M.S. Mahadevaiah Vs. Akkamma and Others - Court Judgment

(Prayer: These Writ Petitions are filed under Articles 227 of the Constitution of India praying to quash the order dtd 29.4.2015, in I.A. No. 05 and I.A. No. 06 passed by the senior civil Judge and JNFC at Devanahalli in O.S. No. 623/2011 vide Annek “ G and etc.)

1. Both these petitions have arisen out of a common order dated 29.4.2015 passed by the Court of Senior Civil Judge, Devanahalli on I.A. 5 and 6 in O.S. 623/2011.

2. I.A. 5 filed by defendant Nos. 3 and 4 was one under Order 7 Rule 11 of CPC requesting the Court to reject the plaint on the ground of non-payment of sufficient court fee and I.A.6 was one filed under Order 13 Rule 8 of CPC read with Section 33 of Karnataka Stamp Act requesting the Court to impound the registered sale deed dated 29.7.2005 relied upon by the plaintiff and refer the same to the Deputy Commissioner to collect requisite stamp duty and penalty.

3. Both these applications have been allowed-in-part and the operative portion reads as follows:

ORDER

I.A.No. 5 filed by the defendants No. 3 and 4 u/o 7 Rule 11(b) R/w Sec. 151 of COC dated 5.9.2014 allowed-in-part.

The plaintiff is directed to value the suit in respect of prayer (a) U/Sec 24(b) of Karnataka Court Fee and Suit Valuation Act, fee shall be computed on one-half of the market value of property i.e., for Rs. 40,00,000/- within next date of hearing. Otherwise, the plaint will be rejected u/o 7 Rule 11(b) of CPC.

I.A.No. 6 filed by the defendants No. 3 and 4 u/o 13 Rule 8 of CPC Section 151 of CPC and Sec. 33 of Karnataka Stamp Act dated 5.9.2014 is hereby allowed.

The plaintiff is directed to pay deficit stamp duty of Rs. 37,386/- plus 10 times penalty of Rs. 3,73,860/- totally Rs. 4,11,246/- in respect of registered sale deed dated 25.4.2005 executed by defendant No. 1-Smt. Akkayamma and her family members through their power or attorney holder-Sri. R. Venkatesh s/o M.V. Ramanna in favour of plaintiff.

The office is directed to collect the duty and penalty as stated above. Thereafter, as per Sec. 37 of the Karnataka Stamp Act, send an authenticate copy of the registered sale deed dated 25.5.2005 to the District Registrar, Bengaluru, together with certificate and the amount collected as a duty and penalty.

For payment of duty and penalty and to pay additional court fee on the market value of the suit schedule property.

Call on 23.7.2015.

4. Plaintiff, being aggrieved by the said order dated 29.4.2015 passed in O.S. 623/2011 on I.A.5 and 6, has preferred the present petitions under Article 227 of the Constitution of India.

5. Sole plaintiff of the said suit is the petitioner herein and defendant Nos. 2 to 4 the respondent Nos. 1 to 3 herein.

6. The facts leading to filing of these petitions are as follows:

Plaintiff has filed a suit for the relief of declaration of title and permanent injunction. He is stated to be in lawful possession of one acre of agricultural land in Sy.No. 107/2 of Kannamangala Village Kasaba Hobli, Devanahalli Taluk, Bangalore Rural District and this is stated to be the southern portion of Sy.No. 107/2 and he is stated to have purchaser the suit schedule property from Smt. Akkamma, defendant No. 1, who is stated to have conveyed the suit schedule property of one acre in his favour for a sum of Rs.1 Lakh by executing a sale deed dated 25.4.2005 which was registered on 29.7.2005 vide document No. 2090/05-06 along with her children. It is his care that Akkamma and her children have delivered the vacant possession of the suit schedule property and since then he is stated to be in lawful possession of the property. Since defendants attempted to deny his title and possession of the suit schedule property on the basis of a false documents i.e., the alleged sale dated 2.7.2005 allegedly executed by defendant No. 1 in favour of defendant No. 2, he was left with no other option but to file a suit for declaration of title and injunction.

