A.J.

Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

Author: V. Dhanapalan

Bench: V. Dhanapalan

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED :: 31-07-2008

CORAM

THE HONOURABLE MR. JUSTICE V. DHANAPALAN

W.P. No.2359 of 2008

A.J.Mapillai Mohadeen,
represented by Power of Attorney Holder
K.Asokan ... Petitioner

vs.

1. The Sub-Registrar,
Registration Department,
Sub-Registrar Office,
Arakandanallur.

2. The Special Deputy Collector (Stamps),

Cuddalore.

3. The Inspector General of Registration,

Registration Department,
No.20, Santhome High Road,
Santhome, Chennai 600 028. ... Respondents

Article
Petition
226
under
of the Constitution of India praying for issuance of a writ o

For Petitioner : Mrs.Radha Gopalan

For Respondents : Mr.N.Senthil Kumar,

Government Advocate

O R D E R

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

This writ petition is filed praying for a declaration declaring that the petitioner is liable to pay and
the respondents are entitled to claim the stamp duty only on the value recited in the sale deed
document No.1620 dated 04.04.2007 executed by TIIC, a public authority, in favour of the
petitioner herein in respect of property measuring 1.23 acres with building in R.S.No.77/4 and also
0.05 cents out of 0.85 cents in R.S.No.77/6 situated in Kuladeepamangalam Village, Tirukovilur
Taluk, Villpuram District.

2. With consent of the parties, the Writ Petition is taken up for final disposal.

3. The case of the petitioner is as under :

(i) The property originally belonged to M/s.Sri Raghavendra Splints Industries,

Tirukoilur Taluk, a partnership concern having its Head Office at Tirukoilur and
factory at R.S.No.77/4 Kuladeepamangalam Village, Tirukoilur Taluk. The said
property was mortgaged with the Tamil Nadu Industrial Investment Corporation
(hereinafter called TIIC). As the said Sri Raghavendra Splints Industries had
committed default, TIIC foreclosed the loan by taking possession of the property
under Section 29 of the State Financial Corporations Act, 1951, and conducted the
tender-cum-public auction on 29.11.2006 bringing the property for auction. The
petitioner had offered the highest bid amount of Rs.4 lakhs in the tender-cum-public
auction and TIIC accepted the offer of the petitioner and agreed to sell the properties
viz., property measuring 1.23 acres with building in R.S.No.77/4 and also 0.05 cents
out of 0.85 cents in R.S.No.77/6 situated in Kuladeepmanagalm Village, Tirukovilur
Taluk, Villupuram District. The auction was confirmed on 06.03.2007.

(ii) In view of the acceptance of the offer, TIIC executed sale deed over the properties
by a sale deed dated 05.04.2007 and pursuant to the said sale deed, possession was
also handed over to the petitioner. In order to register the sale deed, as the value of
the property was Rs.4 lakhs, the petitioner paid Rs.32,000/- towards stamp duty.
But, the 1st respondent, without accepting the same, sent the document to the 2nd
respondent for proper valuation and notification. Thereafter, the 2nd respondent has
fixed the stamp duty at Rs.2,16,000/- taking into account the market value of the
property and issued the proceedings to the effect that the petitioner has to pay
Rs.2,16,000/-, else the documents will not be released. Aggrieved over the same, the
petitioner preferred an appeal dated 23.01.2007 before the 3rd respondent stating
that he purchased the property from TIIC, which is a public authority and, therefore,
he is not liable to pay more than what is stated in the sale deed and the said appeal is
pending.

(iii) It is not the case of the respondents that the petitioner has paid consideration
more than what has been recited in the deed of conveyance executed by TIIC;
moreover, it is beyond one's apprehension that TIIC, a statutory body, would receive
excess amount that what has been actually paid and recited as sale consideration in
the deed of conveyance executed by it in favour of the auction purchaser; merely

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

because the market value is high, the 1st respondent cannot have any reason
whatsoever to doubt about the consideration paid by him to TIIC.

