BEFORE THE ASSISTANT STAMP COLLECTOR, ALLAHABAD CASE No.

6/29/10-11

IN THE MATTER OF: STATE VS. SHRI.SHANTHI BHUSHAN AND ORS.

WRITTEN SUBMISSIONS ON BEHALF OF THE NOTICIEES/RESPONDENTS. 1. The question involved in the proceedings is about the Stamp Duty payable on the sale deed executed on 29-112010.

2.

The stamp duty payable on a sale deed is governed by Article 23 of Schedule I of the Indian Stamp Act. In the

Central Act, Article 23 a stamp duty is payable on the value of the consideration of such conveyance as set forth in the sale deed. The consideration as contained in the sale deed is Rs.1 lakh and therefore, if the sale deed was governed by the Central Act only, without the UP Amendment the Stamp Duty would have been payable on the amount of Rs.1 lakh.

3.

However, the Indian Stamp Act in its application to UP has been amended by the UP (Stamp Amendment Act 1952) and Article 23 of Schedule IB as applicable to UP provides as below:Article 23 conveyance( as defined by Section 2(10) not being a transfer charge or exempt

under No.62. Where the amount or value of the consideration of such conveyance as set forth therein or market value of the property which is the subject of such conveyance, whichever is greater.

4.

So this provision which is applicable to the case in hand provides that if the market value of the immovable property is higher than the value of the consideration as set forth in the deed of conveyance, the stamp duty will be payable on the market value of the immovable property which is the subject matter of the conveyance deed.

5.

Therefore, in order to determine the stamp duty payable on the sale deed dated 29-11-2010 by which the vendor transferred his rights in the two houses in question namely, the main Bungalow and the Cottage along with the lands comprised in the two houses, the stamp duty will be payable on the market value of the property which means the value of the rights of the owner conveyed by him to the transferee.

6.

It is well settled that the market value of a property depends on the various circumstances relating to that property and ultimately means what a willing buyer would be prepared to pay for the purchase of that property.

7.

The relevant facts in this connection are as below:(i) Both the houses and the lands comprised therein have been for more than 70 years under tenancies which are protected under the UP Control of Rent and Eviction Act; (ii) That the Rent payable for the main

Bungalow by the tenant was Rs.184/- per month and the rent payable by the tenant for the Cottage along with the lands was Rs.50/- per month; (iii) That rateable value of the entire property both the main bungalow as well as the cottage along with the lands comprised in those houses was assessed as Rs.33,360/per year. The monthly rent as assessed

for the entire property along with the lands was Rs.33,360/- per year, as recorded in the Assessment Register of the Nagar Nigam Allahabad; (iv) A written contract for the purchase and the sale is the entire property including the main Bungalow and the Cottage along with the compounds of both the houses was entered Mohandas into between the seller Sri.Hari Tandon and the on purchaser 2nd of

Shri.Shanthi

Bhushan

the

September 1966 by which the vendor had

agreed to sell the entire property to the vendee for Rs.1 lakh only out of which an advance of Rs.5,000/- was received by him on the date of the contract; (v) That as the sale deed could not be

executed on account of the expiry of the lease from the Government and

subsequently when the lease was renewed a suit for specific performance had to be filed by Shri.Shanthi Bhushan for the

execution of the sale deed for the entire property for the amount of Rs.1 lakh; (vi) Ultimately, the suit was decreed on 11-112010 by the Court in Suit No.516/2000 on the basis of a compromise entered into between the parties; (vii) That the sale deed in question has been executed in accordance with the decree passed in the suit and since the vendee had a legal right to obtain conveyance of the entire property namely, both the

houses with the lands therein for the agreed amount of Rs.1 lakh, the sale deed had to be executed as directed by the Court for Rs.1 lakh only; (viii) Since under the law once there a contract to convey immovable property that

contract

would

be

binding

on

any

subsequent purchasers also, it is evident that no purchaser would have been willing to pay to the vendor anything above the Rs.1 lakh for the entire property and therefore the market value of the property on the date of conveyance could not in law be more than Rs.1 lakh; Strouds English (Fourth Edition) defined market

value as, The market value of property means what it would fetch in the market under the state of things for the time being existing. Blacks Law Dictionary defined fair market value as being, The price a willing and knowledgeable buyer would pay a willing and knowledgeable seller, neither party being under duress and both having a

reasonable knowledge of relevant facts.. Websters Ne Collegiate Dictionary (1974 Edition) defined market value as , a price at which both buyers and sellers are willing to do business.

8.

