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2007 DIGILAW 1568 (PAT)

Emarat Co-operative Housing v. State Of Bihar

2007-09-24

NAVANITI PRASAD SINGH

body2007
Judgment 1. The present writ application has been filed for quashing the order of Assistant Inspector General of Registration, Govt. of Bihar, Patna (respondent no.2) as communicated to the District Sub-Registrar, Patna Sadar, Patna (respondent no.4) in respect to the petitioner and for a consequential relief directing the District Sub-Registrar, Patna Sadar, Patna to register the sale deed in favour of the petitioner with proper stamp duty and registration fee and other consequential relief. 2. Petitioner is a Co-operative Housing Society duly registered under the provisions of Society Registration Act, 1935 having its registered office at Patna. Respondent no.1 is the State of Bihar through the Secretary -cum-lnspector General of Registration, Department of Registration, Govt. of Bihar, respondent no.2 is the Assistant Inspector General of Registration, Govt. of Bihar, Patna, respondent no. 3 is the Registrar cum District Magistrate, Patna and respondent no. 4 is the District Sub-Registrar, Patna Sadar, Patna. Respondent no.5, private-respondent is the vendor, who is seeking to transfer his land, in question by way of sale to the petitioner and it is this purported sale deed that is the subject matter of dispute as to its proper valuation for the purposes of stamp duty and registration fee. 3. Respondent no.5 has appeared and supports the contention of the petitioner. Other respondents have also appeared and filed counter affidavit. Petitioner has filed rejoinder thereto. 4. With the consent of the parties this writ petition is being disposed of at the stage of admission itself after hearing the parties at length. 5. Petitioner had filed the draft sale deed in question before the respondent no.4 and sought his opinion as to the proper stamp duty and registration fee payable in respect thereof. The said respondent no.4- District Sub-Registrar, Patna Sadar, Patna forwarded the said draft sale deed by his letter no. 2445, dated 7.5.2007 (Annexure 5) to the Secretary cum Inspector General of Registration. Govt. of Bihar, Patna for his opinion and guidelines in the interest of revenue. While doing so, he had indicated the basic facts and the plea of the petitioner and thus sought the guidance from the Inspector General of Registration. By letter no. 1489, dated 20.5.2007 the Assistant Inspector General of Registration, Govt, of Bihar, Patna from the office of Inspector General of Registration conveyed the guidelines to the District Sub-Registrar (Annexure 6). By letter no. By letter no. 1489, dated 20.5.2007 the Assistant Inspector General of Registration, Govt, of Bihar, Patna from the office of Inspector General of Registration conveyed the guidelines to the District Sub-Registrar (Annexure 6). By letter no. 2866 dated 6.6.2007 the District Sub-Registrar informed the petitioner of the decision of the Inspector General of Registration and asked the petitioner to act accordingly. Therefore it is the correctness or otherwise of the view as expressed by Inspector Genera! of Registration, Govt. of Bihar, Patna as contained in Annexure 6 and communicated by Annexure 7 for compliance that is in question. 6. The department has taken the stand that even though what is sought to be transferred by way of sale to petitioner by respondent no.5 is the said respondents land but as the land has now an apartment building thereon constructed by the petitioner himself at his own cost, the said conveyance would be valued for the purposes of stamp duty and registration fee by including the market value of the land sought to be conveyed along with the petitioners own building thereof. The correctness of this view is the subject matter of dispute. 17. A preliminary objection as to the maintainability of this writ petition was raised on behalf of the State, it was submitted that the petitioner had merely filed a draft sale deed and accompanying papers and sought an opinion as to proper value for the purposes of stamp duty and registration fee. The petitioner had not filed the final executed sale deed. The petitioner has no cause to challenge the opinion given from the office of Inspector General of Registration as the proper procedure was for the petitioner to file the executed sale deed with stamp duty and registration fee as per his own assessment. Then if the same was Impounded by the District Sub-Registrar and sent to the District Collector for valuation and fixation of correct duty and fee, a case would be registered as an under valuation case. Then if the same was Impounded by the District Sub-Registrar and sent to the District Collector for valuation and fixation of correct duty and fee, a case would be registered as an under valuation case. In the said case the District Collector would then, as per Bihar Stamp (Prevention of Under Valuation of Instrument) Rules, 1995, determine the duty and fee payable and impose penalty in terms of Sec. 47A read with Sec. 40 which inter alia provides not only for payment of deficit duty and fee but imposition of penalty to the extent of an amount not exceeding ten times the amount of proper duty or deficit duty. Then the petitioner could challenge the same in appeal as provided under Sec. 47A before the Divisional Commissioner. In the other words, on behalf of State it is submitted that the petitioner must first submit to the jurisdiction of the District Sub-Registrar and face penal consequences and having suffered penal consequences he should further suffer appellate proceedings and after those prolonged litigation could only approach this court and not straightway. 