Lalita Devi vs The Commissioner, Gurgaon Division, Gurgaon

G.S. Singhvi, J.—This is a petition for quashing the orders passed by the Collector, Gurgaon (respondent No. 2) and the Commissioner, Gurgaon Division, Gurgaon (respondent No. 1) under Sections 47-A, 21 and (4) of the Indian Stamps Act, 1899 (for short ''the Act'') (as applicable to the State of Haryana).

The facts of the case He in a narrow compass. The petitioners purchased land measuring 17 Biswas 5 Biswanis situated at Gurgaon for a sum of Rs. 2,60,000/- and got the sale deed registered by paying stamp duty of Rs. 32,500/-. However, on a reference made by the Sub Registrar, Gurgaon u/s 47-A(1), respondent No. 2, after making a show of compliance of the procedure prescribed u/s 47-A(2) of the Act, passed order Annexure P.3 dated 28.8.1997 for payment of additional stamp duty by assessing the value of the land at Rs. 17,85,000/-. The relevant extract of that order is reproduced below :-

"This deed has been forwarded to this Court u/s 47-A of the Indian Stamps Act for decision by the Sub-Registrar, Gurgaon. Upon this, the vendee was summoned and Ranbir Singh appeared as representative of the vendee and he made a statement that there are deep pits in the purchased land and he has purchased this land for agricultural purpose. He has not committed any theft of stamp duty over purchase of this land and the land has been only purchased as per amount mentioned in the deed.

I have gone through the statement made by the Sub Registrar, Gurgaon and the vendee and has also heard the vendee in addition to the spot inspec- tion of suit land. After the inspection, it is found that the land mentioned in the deed is situated adjoining the Bus Stand and many houses are built in the surrounding areas and there is plenty of abadi and the land is not agricultural land and agricultural produce cannot be sown in this land and this land is in the shape of plots. Therefore, I am of the opinion that the vendee has purchased this land in the shape of plots and therefore I assess the value of this land as Rs. 17,85,000/- considering the deed to have been registered with a lesser value and accordingly after recovering the stamp duty from the vendee the deed holder be informed. The order has been announced."

The appeal filed by the petitioners was dismissed by respondent No. 1 as barred by limitation vide order Annexure P-4. dated 7.9.2000.

Shri Naresh Katyal argued that order Annexure P-3 should be declared as vitiated by an error of law appeal on the face of the record and violation of the rules of natural justice because before assessing the value of the land at Rs. 17,85,000/- and directing the petitioners to pay the additional stamp duty, respondent No. 2 did not hold enquiry in accordance with the procedure prescribed by Haryana Stamp (Prevention of under valuation of Instruments) Rules, 1978 (for short, the Rules). He further argued that the finding recorded by respondent No. 2 about the nature and situation of the land should be quashed because it is not based on any tangible evidence and also because the petitioners were not given opportunity to produce evidence to rebut the so-called evidence collected at the time of spot inspection. Learned counsel assailed the appellate order by arguing that while dismissing the appeal as time barred, respondent No. 1 over-looked the vital fact that notice in terms of Rule 5(1) of the Rules had not been served upon the petitioners.

Shri Jaswant Singh candidly conceded that before passing order Annexure P-3, respondent No. 2 did not make enquiry in accordance with the provisions of Section 47-A(2) and Rule 4 of the Rules. He also conceded that the petitioners were not given opportunity to produce evidence to rebut the material collected by respondent No. 2 at the time of spot inspection. He, however, defended the appellate order by arguing that respondent No. 1 had dismissed the appeal as time barred because the petitioners failed to explain the delay in filing thereof.

For the purpose of determining the legality of the impugned order, it will be useful to refer to Section 47-A (1) to (4) of the Act and Rule 4 of the Rules. The same read as under :-

"Section 47-A (1) to (4) of the ActP2

47-A. Instruments under-valued how to be dealt with. - (1) If the Registering Officer appointed under the Registration Act, 1908, while registering any instrument transferring any property, has reason to believe that the value of the property or the consideration, as the case may be, 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 value or consideration, as the case may be, and the property duty payable thereon.

(2) On receipt of reference under sub-section (1), the Collector shall, after giving the parties a reasonable opportunity of being heard and after holding an enquiry in such manner as may be prescribed by rules made under this Act, determine the value or consideration and the duty as aforesaid and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty.

