Kailash Rani Vs. State of U.P. and Others - Court Judgment

SooperKanoon Citationsooperkanoon.com/1172420
CourtAllahabad High Court
Decided OnApr-11-2014
Case NumberWrit C No. 33711 of 2001
JudgeSUDHIR AGARWAL
AppellantKailash Rani
RespondentState of U.P. and Others
Excerpt:
sudhir agarwal, j. 1. heard sri b.b. jauhari, learned counsel for the petitioner and learned standing counsel for the respondents. 2. the petitioner is aggrieved by order dated 25.07.2000 passed by additional collector (finance and revenue), shahjahanpur determining deficiency of stamp of rs. 1,35,000/- on the instrument of sale executed by petitioner in respect of property in dispute, whereagainst petitioner's revision has also been dismissed by commissioner, bareilly mandal, bareilly vide order dated 06.06.2001. 3. it is contended that the house in question was a double story building while only ground floor was mentioned in sale deed and instead of determining total value of property in dispute by adding value of second floor, the additional collector on conjectures and surmises has held that total rental value of house may be rs. 6,500/- and the rate of land must be determined treating it to be rs. 2000/ per square meter, on the basis of circle rate, applicable to mohalla civil lines, (second category) and thereupon it has determined value without giving any reason as to why said value would apply for accommodation in question. it has also not determined market value of property in question, in accordance with section 47-a of indian stamp act, 1899 (hereinafter referred to as the "act, 1899") read with u.p. stamp (valuation of property) rules, 1997 (hereinafter referred to as the "1997 rules"). 4. a bare perusal of aforesaid orders clearly show that instead of complying with the requirement of section 47-a of act, 1899 the respondents have proceeded in a very strange manner and treating the circle rate to be conclusive and final document as also assumed rate of rent stated by tehsildar, has passed impugned order simply on the ground that petitioner could not lead evidence to show otherwise. this approach on the part of respondents is patently illegal and it does not confirm the requirement of section 47-a. 5. it goes without saying that proceedings under section 47-a(4) can be initiated only when there exists a ground that correct market value has not been set forth in the instrument. the collector first of all has to determine true market value on the date when instrument was executed and only then he can determine, whether there is any deficiency of stamp or not. this determination of market value does not depend on the fancy, imagination and conjectures of collector or any other competent authority. 6. it is rightly contended that under the provisions of act, 1899 stamp duty is payable on the market value of property in transaction of sale deed. it is also true that market value does not mean circle rate itself but it is only a guiding factor. the collector has to determine market value taking into account various factors. in the case in hand the collector has simply referred to circle rate and in a mechanical way, passed impugned orders. 7. the question, as to what would be a market value came to be considered by a division bench of this court in kaka singh vs. additional collector and district magistrate (f and r), air 1986 all. 107 and it held: "we are inclined to think that the object of the amending act being to avoid large scale evasion of stamp duty, it is not meant to be applied in a matter of fact fashion and in a haphazard way. market value itself as we already mentioned, is a changing factor and will depend on various circumstances and matters relevant to the consideration. no exactitude is in the nature of things possible. in working the act, great caution should be taken in order that it may not work as an engine of oppression. having regard to the object of the act, we are inclined to think that normally the consideration stated as the market value in a given instrument brought for registration should be taken to be correct unless circumstances exist which suggest fraudulent evasion." 8. with regard to procedure for determining market value and the relevant provisions the situation was slightly different upto 1997 but thereafter the legislature has made certain attempt to lay down guidelines also for revenue to determine market value. 9. under section 47-a of the act the obligation is on collector to find out correct market value of property which is alleged to have not been mentioned in the instrument. for the purpose of determining market value no machinery as such is provided in statutory provisions. however, a procedure has now been provided in rules, 1997 in accordance whereto the collector would determine market value. rule 7 thereof reads as under: "7. procedure on receipt of a reference or when suo motu action is proposed under section 47-a.--(1) on receipt of a reference or where action is proposed to be taken suo motu under section 47-a, the collector shall issue notice to parties to the instrument to show cause within thirty days of the receipt of such notice as to why the market value of the property set forth in the instrument and the duty payable thereon be not determined by him. (2) the collector may admit oral or documentary evidence, if any, produced by the parties to the instrument and call for and examine the original instrument to satisfy himself as to the correctness of the market value of the subject-matter of the instrument and for determining the duty payable thereon. (3) the collector may: (a) call for any information or record from any public office, officer or authority under the government or local authority; (b) examine and record the statement of any public officer or authority under the government or local authority; (c) inspect the property after due notice to the parties to the instrument. (4) after considering the representation of the parties, if any, and examining the records and other evidence, the collector shall determine the market value of the subject matter of the instrument and the duty payable thereon. (5) if, as a result of such inquiry, the market value is found to be fully and truly set forth and the instrument duly stamped according to such value, it shall be returned to the person who made the reference with a certificate to that effect. a copy of such certificate shall also be sent to the registering officer concerned. (6) if as a result of such inquiry, the market value is found to be undervalued and not duly stamped, necessary action shall be taken in respect of it according to relevant provisions of the act." 10. the term "market value" has not been defined under the act. however there are some precedents laying down certain guidelines as to how and what manner a market value would be determined. the consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market, if sold by a willing seller, unaffected by the special need of a particular purchaser. it is interesting to note that the act provides first for determination of minimum value of the property and further says that if the market value of the property set forth in the instrument is less than the minimum value determined under the act, in such case before