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SUPREME COURT OF INDIA
Sanjay Kishan Kaul, Abhay S. Oka, Vikram Nath, JJ.
Registrar of Assurances & Anr. - Appellants
Versus
ASL Vyapar Private Ltd. & Anr. - Respondents
CIVIL APPEAL NO.8281 of 2022 [ARISING OUT OF S.L.P.(C) NO 21405 OF 2010] WITH CIVIL APPEAL NO.8282 OF 2022 Arising out of SLP(C) No. 22197 of 2010
Decided On : 10-11-2022
Indian Stamp Act, 1899 – Section 47A – Stamp duty – Auction sale of property – In case of a public auction monitored by court, discretion would not be available to Registering Authority under Section 47A of Act – Court monitored auction is a forced sale, but then it has a competitive element of a public auction to realize the best possible price – In many court cases, this is the process followed by court to get best obtainable price taking due precaution – In a court auction following its own procedure, Registering Officer cannot have any reason to believe that market value of property was not duly set forth – a pre-requisite for a Registering Authority to exercise its power under said Section – Once court is satisfied that bid price is appropriate price on the basis of material before it and gives its imprimatur to it, any interference by Registering Authority on aspect of price of transaction would be wholly unjustified – Provision of Section 47A of Act cannot be said to have any application to a public auction carried out through court process/receiver as that is the most transparent manner of obtaining correct market value of property. (Paras 22, 24, 26, 30 and 31)
Facts of the case:
On 14.12.2007, the Registrar of Assurances issued a notice under Section 47A (2) of Indian Stamp Act, 1899 intimating that the market value of the land was assessed by Registering Officer at Rs. 7,76,69,838 on which deficit Stamp Duty of Rs.48,85,888 and deficit Registration Fee of Rs. 7,67,800 were required to be paid. Sati Pvt. Ltd. filed a Contempt Application against Registrar for allegedly committing breach of the order dated 04.12.2006 of Single Judge. Registrar filed an application seeking recalling of order dated 04.12.2006, but the same was rejected. Aggrieved, the Registrar filed an appeal before the Division Bench who referred the question for decision by a larger Bench.
Findings of Court:
In a court auction following its own procedure, the Registering Officer cannot have any reason to believe that the market value of the property was not duly set forth – a pre-requisite for a Registering Authority to exercise its power under the said Section.
Result : Reference answered. Appeals dismissed.
Key Points: - A court-monitored auction is a forced sale but retains competitive public auction elements to realize the best possible price (!) (!) . - The Registering Authority cannot reasonably doubt the market value set by the court unless there is material evidence challenging the sanctity of the sale (!) (!) . - Once the court is satisfied the bid price is appropriate based on available material, any interference by the Registering Authority on price would be unjustified (!) (!) . - Section 47A cannot be applied to override a court-auctioned price, as such sales are the most transparent method of determining correct market value (!) (!) . - The objective of Section 47A is to prevent revenue loss from under-valuation, but it does not permit re-opening prices in genuine court auctions (!) (!) . - In court auctions, the Registering Authority lacks independent discretion to determine market value under Rule 3 of the Stamp Rules (!) (!) . - The "reason to believe" standard under Section 47A must be based on ground realities, not whimsical assessment, and does not apply to court sale determinations (!) . - The doctrine of deemed fiction is not applicable where a transparent auction process determines the price (!) . - Tenancy and other factors that depress market value must be considered, and a court sale price reflects the reality of the transaction under prevailing circumstances (!) (!) . - The appeals are dismissed, upholding that no further inquiry is necessary on the scope of authority in court auction cases (!) (!) .
JUDGMENT :
SANJAY KISHAN KAUL, J.
Leave granted.
Background:
1. The impugned judgment dated 13.05.2010 in W.P. No. 1295/2009 passed by the High Court of Calcutta decided a reference arising from the following two matters –
(i) State of West Bengal & Anr. v. Sati Enclave Pvt. Ltd. & Ors., a Letters Patent Appeal being APOT No. 196 of 2008 from a partition 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 Company matter”).
