Bombay High Court
Pinak Bharat And Co vs Anil Ramrao Naik on 17 March, 2025
Author: M. S. Karnik
Bench: M. S. Karnik
2025:BHC-OS:4598-DB
15.comap.14-2024 & ors.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL APPEAL NO.14 OF 2024
IN
COMMERCIAL EXECUTION APPLICATION NO.22 OF 2016
The Collector of Stamps, ]
Mumbai City, ]
Government of Maharashtra, ]
Third Floor, Old Custom House, ]
Shahid Bhagat Singh Marg, ]
Fort, Mumbai - 400 001. ] ... Appellant
Versus
1. Pinak Bharat & Co. ]
2. Bina V. Advani ]
Both having their address ]
at Office No.323-A, ]
Shah & Nahar Industrial ]
Estate, A-I, Sitaram Jadhav ]
Marg, Lower Parel, ]
Mumbai - 400 013. ]
3. Anil Ramrao Naik ]
Flat No.3, Amarkunj, 3rd Floor ]
Veer Savarkar Marg, ]
Shivaji Park, Dadar, ]
Mumbai - 400 028. ] ... Respondents
WITH
COMMERCIAL APPEAL (L) NO.28626 OF 2023
IN
COMMERCIAL EXECUTION APPLICATION NO.22 OF 2016
1. Pinak Bharat & Co. ]
2. Bina V. Advani ]
both having their address ]
PMB 1
15.comap.14-2024 & ors.odt
at Office No.323-A, ]
Shah & Nahar Industrial ]
Estate, A-I, Sitaram Jadhav ]
Marg, Lower Parel, ]
Mumbai - 400 013. ] ... Appellants
Versus
1. Anil Ramrao Naik, ]
Flat No.3, Amarkunj, 3rd floor, ]
Veer Savarkar Marg, Shivaji Park, ]
Dadar, Mumbai - 400 028. ]
2. Collector of Stamps, Mumbai City, ]
having his office at 310, 3011, ]
Old Custom House, ]
Ballard Estate, Mumbai - 400 001. ] ... Respondents
WITH
INTERIM APPLICATION (L) NO.1988 OF 2025
IN
COMMERCIAL APPEAL (L) NO.28626 OF 2023
IN
COMMERCIAL EXECUTION APPLICATION NO.22 OF 2016
1. Pinak Bharat & Co. ]
2. Bina V. Advani ]
both having their address ]
at Office No.323-A, ]
Shah & Nahar Industrial ]
Estate, A-I, Sitaram Jadhav ]
Marg, Lower Parel, ]
Mumbai - 400 013. ] ... Applicants
IN THE MATTER BETWEEN :
1. Pinak Bharat & Co. ]
2. Bina V. Advani ]
PMB 2
15.comap.14-2024 & ors.odt
both having their address ]
at Office No.323-A, ]
Shah & Nahar Industrial ]
Estate, A-I, Sitaram Jadhav ]
Marg, Lower Parel, ]
Mumbai - 400 013. ] ... Appellants
Versus
1. Anil Ramrao Naik, ]
Flat No.3, Amarkunj, 3rd floor, ]
Veer Savarkar Marg, Shivaji Park, ]
Dadar, Mumbai - 400 028. ]
2. Collector of Stamps, Mumbai City, ]
having his office Old Custom House]
Fort, Mumbai - 400 001. ] ... Respondents
****
Smt Jyoti Chavan, Addl.G.P. for State Appellant in
COMAP/14/2024 and for Respondent No.2 in
COMAPL/28626/2023.
Mr Mayur Khandeparkar a/w Mr Prerak A. Sharma, for the
Appellant in COMAPL/28626/2023 and for Respondent No.2 in
COMAP/14/2024.