registering the instrument the registering authority shall refer the instrument to collector for determination of market value of the property and the proper duty payable thereon and when the collector determines market value of the property thereafter the parties shall proceed accordingly. therefore, a market value of the property in all cases cannot be said to be higher than the alleged minimum value determined under the rules by the concerned authority, inasmuch as, it is only a kind of guideline provided to the authorities for the purpose of considering as to whether the proper stamp duty is being paid by setting forth true market value of the property in question in the instrument. the entire object of legislature in the various provisions of the act is to require the parties concerned to set forth correct market value of the property at which the transaction has taken place so that appropriate duty in accordance with the act is paid by them. the various provisions with respect to minimum value etc. are only in aid and assistance of the authorities to find out the true amount of consideration on which the parties have entered into transaction so that the correct duty is collected therefrom. 11. the minimum value determined by the authorities under rule 4 or 5 of 1997 rules is only indicative of the fact that if the value set forth in the sale deed is less than such minimum value then registering officer before registering the instrument shall make a reference to the collector and get the market value determined therefrom. it is not necessary that when such a reference is made, necessarily and in all cases, the value set forth in the instrument would not be a market value of the property in question. the collector being under an obligation to determine market value under section 47-a(3) of the act read with rule 7 of 1997 rules thereafter would make inquiry in accordance with procedure prescribed thereunder and find out the correct market value which may be the same which is stated in the instrument or may be higher or lesser as the case may be. but there is no rule of thumb that it will always be higher than the value determined by the competent authority under rule 4 or 5 of 1997 rules. after considering 1997 rules this court in ram khelawan vs. state of u.p. and another, 2005(98) rd 511 has also taken the same view and has said: "15. it is quite possible that even in the first instance the instrument/deed may show the valuation of the property to be less than the minimum value determined in accordance with rules of 1997 (popularly known as circle rate) still purchaser or seller may not be required to pay more stamp duty. the only purpose of the minimum market value fixed and circulated under rule 4 of the rules of 1997 is that in case on the face of it the market value of the property set-forth in the sale deed is less than minimum market value fixed under the said rules than registering officer cannot register the deed and it will have to refer the same to the collector unless on being asked by him to make good the deficiency in stamp duty, parties to the sale deed make good the requisite deficiency. in case deficiency is not made good then matter will have to be referred by registering officer to the collector. however, thereafter it is quite possible that collector may hold that even though market value of the property set-forth in the deed is less than minimum market value fixed under the rules of 1997 still the market value set forth in the sale deed is correct and proper stamp has been paid. it is quite clear from section 47-a(4)(i) and rule 7(5)." 12. rule 7 of 1997 rules while providing for determination of market value nowhere refers to either minimum value fixed under rule 4 or 5 of 1997 rules or provides that the market value shall be determined by the collector which must be in all cases higher than the value set forth in the instrument by the parties concerned. the question as to how and what manner market value would have to be determined by the collector has been discussed in detail and various aspects have been considered by this court in ram khelawan (supra) with which i entirely agree and, therefore, is of the view that the collector is under a statutory obligation before holding that an instrument does not set forth correct market value, to determine as to what is the market value of the property in question. this is what has been said in hajari lal sahu vs. state of u.p. and others, 2004 (96) rd 368 and aniruddha kumar and another vs. c.c.r.a., u.p. and another, 2000(91) 566 with which also this court is in entire agreement. 13. it is in these circumstances this court having considered the aforesaid authorities and also 1997 rules in civil misc. writ petition no. 1637 of 2005, anil kumar and another vs. state of u.p. and others, decided on 22.02.2008 has said: "the collector however has to examine all relevant aspects in the matter and thereafter to find out what is the correct market value of the property in question. he cannot proceed merely by saying that since the land is adjacent to abadi, therefore, it must be valued at the rate of residential land and duty must be charged accordingly." 14. it is thus evident that two fold statutory obligation has been laid upon collector. first of all it has to find out, whether the value set forth in the instrument by the parties is not a true market value and thereafter it has to proceed by application of its own mind following the procedure laid down in 1997 rules to determine as to what is the true market value of property which is the subject matter of the instrument in question. the onus lie upon collector to determine the true market value and he cannot rely on the default or failure on the part of parties to lead evidence in his favour. 15. such proceedings, without observing the requirement of statute, are nothing but amounts to a sheer harassment to public at large and in particular the person who actually suffer due to such whimsical order passed by authorities. a serious statutory duty has been cast upon respondents but instead of doing justice with their statutory requirement, in a totally indiscreet, left or right manner, the authorities are passing unmindful, arbitrary orders, whereby not only large public is being harassed but it also results in burdening the courts though such litigation otherwise could have been avoided. the suggestion made by learned counsel for the petitioners that entire proceedings have been conducted for reasons other than bona fide, also does not appear to be wholly unfounded. 16. learned standing counsel, despite his best efforts, could not show as to how and in what manner the respondents-authorities have complied with requirement of statute for determining true market value in respect to property which is the subject matter of instrument in question. he failed to point out any justification or relevant consideration prevailed with authorities concerned in doing so. 17. in the circumstances, the impugned orders cannot sustain. the writ petition is allowed. the impugned orders dated 25.07.2000 and 06.06.2001 are hereby quashed. the amount, if any, deposited by petitioner under the impugned orders, shall be refunded forthwith. no costs.
Judgment:

Sudhir Agarwal, J.

1. Heard Sri B.B. Jauhari, learned counsel for the petitioner and learned Standing Counsel for the respondents.

2. The petitioner is aggrieved by order dated 25.07.2000 passed by Additional Collector (Finance and Revenue), Shahjahanpur determining deficiency of stamp of Rs. 1,35,000/- on the instrument of sale executed by petitioner in respect of property in dispute, whereagainst petitioner's revision has also been dismissed by Commissioner, Bareilly Mandal, Bareilly vide order dated 06.06.2001.

3. It is contended that the house in question was a double story building while only ground floor was mentioned in sale deed and instead of determining total value of property in dispute by adding value of second floor, the Additional Collector on conjectures and surmises has held that total rental value of house may be Rs. 6,500/- and the rate of land must be determined treating it to be Rs. 2000/ per square meter, on the basis of circle rate, applicable to Mohalla Civil Lines, (second category) and thereupon it has determined value without giving any reason as to why said value would apply for accommodation in question. It has also not determined market value of property in question, in accordance with Section 47-A of Indian Stamp Act, 1899 (hereinafter referred to as the "Act, 1899") read with U.P. Stamp (Valuation of Property) Rules, 1997 (hereinafter referred to as the "1997 Rules").

4. A bare perusal of aforesaid orders clearly show that instead of complying with the requirement of Section 47-A of Act, 1899 the respondents have proceeded in a very strange manner and treating the circle rate to be conclusive and final document as also assumed rate of rent stated by Tehsildar, has passed impugned order simply on the ground that petitioner could not lead evidence to show otherwise. This approach on the part of respondents is patently illegal and it does not confirm the requirement of Section 47-A.

5. It goes without saying that proceedings under Section 47-A(4) can be initiated only when there exists a ground that correct market value has not been set forth in the instrument. The Collector first of all has to determine true market value on the date when instrument was executed and only then he can determine, whether there is any deficiency of stamp or not. This determination of market value does not depend on the fancy, imagination and conjectures of Collector or any other competent authority.

6. It is rightly contended that under the provisions of Act, 1899 stamp duty is payable on the market value of property in transaction of sale deed. It is also true that market value does not mean circle rate itself but it is only a guiding factor. The Collector has to determine market value taking into account various factors. In the case in hand the Collector has simply referred to circle rate and in a mechanical way, passed impugned orders.

