REGISTRAR OF ASSURANCES & ANR Versus ASL VYAPAR PRIVATE LTD. & ANR

REGISTRAR OF ASSURANCES & ANR  Versus ASL VYAPAR PRIVATE LTD. & ANR

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

REPORTABLE

 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.8281 of 2022

[ARISING OUT OF S.L.P.(C) NO 21405 OF 2010]

REGISTRAR OF ASSURANCES & ANR. …APPELLANTS

Versus

ASL VYAPAR PRIVATE LTD. & ANR. …RESPONDENTS

 WITH

CIVIL APPEAL NO.8282 OF 2022

Arising out of SLP(C) No. 22197 of 2010

J U D G M E N T

SANJAY KISHAN KAUL, J.

Leave granted.

Background:

1. The impugned judgment dated 13.05.2010 in W.P. No. 1295/2009

passed by the High Court of Calcutta decided a reference arising from the

following two matters –

1

(i) State of West Bengal & Anr. v. Sati Enclave Pvt. Ltd. &

Ors., a Letters Patent Appeal being APOT No. 196 of 2008 from a

partition and administration suit (“the Partition matter”) and,

(ii) ASL Vyapar Pvt. Ltd. v. The Registrar of Assurances & Ors.,

a Writ Petition being Writ Petition No. 1295 of 2009 (“the

Company matter”).

The facts:

2. In Re the Partition Matter: In a Partition Suit being Extraordinary

Suit No. 32 of 1987, Ld. Single Judge passed an order dated 15.09.1987

for the sale of Premises No. 20 to 20/14 (except 20/10) Chetla Flat Road,

Kolkata- 700027 (“the land”), measuring 41 cottahs and 21 chittacks, i.e.

approximately 2800 square metres. On 08.03.2006, the Joint Receivers

appointed by the Court issued an advertisement in The Telegraph, a

leading daily newspaper for sale of the land. At the auction, several

parties participated, and the offer made by one Priya Dutta at the rate of

Rs.1,88,500 per cottah was the highest. However, she did not pay the

entire earnest money which was stipulated at the rate of 10% of the bid

amount. Sati Pvt. Ltd. (R1 in S.L.P.(C) 22197 of 2010) also offered to

match the bid amount Rs.1,88,500 and to pay the entire earnest money

within 3 days. The court directed default clauses in case of failure to pay

2

the earnest money or consideration amount, such as, if Sati Pvt. Ltd. did

not pay the earnest money within 3 days, the joint receivers could

proceed to convey the property to the next highest bidder whose bid was

for Rs.1,88,000 per cottah.

3. Vide order dated 04.12.2006, Ld. Single Judge accepted the offer

of Sati Pvt. Ltd. and confirmed the sale in its favour. It was further

directed that the aforesaid consideration being the actual consideration

for the property would be treated as value of the property for the purpose

of registration and stamp duty. The Joint Receivers executed the

conveyance in favour of Sati Pvt. Ltd. and presented the same for

registration on 16.05.2007 for sale consideration of Rs.78,69,875. Stamp

duty of Rs. 5,48,810 and Registration Fee of Rs. 86,650 were also paid.

4. However, on 14.12.2007, the Registrar of Assurances issued a

notice under section 47A (2) of the Indian Stamp Act, 1899 (“the Act”)

intimating that the market value of the land was assessed by the

Registering Officer at Rs. 7,76,69,838 on which deficit Stamp Duty of

Rs.48,85,888 and deficit Registration Fee of Rs. 7,67,800 were required

to be paid. Sati Pvt. Ltd. filed a Contempt Application against the

Registrar for allegedly committing breach of the order dated 04.12.2006

3

of the Ld. Single Judge. The Registrar filed an application seeking

recalling of order dated 04.12.2006, but the same was rejected.

Aggrieved, the Registrar filed an appeal before the Division Bench who

referred the question for decision by a larger bench.

5. In Re the Company matter: By an order dated 21.07.2004 of the

Ld. Single Judge, M/s. Kayan Udyog Ltd. was ordered to be wound up

and the Official Liquidator was directed to take the necessary steps. The

Official Liquidator published an advertisement on 12.05.2006 in daily

newspapers inviting offers for purchase of assets and properties of the

company on “as is where is and whatever there is basis” with a Reserve

Price of Rs.1.20 crores and the highest offer received was Rs.75,00,000.