****
CORAM : ALOK ARADHE, CJ &
M. S. KARNIK, J.
DATE : 17th MARCH, 2025
JUDGMENT (Per M. S. Karnik, J.) :
-
1. These Appeals challenge the order dated 27th March
2019 passed by the learned Single Judge of this Court. The
appellant-Pinak Bharat & Co. in Commercial Appeal (L)
15.comap.14-2024 & ors.odt
No.28626 of 2023 is aggrieved by that part of the impugned
order which stipulates "if the sale price is at or below the
valuation obtained, then the valuation will serve as the
current market value"; whereas the Appellant- the Collector of
Stamps, Mumbai City in Commercial Appeal No.14 of 2024
challenges that part of the impugned order whereby it is held
that the Collector of Stamps cannot determine true market
value of a property sold in public auction conducted by Court
and the valuation report obtained by the Court should be
accepted. Since the common order is under challenge, the
present appeals are disposed of by a common judgment and
order.
2. We refer to the facts in Commercial Appeal (L)
No.28626 of 2023. The Appellant No.1-Pinak Bharat & Co.
(hereinafter referred to as "Pinak Bharat & Co." for short) is a
partnership firm and the Original Judgment Creditor. The
Appellant No.2 is the partner of Appellant No.1 as well as the
partner of M/s. Win Win Associates, a sister concern of Pinak
Bharat & Co., in whose favour the sale of the subject property
came to be confirmed vide Order dated 30th October 2018 and
the Certificate of Sale dated 30 th November 2018 came to be
15.comap.14-2024 & ors.odt
issued. Respondent No.1- Anil Ramrao Naik is the Original
Judgment Debtor. Respondent No.2 is the Collector of Stamps
(hereinafter referred to as "the Collector of Stamps").
3. A few relevant facts material to the decision are :-
On 25th September 2015 an Award was passed in
Arbitration proceedings against Anil Ramrao Naik (Respondent
No.1) to pay Pinak Bharat & Co. a sum of Rs.3,50,30,150/-
together with interest @ 12% p.a. from 22 nd February 2005
amounting to approximately Rs.9.39 crores. The Warrant of
Sale was issued by this Court on 18 th October 2016 in
Execution Application No.22 of 2016. The first auction was
fixed when no bids were received. This Court on 17 th January
2018 passed an order reducing the reserve price from
Rs.32.24 crores to Rs.25 crores. There were tenants situated
in the property.
4. Learned Single Judge passed an order on 28 th
February 2018 directing the Sheriff to conduct an auction sale
after a gap of 45 days. Since no bids were received the
reserve price was reduced to Rs.18 crores. On 3 rd May 2018
this Court directed the third auction to take place at a reduced
price of Rs.15 crores.
15.comap.14-2024 & ors.odt
5. The Appellant-Pinak Bharat & Co. was granted leave
on 1st August 2018 to participate in the third auction and to
submit a bid. This Court on 24th September 2018 confirmed
the sale for Rs.15.30 crores in favour of Pinak Bharat and Co.
The order dated 30th October 2018 confirms that the entire
balance purchase price is paid and after setting off the
awarded decree amount of Rs.9,39,21,640/-, a sale is
confirmed in favour of Appellant No.2-M/s. Win Win
Associates. The Sale Certificate came to be issued in favour of
M/s. Win Win Associates on 30 th November 2018 by this
Court.
6. The said Sale Certificate dated 30th November 2018
was impounded under Section 33 of the Maharashtra Stamp
Act, 1958 (hereinafter referred to as "the said Act") by the
Sub Registrar, Mumbai City on 24th December 2018 and was
sent to the Collector of Stamps for adjudication. The Collector
of Stamps passed an interim order on 11 th April 2019 and
thereafter a final order dated 11th April 2019 thereby holding
the market value of the property as Rs. 32.24 crores and the
stamp duty payable as Rs.1,61,20,000/-. It was directed that
penalty is also payable of Rs.6,44,800/-. The said order
15.comap.14-2024 & ors.odt
records that there are totally 60 tenants in the said property.
The stamp duty is levied as per Article 16 read with Article
25(b) of the said Act.
