REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2226     OF 2010 [Arising out of Special Leave to Appeal (C) No.26684 of 2008]

State of Haryana & Ors.             ... Appellants

Versus

Manoj Kumar                ... Respondent

J U D G M E N T

Dalveer Bhandari,   J.   

1. Leave granted.

2. This  appeal  is  directed  against  the  judgment  dated  

4.2.2008 passed by the Division Bench of the High Court of  

Punjab & Haryana at Chandigarh in a Civil Writ Petition No.  

12094 of 2007.

3. The appellants are aggrieved by the impugned judgment  

of the High Court by which the High Court has set aside the

concurrent  findings  of  courts  below  while  exercising  its  

extraordinary  jurisdiction  under  Article  227  of  the  

Constitution of India.

4. Brief facts which are necessary to dispose of this appeal  

are as under:-

5. On 10.11.1999, an agreement to sell a commercial plot  

measuring  788  sq.yards  located  on  Delhi-Mathura  Mewla  

Maharajpur, Faridabad was executed by Smt. Manjula Gulati  

in  favour  of  respondent,  Manoj  Kumar.   The  entire  sale  

consideration  was paid  and the  actual  possession was also  

given, but the sale deed was not executed till 9.2.2001.   

6. According to the appellants, in order to evade substantial  

stamp duty, the respondent filed a suit,  without impleading  

the appellants as parties to the suit, for specific performance  

of agreement to sell dated 10.11.1999 executed by Smt. Gulati  

for  the  sale  of  property  measuring  788 sq.yards  for  a  total  

consideration of Rs.1,95,000/-. The suit was promptly decreed  

in  favour  of  the  respondent  by  the  Civil  Judge  (Junior  

Division), Faridabad.  The suit as a matter of fact was filed on  

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14.9.2000 and decreed on 9.2.2001 and no further appeal was  

filed which clearly indicated that the suit was filed between the  

parties only with the purpose to evade the substantial stamp  

duty.   The court directed its Reader to execute the decree and  

get the sale deed registered in favour of the respondent.  The  

Reader of the court at the court’s direction appeared before the  

Sub Registrar on 9.2.2001  and got the sale deed registered in  

favour  of  the  respondent  for  the  property  for  a  sale  

consideration of Rs.2,00,000/-.  According to the appellants,  

the court decree was obtained by concealing the material facts  

in order to evade the actual payable stamp duty.

7. According  to  the  appellants,  the  Joint  Sub  Registrar,  

Faridabad  made  a  report  that  the  sale  deed  executed  on  

9.2.2001 by respondent Manoj Kumar and the owner Manjula  

Gulati was under-valued.  According to him, no sale deed can  

be registered for an amount which is less than the amount  

fixed  by  the  collector  or  the  circle  rate  (Rs.4,200/-  per  

Sq.Yard).

8. The total value of the land at the rate of Rs.4,200/- per  

Sq.Yard works out to be Rs.33,09,600/-.   On that amount,  

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the stamp duty registration charges of the sale deed payable  

would be Rs.5,13,050/-.  In the instant case, the respondent  

has only paid Rs.31,000/- towards the stamp duty which was  

obviously under-valued.   

9. The District Collector, Faridabad in his order directed the  

respondent to make payment of difference of the amount of  

stamp duty amounting to Rs.4,82,050/-.   

10. The  interpretation  of  amended  section  47(A)  of  the  

Haryana Act has to be in consonance with the notified circle  

rates and any value fixed below that would be in direct conflict  

with the prevalent law of the land and, therefore, liable to be  

struck down by the authorities.

11. Section 47-A of the Haryana Amendment to Stamp Act,  

as applicable to the parties, reads as under:-

S.47-A.  –  Instruments  under-valued,  how  to  be  dealt with. -  (1) If the Registering Officer appointed  under the Registration Act, 1908, while registering any  instrument  transferring  any  property,  has  reason to  believe  that  the  value  of  the  property  or  the  consideration, as the case may be, 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  value  or  consideration,  as  the  case may be, and the proper duty payable thereon.

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(2) On receipt of 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  value  or  consideration  and  the  duty  as  aforesaid  and  the  deficient amount of duty, if any, shall be payable by  the person liable to pay the duty.

