1. Dispute over computation of transfer premium on Company Court-monitored auction of office unit on State-leased land under Section 37A MLRC. (Para 1 , 2 , 3 , 4 , 5 , 6 )
Back
Next 
2026 Supreme(Online)(Bom) 4941
HIGH COURT OF BOMBAY
Somasekhar Sundaresan, J
Rohstoffe International Pvt. Ltd. – Appellant
Versus
The Collector, Mumbai – Respondent
INTERIM APPLICATION NO. 2173 OF 2019|OFFICIAL LIQUIDATOR REPORT NO. 153 OF 2019|COMPANY PETITION NO. 9 OF 2010
Important Points
In court-monitored auctions for properties on State leasehold land, the auction purchase value constitutes the 'true market value' for computing transfer premiums under the Maharashtra Land Revenue Code, aligning with the Stamp Act's valuation framework to avoid inconsistent valuations for the same transaction.
Subject
Property Law - Land Revenue
Act Referred
Maharashtra Land Revenue Code, 1966: S.37A, S.295
Maharashtra Stamp (Determination of True Market Value of Property) Rules, 1995: R.4(6)
Stamp Act
Maharashtra Co-operative Societies Act, 1960: S.91, S.163, S.79-A
Maharashtra Stamp (Determination of True Market Value of Property) Rules, 1995: R.4(6)
Stamp Act
Maharashtra Co-operative Societies Act, 1960: S.91, S.163, S.79-A
Headnote
(A) Maharashtra Land Revenue Code, 1966 - Sections 37A and 295 - Maharashtra Stamp (Determination of True Market Value of Property) Rules, 1995 - Rule 4(6) - Government Resolution dated July 7, 2017 - Transfer of unit in building on State leasehold land - Computation of transfer premium - Ready Reckoner Value vs. Auction Purchase Value - The State has a statutory right to charge premium for the transfer of units in buildings standing on leasehold land owned by the State under Section 37A of the Code. Where the price is discovered through a transparent, court-monitored auction and approved by the court, such auction purchase value constitutes the true market value for computing the transfer premium, mirroring the framework provided under the Market Value Rules for stamp duty. (Paras 10, 30-34, 45)
(B) Statutory Interpretation - Filling legislative silences - Where a policy instrument adopts another valuation framework by reference, any silence in the policy instrument should be filled by applying the logic of the adopted framework to avoid manifest absurdity and ensure consistency between related fiscal provisions. (Paras 36-39)
(C) Co-operative Societies law - Common amenity fund - A charge for a common amenity fund based on society bye-laws and general body resolutions is legitimate. Such charges, being outgoings arising after the confirmation of sale, are payable by the auction purchaser. (Paras 56-58)
Facts of the case:
An office unit in a premises society building, situated on land leased by the State, was sold through a court-monitored auction during liquidation proceedings. The State demanded a transfer premium based on the Ready Reckoner Value, while the auction purchaser contended it should be based on the price discovered in the auction. Additionally, the society claimed a contribution to a common amenity fund from the auction purchaser.
Findings of Court:
The court found that while the State is entitled to charge a premium, the base for computation must be the auction purchase value if the sale was approved by the company court. The society's claim for the amenity fund was held to be legitimate and payable by the incoming member.
Issues: (i) Whether the State is entitled to charge a premium for the transfer of a unit on State-owned leasehold land; (ii) Whether the premium should be computed based on the Ready Reckoner Value or the Auction Purchase Value; and (iii) Whether a common amenity fund charge is legitimate and payable by the auction purchaser.
Ratio Decidendi: The court reasoned that since the 2017 Government Resolution adopted the Ready Reckoner framework, it must also adopt the exception in Rule 4(6) of the Market Value Rules, which recognizes prices determined by an authority as the true market value. To hold otherwise would lead to the absurdity of having two different market values for the same transaction for stamp duty and transfer premium. Court-monitored auctions are transparent mechanisms for price discovery that should be given primacy over notional values.
