Govt of NCT of Delhi Collectors of Stamps v. CTA Apparels Pvt Ltd

District Magistrate/Collector (1999) 5 SCC 02; Thakur Kuldip Singh vs. Union of India (2010) 3 SCC 794; R. Sai Bharathi vs. J. Jayalalitha & Ors. (2004) 2 SCC 9; Ranvir Singh & Anr. vs. UOI (2005) 12 SCC 59; P. Ram Reddy & Ors. vs. LAQ (1995) 2 SCC 305; Kausalya Devi Bugro & Ors. v. LAQ, Aurangabad & Anr. (1984) 2 SCC 324; Special Land Acquisition Officers & Anr. vs. R.K. Rafiq Saheb (2011) 7 SCC 714; Ravinder Narain & Anr. vs. UOI (2003) 4 SCC 481.

(vii) On the basis of the aforesaid decisions, it has been submitted by the counsel for respondent that the valuation of the property depends on verities of factors like - (a) the width of the road upon which the property is situated; (b) the nature and use of the adjacent property;

(c) the use of the property in question;

(d) the area, locality and location of the property in question;

(e) the price agreed upon by the parties; (f) whether it was a distress sale; and (g) whether local prices had escalated or reduced.

(viii) The counsel further submits that market rate depends upon the existing factors, whereas, the circle rates are always older in point of time. The circle rates are prescribed in one condition, whereas, exact market rate (and therefore the market value) depends upon the permutation and combination of varieties of myriad factors including those stated hereinabove and therefore whenever any dispute arises about the determination of value, the same ought to be arrived at by the concerned State authority for the purpose of the Act, the same needs to be done afresh, especially considering Section 47A thereof and the valuation as per circle rate can only be one of the factors to be kept in mind and nothing more.

(ix) Furthermore, that if any document upon which the reliance is placed by the Collector while determining the market value, those documents ought to have been supplied by the Collector to the respondent (original petitioner). Thus, the counsel submits that this aspect of the matter has been properly appreciated by the learned Single Judge while remanding the matter for determination of the issue afresh by the Collector and hence the judgment and order passed by the learned Single Judge in WP.(C) 3587/20 dated 14th March, 2019 need not be interfered with by this Court.

5. REASONS Having heard the counsel for both sides and looking to the facts and circumstances of the case, we see no reason to entertain this Letters Patent Appeal, mainly for the following facts, reasons and judicial pronouncements:-

(i) The property in question ad measuring 1100 sq. yds. is situated at 66-

A, Friends Colony (East), New Delhi-110065. The respondent (original petitioner) has entered into a sale for a consideration of ₹36,00,00,000/- on 12th September, 2016. Sale deed was reduced in writing and the stamp duty paid upon the aforesaid sale consideration by the respondent (original petitioner) is at ₹2,16,00,000/-.

(ii) It appears from the facts of the case that the registering authority has referred the matter to the Collector for determination of the value of the property upon which the stamp duty is to be paid. The valuation on the basis of the circle rate, will come to ₹71,61,59,700/-. Thus, there is a difference of ₹35,61,59,700/- in the valuation of the property in question as per the circle rate and the sale consideration paid.

(iii) For the ready reference, Sections 27 and 47A of the Indian Stamps

Act, 1899 read as under:

47A. Instruments of conveyance, etc. undervalued how to be dealt with. - (1) If the Registering Officer, while registering any instrument transferring any property, has reason to believe that the value of' the property or the consideration, as the case may be, 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 value or consideration, as the case may be, 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, by order, determine the value of the property or the consideration and the duty aforesaid, and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty and, on the payment of such duty, the Collector shall endorse a certificate of such payment on the instrument under his seal and signature. (3) The Collector may, suo motu within two years from the date of registration of any instrument 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 its value or consideration, as the case may be, and the duty payable thereon, and if after such examination, he has reason to believe that the value or consideration has not been truly set forth in the instrument, he may determine the value or consideration and the duty aforesaid in accordance with the procedure provided for in sub-section (2), and the deficient amount of duty, if any, shall be payable the person liable to pay the duty and, on the payment of such duty, the Collector shall endorse a certificate of such payment on the instrument under his seal and signature. (4) Any person aggrieved by an order of the Collector under sub-section (2) or sub-section (3) may appeal to the District Court within whose jurisdiction the property transferred is situated. (5) An appeal under sub-section (4) shall be filed within thirty days of the date of the order sought to be appealed against. (6) The District Court shall hear and dispose of the appeal in such manner as may be prescribed by rule under this Act. Explanation - For the purpose of this section, value of any property shall be estimated to be the price which in opinion of the Collector or the appellate authority, as the case may be, such property would have fetched, if sold in the open market on the date of execution of the instrument relating to the transfer of such property.” (Emphasis supplied)

(iv) The Collector determined the value of the property in question on the basis of the circle rate. It appears from this order dated 22nd July, 2017 that the Collector has relied upon the sale deeds of the surrounding properties. The copies of the sale deeds upon which the reliance has been placed by the Collector were never supplied to the respondent (original petitioner). Thus, documents were relied upon by the Collector, but, the copies were never given to the respondent.