7. The case of the defendant Nos. 3 and 4 is that defendant No. 2 had purchased the entire extent of land measuring 2 acres 38 guntas in Sy.No. 107/2 from Akkamma-defendant No. 1 and her children through registered sale deed dated 2.7.2005 and it is their further case that they have purchased the entire suit schedule property in Sy.No. 107/2 for consideration of Rs. 24 Lakhs from defendant No. 2. It is their case that Akkamma and her children had delivered the vacant possession of the suit schedule property and defendant No. 2 was stated to be in possession of the same and defendant No. 2 is stated to have handed over the possession to them on 2.7.2005.

8. It is averred that the agricultural land in Sy.No. 107/2 was converted in to non-agricultural purpose long prior to filing of the suit and therefore, registered sale deed executed on 25.4.2005 registered on 29.7.2005 is typed on an inadequate stamp paper and therefore, it is inadmissible in evidence. It is their case that court fee paid is also inadequate since valuation made in the valuation slip is incorrect. It is averred that requisite court fee will have to be paid on the market value prevalent as the date of filing of the suit.

9. They had filed an application under Order 13 Rule 8 of CPC read with Section 33 of Karnataka Stamp Act requesting the court to refer the same to Deputy Commissioner, Bangalore Rural District, Bangalore for payment of deficit stamp duty and penalty and another application under Order 7 Rule 11 of CPC to reject the plaint on the ground of paying insufficient court fee.

10. Heard learned counsel Sri. H. R. Krishna Murthy representing the petitioner and learned counsel for the respondent and Government Advocate Mrs. Anitha.

11. Learned counsel for the petitioner has argued that the Trial Court has adopted wrong approach to the real state of affairs and it should have referred the documents to the concerned Deputy Commissioner for determining the deficit court fee and penalty payable and therefore, the order suffers from apparent illegality. Reliance is placed upon the decision of the Hon'ble Apex Court in the case of Chilakuri Gangulappa v. Revenue Divisional Officer (AIR 2001 SC 1321) to contend that document impounded will have to be sent to the Deputy Commissioner and the Deputy Commissioner alone will be competent to determine insufficiency of the stamp duty and penalty.

12. Per contra, learned Govt. Pleader, who is representing the State has relied upon the decision of this Court in the case of Digambar Warty and others v. District Registrar, Bangalore Urban District, Bangalore [(2013(4)Kar. L.J.247(DB)].

13. After hearing the learned counsel for the parties, following points arise for consideration:

a) Whether the Trial Court is justified in directing the plaintiff to value the suit schedule property at Rs. 40 lakhs and pay court fee on half the market value under Section 24(b) of Karnataka Court Fee and Suit Valuation Act?

b) Whether the procedure adopted by the Trial Court in reckoning the deficit stamp duty at Rs. 37,386/- is in accordance with law and under provisions of Sections 33, 34 and 36 of Karnataka Stamp Act?

c) Whether any correction is required in terms of supervisory jurisdiction vested in this Court, if so, to what extent?

POINT NO.(a)

14. Admittedly, the suit is filed for the main relief of declaration of title based on the sale deed stated to have been executed by defendant No.1 Akkamma and her children in his favour on 25.4.2005 which is registered as Deed No. 2090/05-06 dated 29.7.2005. At the time when this document was executed on 25.4.2005 property in question had been shown as agricultural land measuring 1 acre in Sy.No. 107/2 of Kannamangala Village, Kasaba Hobli, Devanahalli Taluk, Bangalore Rural District.

15. Defendants have emphatically denied the authenticity of the sale deed executed on 25.04.2005 by Akkamma in favour of the plaintiff and they have set up their own title on the basis of the sale deed executed to the entire extent of land by Akkamma and her children on 2.7.2005 which is registered as Deed No. 1617/05-06 dated 2.7.2005. It is further averred by defendant Nos. 2 to 4 that the land had already been converted to non-agricultural land for residential houses as per the order of Deputy Commissioner dated 3.12.2012 vide ALN(D)SR 1105/04-05.

