1/23

www.taxguru.in wp-714-2018 J-SK.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO. 714 OF 2018

M/s. Crystal Construction Company
A Partnership Firm, having it Office
at 701/A-2, Shubham Centre,
Chakala Square, Andheri-Kurla
Road, Andheri (E),
Mumbai – 400 099. …Petitioner

Versus
1. Additional Controller of Stamps,
(Mumbai Region) Main Stamp Office,
Old Custom House, Mumbai-400001.

2. The Collector of Stamps, Andheri,

Mumbai Suburban District, Taluka
Andheri, M.M.R.D.A. Building,
Bandra (East), Mumbai – 400051.

3. The State of Maharashtra

Thorough the Revenue Ministry
Revenue and Forest Department
Mantralaya, Madam Cama Road,
Hutatma Chowk, Nariman Point,
Mumbai – 400 032. … Respondents

Mr. Sagheer A. Khan a/w. Adv. Sharique Nachan, Akif and Shoeb, Parth
Zaveri I/b Judicature Law Associates for petitioner.

Mr.Abhay L. Patki, Addl. G.P. For respondent Nos.1 to 3-State.

Coram : N. J. JAMADAR, J.
Reserved on : 30th January 2020.
Pronounced on : 22nd May 2020.

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 2/23 wp-714-2018 J-SK.doc

JUDGMENT :

1. Rule. Rule made returnable forthwith and heard finally with the

consent of the learned Counsels for the parties, at the stage of admission.

2. This petition under Article 226 of the Constitution of India assails

the legality, propriety and correctness of the orders passed by the Collectors

of Stamps on 16th March, 2017, adjudicating the stamp-duty on the

unexecuted conveyance, at Rs.1,52,77,900/- and an order, dated 29 th May,

2017 passed by the Additional Controller of Stamps, Mumbai Region,

under Section 32B of the Maharashtra Stamp Act, 1958 (‘the Stamp Act,

1958’), whereby the appeal preferred by the petitioner under Section 32B of

the Act came to be dismissed.

3. The petition arises in the backdrop of the following facts:

(a) A. H. Wadia Trust is a Public Charitable Trust registered

under the Maharashtra Public Trust Act, 1950 (the Trust Act, 1950). The

said trust holds a property bearing Survey No.8, Hissa No.1, part

corresponding to CTS No.201 admeasuring 3531.30 sq.mtrs. at village

Marol, Mumbai (the trust property). The trust had resolved to alienate the

trust property as there were encroachments over the trust property and the

trust was not in a position to remove the encroachments. The trust, thus,

published notices in the newspapers, the Free Press Journal and Navshakti,

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 3/23 wp-714-2018 J-SK.doc

and invited the offers for the sale of the trust property. One H. S. Aagadi

and N. F. Aagadi gave an offer of Rs.1,60,00,000/. The petitioner herein

had also submitted an offer of Rs.71,42,858/-. The trust decided to sell the

trust property to the highest bidder H. S. Aagadi and N. F. Aagadi. The

trust had also obtained a valuation report of the trust property from M/s. C.

P. Vaidya, Government approved Architect and Valuer. The valuer had

estimated the price of the trust property at Rs.1,28,00,000/-. The trust, thus,

preferred an application under Section 36 (1)(a) of the Trust Act, 1950.

(b) The learned Charity Commissioner allowed the prospective

purchasers to intervene in the proceedings. Ultimately, by an order dated 7 th

April, 2016, the learned Charity Commissioner directed a fresh auction to

get the best value for the trust property. In the said auction the petitioner

offered the highest price of Rs.2,10,00,000/-. Thereupon, the learned

Charity Commissioner, by an order dated 26th April, 2016, was persuaded to

accord sanction to the trust to sell the trust property on ‘as is where is’ and

‘as it is where it is’ basis to the petitioner for the consideration of

Rs.2,10,00,000/-.