7. Pinak Bharat & Co. preferred an Appeal under Section
32B of the said Act to the Additional Controller of Stamps
challenging the order dated 11th April 2019 read with the
corrigendum dated 26th April 2019 and 17th May 2019. The
Additional Controller of Stamps passed an order dated 23 rd
December 2019 condoning the delay of 91 days and holding
the Appeal to be maintainable. The final order dated 28 th
October 2022 was passed dismissing the Appeal thereby
confirming the order of the Collector of Stamps as regards the
market value of the said property; however the Appeal was
partly allowed as regards the penalty that was levied by the
Controller of Stamps.
8. The Appellate Authorities based their orders on a
valuation report dated 30th November 2017 obtained by this
Court pursuant to an order dated 18th October 2016, which
valuation report sets out the market value of the property to
be Rs.32.24 crores. The learned Single Judge in Commercial
Execution Application No.22 of 2016 laid down certain
15.comap.14-2024 & ors.odt
guidelines as a general practice in respect of the market value
for the purposes of stamp. Hence, these Appeals by Pinak
Bharat & Co. as well as the Collector of Stamps aggrieved by
the relevant portions of the impugned order set out earlier.
9. Mr Khandeparkar, learned counsel for Pinak Bharat &
Co. relied upon Rule 4(6) of the Maharashtra Stamp
(Determination of True Market Value of Property) Rules, 1995
(hereinafter referred to as "the Rules of 1995") to contend
that as the property in question is sold pursuant to an order
dated 24th September 2018 of this Court for Rs.15.30 crores,
Rule 4(6) is squarely applicable since the sale is conducted by
the High Court through a public auction. It is submitted that
the Rules cannot be applied dehors the facts of the case, as in
the present case the auction was conducted three times and
the reserve price was reduced from Rs.25 crores to Rs.18
crores to finally Rs.15 crores, after which the property was
finally sold. It is therefore the submission that this clearly has
a bearing on the market value of the property in question. It
is further submitted that the impugned order passed by the
Collector accepts that there are 60 tenants in the said
property which would also have a material bearing on the
15.comap.14-2024 & ors.odt
market value of the property in question.
10. Learned counsel placed reliance on the decision in
Registrar of Assurances and Another vs. ASL Vyapar
Private Ltd. and Another1 to contend that a sale of property
through the Court process is the most transparent manner of
obtaining the correct market value of the property and that in
respect of such a sale no discretion is available to the
adjudicating authority to ascertain whether the property is
undervalued while adjudicating the stamp duty. Reliance is
then placed on V. N. Devadoss vs. Chief Revenue Control
Officer-cum-Inspector and Others2 to demonstrate that
when the property is sold in the open market by inviting bids,
there is no question of any intention to defraud the revenue
nor any question of non-disclosure of the correct price.
Reliance is then placed on the decisions of this Court in
Trident Estate Private Limited and Another vs. Office of
Joint District Registrar-Class-1 and Others 3 and Dr.
Prince John Edavazhikal vs. Collector of Stamps and
Joint District Registrar and Others4 which followed the
aforesaid decisions of the Supreme Court while holding that
1 2022 SCC OnLine SC 1554
2 (2009) 7 SCC 438
3 2024 SCC OnLine Bom 3423
4 2024 SCC OnLine Bom 3872
15.comap.14-2024 & ors.odt
the sale of property through the Court process is the most
transparent manner of obtaining the correct market value of
the property. It is thus submitted that in the facts of the
present case the impugned order passed by the learned Single
Judge calls for interference.