16. The amount of consideration shown in the sale deed dated 2.7.2005 is Rs. 24 Lakhs. Therefore, the learned Judge has taken 1/3^rd of the total consideration found in sale deed dated 2.7.2005 i.e., Rs. 8 lakhs as value for the purpose of reckoning the court fee under Section 24(b) of Karnataka Court Fee and Suits Valuation Act. In the valuation slip filed by the plaintiff and annexed to the plaint, valuation is made under Section 7(2) Karnataka Court Fee and Suits Valuation Act on the ground that it is agricultural land. Determining the market value of the land assessed to revenue would be under Section 7(2) of Karnataka Court Fee and Suits Valuation Act. The land revenue is Rs. 4.44 and it is multiplied by 25 times and total amount of revenue is 111. 10% of the same would be Rs. 11 and hence the minimum of Rs. 25/- is paid as court fee. Valuation for the purpose of pecuniary jurisdiction under Section 50(2) of Karnataka Court Fees and Suits Valuation Act at Rs. 40 Lakhs is justified since suit is filed in the court of Senior Civil Judge.

17. Long prior to filing of the suit, land had been converted to non agricultural purpose. If Rs. 40 Lakhs was the market value as on the date of filing of the suit, as depicted in the valuation slip, court fee will have to be paid on half the market value of Rs. 40 Lakhs in terms of Section 24(b) Karnataka Court Fee and Suits Valuation Act i.e., court fee should be paid on Rs. 20 Lakhs ad valorem. On the other hand, the learned Judge of the Trial Court has considered Rs. 8 Lakhs as market value per acre, since Rs. 24 Lakhs is the total consideration in respect of Rs. 2.38 acres of land in Sy.No.107/2 while Akkamma and her children executed sale deed in favour of defendant No. 2 for ascertaining the deficit Stamp to be collected.

18. What is observed by the Trial Court is that plaintiff is required to value the suit under Section 24(b) Karnataka Court Fee and Suits Valuation Act on half the market value of the land and court fee should be paid accordingly. What is the market value to be paid by the plaintiff is indicated in the impugned order but what is the market value so far as court fee to be paid under Section 24(b) Karnataka Court Fee and Suits Valuation Act is found in operative portion of the order that means court fee will have to be paid on Rs. 20 Lakhs.

19. If there is any dispute regarding court fee, an issue will have to be framed and enquiry will have to be held as per Section 11(2) of Karnataka Court Fee and Suits Valuation Act. Section 11(2) mandates that all question arising out of the issue relating to the insufficiency of the court fee or otherwise shall be heard before the evidence is recorded on the merits of the claim. It is further made clear that if the court decides that the subject matter of the suit is not properly valued or that the fee paid is not sufficient, the court shall fix a date before which the plaint shall be amended in accordance with the Court's decision and the deficit fee shall be paid. A division bench decision of this Court rendered in the case of Veeragouda and others vs Shanthakumar @ Shanthappagowda (ILR 2009 KAR 887) has reiterated that an enquiry is to be held under Section 11 of Act by framing a preliminary issue regarding valuation and Court fee.

20. The learned Judge has simply accepted the market value indicated in the valuation slip for collecting the court fee in terms of Section 24(b) of Karnataka Court Fee and Suits Valuation Act. While holding the enquiry in regard to sufficiency of the court fee, guidance value fixed by the Central Valuation Committee in terms of Sections 45-B of Karnataka Stamp Act, 1957 which has come into effect from 1.4.2003, would be a strong indicator.

21. What was the guidance value prevalent in respect of converted land in the village in question during the year 2011 will have to be decided at least with reference to the guidance value prepared and published by the Central Valuation Committee in terms of Section 45-B of Karnataka Stamp Act. In fact the learned Judge has not conducted any enquiry as such and has merely relied upon the valuation indicated by the plaintiff in the valuation slip. If the guidance value of the land in question as on the date of filing of the suit is lesser than the market value mentioned in the valuation slip, the market value mentioned in the valuation slip would be relevant for the collection of court fee because the plaintiff is the proper person to tell as to what exactly was the market value.