(c) The petitioner complied with the terms and conditions, on

which the learned Charity Commissioner had accorded sanction for sale of

the trust property by the trust to the petitioner. The petitioner, thereafter,

submitted an unexecuted conveyance for adjudication to the Collector of

Stamps, Andheri, Mumbai, Suburban District – respondent no.2 for

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 4/23 wp-714-2018 J-SK.doc

determination of the stamp-duty on the Deed of Conveyance. Initially an

interim order was passed by respondent no.2 on 14 th December, 2016. The

petitioner filed an objection to the interim order on 28th December, 2016. As

certain deficiencies were noticed, the proposal for adjudication came to be

resubmitted. In the meanwhile, respondent no.2 obtained a report about the

market value of the trust property from Deputy Director, Town Planning,

Mumbai. The respondent no.2 based on the report of the Deputy Director,

Town Planning, passed an interim order on 7 th March, 2017 and assessed

the market value of the trust property at Rs.30,55,58,000/-. An objection

was lodged by the petitioner on 8th March, 2017. However, by a final order

dated 16th March, 2017, respondent no.2 determined the market value of the

trust property at Rs.30,55,88,000/- and adjudicated the stamp-duty at

Rs.1,52,77,900/- and called upon the petitioner to pay the deficit stamp-

duty of Rs.1,42,77,900/-.

(d) Being aggrieved, the petitioner preferred an appeal before the

Additional Controller of Stamps under Section 32B of the Stamp Act, 1958.

The appellate authority, after hearing the parties, was persuaded to dismiss

the appeal holding inter alia that the determination of the value of the trust

property by the learned Charity Commissioner did not fall within the

proviso to sub-rule (6) of Rule 4 of the Maharashtra Stamp (Determination

of True Market Value) Rules, 1995 (the Maharashtra Stamp Rules, 1995).

Thus, the claim of the petitioner based on the determination of the value of

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 5/23 wp-714-2018 J-SK.doc

the trust property by the learned Charity Commissioner was not acceptable.

The petitioner has thus invoked the writ jurisdiction of this Court.

(e) The petitioner asserts that the authorities committed error in

not adhering to the provisions contained in Rules 4 to 6 of the Maharashtra

Stamp Rules, 1995. The fact that the value of the trust property was

determined by the learned Charity Commissioner post an exercise of

fetching the highest price for the trust property has been completely lost

sight of. The authorities have failed to appreciate that the challenge to the

order of the learned Charity Commissioner as regards the determination of

valuation of the trust property at Rs.2,10,00,000/- by one of the bidders in

Writ Petition No.5987 of 2016, was repelled by this Court by judgment and

order dated 18th October, 2016. The authorities have also failed to consider

the circular dated 13th October, 2006, which provides guideline for

determination of the market value where the sale of the trust property takes

place with the sanction of the Charity Commissioner under Section 36 of

the Trust Act, 1950.

4. An affidavit-in-reply is filed by Mr. Sanjay Jadhav, Collector of

Stamps, Andheri. The respondents have resisted the petition on the premise

that the determination of the market value by respondent no.2 is in strict

conformity with the Stamp Rules, 1995. The respondents claim that the

Deputy Director of Town Planning has submitted a report of valuation of

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 6/23 wp-714-2018 J-SK.doc

the trust property and by following the prescribed criteria of valuation the

trust property was valued at Rs.30,55,58,000/-. Since the sale in question is

not by one of the authorities mentioned in the proviso to sub-rule (6) of

Rule 4 of the Stamp Rules, 1995, the sanction to the sale of the trust

property by the learned Charity Commissioner at a specified price cannot be

equated with the sale of the property at the pre-determined price by the

specified authorities. The respondents have also sought to rely upon the

guideline 33 in the Annual Statement of Rates for the year 2016-2017,

under which the property sold by or allotted by any Government or Semi-

Government Organization or Government Boards, undertaking or local

authorities (Municipal Corporation/Municipal Council) by prescribed rate is

to be reckoned as the market value for the purpose of the stamp-duty.

Likewise, the price realized pursuant to an auction of the mortgaged

property by an authorized recovery officer, the value so realized is to be

reckoned as the market value. Since the sale with the sanction of the

Charity Commissioner does not fall within the said exceptions, the market

value of the trust property was required to be determined in accordance

with the rules. Thus, the respondents have endeavoured to justify the

impugned orders.

5. I have heard Mr. Sagheer A. Khan, the learned Counsel for the

petitioner and Mr. Abhay L. Patki, the learned Addl.G.P. for the State, at

some length.

