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CASE NO.: Appeal (civil) 5656-5914 1990

PETITIONER: THE GOVT.  OF TAMIL NADU

       Vs.

RESPONDENT: PV.  ENTER.  REP.  BY SCM JAMULUDEEN & ORS.

DATE OF JUDGMENT:       21/11/2000

BENCH: U.C.Banerjee, K.G.Balakrishna

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J       J U D G M E N T

     BANERJEE, J.

     The State Government is in appeal against the judgment of  the High Court wherein Article 5(i) of the Indian  Stamp Act  stands  challenged together with a circular  being  No. 67296/C1/88  dated  9th December, 1988 :  whereas  the  High Court  has approved the validity of the statutory provisions but  it  has expressed its negation to the validity  of  the circular  dated 9th December, 1988 and it is in that  regard that  the  State has come up in appeal before this Court  by the grant of special leave.

     Since  the challenge is restricted to the circular  as noticed  above  the  scope of the appeal  also  thus  stands restricted and limited.

     Before,  however,  adverting to the rival  contention, two  basic  canons of statutory interpretation ought  to  be noted  :  firstly avoidance of redundancy by the legislature and  the second count pertains to the limitation of exercise of  jurisdiction so far as the law court is concerned  since the  law  court  ought  not to embark upon  the  inquiry  of legislative intent.

     The  learned senior advocate Mr.  Mohan appearing  for the  State Government in support of the appeal very strongly contended  that  by reason of the provisions of  Section  27 read with Section 35, question of their being any embargo in the  matter of issuance of circular directing the  Inspector General  of  Registration to have an inspection of  building prior to registration does not and cannot arise and there is existing  appropriate  legislative sanction in that  regard. The  submission  on  the  first blush  seems  to  be  rather attractive  and it is on this score that Sections 27 and  35 ought  to  be  noticed for ascertaining the true  scope  and effect.  The Sections read as below:

     Section 27

     Facts  affecting duty to be set forth in  instrument:-

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The  consideration  (if  any) and the market value  and  all other facts and circumstances affecting the chargeability of any  instrument  with which it is chargeable shall be  fully and truly set forth therein.

     Section  35 Instrument not duly stamped  inadmissible in evidence, etc.-

     No  instrument chargeable with duty shall be  admitted in  Evidence for any purpose by any person having by law  or consent  of parties authority to receive evidence, or  shall be  acted  upon,  registered or authenticated  by  any  such person  or by any public officer, unless such instrument  is duly stamped:

     Provided that :-

     Having  regard  to  the language of the  Sections  the learned  senior Advocate contented that the expression  used@@          JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ by  the  legislature  is registered as such it is  a  step@@ JJJJJJJ before  registration  and thus empowering the  authority  to refuse  registration.   On a close scrutiny of the  statute, however,  we  record  our  inability   to  concur  with  the submissions,  more so by reason of the provisions of Section 47  A, read with Rule 4 of the Tamil Nadu Stamp  (Prevention of  Under-Valuation of Instruments) Rules, 1968 framed under Sections  47A  and 75 of the Indian Stamp Act.  Section  47A has  been  engrafted  in the statute book for the  State  of Tamil  Nadu  only, obviously to meet the exigencies  of  the situation in the State.  Section 47 A reads as below :

     Section  47  A  :   Instrument  of  conveyance  etc., under-valued how to be dealt with

     (1)  If  the registering officer appointed  under  the Indian  Registration  Act,  1908 (Central Act XVI  of  1908) while  registering  any instrument of conveyance,  exchange, gift,  release of benami right or settlement, has reason  to believe  that the market value of the property which is  the subject  matter  of conveyance, exchange, gift,  release  of benami  right or settlement, has not been truly set forth in the  instrument  he may, after registering such  instrument, refer  the  same to the collector for determination  of  the market  value  of such property and the proper duty  payable thereon.  (Emphasised)

     (2)  On receipt of a reference under sub-section (1) , the  collector shall, after giving the parties a  reasonable opportunity  of being heard and after holding an enquiry  in such  manner  as may be prescribed by rules made under  this Act, determine the market value of the property which is the subject  matter  of conveyance, exchange, gift,  release  of benami  right or settlement and the duty as aforesaid..  The difference,  if any, in the amount of duty, shall be payable by the person liable to pay the duty.