(iv) Since the document has not been released, the petitioner is put to serious loss
and irreparable hardship and having no other alternative remedy, he has approached
this Court.

3. In the counter affidavit filed by the respondents, the sale consideration of Rs.4,00,000/- paid by
the petitioner to the TIIC is not denied. They have stated that the value of the property, as per
Guideline, worked out to Rs.23,43,936/- and hence it was referred to the Collector for
determination of the value of the property in question and the petitioner has also consented to refer
the document to the Collector in his letter dated 27.06.2007. According to the respondents, they
have acted in accordance with the provisions of The Indian Stamp Act and The Prevention of
Undervaluation of Instrument Rules.

3.1. With regard to the grounds raised by the petitioner, the respondents in their counter affidavit
have submitted as under:

(i) As per Section 47A(1) of The Indian Stamp Act, the 1st respondent and the 2nd
respondent determined the value of the property as Rs.31,00,000/- (site value -
Rs.20,09,088/-; Building value Rs.10,90,912/-) and the required Stamp Duty is
Rs.2,48,000/-; the petitioner paid the Stamp Duty of Rs.32,000/-; the deficit Stamp
Duty of Rs.2,16,000/- was directed to be paid by the petitioner and the same is
correct, legal and well within the rules and regulations of Prevention of
Undervaluation of Instrument Rules.

(ii) Section 47(A) of the Indian Stamp Act clearly states that while registering any
instrument of conveyance, if there is reason to believe that the market value of the
property which is the subject matter of conveyance has not been truly set forth in the
instrument, the said document may be referred to the Collector under Section 47(A)
of the Indian Stamp Act for determination of the market value of such property.

(iii) The petitioner had purchased the property in the auction conducted by TIIC and
the sale deed was also executed by the statutory authority. When it was presented for
registration, the registering authority, i.e. the 1st respondent had reason to believe
that the market value of the property had not been truly set forth in the instrument,
and, therefore, the same was sent to the Collector for determination of the correct
market value. Hence the Collector determined the market value and directed the
petitioner to pay the deficit stamp duty.

4. In the counter filed by the second respondent, it is stated as follows:

(i) The market value of the building is determined at Rs.2,50,000/- and the house
site value is determined at Rs.1,50,000/- and the age of the building is noted as 18

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

years. The petitioner has purchased the land for a sum of Rs.4,00,000/- and paid the
stamp duty of Rs.32,000/-; since the house site value of the land in R.S.Nos.77/4 and
77/6 in Kuladeepamangalam Village has been fixed at Rs.42/- per sq. feet in the
Guideline Value Register maintained by the Sub-Registrar's Office, the Sub-Registrar,
Arakandanallur, has worked out the house site value at Rs.23,43,936/- and promptly
referred the matter to the Special Deputy Collector (Stamps), Cuddalore, requesting
to fix the value of the building thereon as instructed by the Inspector General of
Registration vide his Order No.40931/B1/2001-1 dated 19.08.2002 and to take action
to recover the deficit stamp duty from the purchaser in accordance with the
provisions laid down under Section 47-A (1).

(ii) The petitioner was issued a notice in Form I under Section 4 of the Prevention of
Undervaluation Rules, 1968 by the Special Deputy Collector (Stamps), Cuddalore to
file his claim and objections if any, in the collection of the deficit stamp duty. The
petitioner in his letter dated 20.08.2007 has stated that the market value of the land
in question was fixed at Rs.42/- per sq. feet by the Sub-Registrar concerned and
requested to fix the value after field inspection. Accordingly, the property was
inspected on 14.09.2007 and an open enquiry was conducted. The petitioner was also
present and objected to fix the value of the land at Rs.42/- per square feet as the land
is cultivable, whereas the village public suggested to fix the value of the land at
Rs.35/- per square feet.

