National Investor Forum Regd. vs Golden Forests India Ltd.
2014 Latest Caselaw 4858 Del

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
                                             Reserved on: 27.08.2014
                                           Pronounced on: 26.09.2014

+      W.P.(C) 1399/2010
       NATIONAL INVESTOR FORUM REGD. .....Petitioner
                    Through : None.
                          Versus

       GOLDEN FORESTS INDIA LTD.         ......Respondent

Through : Sh. Harpawan Kumar Arora, Advocate, for Committee - GFIL in C.M.

No.15884/2013.

Ms. Anubha Agrawal, Advocate, for applicant in C.M. No.15884/2013.

Mr. Yashpal Rangi, Advocate, for D.C., Panchkula, Haryana.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE VIPIN SANGHI

MR. JUSTICE S. RAVINDRA BHAT

% CM APPL.15884/2013

1. This order will dispose of the application preferred by M/s. SAS Properties (hereafter referred to as "SAS") seeking directions for the refund of the amount of stamp duty deposited by it, i.e., `2,50,02,000/- with 25% interest. A direction is sought against the respondent, i.e.,

W.P.(C) 1399/2010 Page 1 the Supreme Court appointed Committee for GFIL (hereafter referred to as "Committee").

2. The brief facts are that by an advertisement published on 15.04.2011, the Committee sought bids for the purchase of 1398 kanal 3 marla of land in District Panchkula which included a partially constructed tourist complex. SAS was the highest bidder; it had offered over `50 Crores for the land. The bid was confirmed by an order of this Court dated 11.08.2011, when the Committee's applications (C.M. Nos.9340-41/2011) were allowed. Thereafter, SAS deposited the requisite amount towards stamp duty, for which stamp papers were also apparently purchased. However, the transaction could not be finalized, because 21 kanals 12 marlas of the land were not, in fact, included in the site plan of the parcel of the land on which the resort was to be constructed and advertised for sale. It, therefore, sought cancellation of the earlier confirmation by filing C.M. No. 9656/2013. After hearing counsel for the parties, the Division Bench of this Court, on 30.9.2013, allowed the plea of SAS on the basis of the following findings:

"It is common knowledge and accepted market practice that lands are evaluated primarily on the basis of their location and distance from motorable roads and highways. The parcel of land which was offered in the bid as per the advertisement was assessed to have a reserved bid price of Rs.50 crores. Those lands inadvertently got included in the "details of the properties" supplied to the bidder belonged to a different parcel of land which would be evaluated and sold off separately. If the best located parts of the other parcels of land are sold out or included in the present bid, it

W.P.(C) 1399/2010 Page 2 would adversely affect the valuation of the remainder lands of Part-C.

5. In these circumstances, since the offer of the Committee of 1403 Kanal is not acceptable and the bidder - M/s SAS Properties desires to have its bid cancelled and monies paid by it returned to it, the application of the Committee is allowed to the extent that the sale confirmed vide order dated 11th August, 2011 is hereby cancelled."

3. As a result of the above order, the amount paid towards consideration was refunded. SAS, therefore, sought for refund of the stamp duty amount through its letter dated 08.10.2013 addressed to the Sub-Divisional Magistrate, Panchkula. However, the request was denied and Collector, Panchkula in his letter dated 14.10.2013 stated that:

"Reference your application dated 08.10.2013 regarding the above subject.

Through the above letter you have applied for refund of Rs.2,50,02,000/-. This stamp paper was purchased by you on 10.04.2012 and the refund application has been made on 10.10.2013. As per the Indian Stamp Act, 1899, it is mandatory to apply for refund within a period of six months from the date of purchase. You have given this application after approximately 1 years 6 months. Therefore, this refund of stamp duty cannot be made."

4. It is argued that since the Committee mistakenly advertised land for which title could not be issued, the confirmation of the sale earlier granted by the Court was cancelled. SAS argues that consequently, the Committee should refund the amount equivalent to the stamp duty, i.e., `2,50,02,000/- with interest, given that SAS has been put to

W.P.(C) 1399/2010 Page 3 prejudice for no fault on its part. The Committee, on the other hand, argues that though the facts revealed that the transaction was finally cancelled, there was no mala fide on its part and on the contrary it had offered to compensate the buyer, by inviting it to accept other lands. In these circumstances, the Committee cannot be directed to bear the entire burden. It was also pointed out during the hearing that the rules governing the refund of stamp duty do not permit refund of the entire amount but only 90%, and that given these circumstances, an appropriate direction ought to be given to Collector of Panchkula.

5. Since the interest of the Revenue was involved, the Collector, Panchkula was issued notice. The affidavit of one Shri Gurmeet Singh, Sub-Divisional Officer (Civil) dated 10.2.2014 was filed. It was argued on behalf of the Collector that the application filed by SAS was duly considered but could not be granted in view of Section 50 (2) of the Indian Stamp Act, 1899 which mandates that application for refund of stamp duty should be made within six months from the date of purchase. It was not disputed, however, that the refund, if allowed, would be admissible to the extent of 90% and that 10% of the cost of stamp would have to be borne by the applicant or parties concerned.

