THE HON'BLE SRI JUSTICE M.SATYANARAYANA MURTHY
WRIT PETITION NO.1300 of 2021
ORDER:
This writ petition is filed under Article 226 of the Constitution of India seeking the following relief:
"to issue a writ or order more particularly in the nature of Writ of Mandamus declaring the action of the Sub-Registrar (Respondent No.3) in refusing to receive the Sale Certificate on the ground that the stamp duty has to be paid as per the market value, but not on the value of sale certificate is illegal, arbitrary and violative of Article 14 of the Constitution of India and the law in this regard established by the Apex court and the High Court. Consequently direct the Respondent No 3 to receive, register and release the sale certificate issued by the Union Bank of India Gudivada Main Branch, Krishna District dated 08.09.2020 in favour of the petitioners in respect of the property situated in schedule property on payment of Stamp duty on the value shown in the sale certificate but not as per the market value."
The case of the petitioners, in brief, is that both the petitioners jointly participated in the auction conducted by the Union Bank of India on 17.07.2020 , in which both were declared as highest bidder for the schedule property for a sum of Rs.4,10,10,000/- and they were declared as successful bidders and paid Rs.1,03,00,000/- towards 25% of the advance amount including Earnest Money Deposit (EMD) of Rs.41,00,000/-. Subsequently, they paid the entire balance amount and in view of the same, the Bank confirmed the sale and issued sale certificate in favour of the petitioners on 08.09.2020. On 09.09.2020 the Union Bank of India delivered physical possession of the schedule property to both the petitioners under proper acknowledgement. Thereafter, the petitioners approached respondent No.3 with a request to register the sale certificate issued by the Bank authorities in pursuance of the sale conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short MSM,J WP_1300_2021 2 "SARFAESI Act"). But, respondent No.3 informed that the market value of the schedule property is Rs.7,21,17,840/-, directed the petitioners to pay the stamp duty on the market value and refused to receive the sale certificate and register the same.
It is further contended that petitioner No.2 submitted an application on 09.11.2020, and the same was replied by the incharge Sub-Registrar, Gudivada in C.No.Nil dated 23.11.2020 stating that as per Section 6 and Section 47A of the Indian Stamp Act, 1899, stamp duty is payable on the higher value which involves in the schedule of the document as per Market Value Guidelines Register. Then, the petitioners approached the Bank authorities and sought their help on the point of objection raised by the Sub-Registrar. The Bank authorities informed that the sale certificate is different from the sale deed and since the sale certificate was issued for the auction value conducted by the public authorities and there cannot be any scope for underbid for evading payment of stamp duty. Hence, refusal to receive and register the sale certificate issued by the bank authorities is illegal and arbitrary, requested to issue a direction as claimed in the writ petition.
Respondent No.3 filed counter admitting sale of property for Rs.4,10,10,000/- by the Union Bank of India, sale certificate issued by the Bank for the value mentioned therein, but contended that the market value of the subject property is Rs.7,21,17,840. Unless the stamp duty is paid on the market value of the property covered by the sale certificate, it cannot be received and registered. The Government issued a memo No.3358/Regtn.I/A2/2012 dated 22.06.2012 which reads thus:
MSM,J WP_1300_2021 3 "Section 13(4) of the Securitization and reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI)Act,2002 provides that in case the borrower fails to discharge his liability in full within the period prescribed in sub section(2),the secured creditor may take recourse to one or more of the following measures to recover his secured debt namely(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realize the secured asset.(b)(c)(d) ....sub section(6) provides that any transfer of secured asset after taking possession thereof or take over management under sub section(4) by the secured creditor or by the manager on behalf of the secured creditor shall vest in the transferee of all rights in or in relation to the secured asset transferred as if the transfer had been made by the owner of such secured asset"
"In view of the above, provisions contained in the SARFAESI Act, 2002, the law departments have therefore opined that the sale of secured asset by the secured creditor can be regarded as a sale of property by a owner of the property. Hence the sale will be governed by Article 47-A of the Schedule I-A of the Indian Stamp Act 1899 and not Article 16 of the Said schedule."
In the counter, respondent No.3 specifically contended as follows:
It is submitted that the contention of the petitioner that the 3rd respondent cannot refuse to receive the Sale Certificate issued by the Recovery officer and the action of the respondent is illegal, is not correct. It is submitted that since the Sale Certificate relating to the Writ Petitioner was issued by the Union Bank of India the same is not covered by the provisions of Article 16 of Schedule-IA to the Indian Stamp Act,1899 but falls under Article 47-A of Schedule-IA of the Indian Stamp Act, thereby chargeable with stamp duty @ 5% on the auction amount or the guideline value whichever is higher and Transfer Duty @ 1.5% is also leviable on the instrument.
It is further contended that respondent No.3 being the Sub-
Registrar bound by the provisions of Stamp Act, the Registration Act and also the instructions given by the authorities from time to time, requested to dismiss the petition.
MSM,J WP_1300_2021 4 During hearing, Sri Raj Kumar Grandhi, learned counsel for the petitioners, reiterated the contentions urged in the petition, drawn the attention of this Court to the judgment of the learned single Judge of the High Court of Andhra Pradesh at Hyderabad in W.P.Nos.17600 of 2011 and 32791 of 2013, so also another judgment of learned single Judge of the High Court of Andhra Pradesh at Hyderabad in "Toshniwal Granites Private Limited v. The Sub-Registrar, Choutuppal1" and the judgment of the Supreme Court in "Municipal Corporation of Delhi v. Pramod Kumar Gupta2". On the strength of the principles laid down in the above judgments, learned counsel for the petitioners contended that refusal of respondent No.3 to receive and register the document based on the memo (referred above) is illegal and arbitrary. Even otherwise, as per proviso to sub-section (6) of Section 47-A of the Indian Stamp Act, in respect of instruments executed by or on behalf of the Central Government or the State Government or any authority or body incorporate by or under any law for the time being in force and wholly owned by Central/State Government, the market value of any property shall be the value shown in such instrument, requested to issue a direction as claimed in the writ petition.