(iii) The land had also been inspected by the Special Deputy Collector Stamps,
Cuddalore and it was found that Sarguru Nagar Layout has been formed on the
eastern and western side of the property in question and north to Manalurpet Road.
Further, in the adjacent area nearby Tiruvannamalai Road, house site layout has also
been formed. During the subsequent sale made on 05.02.2007, a site measuring
4360 sq. ft. in R.S.No.84/5 was sold for Rs.1,83,120/- at the rate of Rs.42/- per sq. ft.
The land in question was found to be lying waste and the petitioner adduced a copy of
the Adangal for fasli 1416. In view of these facts, the rate at Rs.42/- per sq. ft. as fixed
by the Sub-Registrar may be high. However, taking the view of the village public that
the value of the land may be fixed at Rs.35/- per sq. ft., the rate of the land per square
feet has been considered and fixed at Rs.36/-, just Re.1/- high to the suggestion of the
village public.

(iv) As regards the value of structure on the property, the nature of the building, its
age, trees and other accessories have been taken into account and after deducting the
depreciation value, the net value is fixed at Rs.10,65,852/- and the total value of the
house site and building is fixed at Rs.30,75,000/-; the stamp duty at 8% is fixed at
Rs.2,46,000/- and since the petitioner has paid a sum of Rs.32,000/- towards stamp
duty, the deficit stamp duty is Rs.2,14,000/-. The Special Deputy Collector (Stamps),
Cuddalore in his proceedings in M.R.No.307/07-08 dated 14.09.2007 has passed an
order directing the petitioner to pay the deficit stamp duty of Rs.2,14,000/- and to
file an appeal before the Inspector General of Registration, Chennai within a period

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

of 60 days from the date of the order. The order was sent to the petitioner by RPAD
and it was duly received by him on 29.09.2007. But, on behalf of the petitioner, one
K.Asokan, who is said to be the Power of Attorney Holder of the petitioner has filed
the present writ petition.

(v) The averments of the petitioner are not maintainable in law and it is not true that
the petitioner has offered the highest bid amount of Rs.4,00,000/- in the
Tender-cum-Public Auction; since the sale of the property has been made under the
Tamil Nadu Registration Act, the sale is liable for charging stamp duty under the
Indian Stamp Act. TIIC is a Company registered under the Indian Companies Act,
1913 and the document is liable to be assessed under the Prevention of Under
Valuation Rules, 1968 and under Section 47-A(1) of the Indian Stamp Act and
therefore, the petitioner is liable to pay the differential cost of stamp duty together
with interest accrued thereon. Accordingly, he prayed for dismissal of the Writ
Petition.

5. Heard Mrs.Radha Gopalan, learned counsel for the petitioner and Mr.N.Senthil Kumar, learned
Government Advocate for the respondents.

6. Learned counsel for the petitioner has submitted that the action of the 1st respondent in referring
the matter to the 2nd respondent and the 2nd respondent directing the petitioner to pay a sum of
Rs.2,14,000/- towards deficit stamp duty is illegal and arbitrary. It is her further contention that
merely because there is an increase in the market value, it cannot be assumed that the statutory
authority received more consideration and in fact, the Inspector General of Registration, the 3rd
respondent, has directed all the Registrars in the State to release the documents without insisting on
further payment of stamp duty, even if such instruments had already been referred to Special
Deputy Collector (Stamp Duty) for the purpose of valuation/verification. The learned counsel has
also submitted that the petitioner has purchased the property in the auction conducted by the public
authority-TIIC and the sale deed has also been executed by the statutory authority and, hence, the
petitioner cannot be compelled to pay more stamp duty based on the guideline value, especially
when the valuation is based on the allotted price from a public authority and when there is no need
for valuation. In support of her case, learned counsel for the petitioner has relied on the following
decisions :

(i) 1997 (II) CTC 617, S.P.Padmavathi vs. The State of Tamil Nadu and others :