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 7/23 wp-714-2018 J-SK.doc

6. The learned Counsel for the petitioner would urge that the authorities

have completely misdirected themselves in determining the market value of

the trust property solely on the basis of the rates provided in the annual

statement of rates. The authorities have not at all adverted to the provisions

contained in Rule 4(6) of the Stamp Rules, 1995. The fact that the property

was sold post the sanction accorded by the learned Charity Commissioner

has not been adequately considered by the authorities. The Charity

Commissioner discharges a solemn quasi-judicial function under Section 36

of the Public Trust Act, 1950. In the case at hand there is material to

indicate that the Charity Commissioner has taken into account the report of

the valuer and even conducted re-auction of the trust property so as to fetch

the best value for the same. In this backdrop, the authorities were not at all

justified in discarding the value of the trust property as determined by the

Charity Commissioner, which in the circumstances is the true market value

of the trust property. Moreover, the authorities have failed to take into

account the fact that the trust property is totally encumbered in as much as

there are 36 sitting tenants on the trust property.

7. The learned Counsel for the petitioner urged with a degree of

vehemence that the view recorded by the learned Additional Controller of

Stamps that the sale conducted and approved by the Charity Commissioner

does not fall within the proviso to sub-rule (6) of Rule 4 of the Stamps

Rules, 1995 is legally unsustainable. To bolster up this submission the

learned Counsel for the petitioner placed a very strong reliance on a

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 8/23 wp-714-2018 J-SK.doc

judgment of the learned Single Judge of this Court in the case of Pinak

Bharat and Company vs. Bina V. Adani vs. Anil Ramrao Naik in

Commercial Execution Application No.22 of 2016 dated 27th March, 2019,

wherein this Court had, inter alia, considered the question; is there a

meaningful distinction to be drawn between sales by the Government and

Government bodies at a pre-determined price, which has to be accepted by

the adjudicating authority as the market value and a sale by or through a

Court? The aforesaid pronouncement according to the learned Counsel for

the petitioner applies with equal force to the sale conducted through the

aegis of the learned Charity Commissioner.

8. The learned AGP countered the submissions on behalf of the

petitioner. At the outset the tenability of the petition was called in question

as there is an adequate efficacious remedy under Section 53A of the Act,

1958. On merits the learned AGP submitted that the authorities have

determined the market value of the trust property by adhering to the

prescription in the Stamp Rules, 1995 and the value of the property

provided in the annual statement of rates for the relevant year. Thus,

according to the learned AGP no fault can be found with the impugned

order.

9. To begin with, it is necessary to appreciate the circumstances in

which the trust property was resolved to be alienated by the trust, and the

nature of the function which the Charity Commissioner discharges while

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 9/23 wp-714-2018 J-SK.doc

according or refusing sanction to alienate the trust property under Section

36 of the Trust Act, 1950. For this purpose a reference to the order passed

by the charity commissioner would be useful. The order dated 26 th April,

2016, records that the application for alienation of the trust property was

made by the trustees for the stated reason that the trust property was

occupied by unlawful occupants. The trust was not in a position to remove

the encroachment. It was not economical to hold the property and pay the

taxes and outgoings without there being any income from the said property.

Thus, the trust was constrained to alienate the trust property. A resolution to

that effect was passed by the trustees on 19th August, 2015. Notice inviting

the offers was published in two newspapers, namely, Free Press Journal

and Navshakti on 28th August, 2015. In all, three offers were received. The

offer of N.F. Aagadi and H.F. Aagadi i.e. Rs.1,60,00,000/- was the highest

offer. The trust had also obtained a valuation certificate in respect of the

trust property from M/s. C. D. Vaidya, Government approved architect and

valuer, who had valued the trust property at Rs.1,28,00,000/-. Thus, the

trust preferred an application under Section 36 of the Trust Act, 1950 for

permission to sell the trust property for a consideration of Rs.1,60,00,000/-

to the highest offerer N.F. Aagadi and H.F. Aagadi.

10. During the pendency of the said application before the Charity

Commissioner intervention applications were filed and the Charity

Commissioner decided to hold re-auction, and on 7th April, 2016, the

auction was held. In the said auction the petitioner herein offered the

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 10/23 wp-714-2018 J-SK.doc

highest price of Rs.2,10,00,000/-. The rest of the bidders withdrew their

objections. Thereupon, the Charity Commissioner recorded satisfaction that

it was for the benefit of the trust to sell the trust property as the trust

property was unlawfully occupied by hutment dwellers. The Charity

Commissioner thus accorded the sanction for the sale of the trust property.