7. On the other hand learned counsel for the petitioner submits that petitioner having sought the views of the competent authority in advance and the senior most official having decided the matter it could not be said that when the actual sale deed was presented for registration, the District Sub-Registrar or for that matter the District Collector would have the courage and conviction to differ from the views of the Inspector General of Registration and as such a decision having been taken on the facts the adverse consequences would automatically flow and in such an event filing show cause before the Divisional Commissioner would be in exercise of futility. For this purpose reliance was placed on the judgment of the constitution bench in the case of M/s Filterco and another Vs. Commissioner of Sales Tax, M.P. and another reported in AIR 1986 SC 626 as well as a Division Bench judgment of this Court delivered by N.P. Singh, J and B.P. Singh, J (as their Lordships then were) in the case of Bajrangbali Coke Briquetting Industries Vs. State of Bihar since reported in 1987 PLJR 926. 8. In my view the objection taken by the State is not sustainable. State of Bihar since reported in 1987 PLJR 926. 8. In my view the objection taken by the State is not sustainable. It is too late in the day to urge that party must first subject himself to the jurisdiction of a authority which has already disclosed its mind adverse to the petitioner and then face the adverse order and situation and litigat waisting every bodys time, money and energy rather than to approach this court against the decision already indicated for getting the legality thereof tested. Reliance was rightly placed on the judgment of the Apex Court in the case of M/s Filterco Vs. Sales Tax Commissioner., M.P. (supra) wherein in para 11 of the report the Apex Court while dealing with a similar contention that was raised by the State and upheld by the High Court the Apex Court held that although technically it would have been open to the appellants to urge their contentions before the appellate authority namely, the Appellate Assistant Commissioner, that would be a mere exercise in futility when a superior officer namely, the Commissioner, has already passed a well considered order. In my view, such a mode would be an appeal from Ceaser to Ceasers wife. Similar is the view of Division Bench in the case of Bajrangbali Coke Briguetting Industries (supra). Their Lordships in para 18 of the said report have noted that though the impugned order did not appear to have been passed by the State Government in exercise of any statutory power but, in view of the decision having been taken by the State Government and communicated to different authorities, it would be a futile exercise on the part of the petitioners to agitate the question from one forum to another. Their Lordships refused to dismiss the writ petition and considered the same on merits. Thus, the preliminary objection as raised by the State is meritless and is not accepted. 9. The facts are not at all in dispute. What is in dispute is the legal implication thereof. Breifly stated the facts are as under noted: On 15.4.1992 a written agreement was entered into between the respondent no.5, the private respondent and the petitioner Co-operative Housing Society for sale of about 5000 sqft of land situated at Mouza Chitkohra, P.S. Gardanibagh in the district of Patna. What is in dispute is the legal implication thereof. Breifly stated the facts are as under noted: On 15.4.1992 a written agreement was entered into between the respondent no.5, the private respondent and the petitioner Co-operative Housing Society for sale of about 5000 sqft of land situated at Mouza Chitkohra, P.S. Gardanibagh in the district of Patna. The agreement or the terms thereof are not in dispute and the said agreement has been annexed as Annexure 1 to the Writ petition. The said agreement clearly stipulates that respondent no.5 is the owner of 5000 sqft of land, as aforesaid, which has an old dilapidated building thereon. Respondent no.5 has agreed to sell the land to the petitioner- Cooperative Soceity for a consideration of about Rs. 3,67,500/-, which is about rupees one lakh per katha. Instead of receiving cash consideration for the said sale the petitioner was to construct a Villa for the petitioner tin a different, distinct and separate piece of land of the petitioner. The petitioner was given the right to construct out of his own fund a building or apartment complex upon the land that was to be sold to him in which respondent no.5 would have no right. Respondent no.5, as per agreement, itself had delivered possession of the land to the petitioner. Respondent no.5 was obliged to execute the final deed of conveyance conveying the right, title and interest of the respondent no.5 to the petitioner in the said land on constructing the ViWa on petitioners separate, distinct and independent land. To effectuate the said arrangement, respondent no.5 gave Power of Attorney to petitioner (Annexure 2) and agreed to join the petitioner in any formality that was required to be done pursuant thereto and in furtherance of the said agreement. 