The Company Court directed revision of the Reserve Price and to issue a

fresh advertisement. In the second advertisement dated 15.09.2006, the

Reserve Price was fixed at Rs. 1 crore and the highest offer received was

Rs.86,00,000 which was subsequently enhanced to Rs. 87,00,000 when

the auction was held in the Company Court.

6. Vide order dated 08.09.2006, the Company Court confirmed the

sale in favour of ASL Pvt. Ltd. at Rs.87,00,000 subject to certain

conditions of payment within stipulated time periods. On payment of the

4

entire consideration, the Official Liquidator executed the Conveyance

Deed on 07.05.2008 and presented the same before the Registrar of

Assurance, Calcutta for registration. On 06.08.2008, the Additional

Registrar of Assurance-II issued a Demand Notice to ASL Pvt. Ltd.

informing that the market value of the property was assessed at Rs.1.70

crores and ASL Pvt. Ltd. had to pay the deficit Stamp Duty of

Rs.5,86,000 as well as deficit Registration Fee of Rs.92,125. Aggrieved,

ASL Pvt. Ltd. filed the writ petition challenging the notice. Ld. Single

Judge referred the question to a larger bench.

Proceedings before the Full Bench of the Calcutta High Court:

7. In order to appreciate the controversy, it would be appropriate to

first reproduce the relevant provision in exercise of which power the

higher stamp duty was sought. Section 47A was inserted by the Indian

Stamp (West Bengal Amendment) Act, 1990 (hereinafter referred to as

the ‘Act’) reads as under:

“47A. – Instruments of conveyance etc. undervalued how to be

dealt with – (1) Where the registering officer appointed under the

Registration Act, 1908 (16 of 1908), has while registering any

instrument of conveyance, exchange, gift, partition or settlement,

reason to believe that the market value of the property which is the

subject matter of such instrument has not been truly set forth in the

instrument, he may, notwithstanding the contrary provisions in

Section 35 insofar as it relates to registration, register such

instrument provisionally, subject to determination of the market

5

value under sub-section (2), and, after registering such instrument,

refer the matter to such authority as may be prescribed for

determination of the market value of such property and the proper

duty payable thereon.”

Section 47A was further amended by the Indian Stamp (West

Bengal Amendment) Act, 1998 with effect from 15.03.2021, and reads as

under:

“47A. Instruments of conveyance, etc. undervalued, how to be

dealt with (1) Where the registering officer appointed under the

Registration Act, 1908 (16 of 1908) has, while registering any

instrument of

a) agreement or memorandum of an agreement relating to a

sale or lease-cum sale of immovable property,

b) conveyance, (c) to (h) .......

reason to believe that the market value of the property which

is the subject matter of any such instrument has not been

truly set forth in the instrument ·presented for registration,

he may, after receiving such instrument, ascertain the market

value of the property which is the subject matter of such

instrument in the manner prescribed and compute the proper

stamp duty chargeable · on the market value so · ascertained

and thereafter he shall, notwithstanding anything to the

contrary contained in the Registration Act, 1908, in so far as

it relates to registration, keep registration of such instrument

in abeyance till 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.”

6

8. The successful purchasers (respondents herein) sought to rely upon

the two judicial views of this Court in support of their contention that the

transacted value alone should be taken into consideration for affixation of

stamp duty.

1. Govt. of Andhra Pradesh & Ors .v. P. Laxmi Devi1

, which

arose under Section 47A as applicable to Andhra Pradesh, wherein

the Court opined that there was large scale undervaluation of the

real value of property in sale deed so as to defraud the government

proper revenue. There was no provision in the original Stamp Act

to empower the Revenue Authorities to make an inquiry about the

value of the conveyed property. Hence, amendments were made to

the Indian Stamp Act from time to time in several states to

determine the correct stamp duty.

