadoss v. Chief Revenue Control Officer-cum-Inspector) is factually distinguishable as the sale in the said case was conducted by way of public auction by fixing an upset price and therefore undervaluation of the property cannot be presumed. Here the facts are entirely different as sale was not effected in none of these cases after conducting public auction with competing bidders. 11. Applying the above cited other two judgments of the Supreme Court to the facts of these cases, which are identical in all respects, I am of the view that the contentions made by the learned counsels for the petitioners cannot be sustained and there is no legal impediment to initiate proceedings under Section 47-A of the Indian Stamp Act, 1899, even if the said sale deeds are executed pursuant to Civil Court decrees or executed through the Civil Court in execution proceedings. 12. The second point urged by the learned counsel for the petitioner in W.P.Nos.35439 and 35449 of 2004 is that the impugned notices do not reflect the application of mind and no reason is stated for initiating action under section 47A of the Indian Stamp Act, 1899, and therefore the said proceedings are initiated by non-application of mind, hence the same are vitiated. The files relating to these cases were produced before this Court for perusal and the files reveal that no reason is recorded before issuing the impugned orders insofar as W.P.Nos.35439 and 35449 of 2004 are concerned. 13. In answer to the said contention, the learned Advocate General submitted that action was initiated under Section 47-A in time and even if any defect is there for not recording reasons, the same is a curable defect as the action was initiated in the year 2004 itself for the document registered in the year 2004. Petitioners in both the cases challenged the said notices in the year 2004 and prevented the respondents from proceeding further all these years. Hence they are not entitled to contend that at this distance of time, the respondents cannot be given liberty to proceed afresh. 14. The recording of reason for initiating proceedings under Section 47-A of the Stamp Act is mandatory is also well settled. In the Full Bench decision reported in 2008 (1) LW 47 (G.Karmegam v. The Joint Sub Registrar), wherein I was also a party, it is held that the registering authority is expected to give reasons for his conclusion for undervaluation of a document however short that may be and refer the document for correct
Indian Kanoon - http://indiankanoon.org/doc/101857/ 9

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

valuation within a reasonable time and on receipt of the reference the Collector shall follow the procedures and determine the market value and the same is payable by the party, who is liable to pay the same. In the decision reported in 2008 (6) CTC 759 (Hindustan Petroleum Corporation Ltd. v. The Inspector General of Registration) the Division Bench of this Court in para 10 held as follows: "10. On a perusal of the provisions of Section 47-A of the Stamp Act, as amended by the Tamil Nadu, it is manifest that these provisions empower the Registering Authority, while registering any instrument of conveyance to refer the matter to the Collector for determination of market value of the property and the proper duty payable on the instrument if the Registering Authority has reason to believe that market value of the property which is the subject-matter of such instrument has not been rightly set forth in the instrument. The object of the provision is only to neutralise the effect of under-valuation of property with a view to evading payment of stamp duty. The condition precedent for making a reference is, there must be reason for the Registering Authority to believe that the market value of the property has not been truly set forth in the document presented for registration and hence it must follow that the reasons must be recorded, however short it may be. ......." (Emphasis Supplied) The Registering Officer has no jurisdiction to refuse registration of any document. Paragraphs 7 and 8 of the Full Bench decision reported in 2008 (1) LW 47 (G.Karmegam v. The Joint Sub Registrar) reads as follows: "7. Registration of document is a sine qua non for referring the matter to the Collector, if the registering officer believes that the property is undervalued. No jurisdiction has been conferred on the registering officer to refuse registration, even if the document is undervalued. Besides, there is no authority for him to call upon the person concerned to pay additional stamp duty. Collector is the prescribed authority to determine the market value, after affording a reasonable opportunity of hearing the parties. The registering officer cannot make a roving enquiry to ascertain the correct market value of the property by examining the parties. However, it is expected that he has to give reasons for his conclusion for undervaluation, however short they may be. He can neither delay nor refuse registration of the instrument, merely because the document does not reflect the real market value of the property. In order to reach a conclusion, there is no bar for the registering officer to gather information from other sources, including official or public record. Valuation guidelines, prepared by the revenue officials periodically, are intended with an avowed object of assisting the registering officer to find out prima facie, whether the market value set out in the instrument has been set forth correctly. 8. The provision does not provide for any time limit for referring the instrument to the Collector, for determination of market value. However, the Section, while indicating the function of the registering officer, proceeds that after registering such instrument, he may refer the same to the Collector for determination of the market value of such property. It is conspicuous that the Section does not at all prescribe any time limit for referring the document to the Collector. (emphasis supplied) " The case reported in (2009) 5 MLJ 391 (Government of Tamil Nadu v. S.Jayalakshmi), though relates to suo motu power exercised by the Collector, the Division Bench in para 28 held as follows: "28. A perusal of the impugned order and the counter affidavit filed by the second and third respondents wold reveal that the documents have already been registered and in pursuant to objections raised by the Local Audit in its reports 3/99 and 6/99 respectively, demand of additional stamp duty was made on the basis of the market value on the date of the registration of the sale deed. No doubt sub-section 3 of Section 47-A clothe the Collector the suo motu power within 5 years from the date of registration of the any instrument of conveyance etc., not already referred to him under sub-section (1) of Section 47-A to call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of the property which is the subject matter of the conveyance etc., and the duty payable thereon and if after such examination, has reason to believe that the market value of the property has not been truly set forth in the instrument, he may determine the market value of the said property and the duty as aforesaid in accordance with the procedure provided for in sub-section (2) of Section 47-A of the Indian Stamp Act and the difference, if any, in the amount of duty, shall be payable by the persons liable to pay the duty. In the case on hand, a perusal of the impugned orders would reveal that the appellants herein has failed to take into consideration any material nor
Indian Kanoon - http://indiankanoon.org/doc/101857/ 10

