Supreme Court of India
CHIEF REVENUE CONTROLLING OFFICER CUM INSPECTOR GENERAL OF REGISTRATION, & ORS.versusP. BABU
- Citation
- 2025 INSC 44
- Decided
- 2 January 2025
- Disposal
- Dismissed
Holding
A reference to the Collector under Section 47‑A is valid only when the Registering Officer has an objective material basis and records the reasons for believing the instrument is undervalued, and the Collector must follow the statutory procedure, including giving notice and hearing; failure to do so renders the valuation order void.
Summary
The petitioners, revenue officers, challenged the High Court's order that set aside the valuation of two sale deeds which the Joint Sub-Registrar had deemed undervalued and referred to the Special Deputy Collector under Section 47‑A of the Indian Stamp Act, 1899. The Registering Officer issued Form I notices fixing inflated market values but did not record any reasons for concluding that the deeds were undervalued, and the Collector passed a final order without complying with Rules 4 and 6 of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968. The High Court held the proceedings illegal for lack of reasons and procedural violations, and the petitioners appealed to the Supreme Court. The Supreme Court affirmed that "reason to believe" requires an objective material basis and that the Registering Officer must state the basis for undervaluation before referring the matter, while the Collector must follow the prescribed enquiry, give notice, and allow a hearing. Because these procedural safeguards were ignored, the valuation orders were void, and the appeals were dismissed.
Issues considered
- The meaning and scope of the expression 'reason to believe' under Section 47‑A of the Stamp Act.
- Whether the Registering Officer is required to record specific reasons for deeming a document undervalued in the Form I notice.
- Whether the Collector must adhere to the procedural requirements of Rules 4 and 6 of the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 before fixing market value and stamp duty.
- Whether the absence of recorded reasons and denial of a hearing vitiates the entire enquiry and the final valuation order.
Legislation cited
- Indian Stamp Act, 1899s. 17, s. 47-A
- Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968s. Rule 3, s. Rule 4, s. Rule 6, s. Rule 7
Subjects
Stamp valuationMarket value of the propertyJoint Sub-RegistrarSpecial Deputy Collector (Stamps)Registering OfficerRegistering AuthorityChief Revenue Controlling Officer-cum-Inspector General of RegistrationSale considerationSale deedsMechanical actPurchaserForm I noticesForm IIEnquiryPre‑conditionAdditional stamp dutyProvisional orderDuty payableFinal orderNotice of hearing'reason to believe'Subjective satisfactionObjective determination
Judgment
[2025] 1 S.C.R. 576 : 2025 INSC 44
Chief Revenue Controlling Officer Cum
Inspector General of Registration, & Ors.
v.
P. Babu
(Civil Appeal No(s). 75-76 of 2025)
03 January 2025
[J.B. Pardiwala and R. Mahadevan, JJ.]
Issue for Consideration
Matter referred by Joint Sub-Registrar to the Special Deputy
Collector (Stamps) for determining the correct market value of the
property. When both the authorities viz., the Registering Authority
and the Collector are vested with the discretion to decide the
market value of the property, by the expression ‘reason to believe’,
then whether it reflects the subjective satisfaction of the authorities
concerned or it reflects the objective determination of the market
value of the property; what is meant by ‘reason to believe’; when
the Registering Officer holds that the sale consideration in the
sale deed is not correct and the sale is undervalued, whether
it is obligatory for the Registering Authority to assign reason for
arriving at such conclusion before referring the sale deed to the
Collector; High Court whether justified in setting aside the order
of the authorities below w.r.t the stamp valuation.