(3) The Collector may suo mom, or on receipt of reference from the Inspector-General of Registration or the Registrar of a district in whose jurisdiction the property or any portion thereof which is the subject-matter of the instrument is situate, appointed under the Registration Act, 1908, shall, within three years from the date of registration of any instrument, not already referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of its value or consideration, as the case may be, and the duty payable thereon and if after such examination, he has reasons to believe that the value or consideration has not been truly set forth in the instrument, he may determine the value or consideration and the duty as aforesaid in accordance with the procedure provided for in sub-section (2); and the deficient amount of duty, if any, shall be payable by the person liable to pay the duty :

Provided that the Collector shall, within a period of two years from the date of the commencement of the Indian Stamp (Haryana, Amendment) Act, 1973, also be competent to act as aforesaid in respect of the instruments registered on or after the first day of November, 1966 and before the first day of October, 1970.

(4) Any person aggrieved by an order of the Collector under sub- section (2) or sub-section (3) may, within thirty days from the date of the order, prefer an appeal before the Commissioner of Division and all such appeals shall be heard and disposed of in such manner as may be prescribed by rules made under this Act.

Rule 4 of the Rules

Rule-4. Assessment of Duty. - (1)On receipt of reference under sub-section (1) of Section 47-A, the Collector shall serve on the person or persons concerned a notice in form 1, requiring him on a date and at a place to be specified therein either to attend in person or through an authorised agent to produce or to cause to be produced any evidence on which such person or persons may reply in his support.

(2) The Collector, after taking such evidence as the person or persons may produce and after making such enquiry as he may deem proper, shall determine the value of property or consideration as the case may be, and assess the amount of deficient duty recoverable from the person concerned.

(3) If the person or persons fails or fail to attend in response to the notice served under sub-rule (1), the Collector shall proceed ex parte and assess the deficient amount of duty, if any, to the best of his judgment."

A perusal of the provisions quoted above shows that while sub-section (1) of Section 47-A does not envisage holding of enquiry or giving of opportunity of hearing at the stage of reference, sub-section (2) thereof imposes a mandatory duty on the Collector to hold as enquiry in the manner prescribed by the rules framed under the Act and also give reasonable opportunity of hearing to the parties before making a determination of the correct value of the land or property. This necessarily means that the Collector can make determination of the value of the property only after giving reasonable opportunity of hearing to the parties and after holding appropriate enquiry. The expression "reasonable opportunity of hearing" has not been defined in the act or the Rules but, broadly speaking, it means that the party concerned should be given notice of the proposed action and also of the circumstances and evidence available/collected against it and called upon to submit its defence qua proposed action and/or rebut the evidence sought to be relied upon by the competent authority. In a given case, party can also ask for an opportunity to adduce evidence to rebut the evidence collected by the competent authority. It is, thus, clear that before passing an order under sub-section (2) of Section 47-A, the Collector, is under a statutory duty to hold an enquiry and also give opportunity to the vendee and the Sub Registrar to project their respective cases on the issue of determination of the value of the land or property which is subject-matter of the deed. The Collector is also required to disclose the evidence collected during the course of enquiry or otherwise and give opportunity to both the parties to support or controvert such evidence. In the present case, the Collector neither made enquiry envisaged by Section 47-A(2) and Rule 4 nor did he give opportunity to the petitioners to explain the circumstances appearing before them or to rebut the evidence collected at the lime of inspection. In view of this, we do not have the slightest hesitation to hold that the order Annexure P.1 is violative of the mandatory provisions of Section 47-A(2), read with Rule 4 and the rules of natural justice.

We are further of the view that the order passed by respondent No. 2 deserves to be quashed on the ground that it does not satisfy the test of a speaking order. A perusal of Annexure P.3 shows that except making a bald and cryptic reference to the spot inspection, respondent No. 2 has not given any reason foi determination of the value of the land. Therefore, it must be held that the order passed by respondent No. 2 is not a speaking order.

