AI Structured Summary
Not yet generated for this judgment
Judgment
B. Rajendran, J.—Both the writ appeals arise out of the orders dated 09.06.2010 made in WP Nos. 30398 and 30399 of 2008 passed by
the learned single Judge and therefore they are disposed of by this common judgment.
The facts relate to both the writ appeals are that originally, the property in dispute was owned by one Jawahar Mills Limited, hereinafter referred
to as ''Mill''. The Mill availed loan facility with Indian Overseas Bank, Salem by mortgaging the property in question. In view of the default
committed by the Mill in repayment of the loan amount, Indian Overseas Bank had initiated proceedings under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI Act) by issuing notice
u/s 13(2) and possession of the property was also taken over by the bank. Thereafter, on 29.03.2004, the bank issued a publication in newspaper
inviting tenders for sale of the property on 30.03.2005. In the tender called for by the bank, one V.S. Murugesan submitted his offer for purchase
of the property and he was declared as the highest bidder for Rs. 7,00.70,007/-. On being declared as the highest bidder, the said V.S.
Murugesan deposited 10% of the amount as earnest money deposit namely Rs. 70,07,007/-with the bank. Thereafter, the said Murugesan did not
pay the balance amount to the bank. Even as per the admission of the parties, the said V.S. Murugesan had entered into a contract for assignment
of his right to purchase the property with one B. Sivakumar on 03.10.2005, Appellant in W.A. No. 2407 of 2010. Thereafter, on 20.06.2006, the
assignee B. Sivakumar in turn entered into another agreement assigning his right to purchase the property in favour of the Appellants in W.A. No.
2708 of 2010. Thereafter, WP No. 37139 of 2005 was filed before this Court by the said V.S. Murugan seeking for a direction to deposit the
balance sum of Rs. 6,30,63,000/- together with interest at 19.5% per annum with monthly rest from 13.05.2005 till the final payment and to direct
the Indian Overseas Bank, Salem to issue sale certificate in his favour. By order dated 16.11.2006, this Court passed an order directing the Indian
Overseas Bank, Salem Branch to issue sale certificate in favour of the nominee of the said V.S. Murugan, whose tender was accepted by the
bank. Subsequently, on 18.11.2006, a sum of Rs. 9,30,00,000/- was deposited before the Indian Overseas Bank In the meantime, as against this
order dated 16.11.2006 in WP No. 37139 of 2005, an appeal was filed by the Union of the Mill in W.A. No. 50 of 2007 before the Division
Bench of this Court. Before the Division Bench of this Court, a compromise was entered into between the parties and pursuant to the same, it was
informed before this Court that the bank would issue sale certificate in favour of the purchaser or his nominees, which was also accepted by the
Division Bench of this Court as it was only a compromise. Pursuant to such compromise, on 24.12.2007, two sale certificates namely Certificate
Nos. 5 of 2007 and 2 of 2007 respectively were issued in favour of the Appellants by the bank. On the strength of the sale certificates, the
Appellants presented the sale certificates for registration before the Sub-Registrar, Suramangalam, the second Respondent in these writ appeals.
The second Respondent, returned the sale certificate presented for registration on the ground that the document does not contain stamp duty for its
face value and directed the holders of the sale certificate to pay stamp duty for the face value. Challenging the same, the Appellants herein have
filed W.P. Nos. 30398 and 30399 of 2008 before this Court by contending that since the property was purchased by them in an auction sale, they
need not pay stamp duty inasmuch as the sale certificate was issued as per the directions of this Court. Further, the second Respondent, by the
proceedings, which was impugned in the writ petitions, directed the Appellants herein to pay stamp duty at 8% on the value of the property
mentioned in the sale certificates, apart from that, it was indicated that the matter would be referred u/s 47A(1) of the Indian Stamp Act for
determination of the correct value of the property for payment of the correct stamp duty. It was also contended that the Appellants are not liable to
pay any stamp duty on the sale certificates since they have purchased the property by way of Court auction. Further, the indication made by the
second Respondent that the matter will be referred to u/s 47A (1) of the Indian Stamp Act for determination of the correct market value of the
property does not arise as there is no need or necessity to ascertain the market value of the property inasmuch as the property was purchased in
public auction. It was further contended that if at all, the second Respondent can, at the best, seek for stamp duty on the value mentioned in the
document and cannot refer the matter u/s 47A (1) of the Act.