"10. ... The underlined words contained in sub-sections (1) and (3) of Section 47-A
clearly reveal the intention of the Legislature in inserting the aforesaid section 47-A
of the Act. The basis for exercising the power under Section 47-A is that there must
be a reason to believe that the market value of the property, which is the subject
matter of the conveyance, has not been truly set forth in the instrument. It is not a
routine procedure to be followed in respect of each and every document of
conveyance presented for registration, without any evidence to show lack of
bonafides on the part of the parties to the document by attempting fraudulently to

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

under-value the subject of conveyance with a view to evade payment of proper stamp
duty and thereby cause loss to the Revenue. Therefore, the basis for exercise of the
power under section 47-A of the Act is wilful under-valuation of the subject of
transfer, with fraudulent intention to evade payment of proper stamp duty.

11. ... Having regard to the object of the Act, we are inclined to think that normally the
consideration stated as the market value in a given instrument brought for
registration should be taken to be correct unless circumstances exist which suggest
fraudulent evasion. Even in such a case, we trust that disputes will not be raised for
petty sums. Unless the difference is considerable or sizable and it appears patent that
the amount mentioned in the document is in gross undervalue, no disputation as to
value is expected to be started.

... The power should be exercised with great caution and care should be taken to
ensure that it does not work as an engine of operation. It has also been further
observed that normally the consideration stated as the market value in an instrument
brought for registration should be taken to be correct, unless the circumstances exist
which suggest fraudulent evasion. The Division Bench has also further stated that in
such a case, the disputes should not be raised for petty sums unless the difference is
considerable or sizeable and it appears patent that the amount mentioned in the
document is gross under-valuation. We are of the firm view that Section 47-A of the
Act came to be inserted by the Tamil Nadu Amendment Act 24 of 1967 with a view to
check fraudulent evasion of stamp duty payable on the documents while registering
any instrument of conveyance, exchange, gift, release of benami right or settlement.
The question as to fraudulent evasion of capital gain tax and the purpose of Chapter
XX-C of the Income Tax Act, preventing such fraudulent evasion of capital gain tax
by making under valuation came up for consideration before the Supreme Court in
C.B.Gautam vs. Union of India and others, 1992 (6) J.T. 678. While considering the
purpose of Chapter XX-C of the Income Tax Act, the Supreme Court specifically
pointed out that although a presumption of an attempt to evade the tax may be raised
by the appropriate authority concerned, but it has to determine that in a given
transaction of an agreement to sell there might be several bona fide considerations
which might induce a seller to sell his immovable property at less than what might be
consideration as a air market value.

15. We accordingly, answer Point No.1 as follows:

" ... Power under Section 47-A of the Act can only be exercised when the Registering
Officer has reason to believe that the market value of the property, which is the
subject of conveyance, has not been truly set forth, with view to fraudulently evade
payment of proper stamp duty. Mere lapse of time between the date of agreement will
not be the determining factor that the document is undervalued and such
circumstance by itself is not sufficient to invoke the power under Section 47-A of the
Act, unless there is lack of bona fides and fraudulent attempt on the part of the

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

parties to the document to undervalue the subject of transfer with a view to evade
payment of proper stamp duty.

26. Therefore, we are of the view that in the case of instrument of conveyance
executed pursuant to the decree for specific performance passed by the Civil Court, in
which there is no allegation of under-valuation or lack of bona fides, the mere fact
that there is a time gap between the agreement of sale and the execution of the
document, is not sufficient to the Registering Officer to invoke his power under
Section 47A of the Act, unless there are reasons to believe that there is an attempt on
the part of the parties to the instrument to deliberately undervalue the subject of
transfer with a view to evade payment of proper stamp duty.