2. V.N. Devadoss v. Chief Revenue Control Office-cumInspector & Ors.2

, which arose under Section 47A as applicable to

Tamil Nadu, wherein it was held that 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 fide of the parties. Therefore, the basis for the

1 2008(4) SCC 720

2

(2009) 7 SCC 438

7

exercise of power under section 47A of the Act is the wilful

undervaluation of the subject of transfer with fraudulent intention

to evade payment of proper stamp duty. The Registering Officer

cannot have any reason to believe that the market value of the

property was not truly set forth in an instrument of transfer

executed pursuant to the order of a court, when the property was

sold at a public auction after the publication of the advertisement

in newspapers.

9. The respondents then relied upon the judgment in Birendra Nath

Manna & Anr. v. State of West Bengal & Ors.3

, which upheld the

constitutional validity of Section 47A as applicable to West Bengal. The

Respondents also submitted that the Statement of Objects and Reasons

for enactment of the Indian Stamp Act (West Bengal Amendment) 1990

contained the explanation for insertion of Section 47A. It was stated that

West Bengal is no exception to the general phenomenon of under

valuation of properties and the revenue from stamp duty has increased

sharply for states where the basis of charging duty was changed from the

declared price or value of properties to the market value.

3 2000 (1) CHN 173

8

10. In the aforesaid context it was pleaded that the best possible prices

were obtainable through a transparent method and that is what was the

price of the transactions. In the partition matter, there were 98 tenants on

the land and the total monthly rent was Rs.8,000 for the entire land and

80 vendors were occupying the land for hawking business during daytime

and, thus, the consideration of Rs.78,69,000 was the best possible price.

Similarly, in the company matter, the endeavour was made more than

once but even the reserve price was not obtainable and, thus, the best

possible price was obtained at an auction. The market value of the

property would not be a hypothetical figure, which the bidder must match

rather it is the value, which is obtainable through the process of the

highest bidder willing to pay under the prevailing circumstances.

11. On the other hand, the State (appellant before us) submitted that

the provisions brought about by the amendment mentioned aforesaid was

different from the one in Tamil Nadu and, thus, the pronouncement in

V.N. Devadoss4

 case will not apply. In addition, it was urged that the Ld.

Single Judge vide order dated 04.12.2006 lacked the jurisdiction to give

pre-emptive direction that the consideration being the actual

4

(supra)

9

consideration for the property would be treated as value of the property

for registration and stamp duty as Section 47 of the Act provides that the

order passed by the Chief Controlling Revenue Authority shall be final

and shall not be called into question in any civil court or before any

authority.

12. The three Judges Bench held on the conspectus of the aforesaid

arguments that Section 47A of the Act as applicable to West Bengal read

with Rule 3 of the West Bengal Stamp (Prevention of Undervaluation of

Instruments) Rules, 2001 (hereinafter referred to as the ‘Rules’) is not

applicable to an instrument executed by a Receiver pursuant to an order

of sale passed by a civil court, after publication in newspapers. The sale

conducted by the court through its officers qualifies to be an open market

sale subject to the following conditions:

a) there must be wide publicity of the proposed sale and

particularly there shall be publication of advertisement in at least

one newspaper having wide circulation in the concerned city/town/

district.

b) The purchaser of the property must not be connected with

or related to the authority/ officer conducting the sale.

10

13. In the discussion over the objective and purport of Section 47A of

the Act as applicable to the State of West Bengal, Tamil Nadu and Andhra

Pradesh, it was observed that they were in pari materia insofar as they

confer power on the Registering Officer not to register an instrument

when the Registering Officer has reason to believe that the market value

of the property has not been truly set forth in the instrument. The

difference in language of the Section was not significant. When a

property is sold in a private sale, the registering officer has the power to

determine the actual value of the property. As legal fictions are limited

for the purpose for which they are created and cannot be widened by

Rules made under the Act and no such fiction is required to be provided

for determining the price of the property when it is sold in the open

market. Thus, the definition of “Market Value” as under Section 2(16B)

of the Act would not apply to the property if actually sold in the open

market.

“2(16B) – ‘Market Value’ means, in relation to any property which

is the subject matter of an instrument, the price which such

property would have fetched or would fetch if sold in open market

on the date of execution of such instrument as determined in such

manner and by such authority as may be prescribed by rules made

under this Act of the consideration stated in the instrument,

whichever is higher.”