Headnotes†
Stamp Act, 1899 – 47-A – Instruments of conveyance
etc., undervalued how to be dealt with Tamil Nadu Stamp
(Prevention of Undervaluation of Instruments) Rules, 1968 –
rr.3, 4, 6, 7 – Reference made by the Registering Authority
under Section 47A for determination of the market value of the
property in question without following the procedure – Market
value enhanced, additional stamp duty demanded – High
Court allowed the appeals filed by the respondent-purchaser
and set aside the orders passed by the authorities below –
Correctness:
Held: Impugned order is correct – The Registering Officer, after
registration of the document, can refer the same for adjudication
before the Collector, if he has reason to believe that there was
[2025] 1 S.C.R. 577
Chief Revenue Controlling Officer Cum Inspector General
of Registration, & Ors. v. P. Babu
deliberate undervaluation of the property – Such a reference is
not a mechanical act, but the Registering Officer should have
a basis for coming to prima facie finding of undervaluation of
the property – Enquiry by the Registering Authority is a pre-
condition for making reference to the Collector for determination
of market value of the property – The determination of market
value without Notice of hearing to parties is liable to be set
aside – The expression ‘reason to believe’ is not synonymous
with subjective satisfaction of the officer – The belief must be
held in good faith, it cannot be merely a pretence – It is open to
the Court to examine the question whether the reasons for the
belief must have a rational connection or a relevant bearing to
the formation of the belief and are not irrelevant or extraneous to
the purpose of the section – The word ‘reason to believe’ means
some material on the basis of which the department can re-open
the proceedings – However, satisfaction is necessary in terms of
material available on record, which should be based on objective
satisfaction arrived at reasonably – Registering Officer cannot
undertake a roving enquiry for ascertaining the correct market
value of the property – If the Registering Officer is bona fide of
the view that the sale consideration shown in the sale deed is
not correct and the sale is undervalued, then it is obligatory on
the part of the Registering Authority as also the Special Deputy
Collector (Stamps) to assign some reason for arriving at such a
conclusion – If the document in question is straightway referred to
the Collector without recording any prima facie reason, the same
would vitiate the entire enquiry and the ultimate decision – In
the present case, the Form I notices prescribed under the Rules
did not contain any reason – Also, the Collector (Stamps) in his
order failed to indicate the basis on which the sale consideration
shown in the two sale deeds was undervalued – Furthermore,
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 – Form II was
issued however, after the issue of Form II, the parties 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 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
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any representation from the parties concerned, proceed to pass
the final order – However, 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 – Appeals
dismissed. [Paras 18-21, 27, 31, 32, 34]
Words and Phrases – ‘reason to believe’ – Meaning – Discussed.
Case Law Cited
Mohali Club, Mohali v. State of Punjab, AIR 2011 P&H 23;
G. Karmegnam v. The Joint Sub-Registrar, Madurai, 2007 (5) CTC
737 – referred to.
Dawsons Ltd. v. Bonnin, 1922 (2) AC 413 – referred to.
List of Acts
Stamp Act, 1899; Tamil Nadu Stamp (Prevention of Undervaluation
of Instruments) Rules, 1968.
List of Keywords
Stamp valuation; Market value of the property; Joint Sub-
Registrar; Special Deputy Collector (Stamps); Registering Officer;
Registering Authority; Chief Revenue Controlling Officer-cum-the
Inspector General of Registration; Sale consideration; Sale deeds;
Mechanical act; Purchaser; Sale undervalued; Form I notices; Form
II; Enquiry; Pre-condition; Market value enhanced; Additional stamp
duty; Provisional order; Duty payable; Final order; determination
of market value; Notice of hearing; ‘reason to believe’; Subjective
satisfaction of the authorities; Objective determination.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 75-76 of 2025
From the Judgment and Order dated 02.09.2015 of the High Court
of Judicature at Madras in CMA No. 973 of 2010 and CMA No. 2534
of 2012
Appearances for Parties
Sabarish Subramanian, Vishnu Unnikrishnan, Danish Saifi,
Advs. for the Appellants.
Ms. Rohini Musa, Adv. for the Respondent.
[2025] 1 S.C.R. 579
Chief Revenue Controlling Officer Cum Inspector General
of Registration, & Ors. v. P. Babu
Judgment / Order of the Supreme Court
Order
1. Leave granted.
2. These appeals are at the instance of the Chief Revenue Controlling
Officer-cum-the-Inspector General of Registration and two other
Revenue Officers, seeking to challenge the judgment and order
passed by the High Court of Judicature at Madras dated 2-9-2015 in
CMA Nos.973/2010 & 2534/2012 respectively by which the High Court
allowed the civil miscellaneous appeals filed by the respondent –
herein under Section 47-A(10) of the Indian Stamp Act, 1899 (for
short, “the Stamp Act”) and thereby quashed and set aside the order
passed by the Chief Revenue Controlling Officer-cum-the-Inspector
General of Registration with respect to the stamp valuation.