(3)  The  Collector  may  suo  motu,  or  on  receipt  of  reference from the Inspector-General of Registration or  the  Registrar  of  a  district,  in  whose  jurisdiction  the  property or any portion thereof, which is the subject- matter of the instrument is situate,  appointed under  the  Registration  Act,  1908,  shall,  within  three  years  from the  date  of  registration  of  any instrument,  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 its value or  consideration,  as  the  case  may  be,  and  the  duty  payable thereon and if after such examination, he has  reasons to believe that the value or consideration has  not  been truly  set  forth  in  the  instrument,  he  may  determine the value or consideration and the duty as  aforesaid in accordance  with the procedure provided  for  in  sub-section  (2);  and  the  deficient  amount  of  duty, if any, shall be payable by the person liable to  pay the duty.

12. According  to  the  District  Collector,  Faridabad  the  

respondent  did  not  truly  set-forth  the  true  value  in  the  

instrument,  therefore,  order under section 47-A was passed  

against him.

13. The respondent aggrieved by the said order of the District  

Collector filed an appeal  before the Commissioner,  Gurgaon  

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Division,  Gurgaon  (Haryana)  challenging  the  order  dated  

6.12.2005.   The  Commissioner  by  order  dated  8.6.2007  

dismissed  the  appeal  by  holding  that  the  Collector  rate  or  

circle  rate  prescribed  for  sale  of  land  in  village  Mewla  

Maharajpur of commercial nature was Rs.4,200/- per  sq.yard  

and the respondent was directed to pay the balance amount of  

stamp duty.

14. The  respondent  aggrieved  by  the  said  order  of  the  

Commissioner preferred a Civil Writ Petition No.12094 of 2007  

before the High Court of Punjab and Haryana.

15. The  High  Court  while  exercising  its  jurisdiction  under  

Article 227 of the Constitution has set aside the concurrent  

findings of facts of the courts below and observed that “where  

the specific performance of contract in respect of immovable  

property has been granted, the ostensible sale price given in  

the  transfer  deed  is  to  be  accepted  by  the  Registering  

Authority.”

16. According to the High Court, this was done primarily on  

the two grounds, firstly, “because the court has accepted that  

price  and  has  decreed  the  suit  for  specific  performance”;  

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secondly, “there cannot be any opportunity with the vendee to  

fabricate an agreement of sale for showing the incorrect sale  

price  because  litigating  parties  would  not  ordinarily  reach  

such an agreement and sign the fabricated document.”

17. The High Court further observed that “the authenticity of  

the  decree  passed  by  the  court  cannot  be  questioned.  

Therefore,  the  genuineness  of  the  sale  price  has  to  be  

presumed.”

18. The appellants were not parties in the first place in the  

said suit and, therefore, either in law or on facts could not be  

bound by such a decree hence, such observation and finding  

on the fact of it is illegal and liable to set aside.  

19. The High Court in the impugned judgment has set aside  

the  concurrent  findings  of  fact  of  the  courts  below.   The  

appellants aggrieved by the impugned judgment of the High  

Court  have  preferred  this  appeal.   The  appellants  are  

particularly aggrieved by the observations of the High Court  

that “the authenticity of the decree passed by the court cannot  

be questioned. Therefore, the genuineness of the sale price has  

to be presumed.”

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20. According  to  the  appellants,  the  High  Court  failed  to  

appreciate  that  the  respondent  had  intentionally  evaded  

payment  of  the  true  stamp  duty.   The  circle  rate  or  the  

collector rate for the sale of commercial plot of 788 sq.yards  

was  Rs.5,13,050  whereas  the  respondent  paid  only  

Rs.31,000/-.  Hence the respondent was under the bounden  

obligation to pay the balance amount of Rs.4,82,050/-.

21. The appellants also urged that when the respondent had  

paid the full amount of sale consideration on 10.11.1999, then  

why  was  the  sale  deed  executed  only  on  9.2.2001?   The  

respondent  has given  no explanation  for  non-registration of  

sale deed for such a long time.

22. The  appellants  urged  that  the  jurisdiction  of  the  High  

Court under Article 227 is very limited and the High Court,  

while  exercising  the  jurisdiction  under  Article  227,  has  to  

ensure that the courts below work within the bounds of their  

authority.  

23. More than half a century ago, the Constitution Bench of  

this  court  in  Nagendra  Nath  Bora  and  Another v.  

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Commissioner  of  Hills  Division  and  Appeals,  Assam &  

Others AIR 1958 SC 398 settled that power under Article 227  

is limited to seeing that the courts below function within the  

limit of its authority or jurisdiction.