11

14. Insofar as the expression “whichever is higher” in the sub-section

aforesaid, it would mean the higher of the two prices, i.e., the price which

such property would have fetched in the open market on the date of

execution of such instrument (i.e., in the immediate past) or the price

which such property would fetch if sold in the open market on the date of

execution of such instrument (i.e., in the immediate future). If the

legislature had intended that Section 2(16B) of the Act was to apply to

open market sales also it would have made a separate or specific

provision regarding the determination of the price of the property being

sold in the open market. The expression “if sold in open market” presupposes that the property was not sold in the open market. The

language of Rule 3 also buttresses the same view where none of the four

methods of determining the value of the property in question refers to

value fetched at an open market sale. A court sale was opined to be an

open sale. Advertisements published in the daily newspapers having

wide circulation in the city or town where the property is situated is an

open market sale. The court may be well advised to get the valuation of

the property made by a registered valuer for the purposes of fixing the

Reserve Price before issuing the advertisement in newspapers. However,

this cannot be a pre-requisite as it is not always possible to get bids above

12

the reserve price or even matching the reserve price, as was seen in the

company matter. The whole basis of holding that a Court sale is an open

market sale is the sanctity with which the proceedings of the sale are

conducted by the court and its officers. In case the registering authority

has any material to doubt such sanctity, it is open for it to move the court

with a proper application pointing out such materials for reviewing the

order regarding the determination of price.

15. We may note that in order to buttress the entitlement for fixation of

stamp duty based on a market value as perceived in the aforesaid subsection, the State relied upon the judicial pronouncement of this Court in

M/s. Kayjay Industries Pvt. Ltd. V. M/s. Asnew Drums (P) Ltd. & Ors.5

It was submitted that a Court sale is a forced sale and notwithstanding the

competitive element of a public auction, the best price is not often

forthcoming, thereby creating an apprehension that it will adversely

affect the State Exchequer in respect of other properties in the area.

However, even if the property at a Court sale does not fetch the highest or

best available price and there are other pieces of evidence of market

value of similar properties available in the area, the Registering Officer

can always consider the other sale instances or any other material

5

(1974) 2 SCC 213

13

reflecting higher value of the property under sections 47A(1)(2) read with

Section 2(16B) of the Act and Rule 3 of the Undervaluation Rules of

2001.

The Occasion for Reference:

16. On consideration of the matter on 6.2.2020, it was opined that the

impugned judgment had traversed certain areas over which the Court had

reservations:

a. the interpretation of Section 2(16B) of the Act as set out in

para 24 of the impugned judgment (referring to the higher price in

the immediate past or immediate future), is contrary to the

wordings of the statute;

b. para 27.4 of the impugned judgment (giving Registering

Officer the liberty to move the court with proper application in

case of doubts on sanctity of the open market sale) sought to give

the Registering Authority a new channel to open up final

transaction having far reaching repercussions; and

c. the conclusion contained in paras 29.1 and 29.2 (holding that

a court sale cannot be the subject matter of exercise of powers by

the Registering Authority, along with conditions to be satisfied for

14

a court sale to be an open market sale) were beyond what was

observed.

17. In the conspectus of the aforesaid it was opined that the Bench

would have proceeded to enunciate the legal position, but the respondent

mentioned a judgment of two Judges Bench of this Court in Additional

Distt. Sub-Registrar, Siliguri v. Pawan Kumar Verma6

 which held that a

Registering Authority cannot be compelled to follow the value fixed by

the court for purposes of suit valuation, which sought to traverse a

different path. It was held that a legal principle should be settled in the

context of Section 47A in West Bengal, after taking into consideration

that similar amendments were made in the states of Tamil Nadu and

Andhra Pradesh though they were not identical. Thus, the matter was

referred to a three-Judges Bench of this Court.

Submissions of the Appellant:

18. The appellant sought to assail the restriction on the power of the

Registering Officer in case of court auction sales by contending:

6

(2013) 7 SCC 537

15

 Section 47A of the Act as applicable to West Bengal is

different from Section 47A of the Act as applicable to Tamil Nadu.

