Naresh Kumar Sonkar vs State of U.P.and Others

Rajiv Sharma, J.—Heard Counsel for the petitioner and the Standing Counsel appearing for the respondents.

By means of the order dated 10.8.2005, copy of which is annexed as Annexure5 to the writ petition, the Additional Collector (Finance & Revenue) Raebareli, directed the petitioner to pay a sum of Rs.3,74,778/ as deficit in the stamp duty together with interest and penalty. The aforesaid order being an ex parte order, the petitioner moved an application for stay of operation and effect of the impugned order and filed his objections and written arguments in the Stamp Case No.1080 of 2005; State v. Naresh Kumar Sonkar. After filing of the objections, the opposite party No.3 Sub District Magistrate, Mahrajganj, Raebareli submitted and inspection report dated 23.6.2005 reporting therein that the said land is situated on LucknowAllahabad Highway and the same is properly valued as per Collector rate list.

The Additional Collector (Finance & Revenue) relying on the said report, rejected the objections and confirmed the earlier order dated 10.8.2005 by the order dated 26.3.2008.

Aggrieved by the aforesaid orders dated 10.8.2005 and 26.3.2008, the petitioner has filed this writ petition interalia on the grounds that the land purchased by the petitioner is irrigated ''Palo Domat land'' and some plots of the said land are used for agricultural purpose and some are lying vacant; the said land is not close to the AllahabadLucknow Highway and admittedly the same is recorded as agricultural land and it is being used for agricultural purpose and in any case it cannot be treated to be a residential/commercial/industrial land until there is a declaration under Section 143 of the U.P. Zamindari Abolition and Land Reforms Act.

It has also been contended by the petitioner that the market value of the property has to be determined with reference to the date on which the documents is executed. Market value as such keeps on varying and changing. Any subsequent improvement or change in the nature or user of the land, which may result into enhancement of the market value of the property is not to be taken into account and it is only the value of the property on the date of execution of the document that is to be considered for the purposes of determination of property stamp duty payable on the instrument.

A preliminary objection has been raised by the Standing Counsel that the petitioner has equally efficacious remedy of filing an appeal as provided under Section 56 the Indian Stamp Act, 1899 and as such the present writ petition is liable to be dismissed on the ground of alternative remedy. He further submitted that there is no illegality in the impugned orders. Standing Counsel also submitted that the property in question, though was recorded as agricultural land, but was not purchased for agricultural purposes and as a matter of fact, the same is to be used for commercial purposes and as such, the Stamp Duty was determined on that basis.

In reply to the preliminary objection, Counsel for the petitioner submitted that the question whether the Court should entertain the writ petition under Article 226 of the Constitution of India even though alternative remedy is available, the Hon''ble Court has to exercise its jurisdiction looking to the facts of each and every case. Placing reliance on State of U.P. v. Mohd. Nooh; AIR 1958 SC 86, A.V. Vankateswaram, Collector of Customs v. Ramchand Sobhraj Wadhwani; AIR 1961 SC 1506, Whirlpool Corporation v. Registrar of Trade Marks; 1998 (8) SCC 1, it has been contended that the rule of alternative remedy does not oust the jurisdiction of this Court under Article 226 of the Constitution of India, if it is found necessary for promotion of justice and prevention of injustice. Furthermore, the impugned orders are not only arbitrary and illegal but have been passed in utter disregard of the dictum of the Hon''ble Supreme Court and the High Court.

I have considered the submissions made by the learned counsel for the parties and gone through the record.

The Hon''ble Supreme Court in the case of Whirlpool (supra) and Harbanslal Sahnia and another v. Indian Oil Corporation Limited and others, (2003) 2 SCC 107, has held that mere availability of alternative remedy will not bar the jurisdiction of the Court. As stated above, the Rule of alternative remedy does not oust the jurisdiction of this Court under Article 226 of the Constitution of India, if it is found necessary for promotion of justice and prevention of injustice.