The facts:
2. In Re the Partition Matter: In a Partition Suit being Extraordinary Suit No. 32 of 1987, Ld. Single Judge passed an order dated 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 cottahs and 21 chittacks, i.e. approximately 2800 square metres. On 08.03.2006, the Joint Receivers appointed by the Court issued an advertisement in The Telegraph, a leading daily newspaper for sale of the land. At the auction, several parties participated, and the offer made by one Priya Dutta 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 the rate of 10% of the bid amount. Sati Pvt. Ltd. (R1 in S.L.P.(C) 22197 of 2010) also offered to match the bid amount Rs.1,88,500 and to pay the entire earnest money within 3 days. The court directed default clauses in 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, the joint receivers could proceed to convey the property to the next highest bidder whose bid was for Rs.1,88,000 per cottah.
3. Vide order dated 04.12.2006, Ld. Single Judge accepted the offer of Sati Pvt. Ltd. and confirmed the sale in its favour. It was further directed that the aforesaid consideration being the actual consideration for the property would be treated as value of the property for the purpose of registration and stamp duty. The Joint Receivers executed the conveyance in favour of Sati Pvt. Ltd. and presented the same for registration on 16.05.2007 for sale consideration of Rs.78,69,875. Stamp duty 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 a notice under section 47A (2) of the Indian Stamp Act, 1899 (“the Act”) intimating that the market value of the land was assessed by the Registering Officer at Rs. 7,76,69,838 on which deficit Stamp Duty of Rs.48,85,888 and deficit Registration Fee of Rs. 7,67,800 were required to be paid. Sati Pvt. Ltd. filed a Contempt Application against the Registrar for allegedly committing breach of the order dated 04.12.2006 of the Ld. Single Judge. The Registrar filed an application seeking recalling of order dated 04.12.2006, but the same was rejected. Aggrieved, the Registrar filed an appeal before the Division Bench who referred the question for decision by a larger bench.
5. In Re the Company matter: By an order dated 21.07.2004 of the Ld. Single Judge, M/s. Kayan Udyog Ltd. was ordered to be wound up and the Official Liquidator was directed to take the necessary steps. The Official Liquidator published an advertisement on 12.05.2006 in daily newspapers inviting offers for purchase of assets and properties of the company on “as is where is and whatever there is basis” with a Reserve Price 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 issue a fresh advertisement. In the second advertisement dated 15.09.2006, the Reserve Price was fixed at Rs. 1 crore and the highest offer received was Rs.86,00,000 which was subsequently enhanced to Rs. 87,00,000 when the auction was held in the Company Court.
6. Vide order dated 08.09.2006, the Company Court confirmed the sale in favour of ASL Pvt. Ltd. at Rs.87,00,000 subject to certain conditions of payment wi
Stamp duty – In case of a public auction monitored by court, discretion would not be available to Registering Authority under Section 47A of Indian Stamp Act, 1899.
Court auctions dictate the valid market value of properties, precluding stamp authorities from imposing differing assessments of duty.
Sale certificates issued by operation of law under SARFAESI do not fall under Section 47-A of the Indian Stamp Act for undervaluation, distinguishing them from conveyance instruments.
A court-monitored public auction establishes the true market value of property, which cannot be reassessed by the Collector of Stamps.
A public auction conducted by the court is the most transparent method for determining market value, and the Collector of Stamps cannot reassess the value determined by the court.
Registration Authorities cannot question court-determined property valuations under Section 47-A of the Indian Stamp Act, as it undermines judicial authority.
Stamp duty is to be paid on the market value of the property, and in the case of public auctions, the price obtainable in a transparent manner should be considered for stamp duty.
The valuation of property fixed by a court in a judicial proceeding is final and cannot be challenged by registration authorities under Section 47-A of the Indian Stamp Act.
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