11. Ms Jyoti Chavan, learned Additional Government
Pleader in the connected Appeal filed by the Collector of
Stamps assailed that part of the impugned order passed by
the learned Single Judge whereby it is held that the Collector
of Stamps cannot determine true market value of a property
sold in public auction conducted by Court and the valuation
report obtained by the Court should be accepted. It is
submitted that the Collector of Stamps was not a party to the
Commercial Execution Application, but it is pursuant to the
order dated 26th March 2019 passed by the learned Single
Judge directing the Collector of Stamps to remain present,
that he appeared before the Court. Learned Additional
Government Pleader submitted that the impugned order
virtually makes the provisions of Section 31 and Article 16 of
the Schedule-I of the Act redundant. It is submitted that
without laying any foundation for a challenge to the powers of
15.comap.14-2024 & ors.odt
the Collector under the said Act and Article 16, the learned
Single Judge has by laying down general guidelines made the
said Article 16 non-est. It is submitted that there was no
opportunity granted to the Collector of Stamps to defend the
provisions of the said Act. It is submitted that Code and
furthermore the Rules framed thereunder provide the manner
in which the true market value of the property is to be
determined and there is no challenge to the validity of the
same. The proviso to sub-rule (6) of Rule 4 of the Rules is not
applicable to private property but only in respect of
Government, Semi Government or local bodies. It is
submitted that Section 3 of the said Act is the charging
Section which provides that the stamp duty on instruments
will be charged as per Schedule-I. Reliance is then placed on
Section 25 and the statement of objects and reasons to
submit that a complete mechanism for determining the true
market value of the instrument as mentioned in the Schedule-
I is provided. It is then submitted that Pinak Bharat & Co. had
entered into a private arrangement with the prospective
bidder and hence succeeded in curtailing any competition.
Learned Additional Government Pleader relied upon the
15.comap.14-2024 & ors.odt
decisions in Haji Abdul Gani Khan and Another vs. Union
of India and Others5 and Dhanraj vs. Vikram Singh and
Others6 in support of the submission that there should be a
specific challenge to the validity of the statute and without the
specific pleading a statute cannot be made redundant.
Reliance is placed on Bansal Wire Industries Limited vs.
State of Uttar Pradesh and Others7 to support the
submission that in Fiscal Statutes/Taxing Acts nothing can be
read into or implied and the Court cannot make it redundant
by reading into it. Our attention is then invited to Charanjit
Lal Chowdhury vs. Union of India and Others 8 to submit
that presumption of constitutionality always is in favour of
law. Learned Additional Government Pleader was at pains to
distinguish the decisions relied on behalf of Pinak Bharat & Co.
as it is her submission that those decisions were rendered in a
very different fact situation.
CONSIDERATION
12. Before we proceed to consider the submissions of
learned counsel, it would be necessary for us to appreciate
the relevant provisions of the Act and the Rules. Section 2
5 (2023) 11 SCC 432
6 2023 SCC OnLine SC 724
7 (2011) 6 SCC 545
8 1950 SCC 833
15.comap.14-2024 & ors.odt
(na) of the said Act defines "market value" as market value, in
relation to any property which is the subject matter of an
instrument, means the price which such property would have
fetched if sold in open market on the date of execution of
such instrument or the consideration stated in the instrument
whichever is higher. Section 3 of the said Act is the charging
Section which provides that the stamp duty on instruments
will be charged as per Schedule-I. Section 25 provides as to
how transfers in consideration of debt or subject to future
payments etc. are to be charged. As per the proviso, nothing
in Section 25 shall apply to any such certificate of sale as is
mentioned in Article 16 of Schedule-I.
13. Article 16 of Schedule-I provides for the duty leviable
on the certificate of sale granted to the purchaser of any
property sold in a public auction by a Civil or Revenue Court.
Article 16 reads as under :-
Description of Instrument Proper Stamp Duty
16. CERTIFICATE OF SALE (in The same duty as is
respect of each property put leviable on a
up as a separate lot and sold) Conveyance under
granted to the purchaser of clause (a), (b) or (c)
any property sold by public as the case may be, of
auction by a Civil or Revenue Article 25 on the
Court, or Collector or other market value of the
15.comap.14-2024 & ors.odt
Revenue Officer or any other property.
officer empowered by law to
sell property by public
auction.