In Kishore Chandra Agarwal v. State of U.P. and others, (2008 (104) RD 235), on which reliance has been placed by the Counsel for the petitioner, a Division Bench of this Court has held that the Collector/District Magistrate under the provisions of the U.P. Stamp (Valuation of Property) Rules, 1997 has no jurisdiction to say that the stamp duty in respect of the agricultural land which situates in semiurban area or country side area shall be charged treating the land as commercial. The Collector while issuing the rate list under the provisions of Rules, 1997 has no authority to declare the agricultural land as residential or commercial for the purposes of realization of stamp duty as the authority to declare a particular area of the district as residential or commercial vests with the State Government while preparing the Master Plan of the City.

Admittedly, in the instant case, the Additional District Collector (Finance & Revenue), Rae bareli without changing the use of the agricultural land as provided under the relevant law has treated the land as commercial land and proceeded to levy the stamp duty thereon and, therefore,e has usurp the jurisdiction without any legal foundation. In view of the above, the contention of the Standing Counsel has no force and is accordingly rejected.

The petitioner has alleged that he has purchased the agricultural land situated at village Kandwa, pargana Bachranwa, Tehsil Maharajganj, District Rae bareli from one Vijai son of Nanhkau through a registered sale deed after paying the stamp duty on the market value fixed by the Collector, Raebareli as per Rule 5(a) of the U.P. Stamp (Valuation of Property) Rules 1997. It is said that on 23.6.2005 Sub District Magistrate, Mahrajganj inspected the site of the land purchased by the petitioner submitted his report to the Additional District Magistrate, Rae Bareli. In his report the S.D.M. has written that the type of land is �Sinchit Palo Domat� and the means of irrigation is canal as well as pump set and there is no construction over the said land. On the basis of inspection report, a stamp case No.1980 of 2005 was registered against the petitioner under Section 47A of the Indian Stamp Act, 1899.

In the case of Prakashwati v. Chief Controlling Revenue Authority, Board of Revenue; 1996 AWC 1331, the Apex Court had held that situation of a property in an area close to a decent colony not by itself would make it part thereof and should not be a factor for approach of the authority in determining the market value. According to the said decision, valuation has to be determined on constructive materials which could be made available before the authorities concerned.

In Anirudha Kumar and Ashwini Kumar v. Chief Controlling Revenue Authority, (2000 (3) AWC 2587), this Court has referred the aforesaid Prakashwati''s case (supra) and observed as under:

�In the present case, the market value is to be determined on the basis of the value that would satisfy the vendor. Thus, the question of future potential cannot be a factor for determining the market value of such a land for the purpose of stamp duty payable under the Stamp Act. The vendee pays the price that satisfies the vendor and, therefore, it is the utility of the land as on the date of transfer by the vendor and as such, if the land was an agricultural land, it has to be treated as such and the valuation has to be done accordingly. Whether in future the purchaser puts the land into residential use or changes the character is immaterial for the purpose of payment of stamp duty. The principel that has been laid down in P. Ram Reddy (supra) can be attracted for the purpose of determining the market value only to the extent of potential as on the date of transfer and not beyond. Thus, the market value has to be determined according to the factors, which includes the situation of the land, the amenities available in and around and various other factors, including the close proximity of the residential area as well as any transfer made immediately before the transfer or after the transfer in close proximity if such documents are produced in respect of the area that similarly situated land by either of the parties.�

In Shakumbari Sugar and Allied Industries Ltd. v. State of U.P. and others, (2007 (5) ADJ 602) some land was purchased through a sale deed dated 22.7.94. Since the land was agricultural in nature, the petitioner paid the stamp duty in accordance with the circle rate issued by the District Magistrate. On 13.2.1995, a notice under Section 47A read with Section 33(4) of the Stamp Act was issued to show cause, as to why the deficiency of stamp duty should not be levied. In the notice, it was alleged that the petitioner had purchased the land for industrial purposes and as such the stamp duty on the property is to be paid on the basis of market value of the land for industrial purpose. This Court placing reliance on various citations has held that the market value of the property is to be determined with reference to the date on which the document is executed.

