The authority must provide a prima facie basis for suspecting undervaluation under Section 47A, and any revaluation must be justified and not arbitrary.

JUDGMENT :

PRAYER : Civil Miscellaneous Appeal filed under Section 47-A(10) of the Indian Stamp Act, 1899, praying to set aside the order dated 06.05.2010 passed by the first respondent in proceedings No.57816/1/08 pertaining to document bearing No.2744/2002, registered with Office of the third respondent and allow the appeal filed by the appellant before the first respondent.

1. The appellant herein challenges the proceedings of the first respondent, the Inspector General of Registration, dated 06.05.2010 by which he confirmed the proceedings of the DRO (Stamps) dated 25.08.2003, passed under Section 47A of the Stamp Act.

2. The facts leading to this case may be briefly stated :

a. An extent of 7.894 acres comprised in Sy.No.703/1, 704/1A, 704/1B, 704/2, 704/3, 704/4, 704/5A, 705, 706/5 & 706/6 at Paruthipet Village in Thiruvallur District originally belonged to M/s.Tube Investments of India Ltd., In fact, this is part of a larger property. Tube Investments is a listed company and when it found its bicycle manufacturing business had become commercially unviable, it chose to close the said business. It is in these circumstances, it offered for sale of the above said property measuring 7.894 acre with the factory buildings to the appellant herein for a total consideration of Rs.4.16 crores.

b. The Income Tax Department has also cleared the same Vide its order dated 26.04.2002 under Section 269-UL(1) of the Income Tax Act.

c. At the relevant time when sale of the property referred to above took place, the guideline value of the site was Rs.284/- per sq.ft. At that value, the total consideration payable would be Rs.9,74,65,727/-.

d. Suspecting that there might be a deliberate undervaluation of the property to defeat the revenue due to the Government, the concerned Sub Registrar had made a reference to the DRO (Stamps) under Section 47A of the Act.

e. On 07.01.2003, the Special Tahsildar issued Form-I notice, from which it could be derived that the guideline value of the property is Rs.284/- per sq.ft. This was followed by Form-II notice dated 07.08.2003, following which, the enquiry was held and the DRO fixed the rate at Rs.314/- per sq.ft. The dispute is over the justification for fixing the rate at Rs.314/- per sq.ft.,

3. The property which the appellant had purchased was only a small portion of a larger extent, and M/s.Tube Investments chose to convert the remaining portion into housing plots, for which, market price was fixed at Rs.115/- per sq.ft. This would imply that Rs.314/- per sq.ft. which the DRO has reckoned is around 200% more than the said value of the housing site. Here, the DRO of Stamps would state :

(a) that the housing site lies in a low lying area; and

(b)that the property described under the sale deed in question is at a higher level and also abets the main road.

4. Aggrieved by the said proceedings, the appellant herein moved the first respondent, the IG Registration. He confirmed it on all the grounds which has persuaded the DRO Stamps in coming to his decision. This is now under challenge.

4.1 Heard both sides. The learned counsel for the appellant submitted that:

a) The legislative purpose and intent behind Section 47A is to avoid deliberate under valuation of the property and to check revenue loss to the Government. Reference was made to V.N.Devadaoss Vs Chief Revenue Control Officer-cum-Inspector and others [(2009) 7 SCC 438].

b) So far as the present case is concerned, the appellant had purchased the property from a listed company which was in difficult circumstances at the relevant time, so much so it was forced to close down its factory for about 11 years owing to certain internal disputes, and ultimately closed the very business. Inasmuch as the sale is by a listed company and is approved by the Board of the said company, necessarily it cannot be considered that there is an effort to deliberately undervalue of the property. This apart, the Income Tax Department has also granted its approval as per the provisi