10. It appears that pursuant to the said agreement dated 15.4.1992 (Annexure 1) and the possession delivered in part performance thereof, possession was handed over to the petitioner of 5000 sqft of land and the petitioner demolished the old building and with his own funds constructed an apartment thereon. Simultaneously, the petitioner constructed the Villa for respondent no.5 on the separate, distinct and independent plot of respondent no.5 for the residence of respondent no.5. Simultaneously, the petitioner constructed the Villa for respondent no.5 on the separate, distinct and independent plot of respondent no.5 for the residence of respondent no.5. All this having been done then came Bihar Apartment Ownership Act, 2004 and now the petitioner required respondent no.5 to convey the land admeasuring 5000 sqft to it, so that the petitioner would then be in a position to transfer the apartment which he had constructed, to others. In pursuance thereto a draft sale deed (Annexure 3) was drawn up noticing the aforesaid facts. The draft deed of conveyance clearly stipulates that what is being conveyed, in fact, is 5000 sqft of land but the consideration has been shown as Rs. 11,79,450=-00 which is said to be the actual cost of construction as incurred by the petitioner in constructing the residential house (Villa) of respondent no.5 on his separate independent distinct land as per agreement. 11. It may be noted here that as per agreement (Annexure 1) the consideration originally set out was to be Rs. 3,67,500/- but as the cost of Villa constructed by the petitioner far exceeded the said amount, the higher amount was taken to be the consideration for conveyance of the land. Petitioner apprehending that there may be a dispute or difference of opinion with regard to the valuation of the conveyance, sought an advance ruling from the District Sub-Registrar in order to avoid future complications. He filed the draft sale deed with all necessary papers. The District Sub-Registrar forwarded the same to the Inspector General of Registration, Bihar, Patna by his letter (Annexure 5). In that letter he clearly noted the contention of the petitioner which was that what was sought to be conveyed by the deed of sale was only 5000 sqft of land from respondent no.5 to the petitioner for the consideration of petitioners constructing the Villa of the respondent no.5 on a separate piece of land. The petitioner did not want to include the cost of apartment building, which he had constructed on the land that was to be conveyed as that he had constructed with the permission of respondent no.5, the landlord out of his funds and were his property which could not be conveyed to himself. The petitioner did not want to include the cost of apartment building, which he had constructed on the land that was to be conveyed as that he had constructed with the permission of respondent no.5, the landlord out of his funds and were his property which could not be conveyed to himself. Alternatively the stand was that either the market value of the land or the value of construction of Villa done by the petitioner whichever is higher could be taken to be the value for the purpose of stamp duty and registration fee but certainly not the value of the apartment be added to the said value of the land or the Villa. 12. It appears that after examining the position the office of inspector General of Registration, Bihar, Patna by their letter (Annexure 6) communicated to the respondent District Sub-Registrar, Patna that as 5000 sqft land was being conveyed by respondent no.5 to petitioner and as by this time it had a apartment constructed thereon the value for the purpose of stamp duty and registration fee of the conveyance would be the value of the land as well as the apartment building thereon. This decision of the Inspector General of Registration was then conveyed by Annexure 7 to the petitioner-cooperative society. The effect of the decision is that though by the sale deed (deed of conveyance) that is being conveyed by respondent no.5 to the petitioner is only the land, yet the Inspector General of Registration wrongly took the view that the conveyance was of the land with apartment building thereon and as such had to be valued compositely notwithstanding the undisputed fact that the apartment was constructed by the petitioner himself out of his funds and notwithstanding the fact that what already belonged to petitioner could not be conveyed to the petitioner. It is the correctness of this view that has to be tested in the present case. 13. In my view, the answer is simple and stranghtforward but for general misconception that runs with the people and more particularly the people concerned with registration of instruments. The law, in my view, has been settled by the decision of the Privy Council and the decision of the Apex Court following the same to which I will refer later. 