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High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. K. A. SWAMI AND THE HONOURABLE MR. JUSTICE AR. LAKSHMANAN
S.P. Padmavathi
Versus
State of T.N. and Others
W.A.10.1205 of 1991
Decided On : 15-10-1996
STAMP DUTY - SECTION 47A OF THE STAMP ACT - SCOPE - INSTRUMENT OF CONVEYANCE EXECUTED PURSUANT TO DECREE FOR SPECIFIC PERFORMANCE - WHETHER MARKET VALUE OF THE PROPERTY ON THE DATE OF EXECUTION OF THE INSTRUMENT IS THE BASIS FOR STAMP DUTY - HELD, NO - IN THE ABSENCE OF ANY MATERIAL OR CIRCUMSTANCE TO SHOW THAT THERE IS AN ATTEMPT TO FRAUDULENTLY EVADE PAYMENT OF PROPER STAMP DUTY OR LACK OF BONA FIDES, IT IS NOT OPEN TO THE REGISTRAR, REGISTERING THE DOCUMENTS, IN EXERCISE OF HIS POWER UNDER S.47-A OF THE ACT, TO DIRECT PAYMENT OF STAMP DUTY ON THE MARKET VALUE OF THE PROPERTY, AS ON THE DATE THE DOCUMENT, IS EXECUTED AND PRESENTED FOR REGISTRATION.
Fact of the Case:
The petitioner entered into an agreement of sale with one N. Balakrishnan for purchase of the property bearing Door No. 3, New Tank Street, Nungambakkam, Madras-34 for a sum of Rs.2,75,000/-. As the vendor committed breach of contract and did not execute the sale deed, it became necessary for the petitioner/appellant to file a suit for specific performance of the agreement of sale dated 11-2-1985 against the aforesaid Balakrishnan and a third party by name T. Padmavathi who claimed a right to the property on the basis of an alleged earlier agreement of sale in her favour dated 3-1-1985, in C.S.No. 245 of 1986 on the file of the Original Side of this Court. Meanwhile, the vendor Balakrishnan expired and his legal representatives were brought on record. The suit was contested. After contest, the suit was decreed in favour of the petitioner on 13-6-1989. Aggrieved by the judgment and decree the aforesaid Padmavathi the second defendant therein preferred O.S.A.No. 227 of 1989 and the same was dismissed on 28-8-1989, confirming the judgment and decree passed in C.S.No. 245 of 1986. Thereafter, the decree-holder/plaintiff/petitioner filed E.P. No. 16 of 1990 to execute the decree, with a direction to the defendants to execute the sale deed or to have the sale deed executed through the Commissioner appointed by the Court.
Finding of the Court:
In the case of instrument of conveyance executed pursuant to the decree for specific performance passed by the Civil Court, in which there is no allegation of deliberate under-valuation of lack of bona fides in valuing the subject of transfer with a view to evade payment of proper stamp duty, the mere fact that there is a time-gap between the agreement of sale and the execution of the document by itself is not sufficient for the Registering Officer to invoke his power under section 47A of the Stamp Act, unless there are reasons to believe that there is an attempt on the part of the parties to the instrument to under-value with a view to evade payment of proper stamp duty.
Issues: 1. What is the scope of S. 47-A of the Act? 2. Whether, in the case of deed of conveyance presented for registration, pursuant to the decree for specific performance passed in the suit, in the absence of any material or circumstance to show that there is an attempt to fraudulently evade payment of proper stamp duty or lack of bona fides, is it open to the Registrar, registering the documents, in exercise of his power under S.47-A of the Act, to direct payment of stamp duty on the market value of the property, as on the date the document, is executed and presented for registration? 3. Whether the order of the learned single Judge requires to be interfered with?
Ratio Decidendi: The basis for exercise of the power under S. 47-A of the Act is wilful under-valuation of the subject of transfer, with fraudulent intention to evade payment of proper stamp duty. The power should be exercised with great caution and care should be taken to ensure that it does not work as an engine of operation. It has also been further observed that normally the consideration stated as the market value in an instrument brought for registration should be taken to be correct, unless the circumstances exist which suggest fraudulent evasion. The Division Bench has also further stated that even in such a case, the disputes should not be raised for petty sums, unless the difference is considerable or sizeable and it appears patent that the amount mentioned in the document is gross under-valuation.