(v) The aforesaid aspect of the matter has been properly appreciated by the learned Single Judge vide judgment and order dated 14th March, 2019 and the matter was remanded to the Collector for fresh determination of the market value. It further appears from the facts of the case that the sale deeds upon which the reliance is placed by the Collector, the copies of which were given only at appellate stage to the respondent (original petitioner), but, looking at the said sale deeds, it appears that they were of plots measuring approximately 10% of the plot area of the respondent.

(vi) Looking at the sale deeds upon which the sole reliance is placed by the Collector, it appears that even in those sale deeds, the sale consideration was lesser than the valuation arrived at on the basis of the circle rates. Moreover, for a smaller plot area, higher sale consideration can be fetched by the seller and, therefore, whenever any comparison is to be made for arriving at a value for the plot in question, as far as possible the sale deed of the plots having similar measurements should have been kept in mind. Looking at the sale deeds upon which the reliance is placed by the Collector, it appears that for a smaller plot (which is 10% of the plot in question), the valuation of the sale price, was at a rate lesser than the circle rate meaning thereby that for a bigger plot, sale consideration, could be further lesser, than the circle rate.

(vii) The counsel for the appellant has contended that if the Collector had given the sale deeds upon which he was relying upon all these arguments could have been canvassed by the respondent (original petitioner), in detail, before the Collector and hence also the order passed by the Collector dated 22nd July, 2017 deserves to be quashed and set aside. This aspect of the matter has been properly appreciated by the learned Single Judge while deciding W.P.(C) 3587/2018 vide judgment and order dated 14th March, 2019.

(viii) Much has been argued out by the counsel for appellant that circle rate can be the sole basis of the determination of the value and unless the respondent (original petitioner) dislodges the valuation as per circle rate, there exists a presumption that the circle rate would be the basis to determine the valuation for the purpose of the Act. We are not in agreement with the contentions of the appellant for the reasons that: (a) Circle rate at the best can be one of the factors for determination of the valuation and nothing beyond that; (b) Circle rate is nothing, but, a guidance given by the higher ranking Administrative Officer to the subordinate officer whenever any instrument comes up for registration under the Act. On the basis of this circle rate, the Registering Authority can, at best mechanically determine the valuation of the instrument, but, whenever the dispute arises, the exact market valuation, ought to be arrived at, by the Collector as mandated by Section 47A of the Act. Circle rate cannot be mechanically followed by Collector, as a sole factor, to determine market value of the property in question.

(c) Reference in this regard may be made to the decision in R.

Sai Bharathi vs. J. Jayalalitha, (2004) 3 SCC 9, wherein it was held as under:

23. This Explanation also will have to be read in conjunction with Explanation to Section 47-A of the Indian Stamp Act (as amended by T.N. Act 24 of 1967) which reads: “Explanation.—For the purpose of this Act, market value of any property shall be estimated to be the price which, in the opinion of the Collector or the Chief Controlling Revenue Authority or the High Court, as the case may be, such property would have fetched or would fetch, if sold in the open market on the date of execution of the instrument of conveyance, exchange gift, release of benami right or settlement.”

24. This scheme of the enactment and the Rules contemplate that guideline value will only afford a prima facie basis to ascertain the true or correct market value, undue emphasis on the guideline value without reference to the setting in which it is to be viewed will obscure the issue for consideration. It is clear, therefore, that guideline value is not sacrosanct as urged on behalf of the appellants, but only a factor to be taken note of, if at all available in respect of an area in which the property transferred lies. In any event, therefore, if for the purpose of the Stamp Act guideline value alone is not a factor to determine the value of property, its worth will not be any higher in the context of assessing the true market value of properties in question to ascertain whether the transaction has resulted in any offence so as to give a pecuniary advantage to one party or the other.”

(d) The Collector must give proper notice to the concerned parties along with all the documents upon which the Collector places reliance, including the sale deeds of the surrounding properties. (e) The circle rates will be one of the factors for the Collector whenever he determines the value; and (f) Thus, the circle rate is not a conclusive evidence at all for the valuation. The circle rate is giving only a guidance to the Collector for determination of the value under Section 47A of the Act, 1899. If the Collector has to mechanically adopt circle rate and multiply it with area of the plot, for determination of value of the property, perhaps Section 47-A(2) would not be needed at all. Despite the existence of circle rate, as per Section 47-A(2), the Collector has to make enquiry for arriving at value of the property prevailing as on date of transfer of property. The reason is, circle rate is one of the factors for arriving at the value of the property. Meaning thereby, there are several other factors, which must be appreciated, before arriving at value of the property. (g) The valuation of the property in question depends upon the varieties of factors like:  The area of the plot in question or the property in question;  The use of the property in question;  Nature of property in question like new property and ten years old property.  The width of the road upon which the property is situated;  The nature of the adjacent properties;  The nature of use of the adjacent properties, e.g., if an adjacent property is of a commercial nature, then the sale consideration fetched is bound to be different and if the adjacent property is a public convenience constructed by the Government, then the sale consideration fetched by the property in question can be entirely different.  The existing market factors varies time to time, whereas, the circle rates are usually prescribed on a much prior point of time. In the facts of the present case, the circle rates were prescribed by the Government on 23rd September, 2014 whereas the sale deed has been entered into in the year 2016.  The urgency of the sale by the owner of the property and if it is a distress sale.  The need of the purchase of the property as, e.g., if the adjacent property owner wants to purchase at any cost the neighbouring property, the price the owner will fetch will be higher. (h) Reference may be made to the decision in Thakur Kuldeep Singh v. Union of India, (2010) 3 SCC 794, relevant paragraphs whereof are reproduced hereunder:

solely on the basis of the circle rates, the valuation to determine stamp duty has been arrived at by the Collector vide order dated 22nd July, 2017 as well as by the Additional District Judge – appellate Authority vide order dated 16th March, 2018 and hence, no error has been committed by the learned Single Judge while quashing and setting aside these orders and no error has been committed by the learned Single Judge in remanding the matter to the Collector for reconsideration of the issue of determination of the valuation of the property for the purpose of the Act.

(ix) The judgments upon which the reliance has been placed by the counsel for appellant are of no help to the appellant mainly for the reasons that: (a) The facts, illustrated hereinabove, make the present case different from the facts of the case upon which reliance has been placed by the appellant, and hence are of no assistance to the case of the appellant. (b) The reliance of the counsel on State of Haryana v. Manoj Kumar (supra) is misconceived since the Supreme Court only propounded the jurisdiction of the High Court under Article 227 in interfering with the concurrent findings of fact of the courts below and further stated that the issuance of notification (fixing the circle rate) is imperative to arrest the tendency of evading the payment of actual stamp duty. The Hon’ble Supreme Court set aside the judgment rendered by the High Court for being without ‘basis or rationale’ and is completely silent on the issue of determination of value of a property for payment of stamp duty.

(c) Even the sale deeds upon which the reliance was placed by the Collector were supplied to the respondent (original petitioner) only at appellate stage. It appears that the areas of these plots were approximately 10% of the plot in question. Smaller the plot/property higher can be the sale consideration fetched.

6. Counsel for the respondent (original petitioner) has also relied upon several decisions. As the matter is being remanded by the learned Single Judge and as we are dismissing this appeal, without going into the details of the judgments, but, suffice it to say that the circle rates are not the only factors to be kept in mind by the Collector. The circle rate can be one of the factors to be kept in mind by the Collector for determination of the value under Section 47A of the Indian Stamp Act, 1899, especially, when the person who has approached for registration of the sale deed is disputing the valuation pointed out by the registering authority. In such an eventuality, detailed procedure ought to have been followed by the Collector as per Section 47-A(2) of the Act, 1899 keeping in mind the aforesaid aspects of the matter as well as the principles propounded by the Hon’ble Supreme Court, for determination of the value of the property. The mechanical approach of the Collector only to follow the circle rate is hereby deprecated.

7. With the aforesaid observations, this Letters Patent Appeal is hereby dismissed as we see no reason to interfere with the judgment and order dated 14th March, 2019 passed by the learned Single Judge in W.P.(C) 3587/2018 since no error was committed by the learned Single Judge in appreciating the aforesaid facts of the matter.

8. The money deposited by the respondent (original petitioner) with this Court as per the order dated 12th April, 2018 passed by the learned Single Judge shall remain deposited with the Registrar General of this Court and will be invested in a nationalised bank, since the matter is being remanded to the Collector for fresh determination of the valuation, and if any additional stamp duty is required to be paid by this respondent (original petitioner), the amount of ₹1,06,87,791/- will be adjusted towards the same. If more amount is to be deposited by the original petitioner, the aforesaid amount will be adjusted. If lesser amount is to be paid by the original petitioner, rest of the amount will be returned to the original petitioner.

9. Appellant as well as original petitioner can move appropriate application for withdrawal of the amount in this Letters Patent Appeal. They are also permitted to move an application in this Letters Patent Appeal in case of any difficulty.

10. The Collector will determine value of the property in question, in accordance with law and keeping in mind the aforesaid decisions of the Hon’ble Supreme Court and will keep in mind the principles mentioned in this judgment for arriving at value of the property.

11. Both the parties are at liberty to adduce their evidences before the Collector in the proceedings under section 47-A(2) of the Act, 1899 to be read with other provisions of the Act, 1899 and the Rules made thereunder.

12. The appeal is hereby dismissed. C.M. No. 19585/2019 (Stay)

13. In view of the final order passed in LPA 278/2019, this application stands disposed of.

CHIEF JUSTICE C.HARI SHANKAR, J NOVEMBER 15, 2019 ns