30. Learned Government Pleader also relied on the decision of this Court in
R.Thiagasundaram vs. State of Tamil Nadu, AIR 1991 Mad. 82 in which it has been
held that the value as accepted by the Civil Court is not binding on the Registering
Officer. However, this is the circumstances to be taken into consideration. We are not
testing our decision on the ground that value mentioned in the agreement is accepted
by Civil Court. We are of the view that the transaction in question does not suffer
from lack of bona fide and that there are no reasons to believe that the true value of
the property is not set forth in the document.

31. For all the above reasons, we answer pursuant to the decree for specific
performance passed by the Civil Court, in which there is no allegation of deliberate
under-valuation or lack of bona fides in valuing the subject of transfer with a view to
evade payment of proper stamp duty, the mere fact that there is a time gap between
the agreement of sale and the execution of the document by itself is not sufficient for
the Registering Officer to invoke his power under Section 47A of the Stamp Act,
unless there are reasons to believe that there is an attempt on the part of the parties
to the instrument to undervalue, with a view to evade payment of proper stamp duty.

32. Point No.2: In the light of the findings recorded on Points 1 and 2 in view of the
fact that the order of the learned single Judge has proceeded on the basis that it is the
market value of the property on the date of execution will be the determining factor
for determining the amount of stamp duty payable on the document and the
Registering Officer has also not stated any circumstances which led him to believe
that there was deliberate or fraudulent under valuation of the subject of transfer with
a view to evade payment of proper stamp duty, the order of the learned single Judge
which is also reported in 1993 (1) L.W. 629 and also that of the Registering Officer
require to be interfered with. This point is answered accordingly."

(ii) 2002 (2) CTC 329, R.Sukumaran and seven others vs. State of Tamil Nadu and seven others :

"21. ... Merely because there has been an increase in the market value due to the
passage of time, it cannot be assumed that the Housing Board has received

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

consideration more than what has been recited in the document. The over anxious
Registrar, who is also conscious to collect more revenue cannot have any inkling or
reason, doubt or to believe that there is under-valuation or evasion of stamp duty.
Therefore, it has to be held that absolutely the Registrar cannot have any ground or
reason or rhyme or basis or reason whatsoever to doubt about the consideration paid
by the transferee to the Housing Board, the transferor. The same is the legal position
even in respect of commercial plot/flat as well and there could be no difference in
that behalf nor there could be any discrimination."

(iii) 2008 (1) CTC 60 (SC), State of Rajasthan and others vs. Khandaka Jain Jewellers :

"13. ... If any doubt arises in the mind of the Registering Authority that the
instrument is under-valued then as per Section 47-A of the Rajasthan (Amendment)
the instrument can be sent to the Collector for determination of the correct market
value. Under Section 47-A read with Sections 3, 17 and 27, it becomes clear that the
Registering Authority has to ascertain the correct valuation given in the instrument
regarding market value of the property at the time of the sale.

14. ... A taxing statute has to be construed as it is all these contingencies that the
matter was under litigation and the value of the property by that time shot up cannot
be taken into account for interpreting the provisions of a taxing statute. As already
mentioned above a taxing statute has to be construed strictly and if it is construed
strictly then the plea that the incumbent took a long time to get a decree for execution
against the vendor that consideration cannot weigh with the Court for interpreting
the provisions of the taxing statutes. Therefore, simply because the matter have been
in the litigation for a long time that cannot be a consideration to accept the market
value of the instrument when the agreement to sale was entered. As per Section 17, it
clearly says at the time when registration is made, the valuation is to be seen on that
basis. "

(iv) (2008) 4 SCC 720, Government of Andhra Pradesh and others vs. P.Laxmi Devi :

"28. We may, however, consider a hypothetical case. Supposing the correct value of a
proper is Rs.10 lakhs and that is the value stated in the sale deed, but the registering
officer erroneously determines it to be, say, Rs.2 crores. In that case, while making a
reference to the Collector under Section 47-A, the registering officer will demand
duty on 50% of Rs.2 crores i.e. duty on Rs.1 crore instead of demanding duty on Rs.10
lakhs. A party may not be able to pay this exorbitant duty demanded under the
proviso to Section 47-A by the registering officer in such a case. What can be done in
this situation?