The learned single Judge held that the present Appellants are not the auction purchasers or persons who have been allotted any property in the
auction, whereas, they have purchased the property from the original auction purchaser, therefore, it amounts to a sale. Under those circumstances,
the correct market value of the property has to be determined by the second Respondent and the impugned proceedings of the second
Respondent are valid. Aggrieved by the orders passed by the learned single Judge, the present writ appeals are filed.
Mr. Alagirisamy, learned senior counsel appearing for the Appellants would only argue on one point namely even though the Appellants are
liable to pay stamp duty on the basis of the value shown in the document, which is styled as sale certificates, for registration, the Respondents have
no legal right to refer the matter u/s 47 (A) of the Indian Stamp Act for determination of the alleged correct value of the property as there is no
under valuation of the property. The property was purchased by the nominee of the Appellants in the auction purchase and such nomination has
also been considered by this Court. Therefore, the sale certificates were issued in the name of the nominee namely the Appellants, as per the
directions of this Court. The sale is nothing but a sale in favour of the original auction purchaser in the name of his nominees and once it is a Court
auction sale, the Respondents are stopped from making any reference to refer the matter u/s 47 (A) of the Indian Stamp Act for determination of
alleged correct value of the property inasmuch as there is no suppression of the correct market value or undervaluation.
The learned Government Advocate appearing for the Respondents would contend that the impugned order is very clear that the sale certificates
cannot be treated as sale certificates executed either by the Debts Recovery Tribunal or by any other Civil Court. Whereas, it is only a sale of the
property made by an auction by the Indian Overseas Bank and that too by way of tender. Further, the auction purchaser was not the person who
actually wants to get the document registered, whereas, the third parties, who have obtained the right assigned in their favour from the auction
purchaser, have come forward to register the sale certificates in their favour, that too after two years from the date of alleged sale. Therefore, the
sale certificates can be treated only as a sale and in that event, not only stamp duty is payable by the Appellants, but the matter has to be referred
by the registering authorities u/s 47A of the Indian Stamp Act for determination of the correct market value of the property. The guideline value
prevailing during the year 2007 has to be taken into account as the sale certificates were sought to be registered only in the year 2007, whereas the
auction purchase cum tender took place during the year 2005. Therefore, as rightly pointed out by the second Respondent, the sale certificates can
be entertained for registration only on the basis of the guideline value prevailing at that relevant point of time when it was presented for registration.
The learned Government Advocate also submitted that the second Respondent had got powers u/s 47A of the Indian Stamp Act to refer the
matter for determination of the correct market value of the property when he had reasons to believe that the market value of the property has not
been truly set out in the sale certificates presented for registration.
We have heard the counsel for both sides and perused the materials placed on record. At the outset, it is pertinent to point out the dates and
events, which are relevant for disposal of the appeals. For non-payment of amount due by the borrower, the Bank issued the notice a u/s 13(2).
Subsequently, the notice u/s 13(4) of the Act was issued by the bank on 29.03.2004 inviting tenders for sale of the property on 30.03.2005. In the
auction convened by the bank, one V.S. Murugan had submitted his offer to purchase the property and he was declared as highest bidder on
30.03.2005 for a bid of Rs. 7,00,70,007/-. At this juncture, it has to be pointed out that the sale was originally brought by Indian Overseas Bank,
Salem Main Branch and not by the Debts Recovery Tribunal or any other Court or Forum. The Bank has also invited tenders from the public and
it is a public auction. This Court is not informed as to how many persons have participated in the tender. The fact remains that one V.S. Murugan
was declared as the highest bidder in the auction and he offered Rs. 7,00,70,007/- for purchasing the entire property in auction.