11. The position which thus emerges is that the trust was constrained to

alienate the trust property as it was fully encroached. The removal of the

unlawful occupants from the trust property being a herculean task, the trust

invited the offers for purchase of the trust property by issuing public notice

in two newspapers. The trust had obtained a valuation certificate from the

approved valuer. The trust professed to sell the trust property to the highest

bidder for Rs.1,60,00,000/-. Before the Charity Commissioner intervention

applications were filed and it was decided to re-auction the trust property so

as to fetch the best value. Thereupon the petitioner offered the highest price

of Rs.2,10,00,000/-.

12. At this juncture, it is necessary to note the functions which the

Charity Commissioner discharges under Section 36 of the Trust Act, 1950.

The inquiry before the Charity Commissioner is unquestionably a quasi-

judicial enquiry. The Charity Commissioner has to address unto himself

two questions: (i) Is it necessary to alienate the trust property in the interest

of the trust; (ii) If the charity Commissioner is satisfied that the alienation

of the trust property is necessary for the benefit of the trust then the Charity

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 11/23 wp-714-2018 J-SK.doc

Commissioner has to ensure that the property is alienated at a price or value

which is in the best interest of the trust. The overriding consideration

which weighs with the Charity Commissioner is the interest and the benefit

of the trust.

13. In this context, a profitable reference can be made to a Full Bench

judgment of this Court in the case of Shailesh Developers and others vs.

Joint Charity Commissioner, Maharashtra and others reported in 2007(4)

of MR 100, wherein the following questions were considered by the Full

Bench on a reference by a Division Bench :

“i) Whether the power vesting in the Charity Commissioner under

Section 36 of the Bombay Public Trusts Act, 1950 is confined to
grant or refusal of sanction to a particular sale transaction which
the trustees propose to make or it extends to compelling trustees to
sell or transfer the property to another party who participates in the
proceedings under Section 36 and gives his offer?
ii) Whether the party who comes forward to submit his offer
directly before the Charity Commissioner in a pending application
under Section 36 of the said Act of 1950 has locus standi to
challenge the order passed in a proceeding under Section 36?”

14. The Full Bench answered the questions as under:

“32. Hence, we answer the questions referred to our decision

as under:

(i) The power vesting in the Charity Commissioner under

Section 36 of the Bombay Public Trust Act 1950 is not confined
merely to grant or refusal of sanction to a particular sale
transaction in respect of which sanction is sought under Section
36 of the said Act. The power of the Charity Commissioner
extends to inviting offers from the members of the public and
directing the trustees to sell or transfer the trust property to a

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 12/23 wp-714-2018 J-SK.doc

person whose bid or quotation is the best having regard to the

interest, benefit or protection of the trust. Hence we declare that
the decision of the Division Bench of this Court in the case of
Jigna Construction Co. Mumbai v. State of Maharashtra and Ors.
does not lay down correct law.
(ii) The party who comes forward and submits his offer
directly before the Charity Commissioner and complies with other
requirements as may be laid down by the Charity Commissioner
in a pending application under Section 36 of the said Act of 1950
has a locus standi to challenge the final order passed in a
proceeding under Section 36. However, the scope of the challenge
will be limited as indicated in paragraph 29 above.
(iii) We direct the Office to place the Writ Petitions before the
appropriate Benches for deciding the same in accordance with
law.
Reference answered.”

15. In the process of arriving at the aforesaid conclusion the Full Bench

adverted to the historical perspective of the provisions contained in Section

36 of the Trust Act, the pronouncements of this Court and the Supreme

Court on the nature and contour of the power under Section 36 and

thereafter elucidated the powers exercised by the Charity Commissioner in

the following words:

“30 While exercising power either under Clause (b) or

Clause (c), the Charity Commissioner can impose conditions
having regard to the interest, benefit or protection of the trust.
Before passing an order of sanction or authorisation, the Charity
Commissioner has to be satisfied that the trust property is
required to be alienated. Once the Charity Commissioner is
satisfied that the alienation of the trust property is necessary in the
interest of the trust or for the benefit of the trust or for the
protection of the trust, it is very difficult to accept the submission
that the power of the Charity Commissioner is restricted either to
grant sanction to a particular proposal of the trustees or to reject
it. It is the duty of the Charity Commissioner to ensure that the
transaction of alienation is beneficial to the trust and its
beneficiaries. He has to ensure that the property is alienated to a
purchaser or buyer whose offer is the best in all respects. It is not
necessary in every case that the Charity Commissioner has to
ensure that property is sold by the trustees to the person offering

