Supreme Court of India· 03 January 2025

Under the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968, can the Collector pass a final order determining market value without first passing a provisional order?

CHIEF REVENUE CONTROLLING OFFICER-CUM-THE-INSPECTOR GENERAL OF REGISTRATION & ORS v. P. BABU

Coram: J.B. Pardiwala; R. Mahadevan

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Answer

No. Under Rule 4(4) the Collector shall pass an order in writing provisionally determining the market value of the properties and the duty payable, and the basis on which the provisional market value was arrived at shall be clearly indicated in the order. Under Rule 6 that order must be communicated to the parties in Form II, and they must then be given an opportunity to submit their representation before the Collector proceeds to pass the final order under Rule 7. Directly issuing the final order is in violation of Rules 4 and 6.

Headnote

Indian Stamp Act, 1899 — s.47-A — Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 — rr.3, 4, 6 and 7 — "Reason to believe" — Roving enquiry — Form I and Form II — Provisional order — Indian Stamp Act, 1899 — s.47-A — "Reason to believe" — Objective satisfaction — Held: The expression "reason to believe" is not synonymous with the subjective satisfaction of the officer; the belief must be held in good faith and cannot be merely a pretence. It is open to the Court to examine whether the reasons for the belief have a rational connection or a relevant bearing to its formation. (¶21) Indian Stamp Act, 1899 — s.47-A(1) — Reference to the Collector — Recording of prima facie reason — Held further: A Registering Officer may not undertake a roving enquiry to ascertain the correct market value, but is obliged to assign some reason for concluding that an instrument is undervalued. A document referred straightway without recording any prima facie reason vitiates the entire enquiry and the ultimate decision. (¶27) Rules, 1968 — rr.4(4), 6 and 7 — Provisional order and Form II — Final order — Held further: The Collector must pass a written order provisionally determining the market value, clearly indicating the basis on which it was arrived at, communicate it in Form II and receive representations before passing the final order. Passing the final order directly is in violation of Rules 4 and 6. Appeals dismissed. (¶30, 31)

In the Court's own words

Paragraph 29It appears from the aforesaid that the second respondent i.e. the Special Deputy Collector (Stamps) failed to pass any provisional order as contemplated in Rule 4(4) of the Rules 1968. Rule 4(4) of the Rules 1968 reads as follows:-

Paragraph 30As per Rule 6 of the Rules 1968, after passing the provisional order, it is obligatory on the part of the Collector to communicate the market value of the property and the duty payable by the parties concerned in Form II. On receipt of the Form II as contemplated under Rule 7 of the Rules 1968, the Collector shall have to pass the final order. It appears that in the case on hand, without following the Rules 4 and 6 respectively, the Collector (Stamps) directly passed the final order under Rule 7 of the Rules 1968.

Paragraph 31The scheme of the Stamp Act and the relevant rules makes it abundantly clear that the Collector is obligated to communicate the provisional order to the parties concerned in respect of fixation of the correct value of the property and also the duty payable in Form II. In the case on hand, Form II was issued. To that extent, there is no dispute. However, after the issue of Form II, the parties concerned have to be given an opportunity to submit their representation in respect of determining the market value of the subject property. Thereafter, as contemplated in Rule 7 of the Rules 1968, the Collector, after considering the representation if received in writing and the submissions that might have been urged at the time of hearing or even in the absence of any representation from the parties concerned, proceed to pass the final order. It appears from the material on record that in the case on hand, the Collector (Stamps) directly issued the final order without complying with sub-rules (2), (3) and (4) respectively of Rule 4 and also without following Rule 6 of the Rules 1968. This could be said to be in violation of the Rules 4 and 6 respectively of the Rules 1968.

Acts & Sections

s.47-A Indian Stamp Act, 1899s.47-A(1) Indian Stamp Act, 1899s.17 Indian Stamp Act, 1899r.4(4) Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968r.6 Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968r.7 Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968r.3 Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968

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Also decided in this judgment

Whether the expression "reason to believe" in Section 47-A of the Indian Stamp Act, 1899 reflects the subjective satisfaction of the authorities concerned or the objective determination of the market value of the property?Must a Registering Officer record reasons before referring an instrument to the Collector as undervalued under the Indian Stamp Act, 1899?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Supreme Court of India. Corrections