It is seen from the records that on 03.10.2005 i.e., after seven months from the date of auction or date of declaration of V.S. Murugan as the
highest bidder in the auction on 30.03.2005, the said V.S. Murugan had admittedly entered into a contract for assignment of his rights to purchase
the property with V. Sivakumar, Appellant in W.A. No. 2407 of 2010. The said V. Sivakumar in turn entered into an agreement on 20.06.2006
to assign his right to purchase the property in favour of the Appellants in W.A. No. 2408 of 2010. When we consider these two dates, it is clear
that after the said V.S. Murugan was declared as the highest bidder by the bank, but conveniently, he had gone out scouting for prospective
purchasers to buy the property from him till such time he entered into an agreement on 03.10.2005 with the Appellant in W.A. No. 2407 of 2010.
As mentioned above, after seven months from the date on which V.S. Murugan was declared as the highest bidder, he entered into an agreement
assigning his rights in favour of Sivakumar, which can be construed as a purely private agreement for purchase of the property. Subsequently, after
eight months the date namely 03.10.2005, on which date V. Sivakumar was assigned with the right to purchase the property, who himself was a
nominee or representative or assignor by the original tendered, he entered into an agreement dated 20.06.2006 to assign his right in favour of the
Appellants in WA No. 2408 of 2006. After all these things, literally, the property right was passed on from one hand to another. Thereafter,
conveniently, the said V.S. Murugan had filed WP No. 37139 of 2005 before this Court seeking to call for the records relating to the letter dated
23.8.2005 of the second Respondent and quash the same and consequently forbear the Respondents from issuing fresh tender cum auction
notification in respect of their secured assets which were taken symbolic possession from the Mill and consequently confirm the bid in favour of the
Petitioner pursuant to tender notification dated 29.3.2005. In this writ petition, on 16.11.2006, an order was passed by this Court directing the
Petitioners namely the original successful tendered to deposit the balance sum of Rs. 6,30,63,000/- together with interest at the rate of 19.5% with
monthly rest from 13.05.2005 till the final payment and directed the bank to issue sale certificates. Thereafter only, the Appellants, along with the
original tendered, deposited the balance sum of Rs. 8,59,92,933/- on 18.11.2006 and of course, exclusive of the security deposit, the total amount
deposited was Rs. 9,30,00,000/-. Therefore, it is clear that the total amount deposited towards this transaction by the Appellants was Rs.
9,30,00,000/- and not Rs. 7,00,70,007/- with the bank. The total consideration, which the bank had received was Rs. 9,30,00,000/- which is
including interest, as directed by this Court and not the tender amount. Thereafter, the mill and other two unions filed W.A. No. 50 of 2007 as
against the order passed in WP No. 37139 of 2005 dated 16.11.2006. In that writ appeal, the Appellants herein namely Sengoda Gounder and
Jegadeesan were impleaded as fifth and sixth Respondent in MP No. 2 of 2007 dated 10.08.2007. During the pendency of the appeal, a joint
compromise memo was filed by the parties to the appeal. The first Respondent in the appeal namely Murugan had handed over Rs. 3,93,18,505/-
towards the dues of the workmen, which are extracted in the judgment as mentioned below:
Sl. No.
Demand Draft No.
Date
Name of the Bank
Amount
1
12986
6/12/07
Karur Vysya Bank Limited
Rs. 1,94,46,100/
2
12987
6/12/07
Karur Vysya Bank Limited
Rs. 55,53,900/-
3
65349
8/12/07
Axis Bank Limited
Rs. 1,43,18,505/-
This Court, after the compromise memo was filed by the parties, passed an order dated 10.12.2007 in W.A. No. 50 of 2007 as follows:
In view of the above, the interim order passed on 10.01.2007 stands vacated. Respondents 2 and 3 are at liberty to issue the sale certificates to
the auction purchaser or his nominee/s.
This writ appeal is ordered in terms of the Joint Compromise Memo filed by the parties. No costs. Consequently, connected miscellaneous
petitions are closed.
