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PETITIONER: RAMESH CHAND BANSAL & ORS.

       Vs.

RESPONDENT: DISTRICT MAGISTRATE/COLLECTOR GHAZIABAD & ORS.

DATE OF JUDGMENT:       11/05/1999

BENCH: A.P.Misra, N.Santosh Hegde

JUDGMENT:

MISRA, J.

     The  short question raised is:  whether the  Collector while  exercising powers under sub-Rule (a) of Rule 340-A of the  U.P.   Stamp Rules, 1942 framed under the Indian  Stamp Act  had the competence while fixing circle rates to enhance such rate by 20 per cent for the next year in question?  The appellants,  in other words, have challenged circular  dated 29th   November,  1991  which   became  effective  from  1st December,  1991  under which the rate chargeable in  Village Surajpur  of revenue villages located in Tehsil Dadari  area is            fixed                     as            under: ___________________________________________________________ Prescribed rate on Prescribed rates on Road per sq.mt.  road (beyond 100 Mts.) per sq.mt.

     1.   Surajpur  Residential  Plots   600.00  400.00  2. Surajpur  Commercial  Area Plots 750.00 300.00 3.   Surajpur Commercial Plots 3000.00 2500.00

     Note:

     All  the  costs  shown  in the  above  inventory  will automatically  be  deemed increased by 20% after one  year. {Emphasis supplied}

     The  appellants  had challenged the note by which  the rate was deemed to increase by 20% after one year.

     The  appellants  purchased agricultural  land  through registered  sale  deed.  The sale consideration  being  less than  the  aforesaid circle rate, the appellants had to  pay the  additional  stamp  duty  which  they  have  paid.   The Registering  Authority after registering the same instead of returning the sale deed sent the same to Additional District Magistrate  (Finance and Revenue) under Section 47-A of  the Indian  Stamp  Act  who  issued  show-cause  notice  to  the appellants  for  the  enhanced payment of stamp  duty.   The difference  sought to be recovered was not between the value shown in the sale deed and the said circle rate but the rate which  is enhanced to 20% as per the note in the said circle rate.   Dispute  in this case is only with respect  to  this enhancement  of 20%.  The appellants instead of replying  to the  said show- cause, filed a writ petition before the High

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Court,  for  quashing  the said circular  and  the  impugned notice  and  for returning the sale deed already  registered ignoring 20% enhancement.  The High Court dismissed the writ petition  holding  the  said  circular   to  be  within  the competence of the Collector.  Aggrieved by the said decision the present appeal has been filed.

     The  said circular issued under the aforesaid sub-rule (a) of Rule 340- A of the U.P.  Stamp Rules, 1942, is quoted hereunder:

     (a)  Every  Collector shall biennially supply to  the District  Registrar  and  such other officers as  the  State Government  may  specify, a copy of the  statement,  showing classification  of  soil, circle rate and average  price  of land  appertaining  to each such classification  situate  in every pargana, corporation or local party of his district.

     Mr.  Manoj Swarup, learned counsel for the appellants, submits  that  the Collector could only fix the circle  rate composite for two years but not different rates by splitting for  two  different years and even if it could, the note  to the  impugned circular enhancing the rate for the next  year by  20%  is conjectural, arbitrary and beyond the powers  of the  Collector.   He  made  strong   reliance  on  the  word biennially  in the aforesaid Rule which would mean a  rate to  be  for a period of two years, the Collector cannot  fix different  rates  for two different years.  In  reply,  Shri A.K.   Goel,  learned  Additional Advocate General  for  the State,  repelling  this submits that under this no  duty  is cast  upon the Collector to fix a single or inflexible rates for  two  years.  It is for the Collector to  determine  the price  of  the land which he may determine either  for  each year  or for both year.  He submits that the Collector fixed the  rate on the basis of material before him including  the enhancement of 20% for the next year.  If there be materials on the record indicating the trend of rise in prices of land every  year, the enhancement indicated for the next year  in question cannot be said to be either arbitrary or beyond the powers  vested  in  the  Collector.  In  the  present  case, neither  the  vires of the Rule nor lack of material  before the Collector to fix the price is challenged.  The challenge is confined to the power of enhancement for the next year in question  as  has been done in this case by  increasing  the rate by 20%.

