2019 (11) TMI 1820 - HC - Indian Laws

Determination of the value of the property for payment of stamp duty under the Indian Stamp Act, 1899 - main contention advanced is that the documents on which the reliance was placed by the Collector were never supplied to the respondent - HELD THAT - As the matter is being remanded by the learned Single Judge and as this appeal is dismissed, 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 in RAMESH CHAND BANSAL ORS. VERSUS DISTRICT MAGISTRATE/COLLECTOR GHAZIABAD ORS. 1999 (5) TMI 604 - SUPREME COURT and RAVINDER NARAIN AND ANR. VERSUS UNION OF INDIA 2003 (2) TMI 515 - SUPREME COURT determination of the value of the property. The mechanical approach of the Collector only to follow the circle rate is hereby deprecated. It was held in the case of Ramesh Chand Bansal Ors. vs. District Magistrate/Collector that the impugned circular and the notice to be valid. Notice has already been issued to the appellants and they have an opportunity to contest the valuation prima facie fixed under the said circular and to prove to the contrary in the proceedings before the Collector. It was held in the case of Ravinder Narain Anr. vs. UOI that on the basis of the instances pressed into service by the acquiring authority and the land owner-appellants, the average can be fixed @ ₹ 61.50/- for both the notifications in question by adopting the extent of plotted area as done by the High Court which appears to be appropriate in the circumstances of the case. Therefore, the rate per sq. yard can be fixed @Rs.40/-. Though it was contended that there was marked variation in price relating to the instances of sale, vis--vis second notification, it does not appear, on the basis of evidence on record, that the fluctuation was of very high magnitude. This Letters Patent Appeal is hereby dismissed as there are no reason to interfere with the judgment and order dated 14th March, 2019 passed by the learned Single Judge since no error was committed by the learned Single Judge in appreciating the aforesaid facts of the matter. 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 Rs. 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. Appeal dismissed.

Summary

Issues Involved:
1. Under-valuation of property for stamp duty purposes.
2. Application of circle rates for property valuation.
3. Procedural fairness in supplying documents relied upon by the Collector.
4. Factors influencing property valuation.

Detailed Analysis:

1. Under-valuation of Property for Stamp Duty Purposes:
The primary issue revolves around the alleged under-valuation of a property measuring 1100 sq. yds. located at 66-A, Friends Colony (East), New Delhi-110065. The sale deed was executed for Rs. 36,00,00,000/- with a stamp duty of Rs. 2,16,00,000/-. The registering authority objected, citing under-valuation based on the prevailing circle rate, which valued the property at Rs. 71,61,59,700/-. Consequently, the matter was referred to the Collector under Section 47A of the Indian Stamp Act, 1899, who determined the market value based on the circle rate without providing the respondent with the relevant sale deeds of surrounding properties.

2. Application of Circle Rates for Property Valuation:
The appellant argued that the valuation based on the circle rate is presumed correct unless rebutted by the respondent. The circle rate was significantly higher than the sale consideration, creating a valuation difference of Rs. 35,61,59,700/-. The appellant cited previous decisions to support that circle rates can be the sole basis for valuation. However, the respondent contended that circle rates are not conclusive and only one of the factors for determining market value. The court agreed with the respondent, emphasizing that circle rates are merely a guideline and not sacrosanct.

3. Procedural Fairness in Supplying Documents Relied Upon by the Collector:
The respondent argued that the Collector did not supply the documents and sale deeds relied upon for determining the market value, which violated procedural fairness. The court found merit in this argument, noting that the sale deeds were only provided at the appellate stage and were of properties significantly smaller in size (approximately 10% of the plot in question). The court held that proper notice and access to documents are essential for a fair determination of property value.

4. Factors Influencing Property Valuation:
The court highlighted that property valuation depends on various factors, including:
- The area and location of the property.
- The use and nature of the property.
- The width of the road on which the property is situated.
- The nature and use of adjacent properties.
- The urgency of the sale and whether it was a distress sale.
- Prevailing market conditions and local price trends.

The court referenced several Supreme Court decisions to support its stance that circle rates are not the sole determinant of property value. The Collector must consider all relevant factors and conduct a detailed inquiry as mandated by Section 47A of the Act.

Conclusion:
The court dismissed the appeal, upholding the Single Judge's decision to quash the Collector's order and remand the matter for fresh determination. The court emphasized that the Collector must not mechanically apply circle rates but should consider all relevant factors and provide the concerned parties with all documents relied upon. The court directed the Collector to determine the property value in accordance with the law and Supreme Court guidelines, allowing both parties to present evidence. The amount deposited by the respondent will remain with the Registrar General and be adjusted based on the final determination of stamp duty.

Final Orders:
1. The Letters Patent Appeal is dismissed.
2. The money deposited by the respondent will remain with the Registrar General and be adjusted as required.
3. Both parties can move appropriate applications if needed.
4. The Collector will re-evaluate the property value, considering all relevant factors and legal principles.
5. Both parties are allowed to present evidence before the Collector.

C.M. No. 19585/2019 (Stay):
In view of the final order, this application stands disposed of.