Allowed

Surat People'S Co-Operative Bank Ltd. v. State of Gujarat

Gujarat HC10 Oct 2019SCA/677/2015

Case brief

AI extract

What is this about?

The High Court allowed a special civil application seeking to quash proceedings under Section 39(1)(b) of the Gujarat Stamp Act and the refusal to return a registered sale certificate issued by a cooperative bank during recovery proceedings, holding the impugned circular imposing double stamp duty illegal.

What did the court decide?

Quashed reference dated 8.7.2014, initiation of proceedings under Section 39(1)(b), and notice dated 18.7.2014; directed return of original sale certificate.

Surat People'S Co-Operative Bank Ltd. Vs State of Gujarat — Landlord and Tenant | Gujarat HC (2019)

¶1

C/SCA/677/2015 JUDGMENT

¶2

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

¶3

R/SPECIAL CIVIL APPLICATION NO. 677 of 2015

¶4

FOR APPROVAL AND SIGNATURE:

¶5

HONOURABLE MR. JUSTICE BHARGAV D. KARIA

¶6

==========================================================

¶7

1 Whether Reporters of Local Papers may be allowed to see the judgment ?

¶8

2 To be referred to the Reporter or not ?

¶9

3 Whether their Lordships wish to see the fair copy of the judgment ?

¶10

4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

¶11

==========================================================

¶12

SURAT PEOPLE'S CO-OPERATIVE BANK LTD. & 2 other(s)

¶13

Versus

¶14

STATE OF GUJARAT & 2 other(s)

¶15

==========================================================

¶16

Appearance:

¶17

MR RAVINDRA SHAH(1299) for the Petitioner(s) No. 1,2,3 MS SHURTI PATHAK, AGP for the Respondent(s) No. 1 NOTICE SERVED BY DS(5) for the Respondent(s) No. 2,3

¶18

==========================================================

¶19

CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA

¶20

Date : 10/10/2019

¶21

ORAL JUDGMENT

¶22

Rule. Learned Assistant Government Pleader Mr. Dhawan Jayswal wavies service of rule on behalf of the respondents.

¶23

Page 1 of 10

¶24

C/SCA/677/2015 JUDGMENT

¶25

Having regard to the controversy involved in the present case which lies in a very narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.

¶26

By this petition under Articles 226 and 227 of the Constitution of India, the petitioners have prayed for the following reliefs :

¶27

“(A) to issue a writ of mandamus or any other writ, order or direction, quashing and setting aside the impugned reference dated 08.07.2014 made by respondent-3 to the respondent-2 at Annexure-C to the petition and the initiation of proceeding under Section 39(1)(b) based on such reference by the respondent-2 and the impugned notice dated 18.07.2014 at Annexure-B to the petition being ultra-vires, without jurisdiction and without authority of law

¶28

(B) to issue a writ of mandamus or any other writ, order or direction, quashing and setting aside the impugned action of the respondents in demanding stamp duty for registration of the property vide sale certificate dated 10.3.2014 at Annexure-A to the petition and permanently restrain them from making any such demand and initiation of any proceeding to recover stamp duty towards registration of sale certificate dated 10.03.2014, AnnexureA to the petition.

¶29

(C) to issue a writ of Mandamus or any other writ, order or direction quashing and setting aside the impugned action of the respondents in refusing to return the duly registered original sale certificate dated 10.03.2014 for the property at Annexure-A to the petition and command the respondents to return the same to the petitioners within a stipulated time period.

¶30

(D) pending hearing and final disposal of the petition, to stay the proceeding initiated under section 39(1)(b) of the

¶31

Page 2 of 10

¶32

C/SCA/677/2015 JUDGMENT

¶33

Act vide impugned notice dated 18.07.2014 at Annexure-B and further restrain the respondents their officers, servants, assigns etc. in taking any coercive measures against the petitioners in respect of demand of stamp duty of the property vide registration certificate dated 10.03.2014 at Anneuxre-A to the petition.

¶34

(E) pending hearing and final disposal of the petition, to direct the respondents their officers, servants, assigns etc to return the duly registered original sale certificate dated 10.03.2014 at Annexure-A to the petition to the petitioners

¶35

(F) to award the cost of the present petition.”

¶36

Brief facts of the case are that petitioner no.1 is a Cooperative bank deemed to be registered under the Gujarat Cooperative Societies Act, 1961 (“Act 1961” for short) and Gujarat Cooperative Societies Rules, 1965(“Rules 1965” for short). The petitioner no.1 bank is doing the business of banking. Petitioner no.2 purchased the property being House B/13 along with land admeasuring 58.52.91 sq mtrs situated in Jivkornagar Group Housing Scheme in Final plot no. 172 of Manjura T.P. Scheme 9, bearing revenue survey no. 149 of village Manjura at Surat from the petitioner no.1 bank by paying an amount of Rs. 45,10,531/- in the auction proceeding held by the Recovery officer/Sales officer of the bank.