29. In our opinion in this situation, it is always open to a party to file a writ petition
challenging the exorbitant demand made by the registering officer under the proviso
to Section 47-A alleging that the determination made is arbitrary and/or based on

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

extraneous considerations, and in that case it is always open to the High Court, if it is
satisfied that the allegation is correct, to set aside such exorbitant demand under the
proviso to Section 47-A of the Stamp Act by declaring the demand arbitrary. It is well
settled that arbitrariness violates Article 14 of the Constitution vide Maneka Gandhi
vs. Union of India. Hence, the party is not remediless in this situation."

7. Per contra, learned Government Advocate for the respondents has stated that the action of the
respondents 1 and 2 in determining the value of the property at Rs.30,75,000/- and the stamp duty
at Rs.2,46,000/- and directing the petitioner to pay a sum of Rs.2,14,000/- as deficit stamp duty is
correct and well within the rules and regulations of Prevention of Undervaluation of Instrument
Rules; though, it is true that the petitioner has offered the highest bid amount of Rs.4,00,000/- in
the Tender-cum-Public Auction, the sale of the property has been made under the Tamil Nadu
Registration Act and, therefore, the sale is liable for charging stamp duty under the Indian Stamp
Act. The learned Government Advocate has further stated that the property under the sale deed has
been inspected by the authorities concerned and proceedings have been taken under the provisions
laid down under Section 47-A(1) of the Indian Stamp Act and the order passed by the Special Deputy
Collector (Stamps), Cuddalore, directing the petitioner to pay the differential cost of stamp duty
with interest thereon is just and proper and, therefore, the writ petition is liable to be dismissed. In
support of his argument, the learned Government Advocate has placed reliance on the decision of
the Supreme Court reported in 2008 (1) CTC 60 in the case of State of Rajasthan and others vs.
Khandaka Jain Jewellers, wherein it is held as under :

"6. The question is whether the valuation should be assessed on the market rate
prevailing at the time of registration of the sale deed or when the parties entered into
agreement to sell.

7. Learned counsel for the State has submitted that the Stamp Act is a taxing statute
and a taxing statute has to be construed strictly. Whatsoever may have been the
consideration for the vendor not to get the sale deed executed is a matter between
both the parties, but when the matter is before the Registering Authority, the
Registering Authority has to see the valuation of the property at the market value at
the time of registration as per Section 17 of the Act. ... "

8. I have carefully considered the submissions made by the learned counsel on either side and also
gone through the records.

9. An analysis of the case wold reveal that the petitioner is the auction purchaser of the property
originally belonging to one M/s.Sri Raghavendra Splints Industries, Tirukoilur, a partnership
concern, situated at R.S.No.77/4 Kuladeepamangalam Village, Tirukoilur Taluk, Villupuram
District, and the said property was mortgaged with TIIC. As there was a default of payment, TIIC
had brought the property in public auction under Section 29 of the State Financial Corporations Act,
1951, and the said auction was conducted on 29.11.2006. The petitioner being the highest bidder had
offered Rs.4.00 lakhs in the tender-cum-public auction. The said offer has been accepted and
thereafter it was agreed to sell the property measuring 1.23 acres with building in R.S.No.77/4 and

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

also 0.05 cents out of 0.85 cents in R.S.No.77/6 situate in Kuladeepamangalam village. Accordingly,
TIIC has executed a sale deed in favour of the petitioner on 05.04.2007 and pursuant to the same,
possession was also handed over to the petitioner. The petitioner has taken steps to get the property
registered, for which value of the property was fixed at Rs.4.00 lakhs by the pubic authority and the
petitioner paid a sum of Rs.32,000/- towards stamp duty. However, the first respondent, without
accepting the said amount, referred the document to the second respondent for proper valuation
and notification. Pursuant to that, the second respondent fixed the stamp duty at Rs.2,46,000/-,
taking into account the market value of the property and issued the proceedings to the effect that the
petitioner has to pay deficit stamp duty of Rs.2,14,000/- and informed the petitioner that unless the
said amount is paid, the document will not be released. Aggrieved over the action of the second
respondent, the petitioner preferred an appeal before the third respondent on 23.02.2007, on the
ground that the subject property has been purchased in the public auction and the value fixed by the
public authority and, therefore, he is not liable to pay more than the value fixed by the public
authority in the sale deed.