7. The question, as to what would be a market value came to be considered by a Division Bench of this Court in Kaka Singh Vs. Additional Collector and District Magistrate (F and R), AIR 1986 All. 107 and it held:

"We are inclined to think that the object of the Amending Act being to avoid large scale evasion of stamp duty, it is not meant to be applied in a matter of fact fashion and in a haphazard way. Market value itself as we already mentioned, is a changing factor and will depend on various circumstances and matters relevant to the consideration. No exactitude is in the nature of things possible. In working the Act, great caution should be taken in order that it may not work as an engine of oppression. Having regard to the object of the Act, we are inclined to think that normally the consideration stated as the market value in a given instrument brought for registration should be taken to be correct unless circumstances exist which suggest fraudulent evasion."

8. With regard to procedure for determining market value and the relevant provisions the situation was slightly different upto 1997 but thereafter the legislature has made certain attempt to lay down guidelines also for Revenue to determine market value.

9. Under Section 47-A of the Act the obligation is on Collector to find out correct market value of property which is alleged to have not been mentioned in the instrument. For the purpose of determining market value no machinery as such is provided in statutory provisions. However, a procedure has now been provided in Rules, 1997 in accordance whereto the Collector would determine market value. Rule 7 thereof reads as under:

"7. Procedure on receipt of a reference or when suo motu action is proposed under Section 47-A.--(1) On receipt of a reference or where action is proposed to be taken suo motu under Section 47-A, the Collector shall issue notice to parties to the instrument to show cause within thirty days of the receipt of such notice as to why the market value of the property set forth in the instrument and the duty payable thereon be not determined by him.

(2) The Collector may admit oral or documentary evidence, if any, produced by the parties to the instrument and call for and examine the original instrument to satisfy himself as to the correctness of the market value of the subject-matter of the instrument and for determining the duty payable thereon.

(3) The Collector may:

(a) call for any information or record from any public office, officer or authority under the government or local authority;

(b) examine and record the statement of any public officer or authority under the Government or local authority;

(c) inspect the property after due notice to the parties to the instrument.

(4) After considering the representation of the parties, if any, and examining the records and other evidence, the Collector shall determine the market value of the subject matter of the instrument and the duty payable thereon.

(5) If, as a result of such inquiry, the market value is found to be fully and truly set forth and the instrument duly stamped according to such value, it shall be returned to the person who made the reference with a certificate to that effect. A copy of such certificate shall also be sent to the Registering officer concerned.

(6) If as a result of such inquiry, the market value is found to be undervalued and not duly stamped, necessary action shall be taken in respect of it according to relevant provisions of the Act."

10. The term "market value" has not been defined under the Act. However there are some precedents laying down certain guidelines as to how and what manner a market value would be determined. The consensus opinion is that the market value of any property is the price which the property would fetch or would have fetched if sold in the open market, if sold by a willing seller, unaffected by the special need of a particular purchaser. It is interesting to note that the Act provides first for determination of minimum value of the property and further says that if the market value of the property set forth in the instrument is less than the minimum value determined under the Act, in such case before registering the instrument the registering authority shall refer the instrument to Collector for determination of market value of the property and the proper duty payable thereon and when the Collector determines market value of the property thereafter the parties shall proceed accordingly. Therefore, a market value of the property in all cases cannot be said to be higher than the alleged minimum value determined under the rules by the concerned authority, inasmuch as, it is only a kind of guideline provided to the authorities for the purpose of considering as to whether the proper stamp duty is being paid by setting forth true market value of the property in question in the instrument. The entire object of legislature in the various provisions of the Act is to require the parties concerned to set forth correct market value of the property at which the transaction has taken place so that appropriate duty in accordance with the Act is paid by them. The various provisions with respect to minimum value etc. are only in aid and assistance of the authorities to find out the true amount of consideration on which the parties have entered into transaction so that the correct duty is collected therefrom.

