REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL  APPEAL NO.         3411      OF 2009   (Arising out of SLP (C) No. 3920 of 2007)

V.N. Devadoss  ..Appellant

Versus

Chief Revenue Control Officer-cum-Ins. and Ors. ..Respondents

J U D G M E N T

Dr. ARIJIT PASAYAT, J.

1. Leave granted.

2. Challenge in this appeal is to the order passed by a Division Bench of  

the Madras High Court  in appeal filed under Section 47-A  of the Indian  

Stamp Act, 1899 (in short the ‘Act’). The appeal was filed against the order  

passed  by  Chief  Revenue  Control  Officer-cum-Inspector  General  of  

Registration,  Chennai   in  proceedings  Pa.Mu.No.22947/NI/2005  dated  

8.2.2006 confirming the order  of the District  Revenue Officer  (Stamps),  

Office  of  the  District  Collector,  Chennai   in  proceedings  Na.  K.C.  

Pa.244/2004/A4 dated 11.4.2005.

3. The controversy lies within a very narrow compass.

According  to  the  appellant,  an  extent  of  60.86  acres  of  land  

comprised  in  S. Nos.  330,  338,  473,  552 etc.  situate  at  Ambattur  Taluk,  

Tiruvallur District, which was previously owned by Dunlop India Limited, a  

Public Limited Company. The said Company became a sick industry and  

was declared so under the Provisions of Sick Industrial Companies (Special  

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Provisions) Act, 1985 (in short ‘1985 Act’) Consequent to such declaration,  

for the purpose of rehabilitation, surplus properties and assets belonging to  

the said company were sought to be disposed of by the statutory authorities  

under  the  said  Act  such  as  Board  For  Industrial  and  Financial  

Reconstruction (BIFR) and Appellate Authority for industrial and

Financial   Reconstruction  (AIFR)  by  forming  an  Asset  Sales  

Committee (ASC) consisting of members such as representatives of IDBI,  

Debenture  Holders,  Government  of  West  Bengal  and Special  Director  of  

BIFR. In compliance with the guidelines issued by the statutory authorities  

(BIFR  &  AIFR),  the  ASC  made  publications  in  Newspapers  about  its  

proposal  to  sell  the  above  mentioned  60.86  acres  of  lands  and  invited  

tenders in sealed covers from interested persons. The appellant submitted  

his tender along with others and his offer of Rs.24,34,40,000/-, at the rate of  

Rs.40 lakh per acre, was the highest. Accordingly, his tender was accepted  

by  the  ASC  as  well  as  by  the  statutory  authorities.  The  company  was  

granted permission to execute the sale deed in favour of the appellant.

It is the further case of the appellant that on receipt of the entire sale  

consideration of Rs.24,34,40,000/- from him, the said company executed a  

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sale deed dated 17.06.2004, registered as Document. No.6939/2004 on the  

file of the Sub Registrar, Ambattur. The sale is not in between two private  

individuals, on the other hand, it is a sale in consonance with the conditions  

laid down under the 1985 Act. In such circumstances, one could visualize  

that there could be no question of any possibility of under valuation of the  

property  warranting  the  proceedings  under  Section  47-A  of  the  Act.  

Further, the sale was found to be valid in WP No.25962 of 2004 filed by the  

Dunlop Factory Employee's Union.

A reference was made by the Sub Registrar, Ambattur, to the second  

respondent  District  Revenue  Officer  (DRO)  in  respect  of  the  sale  

transaction,  based  on which,  the  second respondent  initiated proceedings  

under  Section  47-A  of  the  Act  resulting  in  issuance  of  notice  dated  

18.08.2004 in Form No.1 of Rule 4 of the Tamil Nadu Stamp (Prevention of  

Undervaluation of Instruments) Rules, 1968  (in short `Rules'), calling upon  

the appellant  to state his objections with regard to fixation of the market  

value  of  the  property  at  Rs.154,69,88,168/-  as  against  the  sum  of  

Rs.24,34,40 000/- for which sum, the property was purchased; and to show  

cause as to why he should not be called upon to pay the balance stamp duty  

of a sum of Rs.10,42,83,856/-.