10. On evaluation of the above facts of the case and the submissions made by the counsel on either
side, the points which arise for consideration in this Writ Petition are :

(i) When the public authority has fixed the value of the property in a public auction
sale, whether that value can be doubted to refer the matter under Section 47-A(1) of
the Indian Stamp Act ?

(ii) Whether there is any fraudulent intention on the part of the petitioner in
presenting the document for registration ?

11. Coming to the first point, it is seen that there is no dispute that the property in question was put
to public auction on 29.11.2006 and the petitioner being the highest bidder has purchased the said
property, for which sale deed was executed on 05.04.2007. It is also seen that TIIC, which is not a
party to the present Writ Petition and is an authority in the State of Tamil Nadu, is governed by the
State Financial Corporations Act, 1951. Under the provisions of the Act, the property in question was
brought under public auction as per Section 29 of the Act. While exercising the power by TIIC, they
evaluated the property and fixed the value based on the market value of the property at the time of
public auction i.e., on 29.11.2006. After handing over of the possession and the sale deed was
executed on 05.04.2007, the document was presented for registration immediately. There is no
much time gap between the public auction and the execution of sale deed. The auction was
confirmed on 06.03.2007. Therefore, there is no reason to believe that the value fixed by the public
authority has been changed.

12. Section 47-A of the Act states that if the registering officer appointed under the Indian
Registration Act,1908, while registering any instrument of conveyance, exchange, gift release of
benami right or settlement has reason to believe that the market value of the property of which is
the subject matter of conveyance, has not been truly set forth in the instrument, he may, after
registering such instrument, refer the same to the Collector for determination of the market value of
such property and the proper duty payable thereon.

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

13. From the above Section, it is clear that when the registering officer has reason to believe that the
market value of the property has not been truly set forth in the instrument with a view to
fraudulently evade payment of proper stamp duty, he may, after registering such instrument, refer
the same to the Collector for determination of the market value of such property and the proper duty
payable thereon.

14. Power under Section 47-A of the Act can only be exercised when the Registering Officer has
reason to believe that the market value of the property, which is the subject of conveyance, has not
been truly set forth, with view to fraudulently evade payment of proper stamp duty. Mere lapse of
time between the date of agreement will not be the determining factor that the document is
undervalued and such circumstance by itself is not sufficient to invoke the power under Section 47-A
of the Act, unless there is lack of bona fides and fraudulent attempt on the part of the parties to the
document to undervalue the subject of transfer with a view to evade payment of proper stamp duty.

15. Therefore, in the present case, when there is no fraudulent attempt on the part of the petitioner
to undervalue the subject of transfer, the authority has no power to fix the market value and impose
the stamp duty at Rs.2,46,000/- instead of Rs.32,000/-, which is already paid by the petitioner, for
the value fixed by the public authority. In other words, when the value itself is properly assessed and
fixed by the public authority, it cannot be construed that the petitioner has undervalued the
property. In the absence of any material to arrive at a conclusion that there is an undervaluation of
the property, the direction of the second respondent to the petitioner to pay the enhanced stamp
duty cannot be sustained.

16. A perusal of the impugned proceedings does not reflect any substantial reason to arrive at a
conclusion to differ from the value already fixed by the authority, thereby increasing the market
value and enhancing the stamp duty.

