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2009 DIGILAW 370 (ORI)

Guru Prasad Mohanty v. State of Orissa

2009-04-30

I.M.QUDDUSI, SANJU PANDA

body2009
JUDGMENT S. PANDA, J. — Since common questions are involved in both the writ petitions, they were heard together and are being dis¬posed of by this common judgment. 2. Challenge has been made in these writ petitions to the instructions dated 5.8.2008 and 20.8.2008 issued by the Inspector General of Registration, Orissa, Cuttack (in short “IGR”) regard¬ing fixation of market value of the land while the Sub-Registrar registering the documents for the purpose of transfer of proper¬ty, as without jurisdiction and inconsistent with the Indian Stamp Act and the Orissa Stamp Rules, 1952 (in short, “the Act and Rules”). 3. The petitioners for the purpose of registration of documents disclosed the valuation of the property before the Registering Authority to facilitate payment of proper stamp duty. The Registering Authority did not accept their documents on the ground that the valuation of the property as disclosed by the petitioner was at a lower rate than the fixed Bench Mark valua¬tion. Accordingly, it fixed the valuation at a higher rate. The petitioners challenged the fixation of Bench Mark Valuation as per the instructions issued by the IGR as arbitrary, contrary to the jurisdiction given to the Registering Authority under Section 47-A of the Indian Stamp Act which was inserted by the Indian Stamp (Orissa Amendment) Act, 2008 and the Rules thereunder, ab initio void and liable to be quashed. 4. The District Level Valuation Committee fixed the bench mark valuation in respect of the properties located in 1350 villages under five tahasils of Bhadrak district, namely, Bha¬drak, Tihidi, Dhamnagar, Bhondari Pokhari and Bonth and referred it to the Government for approval. The Government approved the same on 11.7.2006 which was implemented by the committee in a resolution passed on 7.8.2006 and the said decision of the com¬mittee came into force with effect from 25.8.2006. Thereafter, the District Sub-Registrar, Bhadrak on 29.8.2006 also issued a letter to all Sub-Registrars of the Districts to implement the said bench mark valuation regarding valuation of the property presented for registration. 5. While the matter stood thus, after expiry of two years period, the IGR on 19.6.2008 issued instructions to all the Collectors to ensure revision/enhancement of the existing valua¬tion by 10% as required under Rule 40(2) of the Orissa Stamp Rules. 5. While the matter stood thus, after expiry of two years period, the IGR on 19.6.2008 issued instructions to all the Collectors to ensure revision/enhancement of the existing valua¬tion by 10% as required under Rule 40(2) of the Orissa Stamp Rules. He also issued another instruction regarding fixation of valuation on 5.8.2008 directing all the District Sub-Registrars that the bench mark valuation is only an “indicative” value below which documents registered will be construed as undervalued and there is, however, no bar on accepting documents above that of the bench mark valuation. It was further clarified therein that once a higher valuation (above bench mark valuation) is accepted, that higher value would be the new bench mark for any/all future transactions. Further, he issued another letter on 20.8.2008 stating therein that if the value of a particular plot under the category in Bench Mark Valuation Report is enhanced by the vendor then that enhanced value becomes the value for all the plots in that category. 6. For better appreciation, the contents of the instruc¬tions dated 5.8.2008 and 20.8.2008 respectively are extracted below: “BOARD OF REVENUE: ORISSA : CUTTACK (REGISTRATION WING) xxx xxx xxx Sub: Acceptance of document valued more than that of Bench Mark. Sir, Doubt have arisen over the question of accepting Registration Documents at a value higher than that of the Bench Mark Valuation (BMV). This issue was clarified in the monthly review meeting of May, 2008. It is reiterated that the BMV is only an “indicative” value below which documents registered will be construed as undervalued. There is, however, no bar on accepting documents above that of the BMV. It is further clarified that once a higher valuation (above BMV) is accepted, that higher value will be the new bench mark for any/all future transactions. This may be circulated to all Sub-Registrars offices under your control. xxx xxx xxx “BOARD OF REVENUE: ORISSA: CUTTACK (REGN. WING) xxx xxx xxx Sub: Clarification regarding valuation of plot in Bench Mark Valuation Sir, In continuation to this office letter No. 4177 dt. 5.8.08 on the subject captioned above I am directed to say that, if the value of a particular plot under one category in Bench Mark Valuation Report is enhanced by the Vender, then that enhanced value becomes the Value for all the plots in that category. This may be circulated to all Sub-Registrars under your control. 5.8.08 on the subject captioned above I am directed to say that, if the value of a particular plot under one category in Bench Mark Valuation Report is enhanced by the Vender, then that enhanced value becomes the Value for all the plots in that category. This may be circulated to all Sub-Registrars under your control. xxx xxx xxx 7. The grievance of the petitioners is that the orders of the IGR prescribing the new modalities fixing the valuation as per the IGR’s instructions being contrary to law, the same are liable to be quashed and consequently, the revised valuation which has been issued by the District Sub-Registrar, Bhadrak on 26.9.2008 on the basis of the aforesaid order passed by the IGR calling upon the petitioners to pay more stamp duty as per higher bench mark valuation more than the 10% enhanced rate as pre¬scribed under Rules is also liable to be set aside. 8. The learned counsel appearing for the petitioners submitted that the Orissa Stamp Rules in Chapter (VI) prescribes the modalities for fixation of valuation and in view of the provision contained in sub-rule (2) of Rule 40 of the said Rules which prescribes for enhancement of value by 10% of the value so fixed if the committee fails to revise valuation after expiry of the period of two years, a person who has produced the deed for registration would also face the risk of being booked in a valua¬tion proceeding under Section 47-A of the Act which is a penal provision and fine may also be imposed therefor. So, the impugned orders dated 5.8.2008 and 20.8.2008 directing to pay the stamp duty on revised valuation are liable to be quashed. 9. Opposite parties have filed their counter affidavit taking a stand that the orders passed by the IGR to implement that bench mark valuation dated 5.8.2008 and 20.8.2008 are in consonance with Rule 47 of the Orissa Stamp Rules. The District Valuation Committee after taking into consideration the modali¬ties prescribed under rule 41 of the Orissa Stamp Rules fixed the bench mark valuation of the property which was implemented since 30th August, 2006 and new bench mark valuation of the property has been fixed by the IGR on 5.8.2008 and 20.8.2008 as per Rule 40(1) of the Orissa Stamp Rules. The IGR being the controlling and supervisory authority issued executive instructions from time to time for revision of bench mark valuation after expiry of two years period as the District Level Committee failed to revise the valuation. On 26.9.2006 the bench mark valuation was fixed by the District Level Committee at Rs.20,000/- per decimal for agri¬cultural purpose and Rs.60,000/- per decimal for commercial purpose and after two years the bench mark valuation was enhanced to Rs. 51,392/- per decimal for agricultural purpose and Rs. 66,000/- per decimal for commercial purpose. According to the opposite parties, as there is no illegality in the order passed by the IGR, the writ petition is liable to rejected. 10. From the above submissions of the learned counsel for the parties it appears that so far as commercial purpose is con¬cerned, the revised enhancement value was only 10% (in the year 2006 it was Rs. 60,000/- and after two years it was Rs. 66,000/-) as prescribed in the Orissa Stamp Rules. So far as commercial purpose is concerned, in the year 2006 it was Rs.20,000/- and in the year 2008 it was Rs. 51,392/- which was more than 100% en¬hancement. 11. The State Government by Orissa Act 8 of 2009 amended Section 47-A of the Indian Stamp Act and the Amending Act is called Indian Stamp (Orissa Amendment) Act, 2008. This Act was published in the Orissa Gazettee and came into force on 29.1.2009. By this amending Act, the sub-section (1) of Section 47-A of the Indian Stamp Act has been substituted. For better appreciation, Section 2 of the Indian Stamp (Orissa Amendment) Act, 2008 is quoted below: “2. This Act was published in the Orissa Gazettee and came into force on 29.1.2009. By this amending Act, the sub-section (1) of Section 47-A of the Indian Stamp Act has been substituted. For better appreciation, Section 2 of the Indian Stamp (Orissa Amendment) Act, 2008 is quoted below: “2. In Section 47-A of the Indian Stamp Act, 1989,- (a) for sub-section (1) the following sub-section shall be substituted, namely:- (1) where the registering officer under the Registration Act, 1908, while registering any instrument of conveyance, exchange, gift, partition or settlement has reasons to believe that the market value of the property which is the subject matter of such instrument has not been rightly set forth in the instru¬ment or is less than the minimum value determined in accordance with the rules made under this Act, he shall, before registering such instrument, refer the matter to the Collector, with an intimation in writing to the person concerned, for determination of the market value of such property and the proper duty payable thereon, and (b) xxx xxx xxx 12. Originally the stamp duty on a conveyance of immovable property was being levied ad valorem as set forth in the instru¬ment. However, in the present system, the stamp duty is payable on the market value of the property which is the subject-matter of the conveyance. For ensuring correct stamp duty to be paid on the correct market value of the property, State Government pre¬scribed the Rules in the interest of Revenue. 13. Rules 23 and 24 of the Orissa Stamp Rules, 1952 are the provisions prescribed to deal with undervalued instruments. For better appreciation, Rules 23 and 24 are extracted below: “23. Reference to Collector of instruments for determination of Market Value- If the Registering Officer while registering any instrument of conveyance, exchange, gift, partition or settlement has reasons to believe that the market value of the property has not been correctly set forth in the instrument, “as per the market value guidelines under Clause (j) of Rule 2) he may, after registering the instrument, refer the same to the Collector for determination of the market value and duty payable thereon, while referring the document to the Collector, the fact and circum¬stances that prompted the Registering Officer to come to the belief that property, has been undervalued shall be fully and clearly started.} 24. Assessment of duty (I) On receipt of reference under rule 23 the Collector shall start a miscellaneous case record and serve on the person or persons concerned a notice in Form No.1, appended to these rules requiring him on a date and any evidence on which such person or persons may reply in his support. (2) On the day specified in the notice the Collector, after taking such evidence as the person or persons may produce and making such inquiry as he may deem proper, shall determine the {Market value of the property} and assess the amount of deficit duty recoverable from the person concerned. (3) If the person fails or fail to attend in response to the notice served under Sub-rule (1), the Collector shall assess the deficient amount to duty, if any, to the best of his judgment.” 14. The statutory language clearly indicates that as and when such instrument is presented for registration, the Sub-Registrar is required to satisfy himself, before registering the document, whether true price is reflected in the instrument as it prevails in the locality. As per the said rules, the Registering Authority has to exercise his quasi-judicial satisfaction of the true value of the property or consideration reflected in the instrument presented before him for registration. If he is so satisfied, he has to register the document. If he is not satisfied that the market value of the property has been truly set forth in the instrument, he should make a reference to the collector for determination of the market value of the property. The Collector has the jurisdiction to go into the truth or correctness of the market value set forth in the instrument for the purpose of ensuring that proper stamp duty has been paid on the instrument. He has to reassess the market value and re-determine the stamp duty payable on that. He has to determine the stamp duty payable thereon as prescribed under rule 24 and the Collector, while determining the market value, has to assess the amount of deficit duty recoverable from the person concerned. 15. Rule 2(j) of the Orissa Stamp Rules defines ”Market value guideline” which reads as follows: “2. He has to determine the stamp duty payable thereon as prescribed under rule 24 and the Collector, while determining the market value, has to assess the amount of deficit duty recoverable from the person concerned. 15. Rule 2(j) of the Orissa Stamp Rules defines ”Market value guideline” which reads as follows: “2. Definitions.- (a) to (i) xxx xx xxx (j) “Market value guideline” means the set of values of immovable properties in different villages, N.A.C., Municipali¬ties, Corporation and other local areas in the State prepared under Rule 40} xxx xxx xxx 16. Rules 40 and 41 of the Orissa Stamp Rules which deal with the periodicity of revision and procedure to prepare the Market value guidelines, read as under: “40. Periodicity of revision - (1) The market value guide¬lines prepared under this Chapter shall be issued as soon as they are prepared and shall thereafter be revised biennially from the 1st April. (2) in case the Committee fails to revise the valuation, the Collector as Chairman would enhance the value by ten per cent of the value so fixed. 41. Procedure to prepare Market value guidelines - While working out the values of immovable properties, the respective Committee shall take into account the principle of valuation mentioned the Appendix II and such other instructions issued/to be issued by Government from time to time.” 17. As per Rule 40(2) of the Orissa Stamp Rules, in case the Committee fails to revise the valuation, the Collector as Chairman would enhance the value by ten per cent of the value so fixed. Rule 41 of the Orissa Stamp Rules provides for modalities to fix the market value of the property by the Committee taking into account the principle mentioned in Appendix II and such other instructions issued/to be issued by the Government from time to time. Appendix II to the Rules provides the principle for determination of market value taking into consideration the facts, i.e., types of lands, value of adjacent land in the vicin¬ity, nature of crops raised in a year and average yield from the land, proximity to road, railway station, village and market, facilities available for irrigation, pump sets and the level of land, etc. 18. Therefore, the committee while fixing the market value guidelines shall take into consideration all the criteria as prescribed in Appendix II of the said Rules. 18. Therefore, the committee while fixing the market value guidelines shall take into consideration all the criteria as prescribed in Appendix II of the said Rules. As it reveals, the bench mark valuation was fixed by the committee in the year 2006. From the counter affidavit it is not clear whether the committee had fixed another bench mark valuation in the year 2008. There¬fore, it can safely be presumed that the bench mark valuation was not fixed by the committee in the year 2008 and it was only enhanced, as prescribed under Rule 40(2) of the Orissa Stamp Rules. Therefore, after conjointly reading Rules 23, 24, 40 and 41, it can safely be concluded that if the committee has not revised the bench mark valuation after expiry of the two years period, the Collector can enhance the value by 10% of the value prior to two years. Therefore, the orders of the IGR dated 5.8.2008 and 20.8.2008 were not passed in accordance with the statutory provisions. 19. The guidelines were prepared as instructed by the Board of Revenue and revised from time to time and also by the IGR as provided in Rule 47. The guidelines were intended for assisting the Sub-Registrars to find out, prima facie, whether the market value set forth in the instrument had been correctly made or not. However, those were not intended as a substitute for the market value or to foreclose the inquiry by the Collector which he is under a duty to make as per Section 47-A of the Act or the market value has to be determined by the District Level Valuation Com¬mittee. 20. It is the common knowledge that the value of the property varies from place to place or even from locality to locality. No absolute higher or minimum value can be pre-determined. It would depend on prevailing prices in the locality in which the land covered by the instrument is situated. It will be only an objective satisfaction that the Authority has to reach a reasonable belief that the instrument relating to the transfer of property has not been truly set forth or valued or considera¬tion mentioned, when it is presented for registration. The ulti¬mate decision would be with the Collector subject to the decision on an appeal before the prescribed authority. 21. The ulti¬mate decision would be with the Collector subject to the decision on an appeal before the prescribed authority. 21. The apex Court in the case of State of U.P. and others v. Daulat Ram Gupta reported in AIR 2002 SC 1633 has held that the executive order cannot be inconsistent with the statute. It is true that the power of the authority to issue a direction only for the purpose of giving effect to the provision of the statute. The provisions empowering them to issue directions to the Sub-Registrars regarding improper valuation of the document, the said power could be exercised only to give effect to the provisions of the statue and further to effectuate the object behind the statu¬tory provisions if the object is discernible in the statue. The nature of directions which could be issued under the enabling provisions is only for purposes of giving effect to the statutory provisions and not otherwise. The authority is not authorized to amend the statutory provision by issuing directions. Once the provision prescribed the procedure for fixation of valuation, the authorities are only empowered to give direction confined to the said provision only. 22. Therefore, in view of the above discussions it is not correct to say that the guidelines/instructions issued by the I.G.R., Orissa on valuation must be adopted as the one or only basis of market value. The issuance of the impugned instruction by the I.G.R. has the tendency of arbitrary determination of valuation effecting the procedure prescribed in the Rules and the jurisdiction given to the registering authority under Section 47-A of the Act. Therefore, the Registering Authority should not act mechanically. 23. Hence, as the direction issued by the IGR is contrary to the statutory provision, this Court quashes the impugned orders dated 5.8.2008 and 20.8.2008 and directs the appropriate authority to take steps for fixation of valuation of the land taking into account the Orissa Stamp Rules. The writ petitions are allowed accordingly. I.M. QUDDUSI, J : I agree. Petitions allowed.