Under the Indian Stamp Act (Tamil Nadu Amendment) Act, 1967,

the matter would be referred to the Collector for the determination

of market value, whereas under the Indian Stamp Act (West Bengal

Amendment) Act, 1990, the matter has to be referred to such

authority as may be prescribed in the Rules for the same. The

“reasonable belief” under Section 47A of the Act is an objective

assessment based on the facts and information disclosed, and it is

incorrect to read the intention of the parties to the sale.

 The impugned judgment incorrectly drew a similarity

between Section 2(16B) of the Act as amended in West Bengal and

the Explanation appended to Section 47A of the Act applicable in

Tamil Nadu. The former contemplates that the market value must

be determined in the manner prescribed in the W.B. Stamp Rules

and aims to determine an amount “whichever is higher”, whereas

the latter leaves it to the discretion of the authorities specified

therein.

16

 There could be diverse reasons for the Registering Officer to

have ‘reason to believe’ that the market value is incorrect,

including in a court sale or liquidation proceedings, the

advertisement was not made properly to elicit buyers; the sale of

the property was frequently postponed; or cartelization among

buyers. As per Kayjay Industries7

 case, it was held that in a court

auction sale, there is more likelihood of a distress sale at a lower

value. The Registering Officer has the requisite experience in this

behalf, namely their knowledge of market values of different areas

and circle areas based on sales in the immediately preceding 5

years, and the discrepancy between the market value and value

disclosed in the instrument.

 Rule 3 of the W.B. Stamp Rules enlists the different ways in

which the market value of a property can be determined. The term

“or” as used in Rule 3 denotes that the ways mentioned therein are

disjunctive with the primary objective being to devise a

mechanism that brings the “highest price” or “whichever is

greater”. Therefore, the Registering Officer is not bound by only

what is specified in the deed or determined by the court and can

7

(supra)

17

determine a value that is greater amongst the ways stipulated

therein. The impugned judgment eliminates the independent

“determination” by the Registering Officer for every court sale,

which is against the plain reading of the statute and the objective

lying underneath, viz. to determine the “highest price” of the

property.

 The expression “shall” makes it obligatory for the

Registering Authority to “determine” the market value of the

property based on the “highest price”. The impugned judgment has

erred in interpreting Section 47A of the Act and Rule 3 of the W.B.

Stamp Rules in a manner which is against the very objective of the

Act, the purpose of which is to levy the stamp duty itself, i.e.

maximize the revenue of the State. The impugned judgment has

held that if a sale is concluded by the court process, or during

liquidation proceedings, or open sales, the Registering Authority

shall have to take the value of the property as gospel truth, and not

carry out its mandatory statutory obligation for the “determination”

based on the ways under Rule 3(1) of the W.B. Stamp Rules.

 It is settled law that an interpretation that limits or curtails

the discretion of the authority, when such discretionary powers and

18

limits are laid down in the statute itself, is impermissible. When

the legislature has not created a distinction between specific

classes (distress sale and other forms of sale), the Court cannot, by

a judicial decision, create or carve out a new class which was not

contemplated by the statute.

 The Stamp Act being a fiscal statute, should be interpreted

strictly and literally. The impugned judgment inserted a ‘nonobstante clause’ which would make Rule 3 of the W.B. Stamp

Rules and Sections 47A, 47B, and 47C of the Act as applicable in

West Bengal, inapplicable to any court sale/auction sale. The

impugned judgment cannot create an ‘exemption’ clause in the

fiscal statute when none is provided under the statute. Section 47A

as amended in West Bengal is similar to Section 47A as amended

by the State of Andhra Pradesh, which has been upheld in P.

Laxmi Devi8

 case, wherein it was held that where wordings of a

taxation statute are so plain and unambiguous that it admits no

exceptions, the relying on the object and purpose of the

amendment would be committing an error.

8

(supra)

19

 The decision of V.N. Devadoss9

 case is per incuriam in view

of paragraph 7 of Kayjay Industries10 case which held that a court

sale is a forced sale notwithstanding the competitive element of a

public auction, and the best price is often not forthcoming.

 The impugned judgment relies on the doctrine of deemed

fiction to conclude that the object of the Act is to prevent

fraudulent undervaluation. Unlike the authorities relied upon in the

impugned judgment, the application of the doctrine of deemed

fiction is misplaced.

