The market value of a property for the purpose of stamp duty is to be determined on the basis of the price which the property would fetch or would have fetched if sold in the open market on the date of execution of the instrument of conveyance, exchange or gift.

ORDER :- This revision arises out of proceedings under the Stamp Act, 1899, for under-valuation of an instrument of conveyance for purposes of stamp duty. The conveyance was executed under an instrument dated 24-9-1976. The vendor is a public limited company by name Nonsuch Tea Estates Ltd., Conoor (herein after called 'Nonsuch'). The purchaser is a private limited company, by name, Mahavir Plantations Pte, Ltd., (hereinafter called 'Mahavir'). The subject matter of the conveyance comprised three tea estates by name Prospect Estate, Liddledale Estate and Seaforth Estate. Although the transaction covered the entire plantations in all the three estates, as going concerns, the document was executed only in respect of the lands as such and other items of immovable property. The lands conveyed under the instrument were of the total extent of 6029-76-1/2 acres. Of this extent, Prospect and Liddledale estates covered 3508.83-1/2 acres; the Seaforth estate covered 2520.93 acres. The total consideration set forth in the instrument, and that was also claimed to be the market value, for the three estates of the aggregate extent of 6029.76-1/2 acres was Rs. 1,05,47,955. A stamp duty of Rs. 10,18,407-30 was duly paid on the instrument. The conveyance was registered by the Joint Sub-Registrar, Coimbatore as document No.2561/76 dated 25-9-1976. After registration, the Joint Sub Registrar, however, sent the document to the Collector of Nilgiris for determination of the market value of the properties conveyed and the proper duty payable thereon, apparently in the view that the market value on which stamp duty was paid had not been truly set forth in the instrument. On receipt of the reference, the Collector initiated an inquiry. The Collector first drew up a provisional determination of market value and, after giving an opportunity to the claimant, Mahavir, the Collector passed a final order. Under this order, the Collector determined the market value at Rs. 5,64,11,500, and determined the stamp duty at Rupees 57,21,795.31. The determination of the deficit stamp duty thus came to Rupees 47,03,307-60. The Collector directed that the amount should be paid within 10 days of his order. The claimants, Mahavir, thereupon appealed from the Collector's order to the Appellate Authority, namely, the Subordinate Judge, Nilgiris. The Appellate Authority allowed the appeal on grounds which I shall presently state. This revision has been brought before this Court by the Collector of Nilgiris against the order of the Appellate Authority.

2. Before proceeding to consider the points involved in the present revision, I think, I may refer briefly to the relevant statutory provisions having a bearing on the discussion. The Indian Stamp Act, 1899 is a fiscal enactment charging stamp duty on instrument of various kinds. The dutiable instruments are classified under schedule I to the Act and for each class of instrument the schedule prescribes appropriate rate or rates of stamp duty payable thereon. The schedule has been the subject of amendments by different States and also modifications in rates of duty from time to time. Originally, the stamp duty on a conveyance of immovable property was levied ad valorem on the value as set forth in the instrument. However, from 1968 onwards there has been a different basis of charge in this State on conveyance of immovable property. Under the present system, stamp duty is payable on the market value of the property which is the subject matter of the conveyance. Stamp duty on deeds of exchange and deeds of gift of immovable property is also now levied on an ad valorem basis at a rate pertaining to the market value of the property. Given this basis of charge and for ensuring that correct stamp duty is paid on the correct market value of the property, Rules have been prescribed by the State Government in the interests of the Revenue. Under R.3 of the Tamil Nadu Stamp (Prevention of Under-valuation of Instruments) Rules 19