14. Thus, the proper stamp duty on a certificate of sale
granted to the purchaser of any property sold by public
auction by a Civil Court is the same as is leviable on a
conveyance under Clause (a), (b) or (c) as the case may be,
of Article 25 on the market value of the property. It is
therefore significant to note Clause (a), (b) and (c) of Article
25 of Schedule-I. Relevant in the context is Clause (b) of
Article 25 which reads thus :-
Description of Instrument Proper Stamp Duty
25(b). if relating to
immovable property situated,
-
(i) within the limits of 5 per cent. of the
any Municipal Corporation or market value of the
any Cantonment area property.
annexed to it or any urban
area not mentioned in sub-
clause (ii).
(ii) within the limits 5 per cent. of the
of any Municipal Council market value of the
or Nagar Panchayat or property.
Cantonment. area annexed
to it, or any rural area
within the limits of the
Mumbai Metropolitan Region
Development Authority, or the
Influence Areas as per the
annual statement of rates
15.comap.14-2024 & ors.odt
published under the Bombay
Stamp (Determination of True
Market Value of Property)
Rules, 1995.
(iii) within the limits of 4 per cent. of the
any Grampanchayat area or market value of the
any such area not mentioned property.
in sub-clause (ii).
15. We may now in the present context consider the
relevant provisions of the Rules of 1995. Sub-rule (6) of Rule
4 reads thus :-
"4. Annual statement of rates of immoveable
property
.....
(6) Every registering officer shall, when the
instrument is produced before him for registration, verify in
each case the market value of land and buildings, etc., as
the case may be, determined in accordance with the above
statement and Valuation Guidelines issued from time to
time and if he finds the market value as stated in the
instrument, less than the market value, determined as
above, he shall refer the same to the Collector of the
District for determination of the true market value of the
property which is the subject matter of the instrument and
the proper duty payable thereon:
Provided that, if a property is sold or allotted by
Government or Semi Government body or a Government
Undertaking or a Local Authority on the basis of the
predetermined price, then value determined by said bodies,
shall be the true market value of the subject matter
property.
Provided further that, where the property is
purchased or acquired or taken over by the Government,
Semi-Government Body or a Government Undertaking or
Local Authority, then the actual value determined as
consideration by the said bodies as mentioned in the deed,
shall be considered to be the true market value of the
subject matter property.
15.comap.14-2024 & ors.odt
Provided also that where the market value has
been stated in accordance with or more than that
prescribed in the statement issued by the Chief Controlling
Revenue Authority, but the Registering Officer has reason to
believe that the true valuation of the immoveable property
cannot be arrived at without having recourse to local
enquiry or extraneous evidence he may, before registering
such instrument, refer the same to the Collector of the
District for determination of true market value of property
and the proper duty payable thereon."
16. The Act and the Rules made thereunder provide for a
complete mechanism for determining the true market value of
the instrument as mentioned in Schedule-I for the said Act
and the procedure for arriving at a true market value. We
have already noticed the definition of the term "market value".
The question therefore is, in respect of a certificate of sale
pursuant to a public auction by a Civil Court, how is the
market value of the property to be determined. Sub-rule (6)
of Rule 4 empowers the registering officer to verify in each
case the market value of the land and buildings as the case
may be which is to be determined on the basis of the
procedure prescribed by sub-rule (1) to (5), and if he finds
that the market value as stated in the instrument is less than
the market value determined in terms of the procedure
prescribed by sub-rule (1) to (5), he shall refer the same to
the Collector of the District for determination of the true
15.comap.14-2024 & ors.odt
market value of the property which is the subject matter of
the instrument and the proper duty payable thereon.
17. The first proviso to sub-rule (6) of Rule 4 says that, if
a property is sold or allotted by Government or Semi
Government body or a Government Undertaking or a Local
Authority on the basis of the predetermined price, then value
determined by said bodies, shall be the true market value of
the subject matter property. Article 16 undoubtedly prescribes
the stamp duty payable in respect of a certificate of sale
granted of a property sold in a public auction by a Civil Court.
However, the stamp duty is leviable on the market value of
the property. We must bear in mind that the market value is
to be determined in respect of a property sold in a public
auction by the Court.