Submission of the Respondents:

19. Learned counsel for the respondents sought to support the view of

the High Court by relying upon the judgment of this Court in The

Inspector General of Registration v. K.P. Kadar Hussain11 to the effect

that sale deeds executed by the court auctioned sales are allowed to be

questioned by a party on some pretext, the sanctity, finality, and

credibility of such court auctioned sales and execution of the sale deeds

will come under cloud and the same should not be permitted.

9

(supra)

10 (supra)

11 2014 SCCOnline Mad 3503

20

20. In the Company matter, emphasis was placed on the intention of

the State Legislature, i.e., to accept ‘market value’ as set forth in an

instrument by which the immovable property was transferred or acquired

by the Central or the State Government or any other authority under the

Central or State Government, etc. without any reference of Section

2(16B) and 47A of the Act, as can be seen from Rule 3C(9) of the West

Bengal Stamp Rules. It was contended that there was, thus, no question

of intention of any defraud or not disclose the correct price in a court sale

and as per the observations in V.N. Devadoss12 case the Registering

Authority cannot be permitted to sit over appeal over the decision of the

court, especially a Constitutional Court and doubt the consideration

determined in a court authorised sale.

21. It was pleaded that the reliance placed on Kayjay Industries13 case

was improper as it had been observed in para 9 that “court sales and

market prices are distant neighbours.” The ratio of Pawan Kumar

Verma14 case would have no application as it is not an issue of suit

valuation. Moreover, the observations of the Supreme Court that the

Registering Authority will have an opportunity to make back reference to

the concerned court, and such court will freshly determine the suit

12 (supra)

13 (supra)

14 (supra)

21

valuation, is not proper procedure as the court stands on a higher footing,

has the sanctity of law and cannot be altered by the Registering Authority

on the pretext of generating higher revenues.

Conclusion:

22. On the conspectus of the matter, we have not the slightest

hesitation in upholding the view that the provision of Section 47A of the

Act cannot be said to have any application to a public auction carried out

through court process/receiver as that is the most transparent manner of

obtaining the correct market value of the property.

23. It is no doubt true that in a court auction, the price obtainable may

be slightly less as any bidder has to take care of a scenario where the

auction may be challenged which could result in passage of time in

obtaining perfection of title, with also the possibility of it being

overturned. But then that is a price obtainable as a result of the process

by which the property has to be disposed of. We cannot lose sight of the

very objective of the introduction of the Section whether under the West

Bengal Amendment Act or in any other State, i.e., that in case of under

valuation of property, an aspect not uncommon in our country, where

consideration may be passing through two modes – one the declared

22

price and the other undeclared component, the State should not be

deprived of the revenue. Such transactions do not reflect the correct

price in the document as something more has been paid through a

different method. The objective is to take care of such a scenario so that

the State revenue is not affected and the price actually obtainable in a free

market should be capable of being stamped. If one may say, it is, in fact,

a reflection on the manner in which the transfer of an immovable

property takes place as the price obtainable in a transparent manner

would be different. An auction of a property is possibly one of the most

transparent methods by which the property can be sold. Thus, to say that

even in a court monitored auction, the Registering Authority would have

a say on what is the market price, would amount to the Registering

Authority sitting in appeal over the decision of the Court permitting sale

at a particular price.

24. It is not as if a public auction is carried out just like that. The

necessary pre-requisites require fixation of a minimum price and other

aspects to be taken care of so that the bidding process is transparent.

Even after the bidding process is completed the court has a right to cancel

the bid and such bids are subject to confirmation by the court. Once the

court is satisfied that the bid price is the appropriate price on the basis of

23

the material before it and gives its imprimatur to it, any interference by

the Registering Authority on the aspect of price of transaction would be

wholly unjustified.

25. We may only note that this Court in P. Laxmi Devi15 case has

opined the purpose behind bringing into force Section 47A in the Andhra

Pradesh State, i.e., in case of large scale under-valuation of the real value

of property in the sale deed, the Government is defrauded of a proper

revenue. It was to take care of the absence of any provision in the

original Stamp Act empowering revenue authority to make an inquiry

about the value of the conveyed property, that the Amendment was

brought forth so that the revenue did not suffer. The judgment in V.N.