For the first time, in 1969 by UP Act 11 of the 1969 Section 47A was inserted in the Indian Stamp Act for making a provision in sub section 2 thereof that if the Registering Officer had reasons to believe that the market value of the property which was the subject of the instrument had not been truly set forth in the instrument the Court after

registering the instrument, refer the same to the Collector for determination of the market value of such property and the proper duty payable thereon.

9.

It is submitted that as the facts show that there was binding contract between the parties on 2nd September 1966 to convey the entire property for a sum of Rs.1 lakh and in view of this contract no purchaser would have paid more than this amount to the seller for the ownership rights in the property which was under the protected tenancy of two tenants, the market value of the property could not be deemed to have been wrongly set out in the conveyance deed.

10.

It may also be pointed out that since the subject of the conveyance were two houses namely, the main Bungalow and the Cottage, UP Stamp Rules; Rule 341(3) was applicable for determination of the market value. The Rule is extracted below:Rule 341 For the purposes of payment of Stamp Duty the minimum market value of immovable property forming instrument for conveyance, the subject of an exchange, gift,

settlement, award, or trust referred to in Section 47-A of the Act shall be deemed to be not less that as arrived at on the basis of the multiple given below:(i) .. ..;

(ii) (iii) (iv)

..; Where the subject is building; Where the building is assessed to house tax and is occupied by the owner or it wholly or partly let out to tenants 25 times the actual or assessed which annual rent whichever is higher as the case may be;

(v)

Where the building is not assessed to house tax and occupied by the owner or is wholly or partly let out 25 times the actual or assessed annual rental value whichever is higher as the case may be;

11.

It was clearly this part of Rule 341 which was applicable to the case and it was only on the basis of 25 times the actual or assessed annual rental value of the two houses that the market value could be determined for the purposes of Stamp Duty. Since the assessed rental value of the houses was Rs.33,360/-. The market value could only 25 times of its rental value which had to be made the basis for determination of the market value even if Section 47-A was applied to the case.

12.

However, it has been held in several High Court decisions that when there is a contract to sell the property before the introduction of Section 47-A in the Stamp Act and since

Section 47-A is not retrospective it cannot be applied to cases in which sale was on the basis of a contract entered into before the introduction of Section 47-A.

13.

In AIR 2004 (Patna) 131 Md.Bashiruddin and another vs. State of Bihar, Justice Chandramauli Kr.Prasad who is currently a Judge of the Supreme of India in Para 6 and 7 of the judgment held as follows:6. Having considered the rival submissions, I

find substance in the contention of Mr.Raghib Ashan. It is common ground that Section 47-A of the Act was inserted after the agreement to sell was entered. Here, the sale deed is to be

executed on the basis of the decree passed by the Civil Court. In my opinion, Section 47A of

the Act shall not be applicable to the document presented for registration in pursuance of a decree for specific performance of the contract executed prior to coming into force of Section 47-A of the Act. 7. In that view of the matter, the executing

Court is obliged to present the document for registration on the valuation given in the sale deed for which the decree was passed and the Sub Registrar is obliged to accept the sale deed for registration on that valuation and register the document subject to the fulfillment of other

conditions.

The view which I have taken finds

support from a judgment of this Court in the case of Baijiti Singh v. State of Bihar, 2004(2) Pat LJR 743 in which I have held as follows: Having considered the rival submission, I find substance in the submission of Mr.Sharma. In

the present case, the agreement to sell was entered between the petitioner and his vendor on 12-05-1974. Further the suit for specific

performance was filed in the year 1977 which was dismissed on 26-04-1980. It is on appeal

that this Court, by its judgment and decree dated 31st of January 1995, decreed the suit and ordered the vendor to execute the sale deed on payment of balance consideration money. Thus, the agreement to sell was entered between the petitioner and his vendor prior to introduction of Section 47A of the Stamp Act as amended by Bihar Amendment Act 15 of 1988. In view of

the decision of this Court in the case of Smt. Shanti Devi Prasad (supra), Section 47A of the Stamp Act shall have no application in respect of document presented for registration pursuant to a decree for specific performance of an

agreement executed prior to coming into force of the inserted provision of the Act.

14.

In AIR 1984 (Cal )174 Anglo American Direct Tea Trading Co. Ltd vs. State of Madras, in Para 22 the High Court held as follows: 22. In my view, the contention on behalf of the petitioner is sound and should be accepted. Clearly the scheme of Section 47A of the Indian Stamp Act, 1899 is to deal with those cases where private parties by arrangement

deliberately undervalue the property which is the subject matter of transfer with a view to defraud the Government of legitimate revenue by way of stamp duty. If that scheme is kept in mind it is very difficult to see how that section can be held to be attracted in the instant case. Undoubtedly, the modus operandi of the transfer and the valuation were privately agreed upon but there is no dispute that the entire

arrangement was placed before the Reserve Bank of India for its sanction and approval. It

cannot be disputed that the Reserve Bank of India, after such enquiry as they must have deemed fit and proper, sanctioned and approved of the arrangement. As is apparent from the

document approving the transfer the Reserve Bank of India imposed certain conditions of its own which were accepted by the parties. being the position, the question of That the