14. . There appears to be a common mis-conception carried by the people. The law, in my view, has been settled by the decision of the Privy Council and the decision of the Apex Court following the same to which I will refer later. 14. . There appears to be a common mis-conception carried by the people. The common law (English Law) was that anything attached to the earth/soil would form part of the earth/soil. Meaning thereby that the property (title) in the construction made over land would vest with the landlord, who soever may have constructed the same. This is not a position in India. In India we are governed not by common law or the common law principle but by statute law made in India on the subject. The subject in India is covered by the provision of Transfer of Property Act, 1882. In the T.P.Act there are provisions which clearly suggests a departure from the English law on this subject. By way of illustration Sec. 108 (h) of T.P. Act clearly recognises the right of a lessee to have the right over the construction made by him on the lessors land. This is contrary to the English law in this regard. This distinction was first noted and decided authoritatively in the case of Narayan Das Khettry Vs. Jatindra Nath Roy Chowdhary & ors. since reported in AIR 1927 Privy Council 135. wherein it was held that the maxim quicquid plantatur sole, sole cedit, which means that building so constructed vests in the owner of the land has no application to India. 15. In the case of Laxmipat Singhania Vs. Larsen and Toubro Ltd since reported in AIR 1951 Bombay 205 a similar question arose and their Lordships held referring to the decision of the Privy Council (supra) that the said decision was clearly an authority for the proposition that a building can be owned by one man and the land by another in India; and that in a case where a lessee puts up a building on a vacant plot of land taken on lease by him although the lessor may be the owner of land, the building belongs to the lessee and not to the lessor (para 3) of the reports). The matter came up again before the Apex Court, in the case of Bishan Das & ors Vs. The matter came up again before the Apex Court, in the case of Bishan Das & ors Vs. State of Punjab and others since reported in AIR 1961 SC 1570 , the Constitution Bench speaking through S.K. Das, J held after referring to the decision of the Privy Council (supra)- "These decisions show that a person who bona fide puts up constructions on land belonging to others with their permission would not be a trespasser, nor would the buildings so constructed vest in the owner of the land by the application of the maxim quicquid plantatur solo, solo cedit". The facts before the Apex Court was that the land belonged to the State: with the permission of the State Ramji Das, on behalf of the joint family firm of Faquir Chand Bhagwan Das, built the dharmasala, temple and shops and managed the same during his life time. After his death the petitioners, other members of the joint family continued the management. On the admitted position the petitioners were held not to be trespassers in respect of the dharmasala, temple and shops: nor could it be held that the dharmasala tempie and shops belonged to the State. It was held that it is now well settled that the maxim, what is annexed to the soil goes with the soil, has not been accepted as an absolute rule of law of this country. 16. In view of the aforesaid legal position if we are to examine the facts of the present case what is that we find in law? 5000 sqft land absolutely belonged to respondent no.5 and he had agreed to convey the same to the petitioner. Petitioner was permitted to construct an apartment building thereon out of his own funds and deal with it as his own property. What was sought to be transferred/conveyed was only the land. This was so because the building had been constructed by the petitioner and the petitioner was already the owner thereof. There could not be any transfer/conveyance of the apartment building by respondent no.5, who was not the title holder to the apartment building nor could such a transfer be made by the petitioner to himself as transfer/conveyance is necessarily a bilateral act. No one can transfer unto himself his own property. There could not be any transfer/conveyance of the apartment building by respondent no.5, who was not the title holder to the apartment building nor could such a transfer be made by the petitioner to himself as transfer/conveyance is necessarily a bilateral act. No one can transfer unto himself his own property. The apartment building was already the property of the petitioner and as such there was no transfer of the same through the deed of conveyance as being executed by respondent no.5 in favour of petitioner-cooperative. 17. Sec. 17 of the Registration Act provides for compulsory registration of instruments of conveyance as specified therein and the Stamp Act provides for valuation and payment of Stamp duty in respect thereof. If the conveyance is of land alone then the valuation would be of the land alone and not anything other than in which there is transfer of property, for that is not a subject matter of conveyance. In the present case though the original agreement stipulated the consideration at Rs. 367, 500/- but that was not the true consideration because the true consideration was the ultimate cost of the Villa to be constructed by the petitioner on a separate piece of land of respondent no.5. The draft sale deed in question, therefore, setforth the cost of construction of Villa which was over Rs. 11 lakh. In my view, the valuation for the proposes of stamp duty or registration fee would be the consideration for conveyance of 5000 sqft of land. In terms of the Stamp Act and the Bihar Valuation Rules (supra) it could be either the market cost of land or the cost of the construction of Villa as made by the petitioner, whichever is higher but it cannot certainly include the value of the apartment building on the said land constructed by the petitioner himself. Thus, the finding of the registration authority is clear contrary to the law as laid down and noticed above on the subject, it appears in the zeal to recover maximum revenue for the State the authorities have ignored the law on the subject. I would only to say that a statutory authority or the State has to act within the confines of law how so ever zealous they may be to collect revenue that would not justify its transgression of law. 18. I would only to say that a statutory authority or the State has to act within the confines of law how so ever zealous they may be to collect revenue that would not justify its transgression of law. 18. may note one objection taken by the State in their counter affidavit as to the legality of the agreement dated 15.4.1992 (Annexrue 1). It is submitted that in terms of Sec. 17 of the Registration Act this agreement required compulsory registration and it not having been registered it was not a legal document. The argument has been noted only to be rejected. This agreement is an agreement in terms of Section 53A of the Transfer of Property Act. It is an agreement in writing by which the property is agreed to be transferred for a consideration and in pursuance thereto the possession thereof has been delivered to prospective buyer. No doubt in terms of Sec. 17(1 A) it is a document compulsorily registration but a reference to the said provision itself would show that the said provision was brought in by Registration and Other Related laws Amendment Act, 2001 and has no effect to instrument of the nature, as contemplated under Sec. 53A of the T.P.Act, which have been executed before the commencement of the said Amendment Act. Here the agreement (Annexure 1) was undisputedly executed on 15.4.1992 i.e. almost a decade before the provision was enacted and as such it was not compulsorily registrable at the time when it was executed and therefore it does not loose its legal efficacy in any manner. 19. I may also mention here that in the writ petition it has been pleaded and the same has not been contradicted that even as per the government valuation as per the Bihar Valuation Rules (supra) the estimated cost of land would be approximately Rs. 10 83,482/- whereas the cost of Villa as constructed is about Rs. 11,79,450/ it is the higher valuation which has been taken to be the consideration for the conveyance of land and rightly so in my view. 20. Thus I find that the decision of the registration authority, as contained in Annexure 6, and communicated by Annexure 7 is misconceived in law and invalid. The contention of the petitioner is legally correct and sound. 20. Thus I find that the decision of the registration authority, as contained in Annexure 6, and communicated by Annexure 7 is misconceived in law and invalid. The contention of the petitioner is legally correct and sound. The draft deed of conveyance, as submitted, correctly reflects the consideration which has got to be taken as the valuation for the purposes of stamp duty and the registration fee. The decision, as contained in Annexure 6 of the Inspector General of Registration as communicated is thus liable to be quashed is thus quashed accordingly. The District Sub-Registrar is directed to ignore the same and as and when the deed of conveyance is submitted by respondent no.5 and the petitioner and it corresponds to the draft deed as submitted, to them earlier, the same shall be subject to stamp duty and registration fee, as indicated above and shall be liable to be registered as such. 21. Before parting I deem it my duty to point out to the State that instead of encouraging litigation, imposing penalty, collecting enhanced revenue by imposition of penalty, which goes to ten times the duty payable under the provision of Bihar Stamp Rules (supra) provision could be made for an advance ruling as to valuation and duty liability, so that on proper assessment a citizen pays the duty without the thread of facing prolonged litigation and penalty. This would save a lot of time, money and energy of all concerned which would otherwise be waisted and would also go a long way in stopping unethical and unconstitutional practices that has otherwise seemingly pervaded in the system. Necessity of such provisions of advance ruling have been recognized and have been newly engrafted in certain taxation statute recently. Let this matter be brought to the notice of the State law Commission and the State Legal Rememberancer. 22. In view of the findings above and with the direction, as above the writ petition is allowed.