REGISTRAR OF ASSURANCES & ANR. versus ASL VYAPAR PRIVATE LTD. & ANR on 10 November 2022

1098

SUPREME COURT REPORTS

[2022] 11 S.C.R.

AREGISTRAR OF ASSURANCES & ANR.

v.

ASL VYAPAR PRIVATE LTD. & ANR

(Civil Appeal No.8281 of 2022)

BNOVEMBER 10, 2022

[SANJAY KISHAN KAUL, ABHAY S. OKA AND VIKRAMNATH, JJ.]

Indian stamp Act,1899 – s.47A – Reference – Answered –Held: s.47A has no application to a public auction carried outCthrough Court process/receiver as it is the most transparent mannerof obtaining the correct market value of the property – Theindependent determination of value of property by a Registeringofficer would not apply to a Court sale but to a private transaction– Interference by the Registering Authority on the aspect of priceDof transaction is unjustified – Reference is required to be answeredby opining that in case of a public auction monitored by the Court,the discretion would not be available to the Registering Authorityu/s.47A of the Act.

Indian Stamp Act,1899 – Object and purpose – Discussed.

EAnswering the reference and dismissing the appeals, theCourt, HELD : 1. This Court does not have slightest hesitation inupholding the view that the provision of Section 47A of the Actcannot be said to have any application to a public auction carriedFout through court process/receiver as that is the most transparentmanner of obtaining the correct market value of the property.[Para 22][1113-A-B]

2. It is no doubt true that in a court auction, the priceobtainable may be slightly less as any bidder has to take care of aGscenario where the auction may be challenged which could resultin passage of time in obtaining perfection of title, with also thepossibility of it being overturned. But then that is a priceobtainable as a result of the process by which the property has tobe disposed of. One cannot lose sight of the very objective of theHintroduction of the Section whether under the West Bengal Amendment Act or in any other State, i.e., that in case of undervaluation of property, an aspect not uncommon in our country,where consideration may be passing through two modes – onethe declared price and the other undeclared component, the Stateshould not be deprived of the revenue. Such transactions do notreflect the correct price in the document as something more hasbeen paid through a different method. The objective is to takecare of such a scenario so that the State revenue is not affectedand the price actually obtainable in a free market should be capableof being stamped. If one may say, it is, in fact, a reflection on themanner in which the transfer of an immovable property takesplace as the price obtainable in a transparent manner would bedifferent. An auction of a property is possibly one of the mosttransparent methods by which the property can be sold. Thus, tosay that even in a court monitored auction, the RegisteringAuthority would have a say on what is the market price, wouldamount to the Registering Authority sitting in appeal over thedecision of the Court permitting sale at a particular price. In acourt auction following its own procedure, the Registering Officercannot have any reason to believe that the market value of theproperty was not duly set forth – a pre-requisite for a RegisteringAuthority to exercise its power under the said Section. [Paras23, 26][1113-B-F, 1114-D-E]

3. If this court see in the factual context of the two scenariosin respect of the two cases, the telling aspect in a partition casewas the existence of 98 tenants on a land at a monthly rent ofRs.8,000 for the entire land and 80 vendors occupying the landfor hawking business during day time. It is trite to say that themere existence of tenancy results in a considerable decline inthe market value of the property as they may have their statutoryrights and even otherwise, the purchaser would be acquiring theproperty hardly in an ideal scenario and would be left with theburden to take legal processes for the eviction. In such a scenario,there is actually a great depression in the market value of theproperty as even if a fair transaction without an auction takesplace with full reflection of price, the transacted value would behalf or less of a vacant property. The tenancy aspect can hardlybe said to be an aspect which could be ignored in the determinationof the price. [ Para 27][1114-E-G]

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A4. In the company matter, repeated auctions were held andit is in the negotiated bid that the higher price was obtained. Itwas court monitored. There would be no occasion for the courtto accept the bid if it was not satisfied with the process and thevaluation. A correct value of a property is the one where there isa purchaser and a seller ad idem on the price (the actual price).BThe market value is, thus, the value which the highest bidder iswilling to pay in the facts and prevailing circumstances and not anotional price. [Para 28][1115-A-B]