     The  object  of  the Indian Stamp Act  is  to  collect proper  stamp  duty on an instrument or conveyance on  which such duty is payable.  This is to protect the State revenue. It  is  matter for common knowledge in order to escape  such duty  by  unfair practice, many a time under valuation of  a property or lower consideration is mentioned in a sale deed. The imposition of stamp duty on sale deeds are on the actual market value of such property and not the value described in the instrument.  Thus, an obligation is cast on authority to properly  ascertain its true value for which he is not bound by  the  apparent tenor of the instrument.  He has to  truly decide  the real nature of the transaction and value of such property.   For  this, Act empowers an authority  to  charge stamp  duty  on  the  instrument  presented  before  it  for registration.   The market value of a property may vary from village  to village;  from location to location and even may differ  from  the sizes of area and other relevant  factors. This  apart  there  has  to be  some  material  before  such authority  as  to what is likely value of such  property  in

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that  area.   In its absence it would be very difficult  for such  Registering Authority to assess the valuation of  such instrument.   It is to give such support to the  Registering Authority   the  Rule  340-A  is  introduced.   Under   this Collector  has  to satisfy himself based on various  factors mentioned  therein  before recording the circle rate,  which would  at  best  be  the  prima  facie  rate  of  that  area concerned.   This  is  merely a guideline  which  helps  the Registering  Authority  to  assess the true valuation  of  a transaction  in  an instrument.  This gives him material  to test  prima  facie  whether description of valuation  in  an instrument is proper or not.  Under Section 47- A introduced by the UP Act XI of 1969 conveys how a Registering Authority is  to  deal  in  case  where there  is  divergence  in  the valuation  between what is described in an instrument and in the  circle  rate.  The relevant sub-sections 1,2 and  3  of Section 47-A are quoted hereinbelow:

     47-A.    Instruments   of     conveyance   etc.,   if undervalued,  how  to  be dealt with.  - (1) If  the  market value of any property which is the subject of any instrument of  conveyance, exchange, gift, settlement, award or  trust, as  set  forth  in  such instrument is less  than  even  the minimum  value determined in accordance with any rules  made under  this Act the registering officer appointed under  the Indian  Registration Act, 1908, shall refer the same to  the Collector  for  determination  of the market value  of  such property and the proper duty payable thereon.

     (2)  Without  prejudice  to  the  provisions  of  sub- section  (1), if such registering officer while  registering any  instrument  of conveyance, exchange, gift,  settlement, award  or trust, has reason to believe that the market value of  the  property  which  is   the  subject  of  conveyance, exchange,  gift,  settlement, award or trust, 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.

     (3) On receipt of a reference under sub-section (1) or sub-section  (2)  the  Collector  shall,  after  giving  the parties  a  reasonable opportunity of being heard and  after holding  an  inquiry in such manner as may be prescribed  by rules made under this Act, determine the market value of the property which is the subject of conveyance, exchange, gift, settlement,  award or trust 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.

     Sub-section  (1) provides, in case valuation described in  an instrument is less than the minimum value  determined in  accordance  with the said rule then such  officer  shall refer  it  to the Collector for ascertainment of the  market value  of  such  property, for levying proper duty  on  such instrument.   Sub-  section  (2)  is  without  prejudice  to sub-section  (1).   Similarly, under it if  the  registering officer  believes  that  the market value  of  the  property described  in an instrument has not been truly set forth, he may, after registering such instrument refer the same to the Collector  for  determination of true market value  of  such property.   So,  we find both under sub-sections (1) or  (2) where  the  value described in such instrument is less  than the minimum value fixed under the Rules or even otherwise if

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such registering officer under sub- section (2) has reasoned to  believe  that the market value of the property  has  not been  truly  set  forth  he  may refer  the  matter  to  the Collector  for  true ascertainment of its market value.   On receipt of such reference by the Collector under sub-section (3) he issues notice to the concerned party and after giving such  party  reasonable opportunity of being heard,  may  be after  holding an enquiry determine the market value of such property.   Reading  Section  47-A with the  aforesaid  Rule 340-A  it  is  clear  that  the circle  rate  fixed  by  the Collector   is  not  final  but  is  only  a   prima   facie determination  of  rate  of  an area concern  only  to  give guidance  to  the Registering Authority to test prima  facie whether  the instrument has properly described the value  of the  property.   The circle rate under this Rule is  neither final  for  the  authority nor to one subjected to  pay  the stamp  duty.   So  far sub-sections (1) and (2) it  is  very limited   in  its  application  as   it  only  directs   the Registering   Authority  to  refer  to  the  Collector   for determination  in  case  property is under  valued  in  such instrument.  The circle rate does not take away the right of such  person  to  show  that the  property  in  question  is correctly  valued as he gets an opportunity in case of under valuation  to prove it before the Collector after  reference is made.  This also marks the dividing line for the exercise of   power  between  the   Registering  Authority  and   the Collector.   In case the valuation in the instrument is same as  recorded  in  the circle rate or is truly  described  it could  be registered by Registering Authority but in case it is  under valued in terms of sub-section (1) or  sub-section (2),  it  has to be referred and decided by  the  Collector. Thus,  the circle rate, as aforesaid, is merely a  guideline and  is  also  indicative of division of exercise  of  power between the Registering Authority and the Collector.