3. The subject matter of this litigation is the valuation shown in the
two Sale Deeds registered as DOC No.487/02 dated 5-9-2002 and
488/02 dated 2-9-2002 respectively.
4. The respondent – herein is the purchaser. He got the two sale deeds
executed through the original owner of the property in question. The
market value of the entire property covered in both the sale deeds
is Rs.1,20,000/- and Rs.1,30,000/- respectively. It appears that the
Joint Sub-Registrar, Tindivanam on receipt of the two registered sale
deeds declined to release the documents on the premise that the
sale consideration shown in the two sale deeds was under-valued.
5. The matter was accordingly referred by the Joint Sub-Registrar to
the Special Deputy Collector (Stamps) under Section 47-(A)(10) of
the Act for the purpose of determining the correct market value of
the property. It also issued notice in Form-I fixing the value of the
properties in DOC No.487/2002 at Rs.45,66,660/- and property in
DOC No.488/2002 at Rs.12,94,900/- respectively.
6. The Special Deputy Collector (Stamps) on conclusion of the
inquiry fixed the market value of the property covered under DOC
No.488/2002 at Rs.10,36,937/- and the property covered under DOC
No.487/2002 at Rs.51,16,600/-.
7. The respondent – herein being dissatisfied with the order passed by
the Special Deputy Collector (Stamps) preferred a statutory appeal
580 [2025] 1 S.C.R.
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before the Inspector General of Registration. The appeal came to
be dismissed.
8. In such circumstances, referred to above, the respondent – herein
went before the High Court by filing Civil Miscellaneous Appeals
under Section 47(A)(10) of the Stamp Act.
9. The High Court allowed both the appeals and thereby quashed and
set aside the orders passed by the authorities below.
10. The appellants feeling dissatisfied with the impugned judgment and
order passed by the High Court have come up before this Court with
the present appeals.
11. We have heard Mr. Sabarish Subramanian, the learned counsel
appearing for the appellants and Ms. Rohini Musa, the learned
counsel appearing for the respondent.
12. We take notice of the fact that the High Court while allowing the Civil
Miscellaneous Appeals has observed in paras 20 and 21 respectively
as under:-
“20. That being the legal position, if the contention raised
on the side of the learned counsel appearing for the
Appellant is appreciated in the legal proposition, as above
laid down by the Supreme Court, Full Bench, Division
Bench and Single Judges of our High Court, it would
compel this court to hold that the proceedings referring
the documents for determination of the market value,
without recording any reason to say that the document
is undervalued, thus without performing the statutory
obligation, cast upon the third Respondent Registering
Officer, to record such reasons to arrive at a decision
that the documents are undervalued and the same are
required to be referred to the authority concerned to
determine the actual market value of the property is
contrary to the procedure laid down under law and is ex
facie, illegal. Furthermore, no material is made available
to show that the third Respondent/ Registering Officer, on
the basis of such material, arrived at the conclusion that
the true value is not set forth in the documents. In the
absence of one such material, the proceedings initiated
under Sec.47A is legally unsustainable, as such, the
[2025] 1 S.C.R. 581
Chief Revenue Controlling Officer Cum Inspector General
of Registration, & Ors. v. P. Babu
proceedings initiated for determination of the market value
and the out come of such proceedings, fixing the value of
the property covered under Doc Nos.487 and 488/2002
at Rs.498/- per sq.ft. and Rs.95/- per sq.ft respectively
and demanding additional stamp duty, on the basis of
such exorbitant value fixed, is hence arbitrary bad in law
and null and void.
21. In this case, the documents were registered on
05.09.2002, and 02.09.2002, whereas Form-I notice
was issued on 25.09.2002 and 12.09.2002 respectively.
However, Form-I notices did not reflect the reasons, for
which, the value mentioned in the documents was treated
as undervalued and the material based on which the value
mentioned in the documents was enhanced. Further, the
orders of the second Respondent Special Deputy Collector
(Stamps) dated 12.10.2004 did indicate the basis on which
the value mentioned in the documents in question was
enhanced. The reading of the same would reveal that his
valuation was ‘based on spot inspection and local enquiry.