11. The minimum value determined by the authorities under Rule 4 or 5 of 1997 Rules is only indicative of the fact that if the value set forth in the sale deed is less than such minimum value then Registering Officer before registering the instrument shall make a reference to the Collector and get the market value determined therefrom. It is not necessary that when such a reference is made, necessarily and in all cases, the value set forth in the instrument would not be a market value of the property in question. The Collector being under an obligation to determine market value under Section 47-A(3) of the Act read with Rule 7 of 1997 Rules thereafter would make inquiry in accordance with procedure prescribed thereunder and find out the correct market value which may be the same which is stated in the instrument or may be higher or lesser as the case may be. But there is no rule of thumb that it will always be higher than the value determined by the competent authority under Rule 4 or 5 of 1997 Rules. After considering 1997 Rules this Court in Ram Khelawan Vs. State of U.P. and another, 2005(98) RD 511 has also taken the same view and has said:

"15. It is quite possible that even in the first instance the instrument/deed may show the valuation of the property to be less than the minimum value determined in accordance with Rules of 1997 (popularly known as circle rate) still purchaser or seller may not be required to pay more stamp duty. The only purpose of the minimum market value fixed and circulated under Rule 4 of the Rules of 1997 is that in case on the face of it the market value of the property set-forth in the sale deed is less than minimum market value fixed under the said Rules than Registering Officer cannot register the deed and it will have to refer the same to the Collector unless on being asked by him to make good the deficiency in stamp duty, parties to the sale deed make good the requisite deficiency. In case deficiency is not made good then matter will have to be referred by Registering Officer to the Collector. However, thereafter it is quite possible that Collector may hold that even though market value of the property set-forth in the deed is less than minimum market value fixed under the Rules of 1997 still the market value set forth in the sale deed is correct and proper stamp has been paid. It is quite clear from section 47-A(4)(i) and Rule 7(5)."

12. Rule 7 of 1997 Rules while providing for determination of market value nowhere refers to either minimum value fixed under Rule 4 or 5 of 1997 Rules or provides that the market value shall be determined by the Collector which must be in all cases higher than the value set forth in the instrument by the parties concerned. The question as to how and what manner market value would have to be determined by the Collector has been discussed in detail and various aspects have been considered by this Court in Ram Khelawan (Supra) with which I entirely agree and, therefore, is of the view that the Collector is under a statutory obligation before holding that an instrument does not set forth correct market value, to determine as to what is the market value of the property in question. This is what has been said in Hajari Lal Sahu Vs. State of U.P. and others, 2004 (96) RD 368 and Aniruddha Kumar and another Vs. C.C.R.A., U.P. and another, 2000(91) 566 with which also this Court is in entire agreement.

13. It is in these circumstances this Court having considered the aforesaid authorities and also 1997 Rules in Civil Misc. Writ Petition No. 1637 of 2005, Anil Kumar and another Vs. State of U.P. and others, decided on 22.02.2008 has said:

"The Collector however has to examine all relevant aspects in the matter and thereafter to find out what is the correct market value of the property in question. He cannot proceed merely by saying that since the land is adjacent to Abadi, therefore, it must be valued at the rate of residential land and duty must be charged accordingly."

14. It is thus evident that two fold statutory obligation has been laid upon Collector. First of all it has to find out, whether the value set forth in the instrument by the parties is not a true market value and thereafter it has to proceed by application of its own mind following the procedure laid down in 1997 Rules to determine as to what is the true market value of property which is the subject matter of the instrument in question. The onus lie upon Collector to determine the true market value and he cannot rely on the default or failure on the part of parties to lead evidence in his favour.

15. Such proceedings, without observing the requirement of statute, are nothing but amounts to a sheer harassment to public at large and in particular the person who actually suffer due to such whimsical order passed by authorities. A serious statutory duty has been cast upon respondents but instead of doing justice with their statutory requirement, in a totally indiscreet, left or right manner, the authorities are passing unmindful, arbitrary orders, whereby not only large public is being harassed but it also results in burdening the Courts though such litigation otherwise could have been avoided. The suggestion made by learned counsel for the petitioners that entire proceedings have been conducted for reasons other than bona fide, also does not appear to be wholly unfounded.

16. Learned Standing Counsel, despite his best efforts, could not show as to how and in what manner the respondents-authorities have complied with requirement of statute for determining true market value in respect to property which is the subject matter of instrument in question. He failed to point out any justification or relevant consideration prevailed with authorities concerned in doing so.

17. In the circumstances, the impugned orders cannot sustain. The writ petition is allowed. The impugned orders dated 25.07.2000 and 06.06.2001 are hereby quashed. The amount, if any, deposited by petitioner under the impugned orders, shall be refunded forthwith. No costs.