Devadoss16 case albeit in respect of Amendment in Tamil Nadu, opined

that it was not a routine procedure to be followed in respect of each and

every document of conveyance presented for registration without any

evidence to show a lack of bona fides of the parties. There has to be a

willful under-valuation of the subject of transfer with fraudulent intention

to evade payment of proper stamp duty.

15 (supra)

16 (supra)

24

26. We do not accept the contention that the mere wordings of these

different provisions in any way take away the fundamental intent with

which the provision was brought into force and specifies so in the same

manner though albeit in a different language. In a court auction

following its own procedure, the Registering Officer cannot have any

reason to believe that the market value of the property was not duly set

forth – a pre-requisite for a Registering Authority to exercise its power

under the said Section.

27. If we see in the factual context of the two scenarios before us in

respect of the two cases, the telling aspect in a partition case was the

existence of 98 tenants on a land at a monthly rent of Rs.8,000 for the

entire land and 80 vendors occupying the land for hawking business

during day time. It is trite to say that the mere existence of tenancy

results in a considerable decline in the market value of the property as

they may have their statutory rights and even otherwise, the purchaser

would be acquiring the property hardly in an ideal scenario and would be

left with the burden to take legal processes for the eviction. In such a

scenario, there is actually a great depression in the market value of the

property as even if a fair transaction without an auction takes place with

full reflection of price, the transacted value would be half or less of a

25

vacant property. The tenancy aspect can hardly be said to be an aspect

which could be ignored in the determination of the price.

28. In the company matter, repeated auctions were held and it is in the

negotiated bid that the higher price was obtained. It was court monitored.

There would be no occasion for the court to accept the bid if it was not

satisfied with the process and the valuation. A correct value of a property

is the one where there is a purchaser and a seller ad idem on the price (the

actual price). The market value is, thus, the value which the highest

bidder is willing to pay in the facts and prevailing circumstances and not

a notional price.

29. We find hardly any rational in adopting the submissions on behalf

of the appellant. The provisions are not dissimilar in the different

enactments in its fundamentals; the “reason to believe” of a Registering

Officer has to be based on ground realities and not some whimsical

determination; the Registering Authority cannot be permitted to doubt the

liquidation proceedings as having some superior knowledge when it is a

court monitored process where the court would take care of aspects such

as cartelization; the Registering Authority can hardly be said to be the

only authority with knowledge of the subject to the exclusion of the

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court; the independent determination by a Registering Officer would not

apply to a court sale but to a private transaction; the Stamp Act being a

fiscal statute, while being interpreted strictly and literally would not

imply some kind of absolute power.

30. The decision of this Court in V.N. Devadoss17 case can hardly be

said to be per incuriam. No doubt a court monitored auction is a forced

sale, but then it has a competitive element of a public auction to realize

the best possible price. In many court cases, this is the process followed

by the court to get the best obtainable price taking due precaution.

31. We are, thus, of the view that this reference is required to be

answered by opining that in case of a public auction monitored by the

court, the discretion would not be available to the Registering Authority

under Section 47A of the Act.

32. We may further add that while making the reference, the Bench

itself had noted some aspects of the impugned judgment which could not

find favour with it. Thus, we are not giving our imprimatur to some of

the rational adopted in the impugned judgment as already mentioned in

the order of reference. These have been set out, once again, aforesaid as

17 (supra)

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small paras (a), (b) & (c) while dealing with the aspect of reference and

on these aspects, the impugned judgment cannot be said to be laying

down the correct principles of law.

33. However, no further inquiry in that aspect is necessary in view of

what we have opined herein and, thus, the appeals can stand disposed of

without the requirement of further reference to a two Judges Bench to

deal with the facts and circumstances of the case as those aspects have

also been dealt with by us.

34. The reference is answered accordingly and the appeals stand

dismissed albeit for the reasons set out herein.

………………………J.

[Sanjay Kishan Kaul]

 ....……………………J.

[Abhay S. Oka]

....……………………J.

[Vikram Nath]

New Delhi.

November 10, 2022.

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