18. Let us seek guidance from the decisions of the
Supreme Court on the aspect of determination of market
value of the property in respect of a public auction by a Civil
Court. But before that the facts of this case which have a
material bearing on the answer are relevant. At the cost of
repetition, we note that price was Rs.32.24 crores as per the
valuation report called by the Court. As there were tenants
15.comap.14-2024 & ors.odt
situated in the property the reserve price was fixed at Rs.25
crores. In the first auction no bids were received and hence
the second auction sale was conducted reducing the reserve
price to Rs.18 crores. Even the second auction failed and the
third auction was scheduled at a reduced price of Rs.15
crores. Pinak Bharat & Co. was granted leave to participate in
the third auction and submit a bid. The sale was confirmed for
Rs.15.30 crores in favour of the Pinak Bharat & Co.
19. The Supreme Court in Registrar of Assurances and
Another (supra) held that a public auction carried out through
court process/receiver is the most transparent manner of
obtaining the correct market value of the property. Their
Lordships observed that 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 the material before it and
gives its imprimatur to it, any interference by the Registering
15.comap.14-2024 & ors.odt
Authority on the aspect of price of transaction would be wholly
unjustified.
20. Present is a case of repeated public auctions where
the property could not be sold for the reserve price fixed and
therefore the same had to be reduced from time to time. It is
this factual context which will have to be borne in mind. Also
relevant is the consideration that there were tenants in the
property. The Appellants were permitted to participate in the
auction and submit their bid. The Court was at all stages
monitoring the auction. The conclusions of the Hon'ble
Supreme Court in Registrar of Assurances and Another
(supra) provide a valuable guidance in resolving the present
controversy, reading thus :-
"24. 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.
25. 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
15.comap.14-2024 & ors.odt
uncommon in our country, where consideration may be
passing through two modes - one the declared 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.
26. 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 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.
27. We may only note that this Court in P. Laxmi Devi
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. Devadoss 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.comap.14-2024 & ors.odt
28. 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.
29. 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 vacant property. The tenancy aspect can hardly
be said to be an aspect which could be ignored in the
determination of the price.
30. 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.
31. 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
15.comap.14-2024 & ors.odt
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 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.
32. The decision of this Court in V.N. Devadoss 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.
33. 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.
21. The observations of the Hon'ble Supreme Court
squarely apply in the present facts. We may also note with
profit, the Division Bench of this Court in Spectrum
Constructions and Developers LLP vs. State of
Maharashtra, through Joint District Registrar 9 held that
there is no question of stamp authorities independently
reassessing the market value of the land and building. This
Court was concerned with a fact situation where the Petitioner
therein paid full stamp duty on the consideration accepted by
SEBI. The sale was overseen by a Supreme Court constituted
committee under the Chairmanship of His Lordship Mr Justice
9 2022 SCC OnLine Bom 3693
15.comap.14-2024 & ors.odt
R. M. Lodha, former Chief Justice of India. The reserve price
was fixed by the Lodha Committee. The Petitioner's bid was
much higher than the reserve price. The stamp duty was paid
on the bid amount. A demand was made by the Registering
Authority for payment of deficit stamp duty and penalty,
justifying the market value on the location of the land. In this
context the Division Bench of this Court in paragraphs 6 and 7
held thus :-
"6. We are in agreement with Mr. Vashi, learned Senior
Counsel for the Petitioners, that in the facts and
circumstances of the case, there is no question of the
stamp authorities independently reassessing the market
value of the land and building. The issue at law is covered
by the decision in Pinak Bharat and Co. v. Anil Ramrao
Naik delivered by one of us sitting singly (GS Patel, J).
This points out that where the land is sold or allotted by
the government or a semi-government body, government
undertaking or a local authority on the basis of
predetermined price, then the value as determined by
such body is to be taken as the true market value of the
subject matter property.
7. There is no doubt in this case that the market
value was the bid of the Petitioner as accepted by the
Justice Lodha Committee and that the sale was confirmed
at the amount of the Petitioner's bid by SEBI. In this view
of the matter, there is no question of the stamp
authorities determining any other value. The only value to
be accepted is Rs. 1,66,57,920/-. The stamp duty on this
is Rs.9,99,475/-. There is no question therefore of
allowing the stamp authorities to demand any other
amount. There is certainly no question of a penalty."
