Supreme Court of India
V.N. DEVEDOSSversusCHIEF REVENUE CONTROL OFFICER-CUM-INS. AND ORS.
- Citation
- 2009 INSC 748
- Decided
- 8 May 2009
- Disposal
- Appeal(s) allowed
- Bench
- ARIJIT PASAYAT
Holding
Section 47‑A applies only in cases of willful undervaluation with fraudulent intent; it does not apply to the open‑market sale conducted by the Asset Sales Committee, so the revenue demand is invalid.
Summary
The appellant purchased 60.86 acres of land belonging to Dunlop India Ltd, a sick company, through an open‑market tender conducted by an Asset Sales Committee appointed under the Sick Industrial Companies (Special Provisions) Act, 1985. The sale deed was executed at Rs 24.34 crore and registered. The revenue authorities, invoking Section 47‑A of the Indian Stamp Act, 1899, fixed a market value of Rs 154.69 crore and demanded additional stamp duty, alleging willful undervaluation. The High Court held that the transaction was not a government sale and remanded the matter. The Supreme Court held that Section 47‑A can be exercised only where there is a reason to believe the market value was deliberately understated with fraudulent intent; the open‑tender process and the valuation by the statutory committee negated any such intent. Consequently, the power under Section 47‑A was inapplicable and the registration was to be effected at the disclosed price. The appeal was allowed.
Issues considered
- Whether Section 47‑A of the Indian Stamp Act, 1899 can be invoked to reassess stamp duty where a sale of property of a sick company is conducted by a statutory authority through an open‑market tender.
- Whether the facts demonstrate willful undervaluation with fraudulent intent sufficient to attract the provisions of Section 47‑A.
Legislation cited
Subjects
Stamp dutyUndervaluationSection 47-ASick companyAsset saleBIFRMarket valueFraudulent intentRevenue
Judgment
[2009] 8 S.C.R. 1043
+ V.N. DEVEDOSS A
. v.
CHIEF REVENUE CONTROL OFFICER-CUM-INS. AND
ORS.
(Civil Appeal No. 3411 of 2009)
B
MAY 08, 2009
..-)
~ [DR. ARIJIT PASAYAT, D.K. JAIN AND DR.
MUKUNDAKAM SHARMA, JJ.]
Stamp Act, 1899: s. 47-A - Basis of exercise of power c
undt3r s. 47-A is willful undervaluation of subject of transfer ·
with fraudulent intention to evade payment of proper stamp
"
duty - On facts, property belonging to sick company disposed
of by orders of BIFR and A/FR on the basis of value fixed by
"' Assets Sales Committee consisting of members such as D
repr•3sentatives of IDBI, Debenture holders, Government of
West Bengal and Special Director of BIFR - Said property
was offered for sale in open market and bids were invited -
That being so there was no question of any intention to
defraud the revenue or non disclosure of correct price - s. 47 E
A has no application - Tamil Nadu Stamp (Prevention of
Undervaluation of Instruments) Rules - rule 4 - SICA, 1985.
~
A company became sick industry and was declared
so under the SICA, 1985. Consequently properties
belonging to sick company were sought to be disposed F
of blr statutory authorities such as BIFR, AIFR for forming
Assets Sales Committee. Tender was invited for sale of
60.86 acres of land. Appellant submitted his tender
offering 24.34 crores @ Rs. 40 lakh per acre which was
highest and was accepted. The company granted G
~
,. permission to execute the sale deed in favour of the
appe,llant and received the entire sale consideration and
executed a sale deed. The sale was in consonance with
the conditions laid down under 1985 Act.