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Apart from explaining and setting out the circumstances under which  

he purchased the property,  the appellant also  questioned the jurisdiction of  

the  authorities to invoke Section 47-A of the Act. It is the specific case of  

the appellant that without affording personal hearing, the second respondent  

by  order  dated  11.04.2005,  confirmed  the  market  value  of  the  land  as  

Rs.465/- per sq. ft. and called upon him to pay the additional stamp duty.  

Aggrieved by the order of the second respondent, the appellant preferred an  

appeal before the first respondent on 13.04.2005. On 08.02.2006, the first  

respondent rejected his appeal, confirming the market value of the property  

as Rs.465/per sq, ft. The first respondent also directed the appellant to pay  

interest  at  the  rate  of  2% per  month  towards  the  demand  made  by  the  

authorities. Aggrieved over the same, the appellant filed the appeal before  

the High Court under Section 47-A (10) of the Act.  

The High Court took the view that it was not a case of sale by the  

government or a transaction between the government organizations/bodies.  

It  was  held  that  statutory  authorities  like  BIFR  and  AIFR  acted  as  

facilitators and, therefore, it was held that there was no scope for a different  

view to be taken regarding the market value and for this limited purpose the  

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matter  was remanded to  the  original  authority for passing  an appropriate  

order.  

4. Learned counsel for the appellant submitted that the aforesaid view of  

the  High  Court  is  clearly  erroneous.  It  was  a  case  where  the  sale  was  

conducted under the orders of the statutory authority i.e. BIFR.  There are  

several instances, it is submitted, where the official liquidator is involved to  

take a decision in the matter of acceptance of the bid made.

5. Learned counsel for the respondents on the other hand submitted that  

the  High Court  is  correct  in  holding  that  it  was  essentially  not  a  matter  

between State or a party and the role of the BIFR is that of mediator.  

6. To appreciate  the rival  stands  Section  47-A and Rules  3  and 4 of  

Rules  need to  be noted.  The said  rules  have been framed in  exercise  of  

powers  conferred  under  Sections  47-A  and  75  of  the  Act.  Rule  4  and  

Section 47-A so far as relevant read as follows:    

"47-A.Instruments of conveyance etc. undervalued how to  be dealt with -

(1) If  the  registering  officer  appointed  under  the  Indian  Registration  Act,  1908  (Central  Act  XVI  of  1908)  while  

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registering  any  instrument  of  conveyance,  exchange,  gift,  release of benami right or settlement has reasons to believe that  the market value of the property of 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.

(2) On receipt of a reference under subsection (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 of conveyance,  exchange,  gift,  release  of  benami  right  or  settlement,  not  already  referred  to  him  under  sub-section  (1),  call  for  the  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  persons  liable to pay the duty:

Provided  that  nothing  in  this  subsection  shall  apply  to  any  instrument registered before the date of commencement of the  Indian Stamp (Tamil Nadu Amendment) Act, 1967.

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(4) ………………….

(5) Any person aggrieved by an order of the Collector under  sub-section (2) or sub section (3), may appeal to such authority  as may be prescribed in this behalf. All such appeals shall be  preferred within such time, and shall be heard and disposed of  in such manner, as may be prescribed by rules made under this  Act.

(6) …………………. (7)   …………………. (8)     ………………… (9)   ………………….

(10)  Any  person  aggrieved  by  an  order  of  the  authority  prescribed  under  subsection  (5)  or  the  Chief  Controlling  Revenue Authority under sub-section (6) may, within such time  and in such manner, as may be  prescribed by rules made under  this Act, appeal to the High Court."

"Rule 4: Procedure on receipt of reference under Section 47A:

(1) …………..

(2) …………..

(3) …………..

(4) After  considering  the  representations,  if  any,  received  from the person to whom notice under sub-rule (1) has been  issued,  and after  examining  the  records  and evidence  before  him, the Collector shall pass an order in writing provisionally  determining  the  market  value  of  the  properties  and  the  duty  payable. The basis on which the provisional market value was  arrived at shall be clearly indicated in the order.”