22. In Spectrum Constructions and Developers LLP
(supra), Their Lordships referred to the decision in Pinak
15.comap.14-2024 & ors.odt
Bharat and Co. vs. Anil Ramrao Naik which is under challenge
in the present Appeal. We are in a complete agreement with
what has been held by the Division Bench in Spectrum
Constructions and Developers LLP (supra) as in our opinion
this decision is in line with what the Supreme Court has said
Registrar of Assurances and Another (supra). We do not
propose to multiply the authorities by referring to each of the
decisions referred to by the Petitioner. Suffice it to observe
that this Court in Trident Estate Private Limited and Another
(supra) has after extensively referring to the decision of the
Hon'ble Supreme Court in Registrar of Assurances and
Another (supra) and Spectrum Constructions and Developers
LLP (supra) held that in respect of a sale which was confirmed
at a price bid by the Petitioner, and which was above the
reserve price, there was no question of the stamp authorities
determining the market value. The price bid above the reserve
price would be taken as the market value.
23. According to us, due deference and sanctity has to be
attached to a Court monitored auction as such an auction of a
property is possibly one of the most transparent method by
which the property can be sold. In the facts of the present
15.comap.14-2024 & ors.odt
case, we are of the opinion that it was not permissible for the
Registering Authority to sit in appeal over the one fixed by the
Court. Such a course in no manner has the effect of making
the powers of the Registering Authority under the Act or the
Rules redundant as in all other cases, the authority can
always determine the market value in accordance with the
provisions of the Act and the Rules.
24. The property ultimately was sold for a price higher
than the reserve price on which the stamp duty is payable.
Thus, we are of the opinion that the value at which the
property is ultimately sold above the reserve price must serve
as a market value for the purpose of determining the stamp
duty payable upon the said sale.
25. The submission of Ms Jyoti Chavan, learned Additional
Government Pleader that the decision in Registrar of
Assurances and Another (supra) is distinguishable merely
because Article 16 or Article 25 of Schedule-I was not the
subject matter of consideration before the Hon'ble Supreme
Court, in our opinion, will not make any material difference
having regard to the authoritative pronouncement of the
Supreme Court in respect of an auction monitored by the
15.comap.14-2024 & ors.odt
Court. The decisions relied by Ms Chavan lay down well
settled principles of law.
26. Article 16 is a provision for levy of stamp duty on the
market value of the property sold in a public auction by the
Court. It is in such cases that for determination of the market
value the observations of the Hon'ble Supreme Court in
Registrar of Assurances and Another (supra) are authoritative.
As indicated earlier, Spectrum Constructions and Developers
LLP (supra) though has referred to the decision in Pinak
Bharat & Co., has in fact followed the law laid down in
Registrar of Assurances and Another (supra) and in our
considered opinion, rightly so.
27. Resultantly, the Commercial Appeal (L) No.28626 of
2023 of Pinak Bharat & Co. and another is allowed. The
impugned order dated 27th March 2019 in Commercial
Execution Application No.22 of 2016 is set aside.
28. We make it clear that having set aside the impugned
order, the general practice to be followed prescribed by the
learned Single Judge in paragraph 23 is rendered
inconsequential. In all cases, other than the one covered by
15.comap.14-2024 & ors.odt
this decision, the Registering Officer undoubtedly will have the
power to verify the market value of land and building in
accordance with the said Act and the Rules. Commercial
Appeal No.14 of 2024 filed by the Collector of Stamps,
Mumbai City is disposed of in the light of the aforesaid
observations. No order as to costs.
29. The Interim Application (L) No.1988 of 2025 is also
disposed of.
(M. S. KARNIK, J.) (CHIEF JUSTICE)
Signed by: Pradnya Bhogale
Designation: PA To Honourable Judge