6. This Court find hardly any rational in adopting thesubmissions on behalf of the appellant. The provisions are notCdissimilar in the different enactments in its fundamentals; the“reason to believe” of a Registering Officer has to be based onground realities and not some whimsical determination; theRegistering Authority cannot be permitted to doubt the liquidationproceedings as having some superior knowledge when it is aDcourt monitored process where the court would take care ofaspects such as cartelization; the Registering Authority can hardlybe said to be the only authority with knowledge of the subject tothe exclusion of the court; the independent determination by aRegistering Officer would not apply to a court sale but to a privatetransaction; the Stamp Act being a fiscal statute, while beingEinterpreted strictly and literally would not imply some kind ofabsolute power. [Para 29][1115-C-D]

Govt. of Andhra Pradesh & Ors. v. P. Laxmi Devi2008(4) SCC 720 : [2008] 3 SCR 330; V.N. Devadoss v.Chief Revenue Control Office-cum-Inspector & Ors.F(2009) 7 SCC 438 : [2009] 8 SCR 1043;Birendra NathManna & Anr. v. State of West Bengal & Ors.2000 (1)CHN 173;M/s. Kayjay Industries Pvt. Ltd. V. M/s.Asnew Drums (P) Ltd. & Ors.(1974) 2 SCC 213 : [1974]3 SCR 678;Additional Distt. Sub-Registrar, Siliguri v.GPawan Kumar Verma(2013) 7 SCC 537; The InspectorGeneral of Registration v. K.P. Kadar Hussain 2014SCCOnline Mad 3503 – referred to.

Case Law Reference

[2008] 3 SCR 330H

referred to

Para 8(1)

REGISTRAR OF ASSURANCES & ANR. v. ASL VYAPARPRIVATE LTD. & ANR

CIVIL APPELLATE JURISDICTION : Civil Appeal No.8281of 2022.

From the Judgment and Order dated 13.05.2010 of the High Courtat Calcutta in APOT No.196 of 2008 in EOS No.32 of 1987.

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With

Civil Appeal No.8282 of 2022.

Anand Grover, Sr. Adv., Ms. Astha Sharma, Nipun Saxena,Ravinder Singh, Ms. Raveesha Gupta, Ms. Mantika Haryani, SanjeevKaushik, Shreyas Awasthi, Ms. Deeksha Agrawal, Shantanu Sharma,Archit Adlakha, Ms. Somya Saxena, Advs. for the Appellants.

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Gaurav Kejriwal, Pankaj Singhal, Pawas Agarwal, Arjun Agarwal,Partha Sil, Sanjiv Saxena, Ruchir Mishra, Ramnik Mishra, Tavish B Prasad,DSonjoy Kumar Ghosh, Mrs. Rupali Samanta Ghosh, Advs. for theRespondents.

The Judgment of the Court was delivered by SANJAY KISHAN KAUL, J.

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Leave granted.

Background:

Facts

1. The impugned judgment dated 13.05.2010 in W.P. No. 1295/2009 passed by the High Court of Calcutta decided a reference arisingfrom the following two matters –

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(i) State of West Bengal & Anr. v. Sati Enclave Pvt. Ltd. & Ors.,a Letters Patent Appeal being APOT No. 196 of 2008 from apartition and administration suit (“the Partition matter”) and,

(ii) ASL Vyapar Pvt. Ltd. v. The Registrar of Assurances & Ors.,a Writ Petition being Writ Petition No. 1295 of 2009 (“the Companymatter”).

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The facts:

2. In Re the Partition Matter: In a Partition Suit beingExtraordinary Suit No. 32 of 1987, Ld. Single Judge passed an order H

Adated 15.09.1987 for the sale of Premises No. 20 to 20/14 (except 20/10) Chetla Flat Road, Kolkata- 700027 (“the land”), measuring 41 cottahsand 21 chittacks, i.e. approximately 2800 square metres. On 08.03.2006,the Joint Receivers appointed by the Court issued an advertisement inThe Telegraph, a leading daily newspaper for sale of the land. At theauction, several parties participated, and the offer made by one PriyaBDutta at the rate of Rs.1,88,500 per cottah was the highest. However,she did not pay the entire earnest money which was stipulated at therate of 10% of the bid amount. Sati Pvt. Ltd. (R1 in S.L.P.(C) 22197 of2010) also offered to match the bid amount Rs.1,88,500 and to pay theentire earnest money within 3 days. The court directed default clausesCin case of failure to pay the earnest money or consideration amount,such as, if Sati Pvt. Ltd. did not pay the earnest money within 3 days, thejoint receivers could proceed to convey the property to the next highestbidder whose bid was for Rs.1,88,000 per cottah.