6. It is evident that the sale transaction in this case could not be finalized on account of the lapse of the Committee for GFIL. A crucial part of the 1398 kanals was the land on which the resort was partially built, but was in fact not part of the site plan. That the buyer was within its rights to insist upon conveyance of title for the whole of the land offered, or to withdraw the offer, was recognized when the previous order confirming the sale was withdrawn and the sale

W.P.(C) 1399/2010 Page 4 cancelled, by the order dated 30.09.2013 (in C.M. No.9656/2013). In the circumstances, there can be no doubt that the applicant, SAS'S, has a justified claim for restitution of the entire amount of stamp duty deposited with the Committee. Although the Committee argues that it ought not to be made to bear the entire burden, and that if this Court were to find that Section 50 (2) is not a complete bar, SAS' loss would be minimized and brought down to 10% of the stamp value, the fact remains that the Committee cannot escape its responsibility for what happened.

7. Section 50 of the Indian Stamp Act reads as follows: -

"50. Application for relief under section 49 when to be made - The application for relief under section 49 shall be made within the following periods, that is to say,-

(1) in the cases mentioned in clause (d) (5), within two months of the date of the instrument;

(2) in the case of stamped paper on which no instrument has been executed by any of the parties thereto, within six months after stamp has been spoiled;

(3) in the case of a stamped paper in which any instrument has been executed by any of the parties thereto, within six month after the date of the instrument, or, if it is not dated, within six months after the execution thereof by the person by whom it was first or alone executed;

Provided that,-

(a) when the spoiled instrument has been for sufficient reasons sent out of India, the application may be made within six months after it has been received back in India;

W.P.(C) 1399/2010                                                       Page 5
       (b)     when, from unavoidable circumstances, any

instrument for which another instrument has been substituted cannot be given up to be cancelled within the aforesaid period, the application may be made within six months after the date of execution of the substituted instrument."

8. Textually, Section 50 (2) indicates that in the case of stamped paper on which no instrument has been executed by any of the parties thereto, the application for relief under Section 49 should be within six months after stamp has been "spoiled". Interestingly, Section 50 (3) deals with the situation where a stamp paper is utilized and an instrument has been executed. Even in such circumstances, it is open for the parties to apply for refund.

9. What is meant by expression "spoiled" is elaborated in Section 49 which lists out the situations when the stamp paper is inadvertently and undersignedly spoiled, obliterated or by error in writing or any other means rendered unfit for the purpose intended, before any instrument written thereon is executed by any person, and when the stamp on any document is written out wholly or in part, but which is not signed or executed. It is, therefore, clear that Section 50 (2) applies to create a limitation of six months, only after the stamp is spoiled. Even when the parties use a document on which "any instrument has been executed", it is open to the Collector to make appropriate refund, so long as the application is made within six months from the date of the instrument/the execution. Therefore, the Court sees no bar per se in the grant of refund in the circumstances of this case. The judgment of the Kerala High Court in V.K. Sundram v.

W.P.(C) 1399/2010 Page 6 Tahsildar, Palakkad, 1973 MLJ 433, dealt with the situation where the transaction could not be completed and fell through. In the circumstances, it was held that the refund could be made after it was received back in the parent State. In the present case, the occasion for claiming refund could not have arisen before 30.09.2013, i.e., before this Court permitted withdrawal of the offer and cancelled it, which in effect nullified the previous confirmation. The applicant SAS approached the Collector almost immediately thereafter through its letter of 8.10.2013. Thus, the limitation in the present instance ought to have been reckoned from the date when the cause for refund arose, and not from the date when the stamp paper was produced.

10. Even otherwise, this Court is of the opinion that the larger principle of restitution would apply and the SAS cannot be visited with prejudice for an act of Court by application of principle, actus curiae neminem gravabit, i.e. the act of Court can prejudice none.

11. On the question of relief, this Court is conscious of the fact that the Committee for GFIL was put in place to sub-serve the public purpose, i.e., to collect the assets of the erstwhile Golden Forest India Limited and after putting them to sale, prepare schemes for refund to innocent investors. The immensity of its task in taking control of known assets, identifying the hidden and unknown assets, initiating proceedings to take charge of such assets cannot be lost sight of. Therefore, this Court is of the opinion that even while directing the Collector to refund 90% of the amount in question, i.e., `2,50,02,000/, the balance should be borne by both the parties. In other words, SAS, the applicant would be entitled to the refund of the entire 90% of the

W.P.(C) 1399/2010 Page 7 stamp duty deposited by it; in addition, the Committee shall refund 50% of the balance amount, i.e., 50% of `25,00,200/- to the said SAS. This Court considers the circumstances as such that do not warrant a direction to pay interest on the said amount. The Committee shall ensure that the said amount is paid within four weeks after it receives intimation with respect to the refund of the 90% amount by the Collector. The Collector, Panchkula, in turn directed to refund the entire amount permissible, i.e., 90% of `2,50,02,000/- within four weeks to M/s SAS Properties, the applicant herein.

12. The application is allowed in the above terms.

S. RAVINDRA BHAT (JUDGE)

VIPIN SANGHI (JUDGE) SEPTEMBER 26, 2014

W.P.(C) 1399/2010 Page 8