24. This court placed reliance on Nagendra Nath’s case in a  

subsequent judgment in Nibaran Chandra Bag v. Mahendra  

Nath Ghughu  AIR 1963 SC 1895.  The court observed that  

jurisdiction conferred under Article 227 is not by any means  

appellate in its nature for correcting errors in the decisions of  

subordinate  courts  or  tribunals  but  is  merely  a  power  of  

superintendence to be used to keep them within the bounds of  

their authority.

25. This court had an occasion to examine this aspect of the  

matter in the case of  Mohd. Yunus v.  Mohd. Mustaqim &  

Others (1983) 4 SCC 566 .  The court observed as under:-

“The supervisory jurisdiction conferred on the High  Courts  under  Article  227 of  the  Constitution  is  limited "to seeing that an inferior Court or Tribunal  functions within the limits of its authority," and not  to  correct  an  error  apparent  on  the  face  of  the  record, much less an error of law. for this case there  was, in our opinion, no error of law much less an  error apparent on the face of the record. There was  no failure on the part  of  the learned Subordinate  Judge  to  exercise  jurisdiction  nor  did  he  act  in  

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the  tribunal  functions within the limits  of  its  authority.   It  

cannot correct mere errors of fact by examining the evidence  

and re-appreciating it.

28. In  Virendra Kashinath Ravat & Another v.  Vinayak  

N. Joshi & Others (1999) 1 SCC 47 this court held that the  

limited power under Article 227 cannot be invoked except for  

ensuring that the subordinate courts function within its limits.

29. This court over 50 years has been consistently observing  

that limited jurisdiction of the High Court under Article 227  

cannot be exercised by interfering with the findings of fact and  

set aside the judgments of the courts below on merit.   

30. According  to  the  appellants,  the  High  Court  was  not  

justified in interfering with the findings of fact of the courts  

below.   Consequently,  the  impugned  judgment  of  the  High  

Court is totally unsustainable.   

31. Mr. Manoj Swarup, Advocate appearing on behalf of the  

respondent supported the impugned judgment.  According to  

him, the enquiry under section 47-A is confined to whether  

value  has  not  been  truly  set  forth  in  the  instrument.  

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According to him, the Legislature has expressed its intention  

clearly by emphasizing the detail i.e. that value as set forth in  

the instrument.  Or else, the Legislature would  have used the  

terminology ‘market value’ or ‘circle rates’.

32. Mr.  Swarup  placed  reliance  on  State  of  Punjab  &  

Others v.  Mohabir Singh etc.etc.  (1996) 1 SCC 609.  This  

Court in this case held as under:

“5. It will be only on objective satisfaction that the  Authority has to reach a reasonable belief that the  instrument relating to the transfer or property has  not been truly set forth or valued or consideration  mentioned when it is presented for registration…… ……..

6.  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  true  price  is  reflected  in  the  instrument as it prevails in the locality………..”  

33. Mr.  Swarup  further  submitted  “that  circle  rates  have  

been held to constitute only one of the factors to be taken into  

consideration.   Circle  rates  cannot  be  regarded  as  the  last  

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word  on  the  subject.   This  Court  in  the  case  of  R.  Sai  

Bharathi  v.  J. Jayalalitha & Others (2004) 2 SCC 9 held  

that:-

“22…..The authorities  cannot regard the  guideline  valuation as the last word on the subject of market  value…..”

“24….It  is  clear,  therefore,  that  guideline  value is  not sacrosanct as urged on behalf of the appellants,  but  only  a  factor  to  be  taken  note  of  if  at  all  available in respect of an area in which the property  transferred lies……...”

34. In the light of the above it is submitted that circle rates  

could have been taken as one of the factors and not the last  

word on the subject.  The other factors being:-

i) the  price  agreed  upon  between  the  vendor  and  the  vendee

ii) whether it was a distress sale iii) whether  the  price  in  the  local  area  had  gone  

down/escalated – at the time of the sale iv) Other relevant factors

35. It  is  submitted  that  these other  factors  have  not  been  

considered, not even noticed by the Authority under the Act.”

36. We  have  heard  the  learned  counsel  for  the  parties  at  

length.  We are clearly of the opinion that the High Court, in  

the  impugned  judgment,  has  erred  in  interfering  with  the  

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concurrent  findings  of  fact  of  the  courts  below  under  its  

limited jurisdiction under Article 227  of the Constitution.  The  

High Court erroneously observed that the “the authenticity of  

the  decree  passed  by  the  court  cannot  be  questioned.  