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 13/23 wp-714-2018 J-SK.doc

highest price or consideration. What is the best offer in the interest

of the trust will again depend on facts and circumstances of each
case. In a given case, while alienating the trust property, the
trustees may provide that as a part of consideration for alienation,
the purchaser should construct a building on a part of the trust
property for the use by the trustees for the objects of the trust. In
such a case, it may be necessary to ascertain the reputation and
capacity of the purchaser apart from the consideration offered.
When the Charity Commissioner is satisfied that trust property
needs to be alienated and when he finds that the offer received by
the trustees may not be the best offer, he can always direct that
bids be invited by a public notice. When a better offer is received
in public bidding or auction, it is very difficult to say that the
power of the Charity Commissioner is restricted and he cannot
enjoin the trustees to sell or transfer the trust property to a third
party who has given an offer which is the best in the interest of the
trust. The Trustees approach the Charity Commissioner only when
they are satisfied that there is a necessity to alienate the trust
property. The trustees hold the property for the benefit of the
beneficiaries and therefore once they express desire to alienate the
property, it is obvious that Charity Commissioner can always
impose condition while granting sanction that the property shall
be sold or transferred to a person who has come with an offer
which is the best offer in the interests of the trust. The Section
gives a power to the Charity Commissioner to impose conditions
and the said conditions will include a requirement of selling or
transferring or alienating the trust property to a purchaser who
has offered the best deal having regard to the interest and benefit
of the beneficiaries and the protection of the trust. The power to
impose conditions cannot be a limited power when the law
requires the Charity Commissioner to exercise the said power
having regard to the interest, benefit and protection of the trust.
Once the Charity Commissioner accepts the necessity of alienating
the trust property, the trustees cannot insist that the property
should be sold only to a person of their choice though the offer
given by the person may not be the best offer. The property may be
vesting in the trustees but the vesting is for the benefit of the
beneficiaries. The Charity Commissioner has jurisdiction to
ensure that the property is sold or transferred in such a manner
that the maximum benefits are available to the beneficiaries of the
Trust. Under Clause (b) of Section 36 of the said Act, the Charity
Commissioner has jurisdiction to decide whether it is in the
interest of the trust that the property of the trust be sold or
transferred. Once the learned Charity Commissioner is satisfied
that the property is required to be transferred or sold in the
interest of the Trust, the learned Charity Commissioner cannot
remain silent spectator when he finds that the transaction
proposed by the Trustees is not in the interest of the Trust or its
beneficiaries. Once the necessity of sale or transfer is established,
the Charity Commissioner can certainly ensure that best available
offer is accepted, so that the transaction is for the benefit of the
trust. If the trustees were to be the final authority to judge what is
in the interest of the Trust, the legislature would not have enacted

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 14/23 wp-714-2018 J-SK.doc

provision requiring prior sanction. While deciding which is the

best offer, the learned Charity Commissioner is bound to take into
consideration various factors which cannot be exhaustively listed.
However, the paramount consideration is the interest, benefit and
protection of the trust. It is obvious from the scheme of Section 36
that legislature never intended that trustees could sell or transfer
the trust property vesting in them as if it was their personal
property. It is the duty of Charity Commissioner to ensure that the
property should be alienated in such a manner that maximum
benefits are accrued to the trust. The Charity Commissioner while
considering an application under Section 36(1) of the said Act of
1950, in a given case can opt for public auction or can invite bids.
Thus narrow interpretation sought to be given to the power of
Charity Commissioner under Clauses (a) and (b) of Sub section 1
of Section 36 cannot be accepted. Thus the view taken in the case
of A.R. Khan Construwell and Co. (supra) is the correct view. The
case of Arunodaya Prefab is not correctly decided. “

16. In the light of the aforesaid exposition of the legal position, the

exercise of the power to sanction the alienation of the trust property by the

Charity Commissioner under Section 36 of the Trust Act, 1950, cannot be

construed as a mere administrative action. The power is exercised after

adhering to the principles of inviting an open offer, promoting competitive

bidding and ensuring that the best value is fetched.