Sri Narasimha Reddy.G.L. Learned Assistant Government Pleader for Stamps and Registration reiterated the contentions urged in the counter and referred to the memo No.3358/Regtn.I/A2/2012 dated 22.06.2012, requested to dismiss the writ petition.
It is an undisputed fact that the petitioners purchased the property in the auction held by the Union Bank of India, Gudivada Branch under the provisions of the SARFAESI Act and the 1 2017 (5) ALD 269 2 AIR 1991 SC 401 MSM,J WP_1300_2021 5 petitioners were declared as highest bidders for Rs.4,10,10,000/-, obtained sale certificate from the bank and the Bank authorities delivered the possession of the property to the petitioners. Presentation of sale certificate before respondent No.3 is also not in quarrel and respondent No.3 refused to receive the same, as the stamp duty paid by the petitioner is not sufficient. The question involved in this petition is purely legal. Therefore, it is appropriate to advert to the relevant provisions of the Indian Stamp Act and the Registration Act for deciding the real controversy.
The main endeavour of the Registration department is that the stamp duty is payable on the market value of the property but not on the value mentioned in the sale certificate issued by the Bank. Proviso to sub-section (6) of Section 47-A of the Indian Stamp Act is relevant for the purpose of deciding the real controversy, which is extracted hereunder "Provided that in respect of instruments executed by or on behalf of the Central Government or the State Government or any authority or body incorporate by or under any law for the time being in force and wholly owned by Central/State Government, the market value of any property shall be the value shown in such instrument."
The Union Bank of India is a body corporate under the control of the Central Government and the instrument is sale certificate issued by the Union Bank of India. Therefore, the value of the property mentioned in the sale certificate alone has to be taken into consideration for payment of stamp duty when it is presented for registration.
When similar issue came up for consideration before the High Court of Andhra Pradesh at Hyderabad in W.P.Nos.17600 of 2011 and 32791 of 2013, the learned single Judge elaborately dealt with the same while deciding point No.2 therein.
MSM,J WP_1300_2021 6 Finally, based on the judgment of the Division Bench in W.A.No.355 of 1998 held that the Section 47-A of the Indian Stamps Act needs to be interpreted in a manner which is conducive to intention of the legislature. In W.A.No.355 of 1998, it is held as follows:
".....In our view, exercise of jurisdiction under Section 47-A of the Act can only be had in the event of there being any reason to believe that the market value of the property being the subject matter of the instrument has not been truly set forth in the instrument. Therefore, some deliberate omission or malfeasance is to be assumed in the event of invocation of Section 47-A".
Here, there is no allegation in the counter filed by respondent No.3 about the omission of setting forth the true value in the instrument. In the absence of such allegation, it can safely be concluded that the true value fetched in the open auction held by the Bank as mentioned in the instrument can be accepted.
In paragraph No.27, the learned single Judge of the High Court of Andhra Pradesh at Hyderabad in W.P.Nos.17600 of 2011 and 32791 of 2013, held as follows:
"27. The above decision was prior to introduction of proviso to Section 47-A (6). In view of the proviso now incorporated, on Point No.2, I am impelled to hold that while undertaking registration of the document on the property purchased by petitioner in an open auction conducted by the bank, the valuation mentioned in the certificate of sale shall alone be criteria to determine the stamp duty payable for registration."
In the view of the law laid by the learned single Judge of the High Court of Andhra Pradesh at Hyderabad in W.P.Nos.17600 of 2011 and 32791 of 2013, the stamp duty is payable on the basis of the value mentioned in the instrument presented for registration. Similar view was expressed another learned single Judge of the High Court of Andhra Pradesh at Hyderabad in "Toshniwal Granites MSM,J WP_1300_2021 7 Private Limited v. The Sub-Registrar, Choutuppal"(referred supra).
If these principles are applied to the present facts of the case, the act of respondent No.3 in refusing to register the sale certificate presented before him by the petitioners is a glaring illegality. Therefore, the act of respondent No.3 in refusing to receive and register the document i.e. sale certificate presented by the petitioners for registration is illegal and arbitrary.
When a property is purchased in Court Auction sale, if any value other than the value fixed by the Court, is taken into consideration for the purpose of determining the stamp duty, it tantamounts to exceeding the jurisdiction under law. A harmonious construction and interpretation of the Section 47-A of the Indian Stamp Act and the rules make it clear that the value of property fixed by the Court cannot be deviated from. (Vide: The Inspector General of Registration, Chennai v. K.P.Kadar Hussain3) Even if this principle is applied to the present facts of the case, refusal to receive and register the document by respondent No.3 is nothing but exceeding his jurisdiction.
At this stage, it is brought to the notice of this Court that in pursuance of the interim direction issued by this Court on 21.01.2021, petitioners presented the document for registration and it is pending with respondent No.3 without complying with the interim direction issued by this Court.
Therefore, respondent No.3 is directed to process the document already presented by the petitioners and register the same if it satisfies the requirements under the Registration Act. 3 AIR 2014 Mad. 230 MSM,J WP_1300_2021 8 In the result, the writ petition is allowed directing respondent No.3 to process the document already presented by the petitioners in pursuance of the interim direction issued by this Court on 21.01.2021 and register the same, if it satisfies the requirements under the Registration Act. No costs.
The miscellaneous petitions pending, if any, shall also stand closed.
_________________________________________ JUSTICE M. SATYANARAYANA MURTHY 02.09.2021 Ksp