3. Vide order dated 04.12.2006, Ld. Single Judge accepted theDoffer of Sati Pvt. Ltd. and confirmed the sale in its favour. It was furtherdirected that the aforesaid consideration being the actual considerationfor the property would be treated as value of the property for the purposeof registration and stamp duty. The Joint Receivers executed theconveyance in favour of Sati Pvt. Ltd. and presented the same forregistration on 16.05.2007 for sale consideration of Rs.78,69,875. StampEduty of Rs. 5,48,810 and Registration Fee of Rs. 86,650 were also paid.

4. However, on 14.12.2007, the Registrar of Assurances issued anotice under section 47A (2) of the Indian Stamp Act, 1899 (“the Act”)intimating that the market value of the land was assessed by theRegistering Officer at Rs. 7,76,69,838 on which deficit Stamp Duty ofFRs.48,85,888 and deficit Registration Fee of Rs. 7,67,800 were requiredto be paid. Sati Pvt. Ltd. filed a Contempt Application against the Registrarfor allegedly committing breach of the order dated 04.12.2006 of the Ld.Single Judge. The Registrar filed an application seeking recalling of orderdated 04.12.2006, but the same was rejected. Aggrieved, the RegistrarGfiled an appeal before the Division Bench who referred the question fordecision by a larger bench.

5. In Re the Company matter: By an order dated 21.07.2004 ofthe Ld. Single Judge, M/s. Kayan Udyog Ltd. was ordered to be woundup and the Official Liquidator was directed to take the necessary steps.HThe Official Liquidator published an advertisement on 12.05.2006 in daily

newspapers inviting offers for purchase of assets and properties of thecompany on “as is where is and whatever there is basis” with a ReservePrice of Rs.1.20 crores and the highest offer received was Rs.75,00,000.The Company Court directed revision of the Reserve Price and to issuea fresh advertisement. In the second advertisement dated 15.09.2006,the Reserve Price was fixed at Rs. 1 crore and the highest offer receivedwas Rs.86,00,000 which was subsequently enhanced to Rs. 87,00,000when the auction was held in the Company Court.

6. Vide order dated 08.09.2006, the Company Court confirmedthe sale in favour of ASL Pvt. Ltd. at Rs.87,00,000 subject to certainconditions of payment within stipulated time periods. On payment of theentire consideration, the Official Liquidator executed the ConveyanceDeed on 07.05.2008 and presented the same before the Registrar ofAssurance, Calcutta for registration. On 06.08.2008, the AdditionalRegistrar of Assurance-II issued a Demand Notice to ASL Pvt. Ltd.informing that the market value of the property was assessed at Rs.1.70crores and ASL Pvt. Ltd. had to pay the deficit Stamp Duty of Rs.5,86,000as well as deficit Registration Fee of Rs.92,125. Aggrieved, ASL Pvt.Ltd. filed the writ petition challenging the notice. Ld. Single Judge referredthe question to a larger bench.

Proceedings before the Full Bench of the Calcutta High Court:

7. In order to appreciate the controversy, it would be appropriateto first reproduce the relevant provision in exercise of which power thehigher stamp duty was sought. Section 47A was inserted by the IndianStamp (West Bengal Amendment) Act, 1990 (hereinafter referred to asthe ‘Act’) reads as under:

“47A. – Instruments of conveyance etc. undervalued how to bedealt with – (1) Where the registering officer appointed under theRegistration Act, 1908 (16 of 1908), has while registering anyinstrument of conveyance, exchange, gift, partition or settlement,reason to believe that the market value of the property which isthe subject matter of such instrument has not been truly set forthin the instrument, he may, notwithstanding the contrary provisionsin Section 35 insofar as it relates to registration, register suchinstrument provisionally, subject to determination of the marketvalue under sub-section (2), and, after registering such instrument,refer the matter to such authority as may be prescribed for A

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Adetermination of the market value of such property and the properduty payable thereon.”

Section 47A was further amended by the Indian Stamp (WestBengal Amendment) Act, 1998 with effect from 15.03.2021, and readsas under:B

“47A. Instruments of conveyance, etc. undervalued, how to bedealt with (1) Where the registering officer appointed under theRegistration Act, 1908 (16 of 1908) has, while registering anyinstrument of

a) agreement or memorandum of an agreement relating to aCsale or lease-cum sale of immovable property,

b) conveyance, (c) to (h) .......

reason to believe that the market value of the property whichis the subject matter of any such instrument has not been trulyDset forth in the instrument ·presented for registration, he may,after receiving such instrument, ascertain the market value ofthe property which is the subject matter of such instrument inthe manner prescribed and compute the proper stamp dutychargeable· on the market value so · ascertained and thereafterhe shall, notwithstanding anything to the contrary contained inEthe Registration Act, 1908, in so far as it relates to registration,keep registration of such instrument in abeyance till propertywhich 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 payableFby the person liable to pay the duty.”