But what was the manner of local enquiry and what was
the material collected in the course of such local enquiry
to arrive at higher valuation at Rs.400/- per sq.ft and 76/-
sq.ft. for the property covered in both the documents, and
made available before this court. It is stated in the orders
passed in respect of both the documents that the property
at Sakkarapuram was situated at 150 feet from Chengi Bus
stand and was on the north of the street leading to MP
Nagar. When the property covered in both the documents
is stated to be situated in the same village more or less
adjacently, how the value was fixed at Rs.40/- per sq.ft.
for one property and Rs. 76 /- per sq.ft. for other property
is remained unexplained in the orders passed by the
second Respondent. Further, the Appellant was not given
any notice either for spot inspection or for local enquiry
as contemplated under the relevant rules and their failure
to do so is contrary to the procedure laid down under law
and is in violation of the principles of natural justice.”
13. The High Court concluded by observing the following in para 23
which reads thus:-
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“23. Thus, the discussion held above would only reveal
that the determination of the market value of the property
in question is in pursuance of the reference made by the
third Respondent Registering Authority under Section 47A
of the Stamp Act, without following the procedure laid
down under the Act and without performing the statutory
obligation cast upon the third Respondent and the
impugned orders of the Respondents 1 and 2, in enhancing
the market value and demanding the additional stamp
duty, based enhancement, are without any basis and
based on irrelevant consideration and assumption and
presumption and without application of mind. Further, as
onus to prove that the instrument was undervalued, is on
the department and the same has not been satisfactorily
discharged by the Respondents, the impugned orders of
the Respondents are liable to be set aside.”
14. Thus what weighed with the High Court is the fact that the Form I
notices failed to assign any reasons as to why the documents could
be said to be undervalued. In other words, what was the basis for
the Special Deputy Collector (Stamps) to say that sale consideration
shown in the two sale deeds was not correct. According to the High
Court, there was no basis or any relevant materials on record to take
the view that the two documents were undervalued except the spot
inquiry and local inspection.
15. The only contention raised by the learned counsel appearing for the
appellants is that it is not mandatory to assign reasons in the notice
issued in Form I.
16. Section 17 of the Stamp Act reads as under:-
“17. Instruments executed in India. – All instruments
chargeable with duty and executed by any person in India
shall be stamped before or at the time of execution.”
17. Section 47-A of the Stamp Act reads thus:-
“47-A. Instruments of conveyance etc., undervalued how
to be dealt with.— (1) If the Registering Officer appointed
under the Indian Registration Act, 1908 (Central Act XVI
of 1908) while registering any instrument of conveyance,
exchange, gift, release of benami right or settlement, has
[2025] 1 S.C.R. 583
Chief Revenue Controlling Officer Cum Inspector General
of Registration, & Ors. v. P. Babu
reason to believe that the market value of the property
which is the subject matter of conveyance, exchange, gift,
release of benami right or settlement, has not been truly
set forth in the instrument, he may, after registering such
instrument, refer the same to the Collector for determination
of the market value of such 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 matter of conveyance, exchange, gift, release
of benami right or settlement and the duty as aforesaid. The
difference, if any, in the amount of duty, shall be payable
by the person liable to pay the duty.
(3) The Collector may, suo motu or otherwise, within
five years from the date of registration of any instrument
of conveyance, exchange, gift, release of benami right
or settlement not already referred to him under sub-
section (1), call for and examine the instrument for the
purpose of satisfying himself as to the correctness of the
market value of the property which is the subject matter
of conveyance, exchange, gift, release of benami right or
settlement and the duty payable thereon and if after such
examination, he has reason to believe that the market
value of the property has not been truly set forth in the
instrument, he may determine the market value of such
property and the duty as aforesaid in accordance with the
procedure provided for in sub-Section (2). The difference, if
any in the amount of duty, shall be payable by the person
liable to pay the duty.”
18. Under Section 47-A(1) and under Section 47-A(3), if the Registering
Authority has reason to believe that the instrument of conveyance
did not reflect the correct market value of the property, then the
Registering Authority has the power to refer the same to the Collector
for determination of market value of the property and the Collector, on
reference, under Section 47-A(1), may determine the market value of
584 [2025] 1 S.C.R.