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

any material was placed before them to arrive at a conclusion that the market value of the property conveyed to the allottees under the respective deeds of sale has not been truly set forth and that no reasons have been recorded that the allottees had fraudulently evaded the payment of stamp duty." (Emphasis Supplied) In the decision reported in AIR 1997 Madras 296 (S.P.Padmavathi v. State of Tamil Nadu) in para 12 the Division Bench held thus, "Power under Section 47A of the Act can only be exercised when the Registering Office has reason to believe that the market value of the property, which is the subject of conveyance has not been truly set forth, with a view to fraudulently evade payment of proper stamp duty. Mere lapse of time between the date of agreement and the execution of the document will not be the determining factor that the document is undervalued and such circumstance by itself is not sufficient to invoke the power under Section 47-A of the Act, unless there is lack of bona fides and fraudulent attempt on the part of the parties to the document to undervalue the subject of transfer with a view to evade payment of proper stamp duty......" (Emphasis Supplied) Thus, recording reasons for initiation of proceedings under Section 47-A of the Indian Stamp Act, 1899, is no longer a debatable issue, as it is a mandatory requirement for initiation of proceedings either by reference by the Registering Authority or by the Collector, while exercising suo motu power. 15. The next issue remains to be decided is that whether the learned Advocate General is justified in seeking liberty to proceed afresh. It is an admitted fact that at the instance of the petitioners only the proceedings could not be proceeded further though the same was initiated on 4.8.2004 and 17.5.2004 respectively, by the Collector of Stamps. The records were called for by this Court on 3.12.2004 itself and the matter is pending before this Court for all these years. Therefore the respondents cannot be blamed for the delay in completing the proceedings. Action having been initiated within six months there is no delay on the part of the respondents. 16. Action of the Court shall not prejudice any person is a recognised principle of law. (a) In the decision reported in 2008 (8) Supreme 773 (O.P.Marwaha (D) through LRs v. Jagdish Lal Marwaha (D) through LRs) the Supreme Court considered the said issue and in para 11 held as follows: "11. In support of his submission, Mr.Iyer firstly referred to a decision of a Three Judge Bench of this Court in Jang Singh v. Brij Lal (AIR 1966 SC 1631) wherein this Court was called upon to consider whether a litigant should suffer on account of the lapse made by an officer of the Court. Applying the well known maxim, actus curiae neminem gravabit that an act of Court should do no harm to a litigant, this Court held that the mistake should be rectified by the Court and the parties relegated to the position on the date when the mistake occurred. ........" (b) Same was the view taken by the Supreme Court in the decisions reported in (2003) 3 SCC 272 (Sardar Amarjit Singh Kalra v. Pramod Gupta) and (2003) 8 SCC 648 (South Eastern Coalfields Ltd v. State of M.P.). (c) In the decision reported in AIR 2009 SC 2577 : (2009) 13 SCC 192 (State of Karnataka v. Y.Moideen Kunhi) the Supreme Court held that duty of the Court is to protect public justice and if in a given case it is established that the official failed to discharge his duty, the Court is bound to condone the delay even if the delay is for several years for the sake of public interest. Thus, the learned Advocate General is justified in seeking liberty to proceed afresh in these cases. 17. The following conclusion are arrived at and the issues are answered thus: (a) The Registering Authority or the Collector of Stamps can initiate action to verify whether the valuation of the deed is as per the market value on the date of presentation of the document for registration, even if the document is presented pursuant to a decree, provided the sale was made not through public auction, and if there is reason to believe that there is undervaluation of document
Indian Kanoon - http://indiankanoon.org/doc/101857/ 11