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8. The successful purchasers (respondents herein) sought to relyupon the two judicial views of this Court in support of their contentionthat the transacted value alone should be taken into consideration foraffixation of stamp duty.G1. Govt. of Andhra Pradesh & Ors .v. P. Laxmi Devi[1], whicharose under Section 47A as applicable to Andhra Pradesh, whereinthe Court opined that there was large scale undervaluation of thereal value of property in sale deed so as to defraud the governmentproper revenue. There was no provision in the original Stamp Act to empower the Revenue Authorities to make an inquiry aboutthe value of the conveyed property. Hence, amendments weremade to the Indian Stamp Act from time to time in several statesto determine the correct stamp duty.

2. V.N. Devadoss v. Chief Revenue Control Office-cum-Inspector & Ors.[2], which arose under Section 47A as applicableto Tamil Nadu, wherein it was held that it is not a routine procedureto be followed in respect of each and every document ofconveyance presented for registration without any evidence toshow lack of bona fide of the parties. Therefore, the basis for theexercise of power under section 47A of the Act is the wilfulundervaluation of the subject of transfer with fraudulent intentionto evade payment of proper stamp duty. The Registering Officercannot have any reason to believe that the market value of theproperty was not truly set forth in an instrument of transferexecuted pursuant to the order of a court, when the property wassold at a public auction after the publication of the advertisement in newspapers.

9. The respondents then relied upon the judgment in BirendraNath Manna & Anr. v. State of West Bengal & Ors.[3], which upheldthe constitutional validity of Section 47A as applicable to West Bengal.The Respondents also submitted that the Statement of Objects andReasons for enactment of the Indian Stamp Act (West BengalAmendment) 1990 contained the explanation for insertion of Section47A. It was stated that West Bengal is no exception to the generalphenomenon of under valuation of properties and the revenue from stampduty has increased sharply for states where the basis of charging dutywas changed from the declared price or value of properties to the marketvalue.

10. In the aforesaid context it was pleaded that the best possibleprices were obtainable through a transparent method and that is whatwas the price of the transactions. In the partition matter, there were 98tenants on the land and the total monthly rent was Rs.8,000 for theentire land and 80 vendors were occupying the land for hawking businessduring daytime and, thus, the consideration of Rs.78,69,000 was the bestpossible price. Similarly, in the company matter, the endeavour was made 2 (2009) 7 SCC 438

3 2000 (1) CHN 173

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Amore than once but even the reserve price was not obtainable and, thus,the best possible price was obtained at an auction. The market value ofthe property would not be a hypothetical figure, which the bidder mustmatch rather it is the value, which is obtainable through the process ofthe highest bidder willing to pay under the prevailing circumstances.

B11. On the other hand, the State (appellant before us) submittedthat the provisions brought about by the amendment mentioned aforesaidwas different from the one in Tamil Nadu and, thus, the pronouncementin V.N. Devadoss[4] case will not apply. In addition, it was urged that theLd. Single Judge vide order dated 04.12.2006 lacked the jurisdiction togive pre-emptive direction that the consideration being the actualCconsideration for the property would be treated as value of the propertyfor registration and stamp duty as Section 47 of the Act provides that theorder passed by the Chief Controlling Revenue Authority shall be finaland shall not be called into question in any civil court or before anyauthority.D12. The three Judges Bench held on the conspectus of the aforesaidarguments that Section 47A of the Act as applicable to West Bengalread with Rule 3 of the West Bengal Stamp (Prevention of Undervaluationof Instruments) Rules, 2001 (hereinafter referred to as the ‘Rules’) isnot applicable to an instrument executed by a Receiver pursuant to anEorder of sale passed by a civil court, after publication in newspapers.The sale conducted by the court through its officers qualifies to be anopen market sale subject to the following conditions:

a) there must be wide publicity of the proposed sale andparticularly there shall be publication of advertisement in atFleast one newspaper having wide circulation in the concernedcity/town/ district.

b) The purchaser of the property must not be connected withor related to the authority/ officer conducting the sale.