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such property in accordance with the procedure prescribed. Enquiry
by the Registering Authority is a pre-condition for making reference
to the Collector for determination of market value of the property. The
determination of market value without Notice of hearing to parties
is liable to be set aside. When the Registering Authority finds that
the value set forth in an instrument was less than the minimum
value determined in accordance with the Rules, in that event, the
Registering Authority is empowered to refer the instrument to the
Collector for determination of market value of such property and the
Stamp Duty payable thereon.
19. When both the authorities viz., the Registering Authority and the
Collector are vested with the discretion to decide regarding the
market value of the property, by the expression ‘reason to believe’,
then whether it reflects the subjective satisfaction of the authorities
concerned or it reflects the objective determination of the market
value of the property? What is meant by ‘reason to believe’ is the
issue to be considered.
20. Availability of material is the foundation or the basis, for any authority
to arrive at any decision whatsoever. The basis of a thing is that on
which it stands, and on the failure of which it falls and when a document
consisting partly of statements of fact and partly of undertakings for
the future is made the basis of a contract of insurance, this must mean
that the document is to be the very foundation of the contract, so that
if the statements of fact are untrue, or the promissory statements are
not carried out, the risk does not attach. This has been interpreted
in the case of Dawsons Ltd. v. Bonnin, 1922 (2) AC 413.
21. It has been rightly held in the case of Mohali Club, Mohali v. State of
Punjab, reported in AIR 2011 P&H 23, that the Registering Officer,
after registration of the document, can refer the same for adjudication
before the Collector, if he has reason to believe that there was
deliberate undervaluation of the property. Such a reference is not a
mechanical act, but the Registering Officer should have a basis for
coming to prima facie finding of undervaluation of the property. Duty
is enjoined upon the Registering Officer to ensure that Section 47-
A(1) does not work as an engine of oppression nor as a matter of
routine, mechanically, without application of mind as to the existence
of any material or reason to believe the fraudulent intention to evade
payment of proper Stamp Duty. The expression ‘reason to believe’
[2025] 1 S.C.R. 585
Chief Revenue Controlling Officer Cum Inspector General
of Registration, & Ors. v. P. Babu
is not synonymous with subjective satisfaction of the officer. The
belief must be held in good faith, it cannot be merely a pretence. It
is open to the Court to examine the question whether the reasons
for the belief must have a rational connection or a relevant bearing
to the formation of the belief and are not irrelevant or extraneous
to the purpose of the section. The word ‘reason to believe’ means
some material on the basis of which the department can re-open the
proceedings. However, satisfaction is necessary in terms of material
available on record, which should be based on objective satisfaction
arrived at reasonably.
22. Rule 3 of the Tamil Nadu Stamp (Prevention of Undervaluation of
Instruments) Rules, 1968 (for short, “the Rules 1968”) is as under:-
“3. Furnishing of statement of market value.-
(1) x x x x x
(4) The registering officer may also look into the “Guidelines
Register” containing the value of properties supplied to
them for the purpose of verifying the market value.
Explanation : The “Guidelines Register” supplied to the
officers is intended merely to assist them to ascertain prima
facie, whether the market value has been truly set forth in
the instruments. The entries made therein regarding the
value of properties cannot be a substitute for market price.
Such entries will not foreclose the enquiry of the Collector
under Section 47-A of the Act or fetter the discretion of
the authorities concerned to satisfy themselves on the
reasonableness or otherwise of the value expressed in
the documents.”
23. Form 1 of notice prescribed under the Rules 1968 reads thus:-
“Form I [See rule 4] Form of notice prescribed under rule
4 of the Tamil Nadu Stamp (Prevention of Under valuation
of Instruments) Rules, 1968 To, Please take notice that
under sub-section (1) of section 47-A of the Indian Stamp
Act, 1899 (Central Act II of 1899), a reference has been
received from the registering officer for determination of the
market value of the properties covered by an instrument
of conveyance/ exchange/gift/release of benami right/
settlement registered as document No ......... dated the
586 [2025] 1 S.C.R.
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........... and the duty payable on the above instrument.
A copy of the reference is annexed. 2. You are hereby
required to submit your representation, if any, in writing
to the undersigned within 21 days from the date of
service of this notice to show that the market value of
the properties has been truly and correctly set forth in the
instrument. You may also produce all evidence in support
of your representations within the time allowed. 3. If no
representations are received within the time allowed,
the matter will be disposed of on the basis of the facts
available.”