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

registered. (b) The Registering Authority or the Collector, who initiate action shall record his satisfaction for initiating action under Section 47-A of the Indian Stamp Act, 1899. (c) If the action is initiated within a reasonable time or within the statutory period, which could not be completed due to intervention of the Court, liberty can be granted to proceed afresh in compliance of the provision viz., Section 47-A of the Indian Stamp Act, 1899. 18. Based on the above conclusions, the writ petitions are disposed of as follows: (i) W.P.Nos.35439 and 35449 of 2004 are disposed of and the impugned notices therein are set aside with liberty to the respondents to issue fresh notice in terms of Section 47-A of the Indian Stamp Act, 1899, as expeditiously as possible on receipt of a copy of this order and proceed afresh, in accordance with law. (ii) As the petitioner in W.P.No.7937 of 2005 is not willing to avail Samadhan Scheme, it is open to the respondent/Officer concerned to proceed expeditiously and finalise the action already initiated under section 47A of the Indian Stamp Act, 1899, in accordance with law. If the petitioner is willing to pay the 60% amount with 9% interest per annum from the last date of Samadhan Scheme, the respondent is bound to accept the same in terms of the impugned order. The said rate of interest is ordered taking note of the non-payment of 60% of differential amount by the petitioner all these years. (iii) In view of the findings rendered with regard to the liability of the petitioners to pay stamp duty on the basis of the market value on the date of presentation of the document for registration, the prayer made in W.P.No.12161 of 2007 seeking refund of the amount already paid cannot be sustained and the said writ petition is dismissed. (iv) There will be no order as to costs. vr To 1. The Secretary to Government, Revenue Department, Fort St.George, Chennai. 2. The Inspector General of Registration, Santhome High Road, Chennai 600 028.

3. The Special Deputy Collector (Stamps), O/o.The Collectorate, Thanjavur District. 4. The Sub Registrar, Tarangambadi, Mayiladuthurai Taluk, Nagapattinam District. 5. The Sub Registrar, Sembanarkoil, Mayiladuthurai Taluk, Nagapattinam District.
Indian Kanoon - http://indiankanoon.org/doc/101857/ 12

C. Gnanasekaran vs The Inspector General Of ... on 5 August, 2010

6. The Joint Sub Registrar No.1, Office of the District Registrar, Chennai Central, Chennai 600 018.

7. The Special Deputy Collector (Stamps), District Collectorate Office V Floor, M.Singaravelar Maligai, No.32, Rajaji Salai, Chennai -1. 8. The Sub Registrar, Purasawalkam Registrar's Office, Perambur Barracks Road, Chennai 11

Indian Kanoon - http://indiankanoon.org/doc/101857/

13