13. In the discussion over the objective and purport of SectionG47A of the Act as applicable to the State of West Bengal, Tamil Naduand Andhra Pradesh, it was observed that they were in pari materiainsofar as they confer power on the Registering Officer not to registeran instrument when the Registering Officer has reason to believe thatthe market value of the property has not been truly set forth in the H4 (supra)

instrument. The difference in language of the Section was not significant.When a property is sold in a private sale, the registering officer has thepower to determine the actual value of the property. As legal fictions arelimited for the purpose for which they are created and cannot be widenedby Rules made under the Act and no such fiction is required to be providedfor determining the price of the property when it is sold in the openmarket. Thus, the definition of “Market Value” as under Section 2(16B)of the Act would not apply to the property if actually sold in the openmarket.

“2(16B) – ‘Market Value’ means, in relation to any property whichis the subject matter of an instrument, the price which such propertywould have fetched or would fetch if sold in open market on thedate of execution of such instrument as determined in such mannerand by such authority as may be prescribed by rules made underthis Act of the consideration stated in the instrument, whicheveris higher.”

14. Insofar as the expression “whichever is higher” in the sub-section aforesaid, it would mean the higher of the two prices, i.e., theprice which such property would have fetched in the open market on thedate of execution of such instrument (i.e., in the immediate past) or theprice which such property would fetch if sold in the open market on thedate of execution of such instrument (i.e., in the immediate future). Ifthe legislature had intended that Section 2(16B) of the Act was to applyto open market sales also it would have made a separate or specificprovision regarding the determination of the price of the property beingsold in the open market. The expression “if sold in open market” pre-supposes that the property was not sold in the open market. The languageof Rule 3 also buttresses the same view where none of the four methodsof determining the value of the property in question refers to value fetchedat an open market sale. A court sale was opined to be an open sale.Advertisements published in the daily newspapers having wide circulationin the city or town where the property is situated is an open market sale.The court may be well advised to get the valuation of the property madeby a registered valuer for the purposes of fixing the Reserve Price beforeissuing the advertisement in newspapers. However, this cannot be apre-requisite as it is not always possible to get bids above the reserveprice or even matching the reserve price, as was seen in the companymatter. The whole basis of holding that a Court sale is an open market A

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Asale is the sanctity with which the proceedings of the sale are conductedby the court and its officers. In case the registering authority has anymaterial to doubt such sanctity, it is open for it to move the court with aproper application pointing out such materials for reviewing the orderregarding the determination of price.B15. We may note that in order to buttress the entitlement for fixation B15. We may note that in order to buttress the entitlement for fixationof stamp duty based on a market value as perceived in the aforesaidsub-section, the State relied upon the judicial pronouncement of this Courtin M/s. Kayjay Industries Pvt. Ltd. V. M/s. Asnew Drums (P) Ltd. &Ors.[5] It was submitted that a Court sale is a forced sale andnotwithstanding the competitive element of a public auction, the bestCprice is not often forthcoming, thereby creating an apprehension that itwill adversely affect the State Exchequer in respect of other propertiesin the area. However, even if the property at a Court sale does not fetchthe highest or best available price and there are other pieces of evidenceof market value of similar properties available in the area, the RegisteringDOfficer can always consider the other sale instances or any other materialreflecting higher value of the property under sections 47A(1)(2) readwith Section 2(16B) of the Act and Rule 3 of the Undervaluation Rulesof 2001.

The Occasion for Reference:E16. On consideration of the matter on 6.2.2020, it was opined thatthe impugned judgment had traversed certain areas over which the Courthad reservations:

a. the interpretation of Section 2(16B) of the Act as set out inpara 24 of the impugned judgment (referring to the higher priceFin the immediate past or immediate future), is contrary to thewordings of the statute;

b. para 27.4 of the impugned judgment (giving RegisteringOfficer the liberty to move the court with proper application incase of doubts on sanctity of the open market sale) sought toGgive the Registering Authority a new channel to open up finaltransaction having far reaching repercussions; and

c. the conclusion contained in paras 29.1 and 29.2 (holdingthat a court sale cannot be the subject matter of exercise of H5 (1974) 2 SCC 213

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powers by the Registering Authority, along with conditions tobe satisfied for a court sale to be an open market sale) werebeyond what was observed.

