Judgment:
ORDER
1. Sri N.K. Ramesh, learned Additional Government Advocate is directed to take notice for respondent.
2. The Karnataka Industrial Areas Development Board ('KIADB' for short) a statutory Body executed a deed of sale dated 29-8-1996 (Annexure-B) in favour of the petitioner in regard to a plot of land allotted to the petitioner as per terms and conditions contained in the lease-cum-sale agreement dated 4-6-1985 (Annexure-A). The petitioner presented the said deed for registration before the Jurisdictional Sub-Registrar. The Sub- Registrar having registered the document, being of the opinion that the property was undervalued, made a reference to the respondent under Section 45-A of the Karnataka Stamp Act, 1957 ('Act' for short). In pursuance of it, the respondent (District Registrar) has initiated proceedings under Section 45-A for determination of market value and has passed a provisional order dated 29-4-1997 (Annexure-D) proposing to determine the market value as Rs. 61,53,671/-, as against the sale priceof Rs. 4,07,018/-.
3. The petitioner contends that as the sale deed is executed by a statutory authority, the question of suppression of true price or under valuation, does not arise and therefore, initiation of under valuation proceedings in regard to such a sale is without jurisdiction. The second contention is based on Section 43 of the Karnataka Industrial Areas Development Act, 1966 ('KIAD Act' for short), which reads as follows:
'43. Exemption of Stamp duty and Fees.--No award or agreement or contract made or executed under this Act, or under any rule of regulation made there under shall be chargeable with duty under the Karnataka Stamp Act, 1957, or fees under the Indian Registration Act, 1908'.
Petitioner contends that the deed of sale executed by KIADB in its favour is a 'contract' and having regard to Section 43, no stamp duty is payable in regard to the said deed.
4. In Safeguard Packaging Systems Private Limited v State of Karnataka, this Court has held that the concession extended to Deeds of conveyance executed by EDA, KHB and House Building Co-operative Societies and other Bodies under the proviso to Article 20 of the Schedule to the Act (that is payment of stamp duty only on the consideration mentioned in the deed of sale and not on the market value on the date of sale) has not been extended to sale deeds executed by KIADB; and therefore proceedings regarding under valuation can be initiated in regard to sale deeds executed by KIADB; and the fact that the price mentioned in such deeds of conveyance is the true and correct price paid by the purchaser, has no relevance to the determination of market value on the date of sale, which is the criterion for payment of stamp duty on Deed of conveyance. 'Sale price' or 'consideration for the sale' ceased to be the basis for payment of stamp duty in the case of conveyance. In its place, the 'market value' of the property on the date of sale became the basis for calculating the stamp duty payable on conveyance in view of the Amendment to. Article 20 by the Karnataka Stamp (Amendment) Act, 1975. Therefore proceedings initiated under Section 45-A of the Act in regard to a sale deed executed by KIADB are not without jurisdiction. Hence first contention is rejected.
5. In regard to second contention, it is seen that exemption from payment of stamp duty and the registration charges is granted only in regard to awards, agreements and contracts. The exemption is not extended in regard to conveyances. The contention of the petitioner that conveyance is a 'contract' and therefore stamp duty should not be levied on a sale deed executed by KIADB is untenable.
5.1 Section 54 of Transfer of Property Act, 1882 defines 'sale' as a transfer of ownership in exchange for a price. It also provides that a contract for sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties and it does not, of itself, create any interest in or charge on such property.
5.2 Under the Contract Act, 1872, every promise and every set of promises forming the consideration for each other, is an agreement and an agreement enforceable by law is a contract.
5.3 The term 'contract' is not defined under the Act. A contract is a legally binding agreement between two or more persons which creates an obligation to do or not to do a particular thing. A contract insofar as sales are concerned, for purposes of stamp laws, is a contract to sell or a contract for sale, which is an executory contract. A sale, which is an executed contract, is a conveyance and is not called a 'contract'. The Stamp Act specifies the stamp duty payable on several types of instruments described in the Schedule to the Act. A 'contract' is not an instrument specified in the Schedule to the Act. Article 5 deals with 'Agreement' and Article 20 deals with 'conveyance'. Conveyance includes a sale and every instrument by which property, whether moveable, or immoveable, is transferred inter vivos and which is not otherwise specifically provided for in the Schedule to the Act. Thus the words 'agreement or contract made or executed under the Act or under any rule or regulations made there under' occurring in Section 43 of KIAD Act refer only to agreements and not to conveyances.
6. The question can be answered from another angle also. An instrument can be a contract/agreement and a conveyance. Section 6 of the Act provides that where an instrument comes within two or more of the descriptions in the Schedule and the duties chargeable there under are different, it shall be chargeable only with the highest of such duties. If a deed of sale is a 'contract' and is a 'conveyance', the exemption under Section 43 of the KIAD Act would apply to 'contract' but not apply to the 'conveyance'. Consequently the deed of sale, will not attract Stamp duty as a contract/agreement, but will attract stamp duty as a conveyance. Hence the second contention is also rejected.
7. The petitioner submitted that even if under valuation proceedings are to be initiated, respondent ought to have applied his mind, having regard to the location of the property and other relevant circumstances, as required under Section 45-A of the Act and Rules framed there under; and that in this case, the respondent has not determined the market value by considering the relevant factors and therefore it should be quashed. But the order under challenge is only a provisional order and not a final order. Rules 4, 5 and 6 of the Karnataka Stamp (Prevention of under valuation of Instruments) Rules, 1977 prescribed the procedure to be followed by the Deputy Commissioner. Rules 4(4) and 6 which are relevant are extracted below:
'4(4) After considering the representations, if any, received from the person to whom notice under sub-rule (1) has been issued, and after examining the records and evidence before him the Deputy Commissioner shall pass an order in writing provisionally determining the market value of the properties and the duty payable. The basis on which the provisional market value was arrived at shall be clearly indicated in the order'.
'6. Procedure after arriving at provisional market value.--
The Deputy Commissioner shall communicate a copy of his order provisionally determining the market value of the properties and the duty payable, to all the persons who are liable to pay the duty along with the notice in Form III and call upon the parties to lodge their objections, if any, to such determination of the market value within the time specified in the notice. The Deputy Commissioner shall also hear the parties on the date specified in the notice or on such other day as may be fixed by him and may also proceed ex parte if parties fail to appear after communication of the said notice'.
The petitioner can therefore file its objections to the provisional order and only after considering the objections, final order will be passed by the respondent. Petitioner, if aggrieved by the final order, can file anappeal.
8. In view of the above, the petition is dismissed. However, at the request of petitioner, one month's time is granted to the petitioner to file its objections to the provisional order (Annexure-D) before the respondent. The respondent may also extend the time for filing objections, on the request of the petitioner.
9. Sri N.K. Ramesh is permitted to file memo of appearance in six weeks.