17. The law is well settled and this Court, in a number of decisions, has held that unless there is a
fraudulent attempt on the part of the parties to the document to evade payment of proper stamp
duty and a determining factor that the document is undervalued for some reasons, the authority
cannot exercise his power arbitrarily without any basis. The power should be exercised with great
caution and care should be taken to ensure that it does not operate as an engine of operation. It has
also been further observed that normally the consideration stated as the market value in an
instrument brought for registration should be taken to be correct, unless the circumstances exist to
suggest fraudulent evasion. The said principle has been laid down by this Court in S.P.Padmavathi v.
State of Tamil Nadu, 1997 (2) CTC 617. In R.Sukumaran's case cited by the learned counsel for the
petitioner, this Court has held that merely because there has been an increase in the market value
due to passage of time, it cannot be assumed that the transferor has received consideration more
than what has been recited in the document and therefore it has to be held that the Registrar cannot
have any ground or reason to doubt about the consideration paid by the transferee to the transferor.
In State of Rajasthan v. Khandaka Jain Jewellers, cited by the learned counsel for the petitioner, the
Supreme Court has held that under Section 47-A read with Sections 3,17 and 27, it becomes clear
that the Registering Authority has to ascertain the correct valuation given in the instrument
regarding the market value of the property at the time of the sale. Also, in Government of Andhra

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 A.J.Mapillai Mohadeen vs The Sub-Registrar on 31 July, 2008

Pradesh v. P.Laxmi Devi, referred above, the Apex Court has held that it is always open to a party to
file a writ petition challenging the exorbitant demand made by the registering officer under the
proviso to Section 47-A alleging that the determination made is arbitrary and based on extraneous
considerations and in that case it is always open to the High Court, if it is satisfied that the allegation
is correct, to set aside such exorbitant demand, declaring it as arbitrary.

18. Unless there is an undervaluation of the subject matter with fraudulent intention to evade proper
payment of stamp duty, the respondents cannot impose such a heavy stamp duty on the petitioner
with regard to the document in question. Therefore, in this case, the value fixed by the public
authority in the public auction cannot be doubted for reference under Section 47-A (1).

19. As regards the second point, it is not the case of the respondents that the petitioner has wilfully
or fraudulently presented the document with deficit stamp duty. It cannot also be disputed that the
property in question was purchased by the petitioner in a public auction conducted by the public
authority as per the provisions of the State Financial Corporations Act. The assessment of the value
of the property by the public authority at the time of public auction is a material consideration for
the assessment of the market value. It is seen, there is no much time gap either from public auction
to confirmation of sale; from confirmation of sale to making of payment or from making of payment
to the execution of sale deed. In the absence of any lapses on the part of the petitioner in presenting
the document for registration, there cannot be any convincing reasons to disbelieve or doubt the
value of the document, assessed by the public authority. Hence, there is no material before this
Court to come to a conclusion that there is a fraudulent intention on the part of the petitioner in
presenting the document for registration, by undervaluing the property and not paying the proper
stamp duty.

20. The necessary corollary of the above paragraphs would be that based on the market value
assessed by the public authority, sale deed has been executed and stamp duty paid. Therefore, the
market value stated in the instrument brought for registration should be taken to be correct and that
value cannot be doubted or disbelieved.

21. In the light of the elaborate discussion made above and following the legal proposition and
various rulings referred to above, I am of the considered opinion that the petitioner has to succeed.
Accordingly, this Writ Petition is allowed with a direction to the respondents to register the
document No.1620, dated 04.04.2007, and release the same to the petitioner in accordance with
law. No costs. Consequently, the connected M.P.No.1 of 2008 is closed.

abe/dixit To

1. The Sub-Registrar, Registration Department, Sub-Registrar Office, Arakandanallur.

2. The Special Deputy Collector (Stamps), Cuddalore.

3. The Inspector General of Registration, Registration Department, No.20, Santhome High Road,
Santhome, Chennai 600 028

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