Therefore,  the  genuineness  of  the  sale  price  has  to  be  

presumed.”   This  finding  of  the  High  Court  cannot  be  

sustained.   It  would  have  far  reaching  ramifications  and  

consequences.   If  the genuineness of  the sale  price  entered  

into by the buyer and the seller cannot be questioned, then in  

majority of the cases it is unlikely that the State would ever  

receive  the  stamp  duty  according  to  the  circle  rate  or  the  

collector  rate.   The  approach  of  the  High  Court  is  totally  

unrealistic.

37. The  High  Court  in  the  impugned  judgment  has  also  

erroneously  observed that “there cannot be any opportunity  

with the vendee to fabricate an agreement of sale for showing  

the incorrect sale price because the litigating parties would not  

ordinarily  reach such an agreement and sign the fabricated  

document.”

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38. The  High  Court  gravely  erred  in  not  properly  

comprehending the facts of this case in proper perspective and  

which has led to grave miscarriage of justice.

39. It  is  not  disputed  that  the  commercial  plot  of  788  

sq.yards  located  at  Delhi-Mathura  Mewla  Maharajpur,  

Faridabad was valued by the Circle rate at Rs.4,200 per sq.  

yard fixed by the Collector of Faridabad meaning thereby that  

after  the notification,  no sale  deed can be registered for  an  

amount  lesser  than  Rs.4,200/-  per  sq.yard.   It  may  be  

pertinent to mention that, in order to ensure that there is no  

evasion of stamp duty, circle rates are fixed from time to time  

and the notification is issued to that effect.  The issuance of  

said notification has become imperative to arrest the tendency  

of evading the payment of actual stamp duty. It is a matter of  

common knowledge that usually the circle rate or the collector  

rate  is  lower  than  the  prevalent  actual  market  rate  but  to  

ensure registration of sale deeds  at least at the circle rates or  

the collector rates such notifications are issued from time to  

time by the appellants.

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40. In  the  impugned  judgment,  the  High  Court  has  not  

properly construed the observations of the District Collector,  

Faridabad in which he has clearly stated as under :-

“It appears that the suit has been filed in  the  Civil  Court  and decree  passed  with  the intention to avoid tax and stamp duty  to  be  paid  to  the  Government,  because  when  respondent  had  paid  entire  sale  consideration  to  the  vendor,  then  he  should  have  got  the  sale  deed  also  executed at that time, whereas the same  has  not  been  done.  Therefore,  keeping  into consideration the above facts, I come  to  this  conclusion  that  sale  deed  No.11200  dated  9.2.2001  has  been  executed  in  respect  of  land  measuring  788  sq.yard  situated  in  village  Mewla  Maharajpur,  which  abuts  Delhi  Mathur  Road.  This plot is commercial and this  fact  has  been  concealed  by  the  respondent.   The  sale  deed  had  been  registered  for  less  value.   The  market  value  of  the  land  in  dispute  as  per  Collector rate is Rs.33,09,600/- on which  a total stamp duty of Rs.5,13,050/- was  payable  whereas  the  respondent  has  affixed  stamp  duty  of  Rs.31,000/-.   In  this  manner  on  the  above  deed,  the  stamp duty of Rs.4,82,050/- is payable,  which is ordered to be recovered from the  respondent in accordance with law.”

41. This order was upheld by the Commissioner.  The High  

Court while exercising its jurisdiction under Article 227 has  

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set  aside  the  orders  passed  by  the  District  Collector,  

Faridabad and upheld by the Commissioner, Gurgaon without  

any basis or rationale. Apart from the jurisdiction, even what  

is  factually  stated  in  the  order  of  the  District  Collector,  

Faridabad  as  upheld  by  the  Commissioner,  Gurgaon  is  

unexceptionable  and  any  interference  was  totally  

unwarranted.

42. In the facts and circumstances of the case, the impugned  

judgment  of  the  High  Court  cannot  be  sustained  and  is  

accordingly  set  aside  and  the  order  passed  by  the  District  

Collector, Faridabad which was upheld by the Commissioner,  

Gurgaon is restored.  The respondent is directed to pay the  

balance stamp duty within four weeks from the date of this  

judgment, otherwise the appellants would be at liberty to take  

appropriate steps in accordance with law.   

43. The appeal is allowed and disposed of.  The parties are  

directed to bear their respective costs.    

…..…….……………………..J.      (Dalveer Bhandari)

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..….…….……………………..J.     (Dr. Mukundakam Sharma)

New Delhi; March 9, 2010

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