It is clear from the order passed by the Division Bench of this Court that only due to a compromise memo signed and filed by the parties to the
writ appeal, the appeal was disposed of. Such a compromise memo was entered into between the parties because if the amount was not paid or
settled to the Mill, the sale certificate could not be executed by the bank in favour of either the auction tendered or his nominees. Therefore, the
order passed by the Division Bench cannot be construed that pursuant to the directions given by this Court, the right of the auction purchaser was
recognised. On a compromise arrived at between the parties, this Court recorded it and only based on the compromise arrived at between the
original tendered along with the subsequent nominees, assignees or purchasers, who have agreed to pay the bank, the original tender value of Rs.
7,00,70,007/- with interest at the rate of 19.5% per annum with monthly rest from 13.05.2005 till the final payment was made. The amount was
paid with the bank on 18.11.2006 totaling Rs. 9,30,00,000/- and thereafter, in the appeal, they have also paid a further sum of Rs. 3,96,18,505/-
thus totaling the present Appellant, who stepped into the shoes of the auction purchaser or tendered, have totally paid Rs. 13,26,18,505/- in
respect of the properties covered under both the sale certificates together. But now, conveniently, the Appellants would contend before this Court
that the sale was only an auction sale or a public sale or a public auction and there is no apprehension regarding the suppression of the stamp duty
and therefore, the matter need not be referred to u/s 47A of the Indian Stamp Act. Meticulously, the Appellants also say that they are ready to pay
the stamp duty on the basis of the value mentioned in the sale certificate, which are only to the tune of Rs. 7,00,70,007/- in sale certificates, which
cannot be accepted.
In the application filed before the second Respondent, the Appellant in W.A. No. 2408 of 2010 had stated that the Sub-Registrar collected
Rs. 4,59,445/- only towards registration fee, which is including Rs. 100 towards registration charges, thereby making the value of the document at
Rs. 4,59,44,156/-. Even though the highest bid amount in the auction was for Rs. 7,00,07,007/-, in the sale certificate, the value mentioned
including interest was Rs. 9,30,00,000/- as per the order of this Court.
As far as the sale certificates, the value of the document, as stated by the Appellants shows Rs. 2,29,29,993/-. When we read the sale
certificates, the wording used was ""out of which a sum of Rs. 4,59,44,156/- was paid by the nominees of the purchasers"" as against the total sum
of Rs. 9.30 crores as ordered by this Court in WP No. 37139 of 2005, on 16.11.2006, out of which a sum of Rs. 29,69,776/- was paid by the
nominee purchaser and this was shown to be the value of the sale certificate. Now, the Appellants want registration to be done at this value.
Whereas, in the sale certificates the value shown was Rs. 4,69,54,136/-. When we add these two values namely Rs. 4,59,44,156 and Rs.
29,69,776/-, it would come to Rs. 4,89,13,932/- only. Whereas, even according to the actual tender, the sale was Rs. 7,07,70,007/- thereby as
per the court direction, the interest paid at the rate of Rs. 22,90,0993/- adding the total to Rs. 9.30 crores. Whereas, now, the Appellants carefully
say that they are not going to pay stamp duty or ready to pay the stamp duty at 8% on Rs. 4,89,13,932/-, whereas, the total amount paid by them,
including all the amount paid in the appeal would Rs. 13,23,18,505/-.