24. Form 2 of notice prescribed under the Rules 1968 reads thus:-
“Form II [See rule 6] Form of notice prescribed under rule
6 of the Tamil Nadu Stamp (Prevention of Undervaluation
of Instruments) Rules, 1968 To, Please take notice that
in the matter of the reference under sub-section (1) of
section 47-A of the Indian Stamp Act, 1899 (Central Act
II of 1899) relating to the determination of the market
value of the properties covered by an instrument of
conveyance/exchange/gift ¹[release of benami right/
settlement] registered as document No ......... dated ...........
received from the registering officer. I have passed an
order provisionally determining the market value of the
properties and the duty payable on the instrument. A copy
of the order passed in the matter is annexed. Footnote:
1. The above expression was inserted by G.O. Ms. No.
1317, CT & RE, dt. 27.11.1982.
2. The matter relating to the final determination of the
market value of the properties and the duty payable on
the instrument will be taken up for hearing on the (date)
... camp .... at ........ a.m/p.m. You are hereby required
to lodge before the undersigned before the date of the
hearing, your objections and representations, if any, in
writing as*to why the market value of the properties and
the duty as provisionally determined by me, should not be
confirmed to adduce oral or documentary evidence and
be present at the hearing. If you fail to avail yourself of
this opportunity of appearing before the undersigned or
[2025] 1 S.C.R. 587
Chief Revenue Controlling Officer Cum Inspector General
of Registration, & Ors. v. P. Babu
adducing such evidence, as is necessary, producing the
relevant documents, no further opportunity will be given
and the matter will be disposed of on the basis of the
facts available.”
25. It appears that the High Court followed its Full Bench decision in
G. Karmegnam v. The Joint Sub-Registrar, Madurai reported in
2007 (5) CTC 737 and other Division Bench decisions on the point
in question more particularly the contention that Form I must contain
some reasons for saying that the document is undervalued.
26. In the Full Bench decision, the High Court held as follows:-
“7. Registration of document is a sine qua non for referring
the matter to the Collector, if the Registering Officer believes
that the property is undervalued. No jurisdiction has been
conferred on the Registering Officer to refuse registration,
even if the document is undervalued. Besides, there is no
authority for him to call upon the person concerned to pay
additional stamp duty. Collector is the prescribed authority
to determine the market value, after affording a reasonable
opportunity of hearing the parties. The Registering Officer
cannot make a roving enquiry to ascertain the correct
market value of the property by examining the parties.
However, it is expected that he has to give reasons for
his conclusion for undervaluation, however short they
may be. He can neither delay nor refuse registration of
the instrument, merely because the document does not
reflect the real market value of the property. In order to
reach a conclusion, there is no bar for the Registering
Officer to gather information from other sources, including
official or public record. Valuation guidelines, prepared
by the revenue officials periodically, are intended with an
avowed object of assisting the Registering Officer to find
out prima facie, whether the market value set out in the
instrument has been set forth correctly.
x x x x x
26. When the Collector exercises powers under sub-
sections (2) and (3), he shall be deemed to be a quasi-
judicial authority, as the detailed procedure prescribed in
the relevant rules evidently portrays that the Collector’s
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decision is relatable and verifiable by the materials on
evidence, which he beings into record, on making an
enquiry after hearing the parties concerned. The Collector
has been conferred with such powers by the statute,
whereas the Registering Authority is not. The powers of
the Registering Officer are remarkably limited i.e. to say,
he cannot at all hold any enquiry to ascertain the quantum
of Stamp Duty payable on an instrument. As adverted
to supra, he shall not undertake a detailed enquiry by
examining the parties, which powers are exercisable by
the Collector alone. The relevant rules would indicate that
the procedures have to be adopted for an enquiry by the
Collector. A detailed procedure has been formulated in
Rule (4) for the Collector to act on receipt of reference
under Section 47-A in Tamil Nadu Stamp (Prevention of
Undervaluation of Instrument) Rules, 1968. It does not
lay down any procedure as to what are the duties to be
performed by a Registering Officer, while ascertaining
the market value of the property. The necessary upshot
would be, the legislature thought it appropriate to curtail
the powers of the Registering Officer, probably for the
reason that allowing the Registering Officer to make a
roving enquiry would lead to loss of time for registration,
resulting in accumulation of documents for registration
with him. Further, prescribing an authority for the special
purpose of conducting enquiry is very much essential, who
shall not be the Registering Authority.”
27. We are in complete agreement with the view taken by the Full Bench
of the High Court. It is not permissible for the Registering Officer to
undertake a roving enquiry for the purpose of ascertaining the correct
market value of the property. If the Registering Officer is bona fide
of the view that the sale consideration shown in the sale deed is not
correct and the sale is undervalued, then it is obligatory on the part
of the Registering Authority as well as the Special Deputy Collector
(Stamps) to assign some reason for arriving at such a conclusion.
In such circumstances, if the document in question is straightway
referred to the Collector without recording any prima facie reason,
the same would vitiate the entire enquiry and the ultimate decision. In
the case on hand, it is not in dispute that the Form I notices did not
[2025] 1 S.C.R. 589
Chief Revenue Controlling Officer Cum Inspector General
of Registration, & Ors. v. P. Babu
contain any reason. It also appears that the Collector (Stamps) in his
order also failed to indicate the basis on which the sale consideration
shown in the two sale deeds was undervalued.
28. There is one more aspect of the matter which we should look into.
The High Court in its impugned judgment while recording the facts
in para 2 stated as under:-
“…The third Respondent, having refused to release the
documents on the ground that it was undervalued, referred
the same to the second Respondent Special Deputy
Collector (Stamps), Cuddalore under section 47(A)(1)
of the Act for determining the correct market value of
the property and also issued notice in Form I, thereby
fixing the value of the property in Doc.No. 487/2002 at
Rs.45,66,660/- and the other property in Doc.No.488/2002
at Rs.12,94,900/-. Thereafter, the second Respondent also
issued Form II notice to the parties to the documents for
enquiry before him. The Appellant, who is the purchaser
of the property filed his objections. After enquiry, the
second Respondent Special Deputy Collector (Stamps) in
his proceedings dated 12.10.2004 fixed the market value
of the property covered under Doc no.487/2002 at Rs.
51,16,565 @ Rs.51,16,600/- (Rs.400/- per sq.ft for 9170/-
sq.ft + building at Rs.14,48,565/-) and fixed the market
value of the property covered under Doc.no.488/2002
at Rs.10,36,937/- @ Rs.10,37,000/- (Rs.76/- per sq.ft
for 13,577 sq.ft + Well and laying stone at Rs.5,085/-)
and accordingly demanded deficit stamp duty payable
for the documents. Aggrieved against the same, the
purchaser who is the Appellant herein, preferred further
appeals before the first Respondent Inspector General
of Registration, who by the impugned orders dated
27.01.2009, determined the value of the property covered
in Doc No.487/2002 at Rs.498 /- per sq.ft for land and the
property covered in Doc No.488/2002 at Rs.95/- per sq.ft.
for land and Rs.15,96,999 /- for building.…”
29. It appears from the aforesaid that the second respondent i.e. the
Special Deputy Collector (Stamps) failed to pass any provisional
590 [2025] 1 S.C.R.
Digital Supreme Court Reports
order as contemplated in Rule 4(4) of the Rules 1968. Rule 4(4) of
the Rules 1968 reads as follows:-
“4. Procedure On Receipt Of Reference Under Section
47-A:-
x x x x x
(4) After considering the representations, if any, received
from the person to whom notice under sub-rule (1)
has been issued, and after examining the records and
evidence before him, the Collector shall pass an order in
writing provisionally determining the market value of the
properties and the duty payable. The basis on which the
provisional market value was arrived at shall be clearly
indicated in the order.”
30. As 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.
31. The 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
[2025] 1 S.C.R. 591
Chief Revenue Controlling Officer Cum Inspector General
of Registration, & Ors. v. P. Babu
(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.
32. We are of the view that no error not to speak of any error of law
could be said to have been committed by the High Court in passing
the impugned order.
33. In the result, these appeals fail and are hereby dismissed.
34. Pending applications, if any, also stand disposed of.
Result of the case: Appeals dismissed.
†
Headnotes prepared by: Divya Pandey
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