22. If the market value mentioned in the valuation slip is lesser than the guidance value furnished by the Central Valuation Committee as on the date of filing of the suit, court fee should necessarily be paid on such guidance value prevalent during 2011 the year of filing of the suit. Therefore, the Trial Court is not justified in directing the plaintiff to value the land at Rs. 40 Lakhs to pay half of the market value in terms of Section 24(b) of Karnataka Court Fee and Suits Valuation Act without holding enquiry as contemplated under Section 11(2) of Karnataka Court Fee and Suits Valuation Act. Hence the Trial Court is duty bound to hold a limited enquiry about the market value that prevailed as on the date of filing of suit regarding the converted land of one acre in Sy.No. 107/2 of Kannamangala village, Kasaba Holi, Devanahalli, Bangalore. Hence Point No. (a) is answered in the negative.

POINT No. (b)

23. The learned Judge has come to the conclusion that the stamp duty paid on Rs. 1 Lakh, consideration found in the sale deed executed on 25.4.2005 registered on 29.7.2005 in document No. 2090/05-06 is insufficient. Therefore, he has impounded the document in terms of Section 33 of Karnataka Stamp Act 1958.While doing so, the learned Judge has taken into consideration Rs. 8 Lakhs as value per acre on converted land in Kannamangala village. The said procedure adopted by the Trial Court appears to be correct in the sense that registering authorities have collected the stamp duty on Rs. 24 Lakhs being the entire consideration 2.38 acres of land. A sum of Rs. 24,000/- is collected as registration fee, and Rs. 450/- towards scanning fee and Misc. Rs. 20/- and thus in all Rs. 24,470/- has been received. The amount of stamp duty paid on the sale deed dated 2.7.2005 is Rs. 2,16,960/-. The said amount has been recovered on the basis of the affidavit sworn to by the parties in terms of Section 10-A of Karnataka Stamp Act.

24. If the stamp duty had not been paid in accordance with guidance value fixed by the government in terms of Section 45-B of Karnataka Stamp Act, Sub-register would not have collected Rs. 2,16,960/- has the stamp duty is the argument advanced by learned counsel Sri. K.R. Krishna Murthy. But nothing is forthcoming as to the minimum guidance value that was prevalent in respect of converted agricultural land of one acre during the year 2005 when the sale deed was got registered by the plaintiff.

25. As already stated the guidance value that would be published by the Central Valuation Committee would be a strong indicator insofar as it relates to the market value for collection of stamp duty. Therefore, the court will have to get information from the Sub-registrar Devananhalli about the guidance value that was prevalent in respect of converted agricultural land during July 2005 and percentage of stamp duty payable thereon, at that point of time. After getting such information court will have to see as to what exactly was the stamp duty payable on the sale deed and whether the stamp duty paid by the parties on sale deed dated 2.7.2005 was sufficient. If the stamp duty is found to be insufficient, the deficit stamp duty and penalty at ten times the deficit stamp duty will have to be assessed and recovered.

26. The learned counsel for the petitioner has relied upon the decision reiterated in the case of Chilakuri Gangulappa v. Revenue Divisional Officer (AIR 2001 SC 1321) to contend that the impounded document will have to be straight away sent to the Deputy Commissioner who would ascertain the duty and penalty payable and on assessing of the same, the petitioner would pay the stamp duty and penalty.

27. Decision in Chilakuri Gangulappa v. Revenue Divisional Officer (AIR 2001 SC 1321) referred to above relates to Sections 40 and 47A on Stamp Act, 1899 a Central Legislation and States who have adopted the said stamp act can make necessary amendments. As per the facts of the said case, sale agreement was found to be insufficiently stamped and the Court impounded the same and the court forwarded the impounded document to the Collector for the purpose of determination of the market value of the property. Such procedure is held to be not proper. Section 33 to 38 Karnataka Stamp Act 1957 are relevant and they are found in chapter IV. Section 33 of Karnataka Stamp Act mandates that the authority who is competent to receive a document in evidence to impound the same if it is not sufficiently stamped. Section 34 of Karnataka Stamp Act mandates that instruments not duly stamped are inadmissible in evidence.

28. Section 37 of Karnataka Stamp Act speaks about the manner in which the impounded document has to be dealt with by the authority who has got power to receive it as evidence. As per Section 37 of Karnataka Stamp Act, the court is expected to assess the deficit court fee payable on the document and penalty. After collecting one time deficit stamp duty and 10 times penalty as provided in Section 34 of Karnataka Stamp Act, the court will have to send a copy of the authenticated document together with an endorsement that duty and penalty levied thereon has been recovered. Sub section 2 of Section 37 of Karnataka Stamp Act mandates that if the assessed duty and penalty is not paid by the party who has produced the document, such impounded original document will have to be sent to the Deputy Commissioner and the Deputy Commissioner can collect the same as arrears of Land Revenue.