     (3)  The collector may, suo motu or otherwise,  within five  years from the date of registration of any  instrument

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of  conveyance,  exchange, gift, release of benami right  or settlement  not  already referred to him  under  sub-section (1),  call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market value of  the property which is the subject matter of  conveyance, exchange,  gift,  release of benami right or settlement  and the  duty payable thereon and if after such examination,  he has  reason to believe that the market value of the property has  not  been  truly set forth in the  instrument,  he  may determine  the market value of such property and the duty as aforesaid  in accordance with the procedure provided for  in sub-section  (2).  The difference, if any, in the amount  of duty, shall be payable by the person liable to pay the duty:

     Provided that nothing in this sub- section shall apply to any instrument registered before the date of commencement of the Indian Stamp (Madras Amendment) Act, 1967.

     (4)  Every person liable to pay the difference in  the amount  of  duty  under sub-section (2) or  sub-section  (3) shall,   pay  such  duty  within   such  period  as  may  be prescribed.  In default of such payment, such amount of duty outstanding  on the date of default shall be a charge on the property  affected  in  such   instrument.   On  any  amount remaining  unpaid after the date specified for its  payment, the  person liable to pay the duty shall pay, in addition to the  amount  due, interest at two percent per month on  such amount for the entire period of default.

     - - - - - - - - - - - - - - - - - -

     A   plain   reading  of   this  Section  (47-A)   thus categorically  provides the methods to be taken recourse  to in  the  event  of  instrument of  conveyance  stands  under valued.   The  heading of the Section is very opposite  with the  content  and  indicative  of the  true  intent  of  the legislature.  The heading reads as under :

     Section  47-A  :   Instruments  of  conveyance  etc., under-  valued  how  to  be dealt with. The  body  of  this@@         JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ section  in  any event expressly records a  situation  after registration and not at a stage prior thereto.  In the event of acceptance of submission of Mr.  Mohan then it cannot but be  said to be a duplication of statutory provision which as noticed  above de hors one of the methods of  interpretation of statutes.  The factum of the instrument being referred to the  collector for determination of the market value of such property  runs  totally  counter to the submission  made  in support of the appeal.

     The  intent  of  the  legislature  in  the  matter  of placement  of  sections also needs to be gone into  since  a later  section will carry its effectiveness in the event  of contra  intention  expressed in an earlier provision of  the statute.   The law is well settled on this score and we need not dilate thereon any further but the factum of the refusal to register by reason of under valuation in terms of Section 47  A  cannot stand scrutiny of acceptance having regard  to the  language  used  therein.   The  legislative  intent  as expressed  in  Section  35  stands clear to  the  fact  that refusal  to register is not permissible in terms  therewith. Section  35 is a provision to cater for the instruments  not

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being  properly  stamped and as such being  inadmissible  in evidence.   It is not that the legislature was not aware  of the  stamp duty but a special power has been conferred on to the  registrar  in  that regard and the collector  has  been empowered to impose appropriate fees and stamp duty in terms of  provision of Section 38 read with Sections 39 and 40  of the  Act.  The powers of the collector as specified  therein stands in an unambiguous situation as the final authority in the  matter  of assessment of the duty leviable thereon  and that is precisely the reason as to why the State legislature engrafted  Section  47  A and specifically  records  in  the statute  that  steps to be taken only after registration  of such  an instrument.  It can thus conclusively be said  that there  is  existing a categorical expression of  legislative intent  in regard to the registration of the document   the registration  is  effected  subject  to  the  condition   as provided  in the statute itself with proper safeguard  being taken  note  by  the legislature and  contra  expression  of opinion would run counter to the legislative intent which is otherwise not permissible in law.

     Incidentally,  the  Tamil  Nadu Stamp  (Prevention  of Under-  Valuation of Instruments) Rules, 1968 were framed on 22nd  April,  1968 in terms of the provision of Section  47A read  with  Section 75 of the Indian Stamp Act.   The  Rules prescribe  as to the circumstances under which the authority ought  to  calculate  the market value of  the  property  as required  under  Section 27 of the Act and the functions  of the Registering Authority on that count.  Specific reference has, however, been made to Rule 3.3 which reads as under:

     Rule  3.3:   The  registering  officer  may,  for  the purpose  of  finding out whether the market value  has  been correctly  furnished in the instrument, make such  enquiries as  he  may  deem  fit.   He may  elicit  from  the  parties concerned  any  information bearing on the subject and  call for  and examine any records kept with any public officer or authority.