The requirement of recording of reasons and com- munication thereof has been read as an integral part of the concept of fair procedure. The necessity of giving reasons flows from the concept of rule of law which constitutes one of the corner-stones of our constitutional set up. The administrative authorities charged with the duty to act judicially cannot decide the matters on consideration of policy or expediency. The requirement of recording of reasons by such authorities is an important safeguard to ensure observance of the rule of law. It introduces clarity, checks the introduction of extraneous or irrelevant consideration and minimizes arbitrariness in the decision making process. Another reason which makes it imperative for the quasi-judicial authorities to give reasons is that their orders are not only subject to the right of the aggrieved persons to challenge the same by filing statutory appeal and revision but also by filing writ petition under Article 226 of the Constitution. Such decisions can also be challenged by way of appeal under Article 136 of the Constitution of India. The High Courts have the power to issue writ of certiorari to quash the orders passed by a quasi-judicial authority/Tribunal. Likewise, in appeal the Supreme Court can nullify such order/decision. The power of judicial review can be effectively exercised by the Superior Courts only if the order under challenge contains reasons and we cannot countenance a situation in which the administrative authorities vested with the power to decide the rights of the parties may stultify the power of the judicial re-view vested in the Court simply by not recording reasons in support of their decisions or by refraining from communicating such reasons to the affected person. This is the reason why the Courts have insisted on rigorous compliance of the requirement of recording of reasons and communication thereof by every quasi-judicial authority. Some of the judicial precedents, which can appropriately by cited to support the above mentioned proposition, are :-

(i) Harinagar Sugar Mills Ltd. Vs. Shyam Sundar Jhunjhunwala and Others, ;

(ii) Bharat Raja Vs. The Union of India (UOI) and Others, ;

(iii) Travancore Rayon Ltd. Vs. Union of India (UOI), ;

(iv) Mahabir Prasad Santosh Kumar Vs. State of Uttar Pradesh and Others, ;

(v) Woolcombers of India Ltd. Vs. Woolcombers Workers Union and Another, ;

(vi) Ajantha Industries and Others Vs. Central Board of Direct Taxes, New Delhi and Others, ;

(vii) The Siemens Engineering and Manufacturing Co. of India Ltd. Vs. The Union of India (UOI) and Another, ;

(viii) S.N. Mukherjee Vs. Union of India, ;

(ix) Shanti Prasad Agarwalla and others Vs. Union of India and others, ;

(x) Krishna Swami Vs. Union of India and another, ; and

(xi) M.L. Jaggi Vs. Mahanagar Telephones Nigam Ltd. and others, .

A lucid enunciation of law on the subject has been made in Testeels Ltd. Vs. N.M. Desai and Another, . In that case, Bhagwati, J. (as his Lordship then was) made a panoramic survey of the Indian, American, English and Australian judicial trends on the subject and then held :-

"The necessity of giving reasons flows as a necessary corollary from the rule of law which constitutes one of the basic principles of the Indian Constitutional set up. The administrative authorities having a duty to act judicially cannot therefore decide on considerations of policy or expediency. They must decide the matter solely on the facts of the particular case, solely on the material before them and apart from any extraneous considerations by applying pre-existing legal norms to factual situations. Now the necessity of giving reasons is an important safeguard to ensure observance of the duty to act judicially. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and excludes or, at any rate, minimizes arbitrariness in the decision-making process.

Another reason which compels making of such an order is based on the power of judicial review which is possessed by the High Court under Article 226 and the Supreme Court under Article 32 of the Constitution. These Courts have the power under the said provisions to quash by certiorari a quasi-judicial order made by an Administrative Officer and this power of review can be effectively exercised only if the order is a speaking order. In the absence of any reasons in support of the order, the said courts cannot examine the correctness of the order under review. The High Court and the Supreme Court would be powerless to interfere as to keep the administrative officer within the limits of the law. The result would be that the power of judicial review would be stultified and no redress being available to the citizen, there would be insidious encouragement to arbitrariness and caprice. If this requirement is insisted upon, then they will be subject to judicial scrutiny and correction."

In S.N. Mukherjee v. Union of India (supra), a Constitution Bench reviewed Indian, American, Australian and English precedents on the subject and culled out the following proposition of law :

"Reasons, when recorded by an administrative authority in an order passed by it while exercising Quasi-judicial functions, would no doubt facilities the exercise of its jurisdiction by the appellate or supervisory authority. But the other consideration, referred to above, which have also weighed with this Court in holding that an admin- istrative authority must record reasons for its decision are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose. Namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decision making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge."

The order passed by respondent No. 1 deserves to be invalidated on the short ground that it merely confirms the order passed by respondent No. 2 which, in our opinion, has to be treated as void on the ground of violation of the statutory provisions and rules of natural justice.

For the reasons mentioned above, the writ petition is allowed. Orders Annexures P.3 and P.4 are quashed with a direction to respondent No. 2 to pass fresh order u/s 47-A(2) of the Act after giving reasonable opportunity of hearing to the parties.

Petition allowed.