Case Law Details
State of Gujarat Vs T J Agro Fertilizers Pvt Ltd (Gujarat High Court)
In a pivotal case, the Gujarat High Court addressed the issue of stamp duty valuation for properties sold in public auctions, specifically in the case of State of Gujarat vs T J Agro Fertilizers Pvt Ltd. The court’s decision provides critical insights into the application of the Stamp Act, particularly concerning the determination of market value in property transactions conducted by government-appointed officials.
The case revolves around the sale of land by the Official Liquidator under the Companies Act, who acted on behalf of the Central Government. The land, initially owned by Rishabh Industries Private Limited, was auctioned following the company’s liquidation. T J Agro Fertilizers Pvt Ltd emerged as the highest bidder with an offer of Rs. 74 lakhs. However, the stamp duty authorities valued the property significantly higher, leading to a dispute.
The dispute began when the Official Liquidator sold the property to T J Agro Fertilizers Pvt Ltd for Rs. 74 lakhs. Despite this, the stamp duty authority valued the property at Rs. 5,06,97,800 and demanded a stamp duty of Rs. 24,84,193. The petitioner challenged this valuation, arguing that the property’s sale price in the public auction should be deemed its market value.
The petitioner initially succeeded in having the stamp duty authority’s decision quashed and remanded for reconsideration. However, upon revaluation, the property was still assessed at Rs. 3,30,09,800, resulting in a stamp duty of Rs. 16,17,485. This continued to be contested by the petitioner, who maintained that the auction price, confirmed by the court, should be accepted as the true market value.
The Single Judge referenced Sections 2(na) and 32A of the Stamp Act. Section 2(na) defines “market value” as the price a property would fetch in an open market. Section 32A stipulates that the market value in government-executed instruments should be deemed the true market value.
The court emphasized that since the property was sold in a public auction conducted by a government-appointed Official Liquidator, the auction price must be considered the true market value. The court upheld the petitioner’s argument that the valuation determined by the Official Liquidator should be accepted without additional surcharges.
The Gujarat High Court dismissed the state’s appeal, affirming the Single Judge’s decision. The ruling clarifies the application of the Stamp Act in scenarios involving government auctions and reinforces the principle that the auction price, when confirmed by judicial authority, reflects the true market value of the property.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. This appeal under Clause 15 of Letters Patent, arises out of oral judgement dated 17.7.2018 passed by the learned Single Judge.
2. The respondent who was the original petitioner has approached the Court with a prayer that the appellant be directed to refund the amount of excess valuation of stamp that was charged beyond Rs. 74 lacs, for which, the property was sold in auction.
3. Facts reproduced by the learned Single Judge and which are not in dispute are reproduced herein under:
3.1 That in 1990, land bearing Block Nos.41 and 42 of village Mahapur, Tal. Savli, Dist. Vadodara was purchased by one Rishabh Industries Private Limited and constructed factory shed, boundary wall security cabin etc. The said Company obtained loan from Bank of Baroda and thereafter, went into liquidation for which Official Liquidator was appointed in the year 2007. The property in question was mortgaged with Bank of Baroda. Thereafter, in company proceedings, this Court appointed Sale Committee and the said committee submitted its report stating that the offer of Rs.50 Lacs received by it be confirmed.
3.2 This Court after taking into consideration the valuation report as well as jantri rates, concluded that the value of the property would be roughly about Rs.74 Lacs. The petitioner offered Rs.74 Lacs and since its offer was found highest, sale in favour of the petitioner was confirmed and directed the Official Liquidator to execute Sale Deed.
3.3. However, the respondent No.2 vide order dated 8.2.2008 valued the property in question at Rs.5,06,97,800/- and asked the petitioner to pay stamp duty of Rs.24,84,193/-. Being aggrieved by the said order, the petitioner preferred Special Civil Application No.4430 of 2008 and the coordinate Bench of this Court vide order dated 16.4.2008 quashed the said order dated 8.2.2008 and remanded the matter for taking fresh decision.