17. A useful reference at this juncture can be made to the judgment of

the learned Single Judge of this court in the case of Pinak Bharat and Co.

(supra). In the said case this Court in execution of the decree had

confirmed the sale of the trust property for the consideration of Rs.15.30

Crores. When the sale certificate was issued by the Prothonotary and

Senior Master and was lodged with the Collector of Stamps, the later valued

the property at Rs.155 Crores. It was later on submitted that the authorities

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 15/23 wp-714-2018 J-SK.doc

after taking into consideration the fact that there were tenants on the said

property, re-determined the market value at about Rs.35 Crores

approximately. In the context of the aforesaid facts, the learned Single

Judge considered the question as to whether the determination of the price

in a sale by Court would fall within the ambit of the proviso to sub-rule (6)

of Rule 4 of the Rules, 1995. Sub-rule (6) with which we are primarily

concerned reads as under:

“(6) Every registering officer shall, when the instrument is

produced before him for registration, verify in each casethe
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 a 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

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.”

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 16/23 wp-714-2018 J-SK.doc

18. The Court considered the omission of the sale through Court in the

first proviso to sub-rule (6) and observed as under:

“12 The wording of the first proviso is also important in what

it leaves out. It makes no mention of a sale through Court although
Article 16, as we have seen, specifically deals with public auctions by
Civil or Revenue Courts. In other words, we are told that if the
Government, in any one of its very many manifestations or avatars,
sells a property, and the document mentions that price, then the
Collector or the adjudicating authority is required by law, on
account of this proviso, to accept that stated value as the true market
value without further enquiry. Once these two conditions are
met ,therefore, the adjudicating authority does not need to make any
further enquiry. Indeed, the adjudicating authority cannot make any
further enquiry.

13. Why should a sale through a Court by public auction on

the basis of a valuation obtained, i.e. by following a completely open
and transparent process, be placed at any different or lower level
than the government entities covered by the first proviso? Indeed the
process that we follow in Courts is perhaps much more rigorous than
what the proviso contemplates, because the first proviso itself does
not require a public auction at all but only that the Government body
should fix “a predetermined price”.

14. In our present system, a sale through the Sheriff’s Office,

i.e. a sale in execution is always necessarily by public auction. If it is
by private treaty, it requires a special order. A sale effected by a
Receiver in execution is not, technically, a sale by the Court. It is a
sale by the Receiver appointed in execution and the Receiver may, of
course, with leave of the Court sell either by public auction or by
private treaty. Wherever a sale by public auction, there is an
assurance of an open bidding process and very often that bidding
process takes place in Court itself (as in the present case). Courts
always obtain a valuation. They need to do this so that they can set a
reserve price to ensure that properties are not sold at an
undervaluation and to avoid cartelization and an artificial
hammering down of prices. The reserve price is at or close to a true
market value. Usually, the price realized approximates the market
value. Sometimes the valuation is high and no bids are at all
received. The Decree Holders cannot be left totally without recovery
at all and it is for this reason that Courts sometimes permit, after
maintaining the necessary checks and balances, a saleat a price
below the market value even by public auction. There are, equally,

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 17/23 wp-714-2018 J-SK.doc

times when after a competitive bid-improvement process in open

court, the sale is knocked down at a price much higher than even the
highest valuation.

16. I have no manner of doubt and I have absolutely no

hesitation in saying that if the sale either by the Deputy Sheriff with
permission of the Court, or by the Court Receiver with leave of the
Court, is by private treaty, then it is for the adjudicating authority to
certainly determine the true market value.

17. Very different considerations will, however, arise where

there is a sale by public auction through a Court, and this sale is
preceded by a valuation obtained by the Court as part of that public
auction process. In a situation like that, I do not see why such a sale
or transaction should stand on any different footing from those that
are part of the proviso to sub-rule (6) of Rule 4. I emphatically do not
suggest that the sale certificate amount should be accepted as the
true market value. The correct course in such a situation would be for
the adjudicating authority to accept the valuation on the basis of
which public auction was conducted as fair market value; or, if the
sale is confirmed at a rate higher than the valuation, then to accept
the higher value, i.e. the sale amount accepted. If more than one
valuation has been obtained, then the highest of the most recent of
the valuations is to be accepted as the true market value. This
approach is consistent with sub-rule (6), its first proviso and ensures
that there is consistency both between the stamp adjudication process
and the basis on which the sale is conducted in the first place. There
cannot be an inconsistency between the Court order and a Court-
supervised sale on the one hand and the adjudication for stamp on
the other. This is the only method by which complete synchronicity
can be maintained between the two.

