R. Umaprasad vs Deputy Commissioner for Detection of Under valuation of Stamps and Others

H. Rangavittalachar, J.—The writ petitioner purchased a vacant site bearing No. 86 situate at III Block, Rajmahal Vilas, II Stage, Bangalore, under a sale deed dated 21-8-1996 and presented the document for registration on 29-8-1996 before the Sub-Registrar, Bangalore, who suspecting that the property was undervalued in order to avoid payment of proper stamp duty, referred the matter to the District Registrar for proper assessment of the market value of the property and for payment of proper stamp duty. The District Registrar valued the property at the rate of Rs. 893/- per sq. ft. On that basis, called upon the petitioner to pay a "deficit stamp duty of Rs. 96,875/-".

Aggrieved by the order of the District Registrar, the petitioner preferred an appeal before the Divisional Commissioner. The Divisional Commissioner has dismissed the appeal.

These two orders are under challenge.

The main contention of the writ petitioner before this Court is that both the District Registrar and the Divisional Commissioner were not justified in assessing the market value of the property on the basis of the guidelines issued by the State Government fixing the market value of each locality in Bangalore without holding an independent enquiry in this regard.

Contention deserves to be accepted.

A reading of the order of the District Registrar and the Divisional Commissioner reveals that both of them have determined the market value only on the basis of a Government guideline "fixing the value of all vacant sites situate at Rajmahal Vilas Extension, II Stage, Bangalore, where the property in question is situate at Rs. 893/- per sq. ft." without holding any enquiry for correctly arriving at the market value.

A detailed procedure is prescribed under the Karnataka Stamp Act, 1957 (hereinafter referred to as an "Act" for brevity) and the rules framed under the Act for determining the proper market value for purposes of payment of proper stamp duty. The relevant provision of the Act and the Rules will be referred to whenever necessary:

Under the scheme of the Karnataka Stamp Act and the Rules, whenever the Registering Authority feels that any document presented before it for registration does not correctly state the market value of the property, the Registering Authority may refer the matter u/s 45-A of the Act to the Deputy Commissioner for proper determination of the market value and for payment of proper stamp duty. On receipt of reference, u/s 45-A(2) of the Act, the Deputy Commissioner, after giving the parties an opportunity of being heard, shall hold an enquiry for assessing the proper market value. Rules have been made called as the Karnataka Stamp (Prevention of Under valuation of Instruments) Rules, 1977 which inter alia provides for the procedure for holding the enquiry and the factors to be taken into consideration while arriving at the correct market value, relevant ones being Rules 4, 5 and 7.

Rule 4 reads:

"4. Procedure on receipt of reference u/s 45-A.-- (1) On receipt of a reference under Sub-section (1) of Section 45-A from a registering officer, the Deputy Commissioner shall issue a notice in Form II.--

(i) to every person by whom; and

(ii) to every person in whose favour the instrument has been executed, informing him of the receipt of the reference and asking him to submit to him, his representation, if any, in writing to show that the market value of the property has been truly set forth in the instrument, and also to produce all evidence that he has in support of his representation, within 21 days from the date of service of the notice.

(2) The Deputy Commissioner may, if he thinks fit, record a statement from any person to whom a notice under Sub-rule (1) has been issued.

(3) The Deputy Commissioner may for the purpose of his enquiry.--

(i) call for any information or record from any public office, officer or authority under the Government or any- local authority".

Relevant clauses of Rule 5 is extracted omitting those clauses which are not applicable to the case on hand:

"5. Principles for determination of market value.-- The Deputy Commissioner shall, as far as possible, have also regard to the following points in arriving at the market value.--

(1) In the case of lands.--

(i) xxx

(ii) xxx

(iii) xxx

(iv) xxx

(v) xxx

(vi) xxx

(vii) xxx

(viii) xxx

(2) In the case of house sites.--

(i) the general value of house sites in the locality;

(ii)nearness to road, railway station, bus route;

(iii) nearness to market, shops and the like;

(iv) amenities available in the places like public offices, hospitals and educational institutions;

(v) development activities, industrial improvements in the vicinity;

(vi) land tax and valuation of sites with reference to taxation records of the local authorities concerned;

(vii) any other features having a special bearing on the valuation of the site; and

(viii) any special features of the case represented by the parties".

After completing the enquiry as required under Rules 4 and 5, the District Registrar/Deputy Commissioner is obliged in law, to pass a reasoned order, reflecting his application of mind to the relevant material as per Rule 7, Rule 7 reads:

"(1) The Deputy Commissioner shall after considering the representations received in writing and those urged at the time of the hearing and after a careful consideration of all the relevant factors and evidence placed before him, pass an order, determining the market value of the properties and the duty payable on the instrument, communicate the order to the parties.

(2) A copy of the order shall be communicated to the registering officer concerned to take steps to collect the difference in the amount of stamp duty, if any and register the document".

Thus, by a reading of the above extracted portion of the rules, it is manifest that the Enquiring Authority u/s 45-A(2) of the Act, is statutorily obliged to hold a detail enquiry taking into consideration several factors like the exact location of the site in question prevailing market value, its special advantages etc., and pass a considered order giving reasons and if it fails to do so, the Appellate Authority is obliged to correct the same in exercise of its appellate powers otherwise providing of statutory appeals would become meaningless. The Registrar has not conducted the enquiry as required under Rules 4 and 5 nor his order reflects any application of mind.

The Appellate Authority also has abdicated its appellate power of examining the correctness of the order under appeal with reference to statutory requirements and the general principles of law. Both the orders of the Appellate Authority and the Registrar are clearly unsustainable and accordingly quashed. The matter is remitted to the file of the Inspector General of Stamps, who is now the Appellate Authority to rehear the appeal in the light of above discussion after notice to parties.

Sri V.Y. Kumar, learned Government Advocate is directed to file a memo of appearance within four weeks from today.