3.4 The petitioner filed its submissions on 1.5.2008 and also remained present for personal hearing. By the impugned order dated 23.5.2008, the respondent No.2 valued the property in question at Rs.3,30,09,800/- and directed the petitioner to pay stamp duty of Rs.16,17,485/-.
4. It was the case of the petitioner before the learned Single Judge that he was the purchaser of the property for an amount of Rs.74 lacs in a public auction carried out by a Government Officer appointed under Central Government under Section 359 of Companies Act. According to the petitioner, respondent herein since the official liquidator was a representative of the Central Government, there was no reason for under valuation of property sold in an auction, for which, he had paid the price and it was not the case that the property was sold which was under value.
5. Mr. Chitan Dave, learned Asst. Government Pleader has invited our attention to affidavit-in-reply and submitted that in fact the property real value was far beyond Rs.74 lacs and he has drawn our attention to affidavit-in-reply wherein calculation was made out to show that the value of the property was of Rs.3 crores.
6. The learned Single Judge in his judgement under challenge referred to the provisions of Section 2 (na) of the Stamp Act which defines the term “Market Value” and also referred to provisions of Section 32A of the Stamp Act. The relevant definition reads as under:
“(na) “market value”, in relation to any property which is the subject matter of an instrument means the price which such property would have fetched if sold in open market on the date of execution of such instrument.
“32A :- Determination of market value of property which is the subject matter of conveyance, etc., :-
(1) Every instrument of conveyance, exchange, gift, certificate of sale, partition, partnership, settlement, power of attorney to sell immovable property when given for consideration or transfer of lease by way of assignment, presented for registration under provisions of the Registration Act, 1908 (XVI of 1908) shall be accompanied by a true copy thereof; [and the Statement in such form as may be prescribed by rules] and if an officer registering such instrument under the aforesaid Act or any person referred to in Section 33 before whom such instrument is produced or comes in the performance of his functions, has reason to believe that the consideration set forth therein does not approximate to the market value of the property which is the subject matter of such instrument as the case may be the market value of the property which is the subject matter of such instrument, has not been truly set forth therein, he [shall before] registering the instrument or, as the case may be, performing his functions in respect of such instrument, refer the instrument or true copy thereof to the Collector of such district in which either the whole or any part of the property is situated for determining the true market value of such property and the proper duty payable on the instrument under this section.]
[Provided that for the purpose of this Subsection, the consideration set forth in an instrument executed by the State Government, the Central Government, a local authority, Gujarat Housing Board, Gujarat Slum Clearance Board or Gujarat Industrial Development Corporation, shall be deemed to be the true market value of the property which is the subject matter of such instrument.]
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7. Having considered the judgement of the learned Single Judge and having read the provisions of Section 2 (na) of the Stamp Act and Section 32A, particularly, in context of the provisions, it is apparent that the provisions makes it clear that when the consideration is set forth in the instrument executed by the State Government, the Central Government, a local authority or a Housing Board etc. such valuation shall be deemed to be the true market value of the property, which is subject matter of the instrument.
8. From the proceedings of the facts on hand, it is apparent that the property in question was sold in a public auction carried out by a Official Liquidator appointed under the Companies Act and who was representative of the Central Government.
9. In view of this clear provision of the proviso to Section 32A, the true market value could have been reflected and there was no doubt that the property’s market value reflected in a public auction held by a Official Liquidator of Central Government.
10. Paragraph 9 of the judgement concluded in favour of the petitioner reads as under:
“9. In the present case, the Official Liquidator has been appointed by the Central Government in a liquidation proceedings in pursuance of an order passed by this Court and when the property was sold in open market in public auction which was confirmed by this Court, I am of the opinion that the case would fall under combined reading of Section 2 (na) and proviso under Section 32A of the Stamp Act. Hence the present petition requires consideration and hence, the same stands allowed. The impugned order dated 23.5.2008 passed by the respondent No.2 is hereby quashed and set aside. Rule is made absolute to the above extent.”
11. In view of the reasonings rendered in the judgement, we see no reasons to interfere with the oral judgement under challenge.
12. The appeal is accordingly dismissed.
13. In view of the above, Civil Application (For Stay) also stands dismissed.
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