17. In the conspectus of the aforesaid it was opined that the Benchwould have proceeded to enunciate the legal position, but the respondentmentioned a judgment of two Judges Bench of this Court in AdditionalDistt. Sub-Registrar, Siliguri v. Pawan Kumar Verma[6] which heldthat a Registering Authority cannot be compelled to follow the valuefixed by the court for purposes of suit valuation, which sought to traversea different path. It was held that a legal principle should be settled in thecontext of Section 47A in West Bengal, after taking into considerationthat similar amendments were made in the states of Tamil Nadu andAndhra Pradesh though they were not identical. Thus, the matter wasreferred to a three-Judges Bench of this Court.

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Submissions of the Appellant:

18. The appellant sought to assail the restriction on the power ofthe Registering Officer in case of court auction sales by contending:

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•Section 47A of the Act as applicable to West Bengal isdifferent from Section 47A of the Act as applicable to TamilNadu. Under the Indian Stamp Act (Tamil NaduAmendment) Act, 1967, the matter would be referred tothe Collector for the determination of market value, whereasunder the Indian Stamp Act (West Bengal Amendment)Act, 1990, the matter has to be referred to such authorityas may be prescribed in the Rules for the same. The“reasonable belief” under Section 47A of the Act is anobjective assessment based on the facts and informationdisclosed, and it is incorrect to read the intention of theparties to the sale.

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•The impugned judgment incorrectly drew a similaritybetween Section 2(16B) of the Act as amended in WestBengal and the Explanation appended to Section 47A ofGthe Act applicable in Tamil Nadu. The former contemplatesthat the market value must be determined in the mannerprescribed in the W.B. Stamp Rules and aims to determine 1110SUPREME COURT REPORTS

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an amount “whichever is higher”, whereas the latter leavesit to the discretion of the authorities specified therein.

•There could be diverse reasons for the Registering Officerto have ‘reason to believe’ that the market value is incorrect,including in a court sale or liquidation proceedings, theadvertisement was not made properly to elicit buyers; thesale of the property was frequently postponed; orcartelization among buyers. As per Kayjay Industries[7]case, it was held that in a court auction sale, there is morelikelihood of a distress sale at a lower value. The RegisteringOfficer has the requisite experience in this behalf, namelytheir knowledge of market values of different areas andcircle areas based on sales in the immediately preceding 5years, and the discrepancy between the market value andvalue disclosed in the instrument.

•Rule 3 of the W.B. Stamp Rules enlists the different waysin which the market value of a property can be determined.The term “or” as used in Rule 3 denotes that the waysmentioned therein are disjunctive with the primary objectivebeing to devise a mechanism that brings the “highest price”or “whichever is greater”. Therefore, the RegisteringOfficer is not bound by only what is specified in the deed ordetermined by the court and can determine a value that isgreater amongst the ways stipulated therein. The impugnedjudgment eliminates the independent “determination” by theRegistering Officer for every court sale, which is againstthe plain reading of the statute and the objective lyingunderneath, viz. to determine the “highest price” of theproperty.

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The expression “shall” makes it obligatory for theRegistering Authority to “determine” the market value ofthe property based on the “highest price”. The impugnedjudgment has erred in interpreting Section 47A of the Actand Rule 3 of the W.B. Stamp Rules in a manner which isagainst the very objective of the Act, the purpose of whichis to levy the stamp duty itself, i.e. maximize the revenue ofthe State. The impugned judgment has held that if a sale is concluded by the court process, or during liquidationproceedings, or open sales, the Registering Authority shallhave to take the value of the property as gospel truth, andnot carry out its mandatory statutory obligation for the“determination” based on the ways under Rule 3(1) of theW.B. Stamp Rules.

•It is settled law that an interpretation that limits or curtailsthe discretion of the authority, when such discretionarypowers and limits are laid down in the statute itself, isimpermissible. When the legislature has not created adistinction between specific classes (distress sale and otherforms of sale), the Court cannot, by a judicial decision, createor carve out a new class which was not contemplated bythe statute.

•The Stamp Act being a fiscal statute, should be interpretedstrictly and literally. The impugned judgment inserted a ‘non-obstante clause’ which would make Rule 3 of the W.B.Stamp Rules and Sections 47A, 47B, and 47C of the Act asapplicable in West Bengal, inapplicable to any court sale/auction sale. The impugned judgment cannot create an‘exemption’ clause in the fiscal statute when none is providedunder the statute. Section 47A as amended in West Bengalis similar to Section 47A as amended by the State of AndhraPradesh, which has been upheld in P. Laxmi Devi[8] case,wherein it was held that where wordings of a taxation statuteare so plain and unambiguous that it admits no exceptions,the relying on the object and purpose of the amendmentwould be committing an error.