1043 H
1044 SUPREME COURT REPORTS [2009] 8 S.C.R.
A The seccmd respondent initiated proceedings under
Section 47A of Stamp Act, 1899. A show cause notice was
issued calling upon the appellant to state his objections
with regard to fixation of the market value of the property
-
at Rs. 154.69 crores as against Rs. 24.34 crores for which
B sum the property was purchased md to show cause as
to why he should not be called upon to pay the balance
stamp duty of Rs. 10.42 crores. The appellant apart from
~
explaining the circumstances under which he purchased ~
the property, also questioned the jurisdiction of
authorities to invoke Section 47-A of the Act. It was a
c specific case of the appellant that without affording
personal hearing, the second respondent confirmed the
market value of the land as Rs. 465 per sq. ft. and called .~
upon him to pay additional stamp duty. Appellant filed
appeal before the first respondent, which was rejected.
D
Thereafter he filed appeal before the High Court. 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 held that statutory authorities like
BIFR and AIFR acted as facilitators and, therefore, it held
E that there was no scope for a different view to be taken
regarding the market value and for this limited purpose
the matter' was remanded to the original authority for ..
passing an appropriate order. Hence the appeal.
F Allowing the appeal, the Court
HELD: 1. A bare perusal of the Tamil Nadu Stamp
(Prevention of Undervaluation of Instruments) Rules
make the position clear that sub-Rule (4) of Rule 4
enumerates procedure on receipt of reference under
G Section 47-A of the Stamp Act, 1899. 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
H
V.N. DEVEDOSS v. CHIEF REVENUE CONTROL 1045
OFFICER-CUM-INS.
revEial the intention of the legislature that there must be A
a reason to believe that the market value of the property
whi1ch is the subject matter of the conveyance has not
bee11 truly set out in the instrument. It is not a routine
pro1:edure to be followed in respect of each and every .
document of conveyance presented for registration B
without any evidence to show lack of bone tides of the
- -j
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 c
power under Section 47-A of the Act is willful
und1:lrvaluation of the subject of transfer with fraudulent
intention to evade payment of proper stamp duty. [Para
7) [1052-A-E]
2. Market value is a changing concept. The D
"
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
I offered for sale in the open market and bids were invited. E
<
That being so, there was no question of any intention to
l, defraud the revenue or non disclosure of the correct
• price,. The properties were disposed of by the orders of
BIFR'. and AIFR on the basis of value fixed by ASG. The
view expressed by the Assets Sales Committee which F
consisted of .members such as representatives of IDBI,
Debenture Holders, Government of West Bengal and
Spec:ial Director of BIFR. That being so, there is no
possibility of any under valuation. (Para 10] [1053-A-D]
G
3. Sale has been defined under Section 54 of the
! Transfer of Property Act, 1882. Although the Act has not
included the definition of sale, Section 2(10) of the Act
defines conveyance as including a conveyance on sale,
""T
H
1046 SUPREME COURT REPORTS (2009] 8 $.C.R.
A 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
B specifically provided for by Schedule I or Schedule 1-A,
as the case may be. [Para 11] [1053-E-G]
4. It cannot be said that Section 47-A has application
because there is no scope for entertaining a doubt that
t
-
c 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 power under Section 47-A of the Act as there
is no basis for even entertaining a belief that the market
D 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. [Para
12] [1053-G-H; 1054-A-B]
E CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3411 of 2009. .
From the Judgment & Order dated 27.11.2006 of the High
Court of Madras in Civil Miscellaneous Appeal No. 639 of 2006.
F P.R. Kovilan, Geetu Kovilam, V. Ayyapparaja and Naresh
Kumar for the Appellants. '
A. Mariarputham, Vimal Dubey and R. Nedumaran, for the
Respondents.
G The Judgment of the Court was delivered by
~
DR. ARIJIT PASAYAT, J. 1. Leave granted.
2. Challenge in this appeal is to the order passed by a
H Division Bench of the Madras High Court in appeal filed under
V.N. DEVEDOSS v. CHIEF REVENUE CONTROL 1047
OFFICER-CUM-INS. [DR. ARIJIT PASAYAT, J.]
Section 47-A of the Indian Stamp Act, 1899 (in short the 'Act'). A
The appeal was filed against the order passed by Chief
Revemue Control Officer-cum-Inspector General of Registration,
Chennai in proceedings Pa.Mu.No.22947/Nl/2005 dated
8.2.2:006 confirming the order of the District Revenue Officer
(Stamps), Office of the District Collector, Chennai in B
proceedings Na. K.C. Pa.244/2004/A4 dated 11.4.2005.