In Rakesh Chandra Mittal & others v. Additional District Magistrate, (2004) 3 UPLBEC 2434, a Division Bench of this Court held:

�It is well settled that market value of the property has to be determined with reference to the date on which the document is executed. Market value as such keeps on varying and changing. Any subsequent improvement or change in the nature or user of the land, which may result into enhancement of the market value of the property on the date of execution of the document that is to be considered for the purpose of determination of property stamp duty payable on the instrument.�

Apart from the above decisions, recently a Full Bench of this Court in the case of Shri Ramesh Chandra Srivastava, Kanpur v. State of U.P. and others, 2007 UPTC 335 held that the market value of the property has to be determined with reference to the date on which the document is executed.

At this juncture, it would be useful to add that this Court in the case of Sarva Hitkarini Sahkari Avas Samiti Ltd. Allahabad v. State of U.P. and othes, (2007 (103) RD 19) has observed that the rules framed for determining market value under the Stamp Act and circle rates circulated under said rules are relevant only for initiation of proceedings under Section 47A of Stamp Act. However, after initiation of the case the said rule becomes irrelevant and while deciding the case, market value shall be determined on the basis of general principles for determining market value which are applicable to the land acquisition matters. Moreover, future use of the property is not decisive.

It would be relevant to add that the Collector/District Magistrate under the provisions of the U.P. Stamp (Valuation of Property) Rules, 1997 is not empowered to declare the agricultural land as ''abadi'' land or land to be used for commercial purposes for realization of stamp duty as this power vests to a different authority under Section 143 of the U.P. Zamindari Abolition and Land Reforms Act.

In the above cases, as observed by the Collector, admittedly, the land was an agricultural land and was being used for agriculture purposes and therefore, it cannot be treated to be a residential or commercial plot. The valuation cannot be determined straightway on such an assumption that the land is situated in close proximity of ''abadi'' area or on the presumption that the land is to be used for a purpose other than the agriculture. As averred above, the Full Bench of this Court has clearly held on the basis of the various provisions of the Stamp Act, that the market value is to be determined with reference to the date on which the document was executed and that any subsequent change in the nature or use of the land which may result in the enhancement of the market value of the property was not to be taken into account.

Thus, the legal position which emerges out from the aforesaid cases is that the market value of the land cannot be determined with reference to the use of the land to which buyer intends to put it. The market value is what a general buyer may offer and what the officer may reasonably expect. In determining the market value, the potential of the land as on the date of sale alone can be taken into account and not what potential it may have in the distant future. Any subsequent improvement or change in the nature or user of the land, which may result into enhancement of the market value of the property, is not to be taken into account and it is only the value of the property on the date of execution of the document that is to be considered for the purpose of determination of proper stamp duty payable on the instrument.

In addition to above legal proposition, it may be pointed out that the State Government has issued a Government Order dated 16.9.1999 to all the Divisional Commissioners, District Magistrates and Additional District Magistrates (Finance & Revenue), providing therein that while determining the valuation of the property under 1997 Rules, neither the future potential or use of the property nor the status of the purchaser (Organization, Society, Company etc.) will be taken into consideration. The relevant clause of the Government Order dated 16.9.1999 reads as under:

Having considered the submissions made by the learned Counsel for the parties and the materials placed before this Court, it appears that the authority had proceeded to determine the value on the presumption that though the land is agricultural land but it has not been purchased for the said purpose. The said presumption does not appear to be sound and reasonable.

Accordingly, the writ petition is allowed and the impugned order dated 10.8.2005 and 26.3.2005 passed by the Additional Collector (Finance & Revenue) Rae Bareli in Stamp Case No.1080 of 2005 and Case No.931/0708 are hereby quashed. Respondents shall act accordingly.

The parties shall bear their own costs.

(Petition allowed)