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7. A bare perusal of the rules make the position clear  that sub-Rule (4)  

enumerates  procedure on receipt of reference under Section 47-A. Rule 5  

speaks about  the principles for determination of market value. Sub-clause  

(a) refers to lands; (b) house sites; (c) buildings and (d) properties other than  

lands, house sites and buildings.   Sub-Sections (1) and (3) of Section 47-A  

clearly reveal  the intention of the Legislature that there must be a reason to  

believe that the market value of the property which is the subject matter of  

the conveyance  has  not been truly set out in the instrument. It  is not a  

routine procedure to be followed in respect of each and every document of  

conveyance presented for registration without any evidence to show lack of  

bona  fides  of  the parties  to the document   by attempting  fraudulently  to  

under value the subject of conveyance  with a view to evade payment of  

proper stamp duty  and thereby cause loss to the revenue.  Therefore,  the  

basis for exercise of power under Section 47-A of the Act is willful under  

valuation  of  the  subject  of  transfer  with  fraudulent  intention  to  evade  

payment of proper stamp duty.  

8. In the instant case the factual scenario shows that the vendors of the  

appellant  i.e.  M/s Dunlop India Limited became a sick industry and was  

declared  so  under  the  provisions  of  1985  Act.  Consequent  upon  such  

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declaration,  surplus  properties  and assets  belonging  to  the  said  company  

were  disposed  of   on  the  basis  of  orders  passed  by BIFR and AIFR by  

forming an Assets Sales Committee.  The appellant submitted that his tender  

alongwith others and his offer of  Rs.24.34 crores  approximately was the  

highest,  and the same was accepted by the Assets Sales Committee and also  

by the statutory authorities. The company was granted permission to execute  

the sale deed in favour of the appellant.  

9. Stand of the State is that  what has been disclosed is clearly a sale  

value and the same cannot be termed as market value. There is fallacy in  

this argument.  

10. Market value is a changing concept.  The explanation to sub-Rule (5)  

makes the position clear that value would be such as would have fetched or  

would  fetch  if  sold  in  the  open  market  on  the  date  of  execution  of  the  

instrument  of  conveyance.  Here, the  property was offered for sale  in  the  

open market and bids were invited. That being so, there is no question of  

any intention to defraud the revenue or non disclosure of the correct price.  

The factual  scenario as  indicated above goes to show that  the  properties  

were disposed of by the orders of BIFR and AIFR and that too on the basis  

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of value fixed by ASG. The view expressed by the Assets Sales Committee  

which  consisted  of  members  such  as  representatives  of  IDBI,  Debenture  

Holders, Government of West Bengal and Special Director of BIFR.  That  

being  so,  there  is  no  possibility  of  any  under  valuation  and,  therefore,  

Section 47-A of the Act has no application. It is not correct as observed by  

the High Court that BIFR was only a mediator.  

11.  Sale has been defined under Section 54 of the Transfer of Property  

Act, 1882 (in short the ‘TP Act’).  Although the Act has not included the  

definition of sale, Section 2(10) of the Act defines conveyance as including  

a conveyance on sale, every instrument and every decree or final order of  

any Civil Court  by which property whether immovable or moveable or any  

estate or interest in any property is transferred to, or vested in or declared to  

be of any other person, inter vivos, and which is not otherwise specifically  

provided for by Schedule I or Schedule 1-A, as the case may be.  

12. On the facts of the case it cannot be said that Section 47-A has any  

application because there is no scope for entertaining a doubt that there was  

any  under  valuation.  That  being  so,  the  High  Court’s  order  is  clearly  

unsustainable and is set  aside. The registration shall  be done at the price  

disclosed in the document of conveyance.  There is no scope for exercising  

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power  under  Section  47-A  of  the  Act  as  there  is  no  basis  for  even  

entertaining a belief  that the market value  of the property which is  the  

subject  matter of conveyance has not  been truly set  forth  with a view to  

fraudulently evade payment of proper stamp duty.  

13. The appeal is allowed. There will be no order as to costs.  

…….…....…………………….J. (Dr. ARIJIT PASAYAT)

..………….……………………J. (D.K. JAIN)

..…………………………………J. (Dr. MUKUNDAKAM SHARMA)

New Delhi, May 08, 2009

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