Result: The application was disposed of with directions to recompute the transfer premium based on the auction purchase value and refund the excess amount to the auction purchaser, while upholding the society's claim for the common amenity fund.
(B) Statutory Interpretation - Filling legislative silences - Where a policy instrument adopts another valuation framework by reference, any silence in the policy instrument should be filled by applying the logic of the adopted framework to avoid manifest absurdity and ensure consistency between related fiscal provisions. (Paras 36-39)
(C) Co-operative Societies law - Common amenity fund - A charge for a common amenity fund based on society bye-laws and general body resolutions is legitimate. Such charges, being outgoings arising after the confirmation of sale, are payable by the auction purchaser. (Paras 56-58)
Facts of the case:
An office unit in a premises society building, situated on land leased by the State, was sold through a court-monitored auction during liquidation proceedings. The State demanded a transfer premium based on the Ready Reckoner Value, while the auction purchaser contended it should be based on the price discovered in the auction. Additionally, the society claimed a contribution to a common amenity fund from the auction purchaser.
Findings of Court:
The court found that while the State is entitled to charge a premium, the base for computation must be the auction purchase value if the sale was approved by the company court. The society's claim for the amenity fund was held to be legitimate and payable by the incoming member.
Issues: (i) Whether the State is entitled to charge a premium for the transfer of a unit on State-owned leasehold land; (ii) Whether the premium should be computed based on the Ready Reckoner Value or the Auction Purchase Value; and (iii) Whether a common amenity fund charge is legitimate and payable by the auction purchaser.
Ratio Decidendi: The court reasoned that since the 2017 Government Resolution adopted the Ready Reckoner framework, it must also adopt the exception in Rule 4(6) of the Market Value Rules, which recognizes prices determined by an authority as the true market value. To hold otherwise would lead to the absurdity of having two different market values for the same transaction for stamp duty and transfer premium. Court-monitored auctions are transparent mechanisms for price discovery that should be given primacy over notional values.
Result: The application was disposed of with directions to recompute the transfer premium based on the auction purchase value and refund the excess amount to the auction purchaser, while upholding the society's claim for the common amenity fund.
Legal Category Hierarchy
- property law
-
revenue and taxation
- stamp duty
- land revenue
- cooperative societies
- practice and procedure
Advocates:
For the Appellants/Petitioners: Vishal Kanade, Nidhi Singh, Nidhi Faganiya
For the Respondents: Amar Mishra, Mohit Khanna, Chhaya Parab, Meghna Mehta, Gaurav Aswani, Mutahhar Khan
For the Appellants/Petitioners: Vishal Kanade, Nidhi Singh, Nidhi Faganiya
For the Respondents: Amar Mishra, Mohit Khanna, Chhaya Parab, Meghna Mehta, Gaurav Aswani, Mutahhar Khan
Table of Contents
2. State argues premium on Ready Reckoner Value; purchaser argues on Auction Purchase Value as true market value. (Para 2 , 3 , 22 , 23 , 24 , 25 )
3. 2017 GR adopts Stamp Duty framework; silence on Court-auction value filled by policy alignment to avoid absurdity. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 47 , 48 )
4. Auction purchase value, not Ready Reckoner value, is the base for computing transfer premium under Section 37A MLRC. (Para 45 )
5. Premium recomputed on auction value; excess refunded with interest. Society's common amenity fund claim upheld. (Para 60 , 61 , 62 , 63 )
6. What is the basis for computing transfer premium under Section 37A of the MLRC for a Company Court-monitored auction?
The auction purchase value is the base; silence in the 2017 GR is filled by adopting the policy in Rule 4(6) of the Market Value Rules. (Para 34 , 37 , 38 , 39 , 40 , 45 )
7. Is the State entitled to charge transfer premium for transfer of a unit in a building on leasehold land after the introduction of Section 37A MLRC?