Final Decision: Appeal allowed. The order dated 24-7-1991 passed by the learned single Judge in Writ Petition No. 2214 of 1991 (reported in 1993 (I) Mad LW 629) is set aside and the Writ Petition is allowed. The order dated 18-10-1990 passed hy the Registering Officer is hereby quashed. A direction shall issue to the second respondent to release the instrument of conveyance, which is registered as Document No. 477 of 1990 to the writ petitioner/appellant. Compliance within six weeks from the date of receipt of the order. No costs.
K. A. SWAMI, C.J.
This appeal is preferred against the order dated 24-7-1991 passed by the learned single Judge dismissing W.P. No. 2214 of 1991. Hence the petitioner therein has come up in appeal.
2. The petitioner has sought for quashing the proceedings of the second respondent, dated 18-10-1990 bearing No.60608/B4/90, directing the petitioner to pay stamp duty not on the sum of Rs. 2,75,000/-mentioned as consideration amount in the sale deed, but on the market value, which, according to the second respondent, was in the order of Rs. 7,06,350. Therefore, additional stamp duty of Rs. 56,077/- should be paid, in addition to Rs. 35,750/- already paid.
3. Learned single Judge has taken a view that the market value of the property, as on the date of the execution of the sale deed, has to be taken into account for the purpose of determining the stamp duty payable on the document of conveyance. Therefore, the order passed by the second respondent does not call for interference. The relevant, portion of the order of the learned single Judge is as follows :-
"As such, the specific performance is an equitable remedy given by the Court to enforce against the defendant the duty of doing what he agreed by contract to do. That is all. Obtaining a decree for specific performance does not mean and cannot also, in my view, used as a lever to avoid the proper stamp duty to be paid on the instrument to be executed and registered nearly after five years. On the facts of the instant case, just because a decree for specific performance is passed, it does not mean that it is binding on the authorities under the Registration Act as well as the Stamp Act. They are bound by the provisions of the Act and when a person produces an instrument for registration, it is open to them to arrive at the duty based on the market value on the date of the registration of the document. In fact, S. Ramalingam, J., reported in R. Thiaga Sundaram v. The State of Tamil Nadu, 1991 AIR(Madras) 82, has held that when the State is not a party, the order of the civil court regarding the market value is not binding on the Registering Authority. I am also supported by the views expressed by a Division Bench of this Court and also by the judgment of Balasubramanyan, J., which has been extracted above.
By no stretch of imagination it can be said that there is oppression. Explanation to S.47A of the Act is not used as oppression on the facts of the case. This Court can take judicial note of the fact as to how the prices are spiralling up and as such, in my view, the petitioner has to pay the duty on the market value as fixed by the respondents. I am not able to see any error in the conclusion arrived at by the second respondent in the impugned order that as per sub-sec. (7) of S. 2 read with the Explanation to S. 47A of the Stamp Act, the stamp duty has to be collected based on the market value as per the guidelines on the date of the execution of the document. There are no merits in the writ petition and it is dismissed. No costs."
4. Learned Government Pleader was specifically asked to file a counter affidavit as to the consequences on the revenue and also on the question as to whether stamp duty on the document of conveyance should be paid on the amount of consideration mentioned in the document or on the market value, in cases where sale deeds are executed pursuant to the decree passed by the Civil Court, in a suit for specific performance, we specifically make it clear that our decision relates to only execution of the sale deeds, pursuant to the decree for specific performance passed.
4. 1 The relevant and necessary facts of the case are as follows :-
The petitioner entered into an agreement of sale with one N. Balakrishnan for purchase of the property bearing Door No. 3, New Tank Street, Nungambakkam, Madras-34 for a sum of Rs.2,75,000/-. As the vendor committed breach of contract and did not execute the sale deed, it became necessary for the petitioner/appell
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