Registering Officer having reason to believe that the market value of the property has not been truly set forth in the instrument of transfer does not arise in the facts and circumstances of the present case. Without intending to lay down

any broad proposition as to whether Section 47A of the Indian Stamp Act, 1899 would be

inapplicable in all such cases, it is enough to held that the section is attracted in the facts and circumstances of the instant case. That being

so, the impugned notice and all proceedings on the basis thereof must be held to be without jurisdiction and void. 15. In AIR 1997 (Madras) 296 S.P.Padmavati v. State of Tamil Nadu, a Division Bench of the Madras High Court held as follows:23. Therefore, we are of the view that 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 under valuation or lack of

bonafides, the mere fact that there is a time gap between the agreement of sale and the execution of the document, is not sufficient to the Registering Officer to invoke his power under Section 47A of the Act, unless there are reasons to believe that there is an attempt on the part of

the parties to the instrument to deliberately under value the subject of transfer with a view to evade payment of proper stamp duty. 16. In AIR 2003(Rajasthan) 117 Shanti Lal vs. Collector and another in Para 11 to 17 of its Judgment Rajasthan High Court held as follows:11. Learned counsel for the petitioner

Mr.G.K.Garg in support of his argument placed reliance on the judgment reported in W.L.C 2002(Raj)(UC) 313 Satyam Properties v. State of Raj and judgment reported in 1983 RLR 93: (AIR 1983 Raj 90) State of Rajasthan v.

Maharaja Shri.Karni Singh Ji wherein this Court has held that the Collector had no jurisdiction to launch an inquiry into the value of the land. He could however, proceed to hold an inquiry as to whether consideration has been truly set forth in the instrument or not but proceeding to hold an inquiry regarding the valuation of the land, was uncalled for and was without authorities and

jurisdiction. 12. Learned counsel for the petitioner further

placed reliance on the judgment of the Division Bench of Madras High Court reported in AIR 1997 Mad 296 S.P.Padmavathi v. State of Tamil Nadu wherein Division Bench of Madras High

Court has held that mere lapse of time between the date of agreement and the execution of the document will not be the determining factor that the document is undervalued and such

circumstances by itself is not sufficient to invoke the power S. 47-A of the Act, unless there is lack of bonafides and fraudulent attempt on the part of the parties to the document to

undervalue the subject of the transfer with a view to evade payment of proper stamp duty. 13. Similar High view has in been the taken case by of the

Calcutta

Court

Anglo

American Direct Tea Trading Co. Ltd vs. State of Madras reported in AIR 1984 Cal 174. 14. Having heard the rival submissions of the

learned counsel for the parties and after careful perusal of the material available on record as well as relevant Section 47-A sub rule (1) and also carefully examined the judgments referred before me. 15. Upon careful reading of the judgment,

which is under challenge in this writ petition dated 30-12-1989 passed by the Collector, Dholpur, reveals that Collector Dholpur is of the view that since registration was made in the year 1965 and at the time of decision the

prevailing rate of two shops in question is about Rs.1.5 lacs where as the stamp duties were paid considering the value of the shops of Rs.8,000/each, but has not cared to examine the value Rs.8,000/- which has been settled by the Civil Court in the suit for specific performance and same has been upheld by the Addl. District and Sessions Judge, Dholpur. 16. The ratio decided by this Honble Court in

the case of Satyam Properties v. State of Raj (supra) and also held by the Madras High Court as well as Calcutta High Court. convinced hereinabove that are the judgments covered I am fully referred with the

squarely

present controversy. 17. The order dated 30-12-1989 certainly The order

requires interference by this Court.

passed by the Collector Dholpur is in violation of Section 47-A sub rule (1) and in violation of principle laid down by the various High Courts as discussed hereinabove. 17. In view of the above, it is clear that as the sale deed has been executed in pursuance of a decree of a Court on the basis of a contract entered into 1966 between the parties, it is crystal clear that the property has not been under valued

in the sale deed and the proceedings under Section 47-A are totally unjustified. 18. All the facts were fully stated in the sale deed and there has been no attempt of under valuation of the property. 19. It appears that these proceedings are being taken malafide for some extremeness reasons, at instance of certain persons who for their own reasons want to malign the reputation of the parties in the transaction.

(SHANTI BHUSHAN) NOTICIEES/RESPONDENT

ADVOCATE FOR THE NOTICIEES/RESPONDENTS Date: Place: