# Smt. Vijaya Jain v. State of U.P. & Ors

- **Citation:** (2015) 3 ILRA 1183
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2015-09-01
- **Case number:** Criminal Appeal No. 282 of 2009
- **Bench:** Dr. Dhananjaya Yeshwant Chandrachud, C.J. Yashwant Varma
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/smt-vijaya-jain-v-state-of-u-p-ors-43371
- **Pages:** 14

## Headnote

(A)Constitution
of
India.
Art.-226-Writ
Jurisdiction-dismissal
on
ground
of
alternative remedy-additional demand of
stamp duty-without any material satisfaction
about deficit amount-order passed ex-parte
even recall application rejected-Learned
Single Judge dismissed petition on ground
against
order
impugned-provisions
of
statutory appeal or revision available-heldorder passed ex parte without affording
opportunity of hearing-can not be relegated
to avail alternative remedy.
Held: Para-14
In our opinion, therefore, since the
proceedings had been taken ex parte
against the appellant and in complete
violation
of
the
rudimentary
requirements of a fair hearing, her case
clearly fell in the first of the well
recognized exceptions to a party being
relegated to the alternative remedy.
(B)U.P. Stamp (Valuation of property)
Rules 1997-Rule 4 and 7-circle rate fixed
by D.M.-mere a guide line for valuationbut its potentiality should seen on date
of execution of sole deed- and not future
use-order impugned quashed remained
for fresh decision.
Held: Para-26
The market value of the property is to be
determined
with
reference
to
its
character on the date of execution of the
instrument and its potentiality as on that
date.

## Text

_Characters 0–39,834 of 47,327. This is a partial read: ask again with offset=39834 for what follows._

3 All]
 Smt. Vijaya Jain Vs. State of U.P. & Ors.
1183
Criminal Appeal No. 282 of 2009
preferred by appellant Phool Chandra are
hereby dismissed. Both these appellants
are in custody. They shall serve out their
sentence awarded by the trial court.
50. Office is directed to communicate
this order to the court concerned forthwith to
ensure compliance and also to send back the
lower court record.
--------
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 01.09.2015
BEFORE
THE HON'BLE DR. DHANANJAYA
YESHWANT CHANDRACHUD, C.J.
THE HON'BLE YASHWANT VARMA, J.
Special Appeal Defective No. 598 of 2015
Smt. Vijaya Jain
...Appellant
Versus
State of U.P. & Ors.
...Respondents
Counsel for the Appellant:
Sri Aishwarya Pratap Singh
Counsel for the Respondents:
C.S.C.
(A)Constitution
of
India.
Art.-226-Writ
Jurisdiction-dismissal
on
ground
of
alternative remedy-additional demand of
stamp duty-without any material satisfaction
about deficit amount-order passed ex-parte
even recall application rejected-Learned
Single Judge dismissed petition on ground
against
order
impugned-provisions
of
statutory appeal or revision available-heldorder passed ex parte without affording
opportunity of hearing-can not be relegated
to avail alternative remedy.
Held: Para-14
In our opinion, therefore, since the
proceedings had been taken ex parte
against the appellant and in complete
violation
of
the
rudimentary
requirements of a fair hearing, her case
clearly fell in the first of the well
recognized exceptions to a party being
relegated to the alternative remedy.
(B)U.P. Stamp (Valuation of property)
Rules 1997-Rule 4 and 7-circle rate fixed
by D.M.-mere a guide line for valuationbut its potentiality should seen on date
of execution of sole deed- and not future
use-order impugned quashed remained
for fresh decision.
Held: Para-26
The market value of the property is to be
determined
with
reference
to
its
character on the date of execution of the
instrument and its potentiality as on that
date.
(Delivered by Hon'ble Yashwant Varma, J.)
1. The original petitioner is in appeal
before us consequent to the order of the
learned Single Judge dismissing her writ
petition on 17 August 2015 holding that the
petitioner had an equally efficacious
statutory remedy of filing an appeal under
Section 56 of the Indian Stamp Act 18991.
2. The writ petition laid challenge to
an order dated 10 November 2014 passed
by the Collector and District Magistrate,
Gautambudh Nagar holding that the gift
deed executed in favor of the appellant on
17 December 2012 was liable to be
subjected to a levy of Rs.8,89,000/- as
deficit stamp duty together with penalty of
four times the deficit stamp duty amounting
to Rs.35,56,000/-. Thus a total amount of
Rs.44,45,000/- was sought to be recovered
from the appellant. Apart from the above,
the deficit amount of stamp duty was also
subjected to a levy of interest at the rate of
1.5 % per month on simple interest basis
from the date of execution of the instrument
till the date of actual recovery of the sums
1184
 INDIAN LAW REPORTS ALLAHABAD SERIES
aforementioned. Since the order of 10
November 2014 was stated to have been
made ex parte, the appellant sought recall of
the same by moving an application before
the second respondent. This application
came to be rejected on 03 August 2015 and
the original order of 10 November 2014
was maintained. It was aggrieved by the
aforesaid two orders that the appellant filed
a writ petition before this Court.
3. Before we proceed further, we
would like to highlight here that the order
of the second respondent refers to the
instrument in question as a sale deed.
However, a copy of the instrument, which
has been produced before us and which
fact was also borne out from the
representation submitted by the appellant
before the second respondent shows that it
is in fact a gift deed dated 17 December
2012 executed by the husband of the
appellant in her favour in respect of a plot
described as Khasra No. 786 area 0.7160
hectare
situate
in
village
Surajpur,
Pargana Dadri. The Collector proceeded
to pass the impugned orders holding that
the instrument had come to be taxed at
rates applicable to agricultural land
whereas in his opinion it was liable to be
taxed treating the property comprised in
the
instrument
as
residential.
He
accordingly proceeded to apply the circle
rate applicable to residential plots and
held the Appellant liable to pay the
amounts aforementioned.
4. The learned Single Judge has
proceeded to dismiss the writ petition as
noted above by holding that the appellant
has an equally efficacious statutory
remedy of filing an appeal under Section
56 of the Act. It is apposite to note here
that the remedy of an appeal stands
incorporated in Section 56 of the Act by
virtue of insertion of sub-section (1-A) in
the said provision in terms of U.P. Act
No. 38 of 2001. The amendment came
into force with effect from 20 May 2002.
The proviso to sub-section (1-A) of
Section 56 of the Act proceeds to impose
a condition to the effect that no
application for stay or recovery of any
disputed amount of stamp duty including
interest thereon or penalty shall be
entertained unless the applicant has
furnished
satisfactory
proof
of
the
payment of not less than one-third of the
disputed
amount.
This
condition,
however, does not stand engrafted in subsection (1) of Section 56 of the Act,
which confers revisional power in the
Chief Controlling Revenue Authority.
5.

The
distinction
in
the
requirements of the two provisions noted
above fell for consideration before a Full
Bench of this Court in Gaurav Aseem
Avej Vs. Chief Controlling Revenue
Authority U.P. Allahabad and others2 .
The Full Bench answered the questions
framed
for its consideration in the
following terms: -
"Conclusion:
(1) In view of the foregoing
discussions, we are of the considered
opinion that sub-section (1) of section 56
of the Indian Stamp Act, 1899 does not
stand deleted by insertion of sub-section
(1-A) in section 56 of the Act by the U.P.
Act No. 38 of 2001 and both the
provisions of revision and appeal are
available to an aggrieved person.
(2) If a revision is preferred under
sub-section (1) of section 56 of the Act
then there is no requirement of deposit of
1/3rd of the disputed amount of deficient
stamp duty including interest or penalty,
3 All]
 Smt. Vijaya Jain Vs. State of U.P. & Ors.
1185
if any while filing an application for grant
of interim relief.
(3) The proviso of sub-section (1-A)
of section 56 of the Act will apply only in
cases where an appeal is preferred under
sub-section (1-A) and its scope is
restricted to appeal only.
(4) Sub-section (1-A) of section 56
of the Act as inserted by the U.P. Act No.
38 of 2001 is constitutionally valid."
6.
We have, however, heard the
learned counsel for the parties even on the
assumption that the remedy of a revision was
available to the appellant against the orders
passed by the second respondent and
whether in the facts and circumstances of the
case, the appellant was liable to be relegated
to the alternative remedy provided for under
Section 56 of the Act.
7. The existence of an alternative
statutory remedy as has been consistently
held by the Courts is not a rule of
inflexible character nor is it an inviolable
condition. The Courts vested with the
power and jurisdiction under Article 226
of the Constitution of India have always
viewed this rule as a self imposed
restriction rather than a rule which is to be
blindly adhered to and which brooks of no
exception. Some of the well settled
exceptions to the rule of a petitioner being
relegated to an alternative remedy are
where the principles of natural justice
have been violated or where orders are
made
without
jurisdiction.
Without
burdening this judgment with precedent,
we may refer to only two causes which
travelled to the Supreme Court from
proceedings arising out of the Stamp Acts
of the respective States.
8. In Government of Andhra
Pradesh and others Vs. Smt. P. Laxmi
Devi3 while considering the validity of a
provision requiring a pre-deposit for
consideration of a revision petition
against the order of the Collector, the
Supreme Court observed as follows: -
"29. In our opinion in this situation it
is always open to a party to file a writ
petition
challenging
the
exorbitant
demand made by the registering officer
under the proviso to Section 47-A
alleging that the determination made is
arbitrary and/or based on extraneous
considerations, and in that case it is
always open to the High Court, if it is
satisfied that the allegation is correct, to
set aside such exorbitant demand under
the proviso to Section 47-A of the Stamp
Act by declaring the demand arbitrary. It
is well settled that arbitrariness violates
Articles 14 of the Constitution vide
Maneka Gandhi vs. Union of India
[(1978) 1 SCC 248]. Hence, the party is
not remediless in this situation."
9. A similar issue fell for
consideration before the Supreme Court
in Har Devi Asnani Vs. State of
Rajasthan4. Considering the judgment of
the High Court relegating the appellants
before it to the alternative remedy of
preferring a revision under the provisions
of the Stamp Act as applicable in
Rajasthan, the Supreme Court held as
follows: -
"12. We are, however, inclined to
interfere with the order dated 21.10.2009
of the learned Single Judge of the High
Court in SB Civil Writ Petition No.1244
of 2009 as well as the order dated
22.03.2010 of the Division Bench of the
High Court in D.B. Civil Appeal (Writ)
No.1261 of 2009. The learned Single
Judge of the High Court and the Division
1186
 INDIAN LAW REPORTS ALLAHABAD SERIES
Bench of the High Court have taken a
view that as the appellant has a right of
revision under Section 65 (1) of the Act,
the
writ
petition
of
the
appellant
challenging the determination of the value
of the land at Rs.2,58,44,260/- and the
demand of additional stamp duty and
registration charges and penalty totaling
to Rs.15,70,000/- could not be entertained
under Article 226 of the Constitution. The
learned Single Judge of the High Court
and the Division Bench of the High Court
have
not
considered
whether
the
determination of market value and the
demand of deficit stamp duty were
exorbitant so as to make the remedy by
way of revision requiring deposit of 50%
of the demand before the revision is
entertained ineffective. In Government of
Andhra Pradesh and others Vs. Smt. P.
Laxmi Devi (supra) this Court, while
upholding the proviso to sub-section (1)
of Section 47-A of the Indian Stamp Act
introduced
by
Andhra
Pradesh
Amendment Act 8 of 1998, observed:
... ... ....
13. In our view, therefore, the
learned
Single
Judge
should
have
examined the facts of the present case to
find out whether the determination of the
value of the property purchased by the
appellant and the demand of additional
stamp duty made by the appellant by the
Additional Collector were exorbitant so as
to call for interference under Article 226
of the Constitution."
10. The law as authoritatively laid
down by the Supreme Court in the
aforementioned two judgments clearly
establishes that a petitioner before the
High Court is not liable to be relegated to
the alternative remedy as a matter of rule.
If in the facts of a particular case it is
established that the principles of natural
justice have been violated or that the
order
has
been
rendered
without
jurisdiction or if it is disclosed to the
Court that grave injustice has been caused
to the petitioner and it is found that his
relegation to the alternative remedy would
perpetuate injustice and cause prejudice, it
is always open to this Court to exercise its
prerogative constitutional powers and to
issue an appropriate writ striking at the
offending action. This principle stands
extended in light of the abovementioned
precedents to a case where the petitioner
is foisted with an exorbitant and arbitrary
demand in which case his relegation to
the alternative remedy would not be
justified.
11. The first issue that therefore falls
for consideration is whether the case of
the appellant fell within the exceptions
referred to above and whether the facts of
the present case justified the appellant
being relegated to the alternative remedy.
12. Pursuant to the initial notice that
was issued to the appellant on 9
September 2013, she filed a detailed reply
for
consideration
of
the
second
respondent on 3 October 2013. By her
communication dated 7 July 2014, the
appellant wrote to the District Magistrate
that she had not heard back from his
office subsequent to the reply being
submitted and therefore presuming that
the notice itself had been withdrawn, she
requested the second respondent to send a
letter or copy of the order which may
have been passed confirming the above.
The appellant does not appear to have
received any reply from the office of the
second respondent nor was she made
aware
of
the
continuance
of
the
proceedings. On 9 January 2015, she
again wrote to the second respondent,
3 All]
 Smt. Vijaya Jain Vs. State of U.P. & Ors.
1187
drawing his attention to the fact that her
attempts to meet him had proved
unsuccessful and that the staff of the
collectorate was most uncooperative. She
accordingly requested to be granted an
appointment and a specific date of hearing
to be fixed so that the controversy could
be brought to a close.
13. It is apparent from the above
narration of facts that the order of 10
November 2014 had not been brought to
the notice of the appellant. The writ
petition then recites that it was only on 31
May 2015 when the Amin of the village
sought to serve upon her a recovery
certificate dated 29 May 2015, that she
was made aware of an adverse order
having been passed in the proceedings in
question. She accordingly applied for a
certified copy of the order passed on 10
November
2014
and
made
a
representation for recall of the said order
on 4 June 2015. The second respondent
did not proceed to reject the said
representation dated 4 June 2015 outright
but
curiously
enough
issued
a
communication to the Naib Tehsildar on 9
June 2015 to submit a report after
undertaking a spot inspection. The Naib
Tehsildar in turn appears to have
inspected the plot in question on 17 July
2015 and submitted a report of even date.
On 3 August 2015, the second respondent
relying on this report of 17 July 2015,
proceeded to reject the application dated 4
June 2015 for recall and maintained the
order in original passed on 10 November
2014.
14. From the above narration of
facts, it is evident that the proceedings
against the appellant were taken ex parte
and in violation of the principles of
natural
justice.
The
communications
addressed by the appellant to the second
respondent clearly establish that she was
not served with any notice nor made
aware of the proceedings which were at
that stage pending before the second
respondent. Her application for recall of
the original order was not dismissed on
the ground that the rules of natural justice
had been complied with or that she had
willfully refused to cooperate in the
disposal
of
the
proceedings.
The
application dated 4 June 2015 for recall of
the order dated 10 November 2014 came
to be rejected based upon the report of the
Naib Tehsildar dated 17 July 2015 which
in the understanding of the second
respondent
fortified
the
conclusions
which stood recorded in the original order
of 10 November 2014. In our opinion,
therefore, since the proceedings had been
taken ex parte against the appellant and in
complete violation of the rudimentary
requirements of a fair hearing, her case
clearly fell in the first of the well
recognized exceptions to a party being
relegated to the alternative remedy.
15. There is another aspect of the
matter which the learned Single Judge in
our opinion failed to bear in mind while
relegating the appellant to the alternative
remedy.
16. As was noticed by us above, the
proceedings
taken
by
the
District
Magistrate stood initiated and in fact
concluded against the appellant on the
ground that the instrument executed in her
favour on 17 December 2012 had escaped
payment of stamp duty. The gift deed
itself had been duly registered upon
payment of stamp duty of Rs.1,13,000/-
and returned to the appellant. The amount
paid as stamp duty was found to be deficit
by the second respondent and it was on
1188
 INDIAN LAW REPORTS ALLAHABAD SERIES
the above conclusion that the appellant was
held liable to pay in total a sum of
Rs.44,45,000/-. In addition to the above, the
appellant was further called upon to pay
interest on the deficit stamp duty @ 1.5 %
per month on simple interest basis from the
date of execution of the instruments till the
date of recovery of the amount mentioned
above. The demand therefore was an
increase of almost forty times the original
duty paid on the instrument. This in our
opinion was clearly an exorbitant demand
which stood raised against the appellant and
therefore fell in the category of situations
which were noticed by the Supreme Court
in P. Laxmi Devi (supra) and Har Devi
Asnani (supra). For this reason also, we are
of the opinion that the learned single Judge
clearly fell in error in relegating the
appellant to the alternative remedy of an
appeal under the Act.
17. Having arrived at the above
conclusion we proceeded to hear the
learned counsels for parties at some
length on the merits of the issues raised in
the writ petition. From the discussion that
follows we are clearly of the opinion that
the orders impugned in the writ petition
were clearly unsustainable. We proceed to
record our reasons hereinafter.
18.

Before
proceeding
further,
however, it would be relevant to note the
salient statutory provisions that would have a
bearing on the issues raised before us. The
power of the Collector to move against an
instrument on the ground of deficit stamp
duty having been paid thereon is drawn from
the provisions of Section 47-A of the Act.
The relevant extracts of Section 47-A stand
extracted below: -
"[47-A.
Under-valuation
of
the
instrument. -
(1) (a) If the market value of any
property which is the subject of any
instrument, on which duty is chargeable
on the market value of the property as set
forth in such instrument, is less than even
the minimum value in accordance with
the rules made under this Act, the
registering officer appointed under the
Registration Act, 1908, (Act no. 16 of
1908),
notwithstanding
anything
contained in the said Act, immediately
after presentation of such instrument and
before accepting it for registration and
taking any action under Section 52 of the
said Act, require the person liable to pay
stamp duty under Section 29, to pay the
deficit stamp duty as computed on the
basis of the minimum value determined in
accordance with the said rules and return
the instrument for presenting again in
accordance with Section 23 of the
Registration Act, 1908.
(b) When the deficit stamp duty
required to be paid under clause (a) is
paid in respect of any instrument and the
instrument
is
presented
again
for
registration, the Registering Officer shall
certify by endorsement thereon, that the
deficit stamp duty has been paid in
respect thereof and the name and the
residence of the person paying them and
register the same.
(c) Notwithstanding contained in any
other provisions of this Act, the deficit
stamp duty may be paid under clause (a)
in
the
form
of
impressed
stamps
containing such declaration as may be
prescribed. 3
(d) If any person does not make the
payment of deficit stamp duty after
receiving the order referred to in clause
(a) and presents the instrument again for
registration, the registering officer shall,
before registering the instrument refer the
same to the Collector, for determination
3 All]
 Smt. Vijaya Jain Vs. State of U.P. & Ors.
1189
of the market value of the property and
the proper duty payable thereon.
(2) On receipt of a 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 market value of the
property which is the subject of such
instrument and the proper duty payable
thereon.
(3) the Collector may, suo motu, or
on a reference from any Court or from the
Commissioner of Stamps or an Additional
Commissioner of Stamps or from a
Deputy Commissioner of Stamps or from
an Assistant Commissioner of Stamps or
any officer authorized by the State
Government in that behalf, within four
years from the date of registration of any
instrument on which duty is chargeable on
the market value of the property, not
already referred to him under sub- section
(1), call for an examine the instrument for
the purpose of satisfying himself as to the
correctness of the market value, of the
property which is the subject of such
instrument and the duty payable thereon,
and if, after such examination, he has
reason to believe that market value of
such property has not been truly set forth
in such instrument, he may determine the
market value of such property and the
duty payable thereon:
Provided
that,
with
the
prior
permission of the State Government, an
action under this sub-section may be
taken after a period of four years but
before a period of eight years from the
date of registration of the instrument on
which duty is chargeable on the market
value of the property.
Explanation: The payment of deficit
stamp duty by any person under any order
of registering officer under sub-section
(1) shall not prevent the Collector from
initiating proceedings on any instrument
under sub-section (3).
(4) If on enquiry under sub-section
(2) and examination under subsection (3)
the Collector finds the market value of the
property-
(i) truly set forth and the instrument
duly stamped, he shall certify by
endorsement that it is duly stamped and
return it to the person who made the
reference;
(ii) not truly set forth and the
instrument not duly stamped, he shall
require the payment of proper duty or the
amount
required
to
make
up
the
deficiency in the same together with a
penalty of an amount not exceeding four
times the amount of the proper duty or the
deficient portion thereof.
* [(4-A) The Collector shall also
require along with the deficit stamp duty
or penalty required to be paid under
clause (ii) of sub-section (4), the payment
of a simple interest at the rate of one and
half percent per mensem on the amount of
deficit stamp duty calculated from the
date of the execution of the instrument till
the date of actual payment:
Provided that the amount of interest
under the sub-section shall be recalculated
if the amount of deficit stamp duty is
varied on appeal or revision or by any
order of a competent Court or Authority.
(4-B) The amount of interest payable
under sub-section (4-A) shall be added to
the amount due and be also deemed for all
purposes to be part of the amount required
to be paid.
(4-C) Where realisation of the deficit
stamp duty remained stayed by any order
of any Court or Authority and such order
of stay is subsequently vacated, the
interest referred to in sub-section (4-A)
1190
 INDIAN LAW REPORTS ALLAHABAD SERIES
shall be payable also for any period
during which such order of stay remained
in operation.
(4-D) Any amount paid or deposited
by or recovered from, or refundable to, a
person under the provision of this Act,
shall first be adjusted towards the deficit
stamp duty or penalty outstanding against
him and the excess, if any, shall then be
adjusted towards the interest, if any, due
from him.]"
19. The State Government in
exercise of its rule making power has
framed
the
Uttar
Pradesh
Stamp
(Valuation of Property) Rules 19975.
Rule 4 of the aforementioned rules,
requires the Collector of the district to fix
the minimum value per hectare/sq. mtr of
agricultural and non agricultural land. The
minimum value which is fixed by the
Collector in exercise of powers conferred
by rule 4 is commonly known as the circle
rate. Rule 7 provides and lays down the
procedure to be followed by the Collector
where he chooses to exercise the power
conferred upon him by virtue of Section
47-A of the Act. Rule 7 reads as follows:
"7. Procedure on receipt of a
reference or when suo motu action is
proposed under Section 47-A. (1) On
receipt of a reference or where action is
proposed to be taken suo motu under
Section 47-A, the Collector shall issue
notice to parties to the instrument to show
cause within thirty days of the receipt of
such notice as to why the market value of
the property set forth in the instrument
and the duty payable thereon be not
determined by him.
(2) The Collector may admit oral or
documentary evidence, if any, produced
by the parties to the instrument and call
for and examine the original instrument to
satisfy himself as to the correctness of the
market value of the subject matter of the
instrument and for determining the duty
payable thereon.
(3) The Collector may-
(a) call for any information or record
from any public office, officer or
authority under the Government or a local
authority;
(b) examine and record the statement
of any public officer or authority
under the Government or the local
authority; and
(c) inspect the property after due
notice to parties to the instrument.
(4)
After
considering
the
representation of the parties, if any, and
examining the records and other evidence,
the Collector shall determine the market
value of the subject-matter of the
instrument and the duty payable thereon.
(5) If, as a result of such inquiry, the
market value is found to be fully and truly
set forth and the instrument duly stamped
according to such value, it shall be
returned to the person who made the
reference with a certificate to that effect.
A copy of such certificate shall also be
sent to the Registering Officer concerned.
(6) If, as a result of inquiry, the
instrument is found to be under-valued
and not duly stamped, necessary action
shall be taken in respect of it according to
relevant provisions of the Act."
20. Having extracted the relevant
statutory provisions above, the following
principles emerge therefrom. Sub-section
(1) (a) of Section 47-A of the Act
empowers the registering officer to call
upon the person who has presented an
instrument for registration to pay deficit
stamp duty. This power is exercisable by
the registering officer immediately after
presentation of an instrument and before
3 All]
 Smt. Vijaya Jain Vs. State of U.P. & Ors.
1191
accepting it for registration and taking any
action under Section 52 of the Act. This
power is liable to be exercised in a
situation where the market value of the
property as set forth in the instrument is
less than even the minimum value fixed
by the Collector in accordance with the
rules made under the Act. In distinction to
the above, the power under sub-section
(3) of Section 47-A is exercised by the
Collector either suo motu or on a
reference from any Court or from the
Commissioner of Stamps or an Additional
Commissioner
of
Stamps,
Deputy
Commissioner of Stamps, an Assistant
Commissioner of Stamps or any officer
authorized in that behalf by the State
Government.
This
power
confers
jurisdiction and authority on the Collector
to call for and examine any instrument for
the purpose of satisfying himself as to the
correctness of the market value of the
property which forms the subject matter
of the instrument and if upon such
examination, he has reason to believe that
the market value of such property has not
been truly set forth in such instrument, he
may proceed to determine the market
value of such property and the duty
payable thereon. The first distinguishing
feature of sub section (3) is that it is
available to be exercised even after the
instrument has been registered. Secondly
the Collector proceeds under sub section
(3) upon finding that the "market value"
of the property has not been truly set forth
in the instrument as distinct from the
"minimum value fixed by the Collector in
accordance with the rules made under the
Act" which is the benchmark for initiation
of action under sub section (1).
21. The manner in which the power
under sub-section (3) of Section 47-A of
the Act is to be exercised stands
encapsulated in rule 7 of the Rules. Subrule (1) thereof enjoins the Collector to
issue notice to the parties to the
instrument to show cause as to why the
market value of the property set forth in
the instrument and the duty payable
thereon be not determined by him. The
notice to show cause comes to be issued
by the Collector on receipt of a reference
or where action is proposed to be taken
suo motu, of course, upon being satisfied
that the market value of the property
comprised in the instrument has not been
truly set forth. In terms of sub-rule (2), the
Collector is empowered to call for and
examine the original instrument to satisfy
himself as to the correctness of the market
value of the subject matter of the
instrument and for determining the duty
payable
thereon.
In
terms
of
the
provisions of sub-rule (3), the Collector is
empowered to call for any information,
examine and record the statement of any
public officer, or authority and inspect the
property after due notice to the parties to
the instrument. Sub-rule (4) mandates that
after examining the record and other
evidences, the Collector shall proceed to
determine the market value of the subject
matter of the instrument and the duty
payable thereon. In terms of sub-rules (5)
and (6), if as a result of such enquiry, the
market value is found to be fully and truly
set forth in the instrument and adequate
duty paid thereon, the same is liable to be
returned to the person who made the
reference with a certificate to that effect.
If as a result of enquiry, the instrument is
found to be undervalued and not duly
stamped, further action is liable to be
taken in accordance with the relevant
provisions of the Act.
22. Admittedly the gift deed
executed on 17 December 2012 was duly
1192
 INDIAN LAW REPORTS ALLAHABAD SERIES
registered and returned to the appellant.
The instrument thereafter appears to have
been scrutinized by the Sub Registrar,
Gautambudh Nagar and the Assistant
Inspector
General
of
Registration,
Gautambudh
Nagar
who
submitted
confidential
memos
to
the
second
respondent on 4 January 2013 and 20
February 2013 respectively. It was on the
consideration of the above confidential
memos that the notice came to be issued
by the Collector, Gautam Budh Nagar on
9 September 2013. The notice called upon
the appellant to show cause why deficit
stamp duty of Rs. 8,89,000 be not
recovered from her.
23. From the provisions extracted
above, it is apparent that the Collector
proceeds under sub section (3) of Section
47-A read with rule 7 when he has reason
to believe that the market value of the
property comprised in the instrument has
not been truly set forth and that in the
opinion of the Collector, circumstances
exist warranting him to undertake the
enquiry contemplated under rule 7. What
we however find from the notice dated 09
September 2013 is that the Collector has
proceeded to record, albeit prima facie,
that the instrument in question has been
insufficiently stamped to the extent of
Rs.8,89,000/-. The notice apart from
referring to a note dated 20 May 2013,
received from the Assistant Inspector
General of Registration neither carries nor
discloses any basis upon which the
Collector came to the prima facie
conclusion that the appellant was liable to
pay Rs. 8,89,000/ as deficit stamp duty. In
our opinion a notice of this nature must
necessarily
disclose
to
the
person
concerned the basis and the reasons upon
which the Collector has come to form an
opinion that the market value of the
property has not been truly set forth. In
the absence of a disclosure of even
rudimentary details on the basis of which
the Collector came to form this opinion,
the person concerned has no inkling of the
case that he has to meet. A notice in order
to be legally valid and be in compliance
with the principles of natural justice must
necessarily disclose, though not in great
detail, the case and the basis on which
action is proposed to be taken against the
person concerned. Not only this and as is
evident from a bare reading of rule 7, at
the stage of issuance of notice, the
Collector has to proceed on the basis of
material which may tend to indicate that
the market value of the property has not
been truly and faithfully disclosed in the
instrument. The stage of computation of
market value comes only after the
provisions of sub rules (2) (3) and (4) of
rule 7 come into play. At the stage of
issuance of notices, the Collector calls
upon the person concerned to show cause
"as to why the market value of the
property.... be not determined by him".
24. In the facts of the present case,
we find that the Collector had already
prejudged the issue by recording that the
appellant had paid deficit stamp duty to
the extent of Rs.8,89,000/-. A reading of
the order passed on 10 November 2014
then shows that the Collector proceeded
to raise the demand against the appellant
proceeding on the assumption that the
property comprised in the instrument was
liable to be taxed not as an agricultural
land but as a residential plot. He
accordingly proceeded to levy the circle
rate for a residential plot to compute the
market value of the property. The order of
10 November 2014 neither refers to nor
relies upon any evidence to establish that
the property was being used for a
3 All]
 Smt. Vijaya Jain Vs. State of U.P. & Ors.
1193
residential purpose on the date of
execution of the gift deed dated 17
December 2012. It is settled law that the
market value of the property comprised in
an instrument is liable to be computed
with reference to the date on which it was
executed.
25. A Full Bench of this Court in
Shri Ramesh Chandra Srivastava, Rampur
Vs.State of U.P and others6 was called
upon to consider as to what should be the
date with reference to which the market
value of the property forming the subjectmatter of the instrument is to be
determined. Answering the above, the
Full Bench explained the position of law
in the following terms:-
"38. The above observation do
support the view which we are proposing
to take in the present case i.e. the relevant
date for the purpose of determining the
market value on which the stamp duty is
payable is the date on which the
instrument in question is executed, or in
other words when the taxable event takes
place.
xxx xxx xxx
66. In view of the above discussion
we answer the second question by holding
that the relevant date for determining the
market value of the property for being
subject-matter of the sale deed is the third
i.e. January 3, 1985 when the Court
executed the sale deed in question on
behalf of the vendors."
26. This Court on more than one
occasion has held that the market value of
the land is not liable to be determined
with reference to the use to which a buyer
intends to put it in future. The market
value of the property is to be determined
with reference to its character on the date
of execution of the instrument and its
potentiality as on that date. We may in
this connection refer to what was
observed by a learned Single Judge in
Veer Bal Singh Vs. State of U.P. And
others7: -
"11. In M/s. Maya Food and
Vanaspati Ltd. Co. V. Chief Controlling
Revenue Authority (Board of Revenue)
Allahabad, 1990 (90) RD 57, the Court
held that the market value of the land
could not be determined with reference to
the use of the land to which the buyer
intends to put in use. The Court held that
a buyer may intend to establish an
industrial undertaking thereon and that
another buyer may intend to use it for
agricultural purposes and a third person
may intend to dedicate it for charitable
purposes
and
that
these
different
intentions of individual buyers may affect
that price of each of them would be
willing to pay for the property but the
market value would not depend upon
what each individual would offer for the
property in question and that the market
value would be that which a general buyer
would
offer
and
what
the
owner
reasonably accepts for that property, the
Court held that in determining the market
value the potential of the land as on the
date of sale alone could be taken into
account in determining the market value
and that the potential value of the land
that could be put in use in future could not
to be taken into consideration.
xxx xxx xxx
14. The other limb of the argument is
that the market value of the land cannot
be determined with reference to use of the
land to which buyer intends to put it in
use, has substance. The matter in depth
has been examined by this Court in
Shakumbari Sugar and Allied Industries
1194
 INDIAN LAW REPORTS ALLAHABAD SERIES
Ltd. v. State of U. P. And others, 2007 (5)
ADJ 602. In this case, reliance has been
placed on earlier judgment in M/s. Maya
Foods and Vanaspati Ltd., Allahabad v.
Chief Controlling Revenue Authority,
1998 (4) AWC 636 wherein the following
passage has been reproduced:
"Learned Chief Controlling Revenue
Authority has observed that the land was
purchased for an industrial purpose and
the Collector is not arbitrary in deciding
the price of the land on the basis of the
proposed usage. This proposition is
legally incorrect. The market value of the
land cannot be determined with reference
to the use of the land to which buyer
intends to put it. One buyer may intend to
establish
an
industrial
undertaking
thereon, another may intend to use it for
agricultural purpose and a third person
may intend to dedicate it for charitable
purposes like leaving it open as pasture
ground or a cremation ground or a
playground. These different intentions
may affect the price that each of them
may be willing to pay for the property and
such prices have wide variations but the
market value is not what each such
individual may offer for the property. The
market value is what a general buyer may
offer and what the owner 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."
xxx xxx xxx
16. None of the authorities below
besides the report of the Sub-Registrar has
referred any other material in support of
their orders. In Ram Khelawan @ Bachha
v. State of U. P. Through Collector,
Hamirpur and another, 2005 (98) RD 511,
it has been held that the report of the
Tehsildar may be a relevant factor for
initiation
of the
proceedings
under
Section 47-A of the Act, but it cannot be
relied upon to pass an order under the
aforesaid Section. In other words, the said
report cannot form itself basis of the order
passed under Section 47-A of the Act. In
the case of Vijai Kumar v. Commissioner,
Meerut Division, Meerut, 2008 (7) ADJ
293 (para 17), the ambit and scope of
Section 47-A of the Act has been
considered with some depth. Taking into
consideration
the
Division
Bench
judgment of this Court in Kaka Singh v.
Additional
Collector
and
District
Magistrate (Finance and Revenue), 1986
ALJ 49; Kishore Chandra Agrawal v.
State of U. P. and others, 2008 (104) RD
253 and various other cases it has been
held that under Section 47-A (3) of the
Act, the burden lay upon the Collector to
prove that the market value is more than
minimum as prescribed by the Collector
under the Rules. The report of the SubRegistrar and Tehsildar itself is not
sufficient to discharge that burden"
27. The above principles of law
enunciated
in
the
aforementioned
judgments
have
been
consistently
followed by this Court.