     Reverting  to  the submission for the appellants  that enhancement  by  20%  for the next year in  question  to  be beyond  the  power of the Collector under Rule 340-A  as  he could  only  fix one circle rate in a span of two years,  we find  no merit in it.  Under the said Rule Collector has  to supply  biennially  to the District Registrar a copy of  the statement  recording  circle rate and average price of  land etc.   in  every pargana, corporation or local body  of  his district.   The  supply of biennially statement  would  only mean  supplying  such statement once in two years but  while supplying that statement there is no inhibition either under this Rule or any other Rule or under the Act nor any pointed out  which  restricts  the  Collector   to  give  such  rate differently for two years.  The restriction, if any, is that such statement shall only be supplied once in two years.  If there be any material in possession of the Collector clearly indicating a regular pattern of increasing percentage of the prices  of land every year then to that extent if he in  his biennially  statement  refers  to   such  increase  for  the following  years it cannot be said that the Collector  lacks competence  to  exercise such power.  As we have said,  this assessment  by the Collector is only prima facie and is  not final  and is open to both the Authorities or person seeking registration  to  prove  to the contrary the  actual  market value  of such property.  This circle rate in no way effects any  party  when  finally  determining its  value.   In  the present  case, the vires of this Rule is not under challenge nor  there is any challenge that there was no such  material before  the  Collector to enhance for subsequent year by  20 per  cent.   We  do  not find any  such  ground  raised  nor

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appellants could point out any raised before the authorities concerned.   On the contrary, learned counsel for the  State submits  that there was sufficient material before the State showing  the  trend  of increase in land prices  during  the relevant  years  in question to sustain the fixation of  20% enhanced price for the next year in question.

     In  State  of Punjab & Ors.Vs.  Mohabir Singh &  Ors., 1996 (1) SCC 609, it was held:

     The guidelines provided by the State would only serve as  prima  facie material available before  the  Registering Authority  to  alert him regarding the value.  It is  common knowledge  that the value of the property varies from  place to  place  or  even from locality to locality  in  the  same place.   No  absolute  higher  or   minimum  value  can   be predetermined.   It would depend on prevailing prices in the locality in which the land covered by the

     instrument  is situated.  It will be only on objective satisfaction  that  the Authority has to reach a  reasonable belief  that  the  instrument relating to  the  transfer  of property  has  not  been  truly   set  forth  or  valued  or consideration   mentioned   when  it    is   presented   for registration.   The  ultimate  decision would  be  with  the Collector  subject  to the decision on an appeal before  the District  Court as provided under sub-section (4) of Section 47- A.

     It  would  thus be seen that the aforesaid  guidelines would  inhibit  the  Registering Authority to  exercise  his quasi-judicial  satisfaction  of  the   true  value  of  the property  or  consideration  reflected   in  the  instrument presented  before  him  for   registration.   The  statutory language  clearly  indicates  that  as   and  when  such  an instrument  is presented for registration, the Sub-Registrar is  required  to  satisfy himself,  before  registering  the document,  whether  the  true  price  is  reflected  in  the instrument  as  it  prevails in the locality.  If he  is  so satisfied,  he  registers  the  document.    If  he  is  not satisfied  that  the market value or the  consideration  has been  truly  set  forth in the instrument,  subject  to  his making  reference under sub-section (1) of Section 47-A,  he registers  the  document.   Thereafter,  he  should  make  a reference to the Collector for action under sub-sections (2) and  (3)  of  Section 47-A.  Accordingly, we hold  that  the offending  instructions are not consistent with  sub-section (1)  of  Section 47-A.  It would, therefore, be open to  the State  Government to revise its guidelines and issue  proper directions consistent with the law.

     This  was a case under the amended Punjab Act, 1982 in which  sub-sections 1,2 and 3 of Section 47-A are similar to sub-sections  2,3  and 4 of Section 47-A of the  U.P.   Act. Only  sub-section  (1) of the U.P.  Act is  different  under which  it  directs  the Registering Authority to  refer  the matter to the Collector in case the description of the value in  the  instrument  is  less than even  the  minimum  value determined under the Rules.

     For the aforesaid reasons, we do not find any merit in the  submission.  Accordingly, we hold the impugned circular and  the notice to be valid.  Notice has already been issued

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to  the  appellants and they have an opportunity to  contest the  valuation prima facie fixed under the said circular and to  prove  to  the contrary in the  proceedings  before  the Collector.   Hence,  for  all  the  aforesaid  reasons,  the present  appeal  is  devoid of any merit  and,  accordingly, dismissed.  Costs on the parties.