.... t 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 c
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
Provisions) Act, 1985 (in short '1985 Act') Consequent to such D
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 Boa;d For Industrial and Financial Reconstruction (BIFR)
and Appellate Authority for industrial and Financial E
Reconstruction (AIFR) by forming an Asset Sales Committee
(ASC) consisting of members such as representatives of IDBI,
DebEmture 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 F
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,
G
- •
his tEmder 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 H'
1048 SUPREME COURT REPORTS [2009) 8 S.C.R.
A said company executed a 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 su·ch
B 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.
t
-
c 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
D 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
E 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/-.
Apart from explaining and setting out the circumstances
F 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
G
stamp duty. Aggrieved by the order of the second respondent,
the appellant preferred an appeal before the first respondent
on 13.04.:W05. 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
H
V.N. DEVEDOSS v. CHIEF REVENUE CONTROL 1049
OFFICER-CUM-INS. [DR. ARIJIT PASAYAT, J.]
appeillant to pay interest at the rate of 2% per month towards A
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 B
by thie government or a transaction between the government
organizations/bodies. It was held that statutory authorities like
,. t BIFR and AIFR acted as facilitators and, therP.fore, 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
matter was remanded to the original authority for passing an
c
'..-.
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 D
statutc1ry 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 E
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 F
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.lnstruments of conveyance etc. undervalued how G
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,
H
1050 SUPREME COURT REPORTS (2009] 8 S.C.R.
A 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,
8 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
t
-
c 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
D 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
E 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,
F 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
G
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
H
V.N. DEVEDOSS v. CHIEF REVENUE CONTROL 1051
OFFICER-CUM~INS. [DR. ARIJIT PASAYAT, J.]
instrument registered before the date of commencement A
of the Indian Stamp (Tamil Nadu Amendment) Act, 1967.
.
(4) ......................
(5) Any person aggrieved by an order of the Collector
under sub-section (2) or sub section (3), may appeal to B
such authority as may be prescribed in this behalf. All such
... r 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.
c
(6) ...................
(7) ......................
(8) .....................
D
(9) ......................
('I 0) 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
E
time and in such manner, as may be prescribed by rules
made under this Act, appeal to the High Court."
''F!ule 4: Procedure on receipt of reference under Section
47A:
F
(1) ..............
(2) ..............
(3) ..............
G
. (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 H
1052 SUPREME COURT REPORTS [2009] 8 S.C.R.
A and the duty payable. The basis on which the provisional
market value was arrived at shall be clearly indicated in
the order."
7. A bare perusal of the rules make the position clear that
sub-Rule (4) enumerates procedure on receipt of reference
B
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
c 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
D show lack of bona fides of the parties to the document by 'J
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
E 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
F a sick industry and was declared so under the provisions of
19$5 Act. Consequent upon such 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
G
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.
H
, V.N. DEVEDOSS v. CHIEF REVENUE CONTROL 1053
OFFICER-CUM-INS. [DR. ARIJIT PASAYAT, J.]
~ 9. Stand of the State is that what has been disclosed is A
..,, 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 B
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
c
that the properties were disposed of by the orders of BIFR and
-.... AIFR and that too on the basis of value fixed by ASG. The view
expressed by the Assets Sales Committee which consisted of
•members such as representatives of IDBI, Debenture Holders,
"f
Government of West Bengal and Special Director of BIFR. That D
being so, there is no possibility of any under valuation and,
therefore, Section 47-A of the Act has no application. It is not
cQrrect as observed by the High Court that BiFR was only a
mediator.
E
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 F
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. G
_. ' 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 H
1054 SUPREME COURT REPORTS [2009] 8 S.C.R.
A disclosed in the document of conveyance. There is no scope 1
for exercising 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
B of proper stamp duty.
13. The appeal is allowed. There will be no order as to
costs.
D.G. Appeal allowed.
-
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