………..

19. Finally, if this Court in execution is satisfied with the

valuation and accepts it, then it is not open to the adjudicating
authority to question that valuation. In another manner of speaking,
it is never open to the adjudicating party to hold, even by
implication, that when a court sold the property through a auction by
following this process, it did so at an undervaluation. The imprimatur
of the court on the sale, i.e. its confirmation of the sale, carries great
sanctity. If the validity or very basis of the sale was allowed to be
brought into question by an executive or administrative authority, it
would result in the stamp authority calling into question judicial
orders of this court. That is impermissible and entirely beyond the
remit of the adjudicating authority. In this, the purpose of the Stamp
Act must be kept in mind. This is not an Act that validates, permits or
regulates sales of property. It only assesses the transactions for
payment of a levy to the exchequer. Therefore, it follows that it is not

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 18/23 wp-714-2018 J-SK.doc

open to the adjudicating authority to suggest, directly or indirectly,

that a sale that carries the imprimatur of the court, one that is
confirmed by the court, is liable to be set aside or not given effect to.
When it confirms a sale, the court never determines the stamp duty
payable. It always leaves that to the stamp adjudicating authority,
and that is the only thing the stamp adjudicating authority can do,
nothing more and nothing less. It cannot, therefore, question the sale
in any manner. The only issue before the adjudicating authority is the
determination of the market value for the purposes of computing the
stamp payable. That basis cannot be different from the one on which
the court proceeded, i.e. the highest valuation obtained or the actual
sale price, whichever is higher.”
(emphasis supplied)

20. The learned Single Judge proceeded to delineate the general practice

as well in paragraph no.23, which reads as under:

“23. Hence, as a general practice:

(a) Where there is a sale by private treaty, the usual

course stipulated in the Maharashtra Stamp Act will apply;

(b) Where the sale is by the Court, i.e. through the office
of the Sheriff, or by the Court Receiver in execution, and is by
public auction pursuant to a valuation having been previously
obtained, then –
(i) If the sale price is at or below the valuation obtained, then
the valuation will serve as the current market value;
(ii)If the final sale price, i.e. the final bid, is higher than the
valuation, then the final bid amount and the not the valuation
will be taken as the current market value for the purposes of
stamp;

(iii) Where there are multiple valuations obtained, then

the highest of the valuations most recent, i.e. most proximate
in time to the actual sale, should be taken as the current
market value.”

21. The aforesaid pronouncements indicates as to how a sale through

Court stands even on a higher pedestal than the sale by the authorities

envisaged by the first proviso to sub-rule (6), namely, sale or allotment by

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 19/23 wp-714-2018 J-SK.doc

the Government or Semi-government Body or a Government undertaking or

a local authority on the basis of the predetermined price, when the method

of auction sale is resorted to, which in itself provides for an open

competitive bidding. In the event the process of sale through auction is

preceded by obtaining a valuation certificate from an approved valuer and

thereafter the open competitive bids are invited then the said process has all

the trappings of a process which ensures the objective of fetching of a true

market value of the property. The aforesaid pronouncement governs the sale

of the trust property by the Charity Commissioner under section 36 of the

Trust Act, 1950, provided the elements of prior valuation of the trust

property and the sale of the trust property through auction process are

adhered to.

22. There is another factor which has a significant bearing on the

determination of the market value of the property sold through the aegis of

the Charity Commissioner. The authorities were not justified in totally

eschewing from consideration the factum of the sale of the trust property by

the Charity Commissioner by opining that the said sale by the Charity

Commissioner does not fall within the categories of the sale exempted by

the proviso to sub-rule (6) of Rule 4 of the Rules, 1995. The circular dated

13th October, 2006, issued by the Controller of Stamps, State of

Maharashtra, indicates that while determining the market value of the

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 20/23 wp-714-2018 J-SK.doc

property sold by the orders of the Charity Commissioner, the adjudicating

authorities shall call for certain information, namely, whether there was a

public notice of auction, whether the value at which the property was sold

was obtained in a public auction conducted by the Charity Commissioner.