Yes, Section 37A read with the 2017 GR provides a statutory basis, and Aspi Chinoy no longer holds the field. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 )
8. Can a society levy a common amenity fund charge on an incoming member purchasing a unit in a court-monitored auction?
Yes, such charge is legitimate under bye-laws and Clause 14 of auction terms, payable by the purchaser for outgoings after sale confirmation. (Para 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 )
JUDGEMENT:
Context and Factual Background:
1. The core controversy in the captioned proceedings is what the market value should be in Company Court-monitored auctions of office units for the State of Maharashtra to charge a premium on an ad valorem basis under Section 37A of the Maharashtra Land Revenue Code, 1966 (“MLRC”) for registration of the transfer where the office unit is in a building that stands on land leased by the State to a premises society.
2. According to the State, the premium should be charged on market value as set out on the annual statement of rates (“Ready Reckoner Value”) notified under the Maharashtra Stamp (Determination of True Market Value of Property) Rules, 1995 (“Market Value Rules”), ignoring the price discovered in the auction process (“Auction Purchase Value”) because that is the rate statutorily stipulated for purposes of computing transfer premium under Section 37A of the MLRC.
3. According to the Applicant, Rohstoffe International Pvt. Ltd., which is the auction purchaser (“Auction Purchaser”), the transfer premium should be computed on the Auction Purchase Value and not the Ready Reckoner Value, because that is the true market value and is identified as such even under the law governing Stamp Duty.
4. Originally, the Auction Purchaser had questioned even the right of the State to charge a premium on an individual unit in a building standing on leasehold land owned by the State. However, in the course of the hearing, it became common ground that the State indeed has a right to charge a premium to register a transfer of an office unit in a building erected on the State’s land leased to a premises society. The only quarrel is on the computation of the charge of transfer premium.
5. The captioned proceedings, Interim Application No. 2173 of 2019 (“IA 2173”) also entail a question about a charge of a contribution to a common amenity fund imposed by the Mittal Court Premises Co-operative Society Limited (“Society”) on the Auction Purchaser as the incoming member. Whether such a charge may be imposed on an incoming member or whether it should have been imposed on the outgoing member i.e. effectively, on the liquidation estate is also a question to be answered.
6. The factual matrix relevant for the adjudication of this case may be summarised thus:
A] Sonal Garments (India) Private Limited (“Company”) was subjected to liquidation proceedings and winding up order was passed on April 16, 2012;
B] As part of the liquidation proceedings, Office Unit No. 134-A Mittal Court, Nariman Point, Mumbai, (“Office Unit”), an office in the Society, was auctioned by the Official Liquidator under the oversight of the Company Court. The transfer of the Office Unit pursuant to the auction was approved by an order dated October 10, 2018 passed by the Company Court, for the Auction Purchase Value of Rs. 2,65,00,000/-;
C] Under a Government Resolution dated July 7, 2017 (“2017 GR”), the transfer premium is to be computed at the higher of Rs. 2,000 per square foot and the amount computed at a rate of 6% of the Ready Reckoner Value, whichever is higher. Towards this end, on the basis of the Ready Reckoner Value of Rs. 5,93,26,567/-, the premium has claimed by the State as amounting to Rs. 35,59,600/- (rounded up);
D] The State also has claims about a past transfer of the Office Unit and a past mortgage without State approval and the transfer premium claimed on it is Rs. 3,69,100/-. On November 27, 2019, the State issued a notice demanding Rs. 39,26,700 for issuance of a no-objection certificate to recognise the transfer;
E] Upon the State refusing to effect registration of the transfer in favour of the Auction Purchaser unless such transfer premium were paid, IA 2173 was filed by the Auction Purchaser. By an order dated July 27, 2020 (“Interim Order”), a Learned Single Judge set out an ad interim working arrangement in IA 2173 for the Auction Purchaser to be given a no-objection certificate by the State and by the Socie