     The  Rule  noted  above   authorises  the  registering officer  for  the  purpose of the assessment of  the  market value  but  the  rule by itself does not  suggest  that  the registration  of a document is dependent on the recording of satisfaction  pertaining  to the evidence received in  terms therewith.   As a matter of fact the rule cannot possibly be read  to provide the same, since that would be contra to the statute  and it is in this perspective that the circular was stated  to  be  beyond  the executive  power  and  for  true appreciation  of  the submissions it would be convenient  to note  relevant  extracts of the circular at  this  juncture. The  circular  reads  as   below:-  .Article  5(I)  was inserted  enabling  levy of 13% on the cost of the  proposed construction  in respect of properties situated in  Chennai, Madurai,  Coimbatore, Sale and Trichirapalli Municipal towns and  12%  in  respect  of  other areas.   In  view  of  this amendment  levy of 13% stamp duty on the value of  undivided share of the land and another 13% stamp duty on the value of construction  affected  in  the agreement will  replace  the practice  of levy of 13% on the value of the undivided share of  land  and  Rs.2.5  for   agreement.   The  large   scale registration of such documents in Chennai was brought to the notice  of documents in Chennai was brought to the notice of the  I.G.R.   In order to prevent loss of revenue by way  of stamp  duty to the Government the following instructions are

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issued.

     In  all cases of documents presented for  registration involving  undivided  share  of   lands  relating  to  multi storeyed buildings, such documents shall be kept pending and reference  made  to  the  D.I.G.s  with  the  copy  of  the documents.   The D.I.G.  shall inspect the property and find whether such documents come under the purview of the amended Act  38/87  or the facts relating to the building  has  been suppressed against Section 27 and instruct the sub-registrar to register the document accordingly.  In case of short levy of  stamp duty such document shall be registered only  after collecting the duty.

     This  circular  comes  to   effect  immediately.   The sub-registrars  are instructed to function without  allowing room  for  complaint.  The receipt of the circular shall  be acknowledged immediately.

     The  circular,  thus, in no uncertain  terms  provides registration  only  upon collection of duty and it  is  this circular  which stands challenged as in excess of the powers conferred  in  terms of the provisions of Section  47A  read with  Section  75.  The circular itself  records  ..such document  shall  be  registered only  after  collecting  the duty.   This  particular  insertion   has  prompted  the parties,  the writ petitioner being the appellants herein to move  the  court as the same is violative of Section  47(A). The High Court while dealing with the matter expressly dealt with the issue rather elaborately and came to the conclusion that  the circular cannot be possibly said to be within  the powers  conferred in terms of the provisions of Section 47A. The High Court also came to the conclusion that Article 5(i) by itself does not authorise issuance of the circular to the effect of having an embargo in the matter of registration.

     The  learned senior Advocate, however, impressed  upon the  Court  the  large  scale activities in  the  matter  of avoidance  of stamp duty is now being practiced in the State and  the  circular  has been introduced only to  avoid  such avoidance  of  stamp  duty.   While  it  is  true  that  the Government  revenue should be protected and there cannot  be any  exception  provided, however, the same is otherwise  in consonance  with  the principles of law and not de hors  the same.  The statute itself expressly provides that it is only after   registration  that  the   Registrar  or  an  officer authorised  in that behalf can take certain steps and on the wake  of  such a statutory provision question  taking  steps before  the registration does not and cannot arise and it is this  conclusion which has prompted the High Court to  decry the  validity of the circular.  We also think it fit to lend our  concurrence  therewith.   The   judgment  decrying  the validity  of the circular cannot possibly be faulted in  any way whatsoever.

     Mr.   Mohan  next  contended that the  conclusions  as recorded  in paragraph 97 of the judgment in M/s.  Park View Enterprises & Ors.  v.  State of Tamilnadu & Ors.  [AIR 1990 Madras 251 at 301] however, cannot in any event be sustained since  they tantamount to the issuance of a mandamus.  While it  is true that the direction of the nature as contained in sub  paragraphs 1-16 under paragraph 97 may be with a bit of stretch  can  be termed to be so but they themselves do  not pose  any difficulty in the matter of their  implementation. In  any  event, however, since, some contentions  have  been

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raised  in that regard and to avoid all future confusions we would  clarify  the  same by recording  that  the  concerned authority  ought to act in accordance with the provisions of law  and  the  same thus stands substituted  for  paragraphs noted  above.   With  that clarification,  the  appeals  are dismissed  with however no order as to costs.  Civil  Appeal Nos.  5914 A-E/1990 and 4597/1990

     In  view of the above judgment, these appeals are also dismissed with no order as to costs.