In case, the transaction is otherwise than by public auction it shall be

ascertained as to how the Charity Commissioner arrived at the value of the

trust property while according sanction for its sale. In the event no

documents were forthcoming on the aforesaid points then the competent

authorities shall determine the market value in accordance with the

provisions contained in Sections 31, 32A and 33 of the Stamp Act, 1958.

23. The aforesaid circular thus equates the sale of the trust property by

the orders of the Charity Commissioner with the sale and/or allotment of

the property by the authorities enumerated in the first proviso to sub-rule

(6) of Rule 4. The circular further envisages the procedure to be followed

where the competent authorities entertain a genuine doubt about the

correctness of the value of the property which is sold under the orders of the

Charity Commissioner. The authorities in the instant case were thus not

within their rights in totally discarding the determination of the value of the

trust property by the learned Charity Commissioner on the premise that the

said ‘authority’ is not enumerated in the proviso to sub-rule (6) of Rule 4.

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 21/23 wp-714-2018 J-SK.doc

24. The situation is further accentuated by the fact that in the case at

hand the Charity Commissioner had followed the requisite process to fetch

the best value. The trust itself had issued public advertisements. The trust

had professed to sell the trust property to the highest bidder. The entire

transaction was backed by a valuation certificate issued by the approved

valuer, which the learned Charity Commissioner took into account. The

Charity Commissioner, in turn, conducted a fresh auction to obtain the best

price. Furthermore, the challenge to the order of the Charity Commissioner

was repelled by this Court by order dated 18 th October, 2016, in Writ

Petition No.5987 of 2016.

25. The upshot of aforesaid consideration is that the Collector of Stamps

committed a manifest error in not at all adverting to the fact that the learned

Charity Commissioner had determined the value of the trust property by

following requisite process to ensure the best value, and determining the

market value of the trust property on the sole premise that there was vast

difference in the value determined by the Deputy Director, Town Planning

and the value at which the learned Charity Commissioner accorded sanction

for sale. The appellate authority also fell in error in opining that the sale by

the order of the Charity Commissioner did not fall within the ambit of the

first proviso to sub-rule (6) of Rule 4. The authorities have singularly

missed to take into account the fact that there were 36 unauthorised

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 22/23 wp-714-2018 J-SK.doc

occupants over the trust property and they were stated to be in occupation

of the trust property since 1980, and, thereby the value of the trust property

was considerably diminished. It is trite that the property occupied by the

encroachers / hutment dwellers does not get the expected price. Indubitaly,

the fact that the property is under encroachment since decades affects its

price considerably. There is no consideration at all on these aspects of the

matter as well.

26. The upshot of aforesaid consideration is that the impugned orders

deserve to be quashed and set aside since the authorities have not

considered the very instructions issued by the Controller of Stamps in the

circular dated 13th October, 2006, and have proceeded to determine the

market value solely on the basis of the valuation report of the Deputy

Director, Town Planning. It would be in the fitness of things to direct the

Collector of Stamps, Andheri, Mumbai – respondent no.2 to adjudicate the

stamp-duty on the instrument in question after providing an effective

opportunity of hearing to the petitioner and in the light of the aforesaid

observations.

27. Hence, the writ petition stands allowed in the following terms:

(i) The order dated 16th March, 2017 passed by respondent no.2

determining the market value of the trust property and the order

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::

 23/23 wp-714-2018 J-SK.doc

dated 29th May, 2017, passed by respondent no.1, on appeal, are

hereby quashed and set aside.

(ii) The matter stands remitted back to respondent no.2 for a fresh

adjudication after providing an opportunity of hearing to the

petitioner and in the light of the observations made by this

Court.

(iii) The petitioner shall appear before respondent no.2 on 6 th July

2020.

(iv) Respondent no.2 shall make an endeavour to adjudicate the

stamp-duty within a period of two months from the date of the

first appearance of the petitioner before respondent no.2.

28. In the circumstances, there shall be no order as to costs.

29. Rule made absolute in aforesaid terms.

[N. J. JAMADAR, J.]

Santosh

::: Uploaded on - 22/05/2020 ::: Downloaded on - 29/05/2020 13:28:32 :::