•The decision of V.N. Devadoss[9] case is per incuriam inview of paragraph 7 of Kayjay Industries[10] case whichheld that a court sale is a forced sale notwithstanding thecompetitive element of a public auction, and the best priceis often not forthcoming.

•The impugned judgment relies on the doctrine of deemedfiction to conclude that the object of the Act is to prevent 8 (supra)

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fraudulent undervaluation. Unlike the authorities relied uponin the impugned judgment, the application of the doctrine ofdeemed fiction is misplaced.

Submission of the Respondents:

19. Learned counsel for the respondents sought to support theBview of the High Court by relying upon the judgment of this Court in TheInspector General of Registration v. K.P. Kadar Hussain[11]to theeffect that sale deeds executed by the court auctioned sales are allowedto be questioned by a party on some pretext, the sanctity, finality, andcredibility of such court auctioned sales and execution of the sale deedsCwill come under cloud and the same should not be permitted.

20. In the Company matter, emphasis was placed on the intentionof the State Legislature, i.e., to accept ‘market value’ as set forth in aninstrument by which the immovable property was transferred or acquiredby the Central or the State Government or any other authority under theDCentral or State Government, etc. without any reference of Section 2(16B)and 47A of the Act, as can be seen from Rule 3C(9) of the West BengalStamp Rules. It was contended that there was, thus, no question ofintention of any defraud or not disclose the correct price in a court saleand as per the observations in V.N. Devadoss[12] case the RegisteringAuthority cannot be permitted to sit over appeal over the decision of theEcourt, especially a Constitutional Court and doubt the considerationdetermined in a court authorised sale.

21. It was pleaded that the reliance placed on Kayjay Industries[13]case was improper as it had been observed in para 9 that “court salesand market prices are distant neighbours.” The ratio of Pawan KumarFVerma[14] case would have no application as it is not an issue of suitvaluation. Moreover, the observations of the Supreme Court that theRegistering Authority will have an opportunity to make back referenceto the concerned court, and such court will freshly determine the suitvaluation, is not proper procedure as the court stands on a higher footing,Ghas the sanctity of law and cannot be altered by the Registering Authorityon the pretext of generating higher revenues.

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11 2014 SCC Online Mad 350312 (supra)13 (supra)14 (supra)

Conclusion:

22. On the conspectus of the matter, we have not the slightesthesitation in upholding the view that the provision of Section 47A of theAct cannot be said to have any application to a public auction carried outthrough court process/receiver as that is the most transparent mannerof obtaining the correct market value of the property.

23. It is no doubt true that in a court auction, the price obtainablemay be slightly less as any bidder has to take care of a scenario wherethe auction may be challenged which could result in passage of time inobtaining perfection of title, with also the possibility of it being overturned.But then that is a price obtainable as a result of the process by which theproperty has to be disposed of. We cannot lose sight of the very objectiveof the introduction of the Section whether under the West BengalAmendment Act or in any other State, i.e., that in case of under valuationof property, an aspect not uncommon in our country, where considerationmay be passing through two modes – one the declared price and theother undeclared component, the State should not be deprived of therevenue. Such transactions do not reflect the correct price in the documentas something more has been paid through a different method. Theobjective is to take care of such a scenario so that the State revenue isnot affected and the price actually obtainable in a free market should becapable of being stamped. If one may say, it is, in fact, a reflection onthe manner in which the transfer of an immovable property takes placeas the price obtainable in a transparent manner would be different. Anauction of a property is possibly one of the most transparent methods bywhich the property can be sold. Thus, to say that even in a court monitoredauction, the Registering Authority would have a say on what is the marketprice, would amount to the Registering Authority sitting in appeal overthe decision of the Court permitting sale at a particular price.

24. It is not as if a public auction is carried out just like that. Thenecessary pre-requisites require fixation of a minimum price and otheraspects to be taken care of so that the bidding process is transparent.Even after the bidding process is completed the court has a right tocancel the bid and such bids are subject to confirmation by the court.Once the court is satisfied that the bid price is the appropriate price onthe basis of the material before it and gives its imprimatur to it, anyinterference by the Registering Authority on the aspect of price oftransaction would be wholly unjustified.