29. What is the argued by the learned counsel for the petitioner is that reference will have to be made by the trail court in terms of Section 46A of Karnataka Stamp Act to the Chief Controlling Revenue Authority to decided the duty and penalty and the court cannot impound the document. When the document is produced before the court, which has got authority to admit the same in evidence, is mandated to see as to whether such document is adequately stamped. If it is found that it is not stamped adequately, it has to impound the document and collect one time of deficit duty and ten times penalty. On recovering the same, it has to send the authenticated document along with certificate that the requisite duty and penalty have been recovered to the Deputy Commissioner. If the assessed duty and penalty is not paid, document will be inadmissible in evidence and will be sent to the Deputy Commissioner who inturn will assess the duty and penalty and recover the same as arrears of the land revenue of terms of Section 46 of Karnataka Stamp Act. When the insufficient document is produced before the court, the question of recourse under section 46-A does not arise at all.

30. Specific mechanism is provided in Karnataka Stamp Act about the court impounding the insufficiently stamped document and procedure to recover the stamp duty and penalty. Court cannot delegate the power to recover the same to the Deputy Commissioner or the authority under the Karnataka Stamp Act.

31. On the other hand Section 38 Karnataka Stamp Act enables the Deputy Commissioner to refund any portion of the penalty in excess of Rs. 5 which has been paid in respect of such document. When specific provision is found under sub-Section (1) of Section 38 Karnataka Stamp Act to seek refund penalty in excess of Rs. 5 which has been paid, the question of referring the impounded document to the Chief Controlling Revenue Authority under Section 46A or to the Deputy Commissioner does not arise. Even otherwise in Chilakuri Gangappa's case, it is held that procedure of Court referring the insufficiently stamped document to the Deputy Commissioner to assess the duty and penalty and recover the same is incorrect and improper.

32. In fact Section 38 is dependent upon the procedure enumerated in Sections 34 and 37. Therefore the provision of chapter III are not inconsistent with the provisions of chapter IV.

33. Hence, the trial court will have to first take into consideration as to what was the value of one acre of converted land as on the date of presenting the same for registration preferably, based on the guidance value of converted land in Kannamangala Village and thereafter assess the duty and penalty to be paid. While holding the limited enquiry under section 11(2) of Karnataka Court Fee and Suits Valuation Act as reiterated by the division bench of this court in the case of Veeragouda and others vs Shanthakumar @ Shanthappagowda (ILR 2009 KAR 887) trial court can find out the market value of the land in question as on the date of presentation of the same to the sub-registrar which would be the basis for collecting the stamp duty and penalty. The approach adopted by the trial court in assessing the market value of the property in question and in regard to the assessing of deficit stamp duty and penalty is incorrect and improper. Hence Point No. (b) is answered in the negative.

POINT NO. (c)

34. The approach of the Trial Court needs to be corrected under the supervisory jurisdiction vested in this court under Article 227 of Constitution of India. Hence, point No. (c) is answered in the affirmative.

35. In the result, following order is passed.

ORDER

Accordingly, the petitions are allowed. The impugned order is set aside. The matter is remanded to the Trial Court to hold enquiry under section 11(2) of Karnataka Court Fee and Suits Valuation Act on the basis of the law reiterated by this Court in the case of Veeragouda and others vs Shanthakumar @ Shanthappagowda (ILR 2009 KAR 887 (DB)) to find out market value of the land in question as on the date of filing the suit i.e., July 2011 for the purpose of collecting court fee in terms of Section 24(b) of Karnataka Court Fee and Suits Valuation Act.

While holding the said enquiry, the learned Judge shall also collect requisite evidence in regard to the market value of the land in question as on the date of presentation of the deed before the sub-registrar i.e., 29.7.2005, relating to one acre of land for collection of deficit duty and penalty.

The said exercise shall be done as early as possible.

A copy of this order must be sent to the Trial Court at the earliest for compliance.