As per the dates and events submitted by the Appellant themselves, the original tendered had conveniently sought help from the other people
namely the Appellants herein. The right of assignment was exchanged between the Appellants. Ultimately, when the Mill demanded repayment of
certain amount due to their employees before the Division Bench of this Court in the W.A. No. 50 of 2007, a compromise was entered into with
the workers of the mill. These developments takes place, particularly after filing of W.P. No. 37139 of 2005 only when the bank itself cancelled
the tender notification. Therefore, can this sale be called as a one of public auction and transparent one? This Court is not appraised of the fact as
to how the transaction took place between Sivakumar and V.S. Murugan and thereafter between V. Sivakumar and the Appellants namely
Sengoda Gounder and another. What was the amount transacted between them is not known to this Court, but definitely, it will not be less than
Rs. 13 crores ultimately paid. Even as per the calculations worked out above, it will be Rs. 13,23,18,505/-. But unfortunately, the sale certificates
mentions only Rs. 9,30,00,000/- for which alone, the Appellants valued the property. Conveniently, the Appellants also paid 1% of registration
charges namely Rs. 4,59,445/- and it is not known as to how this amount was arrived at. Therefore, the learned single Judge has correctly pointed
out in para No. 9 of the order that V.S. Murugan, though has taken part in the auction, cannot be called as an auction purchaser as he had entered
into various agreement with different parties and they in turn entered into different agreements with third parties to get the sale certificates in the
name of alleged nominees. Therefore, definitely, this is not a case where the property can be treated as purchased in public auction.
In this connection, the learned senior counsel for the Appellant relied on the decision reported in V.N. Devadoss Vs. Chief Revenue Control
Officer-cum-Ins. and Others, for the proposition that for the purpose of sending the instrument for determination of the market value u/s 47A of the
Indian Stamp Act, there must be a reason to believe that the market value of the property has not been truly set out in the instrument and 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 bona fides of the parties to the document by attempting fraudulently to undervalue the subject of conveyance with a view to evade payment
of proper stamp duty and thereby cause loss to the Government.
This decision will not be of any help to the Appellants. In this case, the original tender itself was called on 30.03.2005, the auction was
confirmed, but till 2006, the bid amount was not paid. Even in the year 2006, the amount paid was not the original auction amount of Rs.
7,00,70,007/-but an enhancement amount paid by way of adding interest, amounting to Rs. 9,30,00,000/-. Thereafter also, the sale certificates
were not presented for registration as the sale certificates were not issued by the bank. The sale certificates were issued after a compromise
entered into between the Appellants and the workers of the Mill by making a payment of Rs. 3,93,18,505/- to the workers of the Mill and only
thereafter, the sale certificates were issued by the bank. The bank issued sale certificates not as per the directions of this Court, but by way of
compromise entered into between the parties. As already stated, the auction was not conducted by the Debts Recovery Tribunal or civil Court and
the sale certificate was issued pursuant to the compromise entered into between the parties. Subsequently, when the sale certificates were sought
to be registered in the year 2007, necessarily, the guideline value prevailing during the year 2007 has to be taken note of by the registering authority
for the purpose of determination of the market value.
The Honourable Supreme Court held that In a suit for specific performance, after the dispute was ultimately decided by the Supreme Court,
which took long time, when the sale deed was presented before the registering authority, the registering authority would insist on payment of the
stamp duty as per the prevailing guide line value on the date of the presentation of the instrument for registration. The Honourable Supreme Court
has also held that the stamp duty has to be paid as per the prevailing guideline value as on the date of registration even though the agreement to
convey the property entered long back. By applying that theory in this case, necessarily, the holder of the sale certificates have to pay the stamp
duty as per the guide line value prevailing as on the date of presentation of the sale certificates. The valuation of the property on the date of auction
is totally different when compared to the value of the property on the date of presentation of the sale certificates for registration, especially, in this
case, as per the dates and events mentioned above, thse delay was only on the part of the purchasers and therefore, they are liable to pay the
stamp duty as on the date of registration of the instrument. Consequently, the registering authorities are empowered to refer the matter u/s 47A of
the Indian Stamp Act for determination of the correct value of the property apart from collecting the actual stamp duty at Rs. 9.30 crores being the
total value of the property as stated in the sale certificates and the corresponding registration charges. Therefore, we hold that the Appellants are
liable to pay stamp duty on the actual value of the property apart from registration charges and the registering authority is empowered to refer the
matter u/s 47A of the Indian Stamp Act for determination of the correct value of the property. Consequently, we find no reason to interfere with
the reasoned order of the learned single Judge.
Under those circumstances, we do not find any illegality or infirmity in the orders impugned in these writ appeals. The writ appeals are
therefore dismissed. No costs.