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A25. We may only note that this Court in P. Laxmi Devi[15] case hasopined the purpose behind bringing into force Section 47A in the AndhraPradesh State, i.e., in case of large scale under-valuation of the realvalue of property in the sale deed, the Government is defrauded of aproper revenue. It was to take care of the absence of any provision inthe original Stamp Act empowering revenue authority to make an inquiryBabout the value of the conveyed property, that the Amendment wasbrought forth so that the revenue did not suffer. The judgment in V.N.Devadoss[16] case albeit in respect of Amendment in Tamil Nadu, opinedthat it was not a routine procedure to be followed in respect of each andevery document of conveyance presented for registration without anyCevidence to show a lack of bona fides of the parties. There has to be awillful under-valuation of the subject of transfer with fraudulent intentionto evade payment of proper stamp duty.

26. We do not accept the contention that the mere wordings ofthese different provisions in any way take away the fundamental intentDwith which the provision was brought into force and specifies so in thesame manner though albeit in a different language. In a court auctionfollowing its own procedure, the Registering Officer cannot have anyreason to believe that the market value of the property was not duly setforth – a pre-requisite for a Registering Authority to exercise its powerunder the said Section.E

27. If we see in the factual context of the two scenarios before usin respect of the two cases, the telling aspect in a partition case was theexistence of 98 tenants on a land at a monthly rent of Rs.8,000 for theentire land and 80 vendors occupying the land for hawking businessduring day time. It is trite to say that the mere existence of tenancyFresults in a considerable decline in the market value of the property asthey may have their statutory rights and even otherwise, the purchaserwould be acquiring the property hardly in an ideal scenario and would beleft with the burden to take legal processes for the eviction. In such ascenario, there is actually a great depression in the market value of theGproperty as even if a fair transaction without an auction takes place withfull reflection of price, the transacted value would be half or less of avacant property. The tenancy aspect can hardly be said to be an aspectwhich could be ignored in the determination of the price.

15 (supra)16 (supra)H

28. In the company matter, repeated auctions were held and it isin the negotiated bid that the higher price was obtained. It was courtmonitored. There would be no occasion for the court to accept the bid ifit was not satisfied with the process and the valuation. A correct valueof a property is the one where there is a purchaser and a seller ad idemon the price (the actual price). The market value is, thus, the value whichthe highest bidder is willing to pay in the facts and prevailing circumstancesand not a notional price.

29. We find hardly any rational in adopting the submissions onbehalf of the appellant. The provisions are not dissimilar in the differentenactments in its fundamentals; the “reason to believe” of a RegisteringOfficer has to be based on ground realities and not some whimsicaldetermination; the Registering Authority cannot be permitted to doubtthe liquidation proceedings as having some superior knowledge when itis a court monitored process where the court would take care of aspectssuch as cartelization; the Registering Authority can hardly be said to bethe only authority with knowledge of the subject to the exclusion of thecourt; the independent determination by a Registering Officer would notapply to a court sale but to a private transaction; the Stamp Act being afiscal statute, while being interpreted strictly and literally would not implysome kind of absolute power.

30. The decision of this Court in V.N. Devadoss[17] case can hardlybe said to be per incuriam. No doubt a court monitored auction is aforced sale, but then it has a competitive element of a public auction torealize the best possible price. In many court cases, this is the processfollowed by the court to get the best obtainable price taking due precaution.

31. We are, thus, of the view that this reference is required to beanswered by opining that in case of a public auction monitored by thecourt, the discretion would not be available to the Registering Authorityunder Section 47A of the Act.

32. We may further add that while making the reference, theBench itself had noted some aspects of the impugned judgment whichcould not find favour with it. Thus, we are not giving our imprimatur tosome of the rational adopted in the impugned judgment as alreadymentioned in the order of reference. These have been set out, onceagain, aforesaid as small paras (a), (b) & (c) while dealing with the ABC

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Aaspect of reference and on these aspects, the impugned judgment cannotbe said to be laying down the correct principles of law.

33. However, no further inquiry in that aspect is necessary inview of what we have opined herein and, thus, the appeals can standdisposed of without the requirement of further reference to a two JudgesBBench to deal with the facts and circumstances of the case as thoseaspects have also been dealt with by us.

34. The reference is answered accordingly and the appeals standdismissed albeit for the reasons set out herein.

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Ankit Gyan

(Assisted by : Aarsh Choudhary, LCRA)

Appeals dismissed.

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