¶37

4.1) It is the case of the petitioners that the said property was of the ownership of one Pushpaben Josephbhai Patel who had availed different financial facilities from various banks including the petitioner no.1 bank. The said property was mortgaged by the borrower with petitioner no.1 bank and on default committed by the borrower, the petitioner no.1 bank initiated recovery proceedings under

¶38

Page 3 of 10

¶39

C/SCA/677/2015 JUDGMENT

¶40

the Act-1961 by filing Summary Lavad Suit No.69/2002 before the Board of Nominees, Surat. The said Lavad Suit came to be decreed by the Board of Nominees Surat in favour of the petitioner no.1 bank and the decreetal dues were ordered to be recovered from the properties of the buyer including the property in question. It is the case of the petitioners that since the judgment debtor did not pay up the decreetal dues, the Recovery Officer initiated recovery proceedings and the present property was sold to petitioner no.2 in an auction for a consideration of Rs. 45,10.531/-. The Recovery Officer thereafter, issued sale certificate dated 10^th March, 2014 to the petitioner no.2purchaser. The sale certificate was thereafter presented for registration under the provisions of the Registration Act, 1908 before respondent no.3 on 7^th July, 2014.

¶41

4.2) The petitioners asked for certain information under the Right to Information Act, 2005 (for short”RTI Act”) and came to know that respondent no.3 instead of returning the original sale certificate to the petitioners, referred the matter to respondent no.2 by reference letter dated 8^th July, 2014 purportedly under section 32A of the Gujarat Stamp Act, 1958 (“the Act 1958” for short)

¶42

4.3) Pursuant to reference made by respondent no.3, respondent no.2 issued notice dated 18^th July, 2014 to the petitioner no.1 bank under section 39(1)(b) of the Act-1958. Petitioner no.1 bank gave a request letter dated 4^th August, 2014 to respondent no.2 to grant time. Respondent no.2 acceded to said request and thereafter, issued a show cause notice to petitioner no.1-bank calling upon it to show

¶43

Page 4 of 10

¶44

C/SCA/677/2015 JUDGMENT

¶45

cause as to why action under section 39(1)(b) of the Act should not be initiated against petitioner no.1. Petitioner no.1 gave an application dated 21^st August, 2014 to the respondent no.2 to grant time since it had applied for the relevant documents under the RTI Act, so as to enable it to defend the said proceedings. It appears that thereafter the petitioners did not receive any further intimation/ communication from the office of respondent no.2 regarding the said proceedings.

¶46

4.4) It is the case of the petitioners that after receiving the documents under RTI Act, the petitioners went to the office of respondents no. 2 and 3 and requested to return the duly registered original sale certificate dated 10^th March, 2014 executed by petitioner no.1 in favour of petitioner no.2. However, the respondents did not pay any heed to the request under the guise of notification dated 30^th April, 2011 and did not return the duly registered aforesaid original sale certificate to the petitioners.

¶47

Learned advocate for the petitioners Mr. Ravindra Shah submitted that reliance placed by the respondents upon the circular dated 30^th April, 2011 is thoroughly misconceived and not tenable in eyes of law inasmuch as respondents no. 2 and 3 were given to understand that as per the said resolution, the petitioner no.1 is bound to make payment of double stamp duty. Learned advocate for the petitioner relied upon the judgment of Division Bench of this Court in case of Canara Bank v. Collector of Stamp and others reported in (2014) 1 GLR 241 and submitted that the said circular dated 30^th April, 2011

¶48

Page 5 of 10

¶49

C/SCA/677/2015 JUDGMENT

¶50

issued by the Inspector General of Registration being ultravires the provisions of the Act has been struck down by the Court. He further submitted that inspite of above settled position of law, the respondents have refused to return the duly registered original sale deed dated 10^th March, 2014 until the petitioners pay up the amount of double stamp duty and such action of the respondents is ultra vires, illegal, colourable exercise of powers, arbitrary and also amounts to overreaching the process of law.

¶51

5.1) He further submitted that the sale certificate is issued by petitioner no.1 to petitioner no.2 under Rule 138(5) of the Rules-1965. The sale certificate so issued is not chargeable with duty under section 3 of the Act-1958 inasmuch as Article 17 of the Schedule I to the Act-1958 applies only to the certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Court or Collector or other Revenue officer or by an officer of Customs, which is not applicable in the present case.

¶52

5.2) He further submitted that the sale certificate is issued by petitioner no.1 to petitioner no.2 while exercising powers of Registrar under section 159 of the Act-1961 read with Rule 138(5) of the Rules-1965. Therefore, the demand of the stamp duty by the respondents is ultra vires and without any authority of law inasmuch as the respondents cannot make any such demand unless the same is permissible in the eyes of law and has been expressly provided for under the Act-1958.

¶53

Page 6 of 10

¶54

C/SCA/677/2015 JUDGMENT

¶55

5.3) He further submitted that provisions of section 32A of the Act-1958 has not been complied with by the respondents before resorting to the initiation of proceedings under section 39(1)(b) of the Act-1958.

¶56

5.4) He further submitted that respondents no. 2 and 3 have assumed their powers and jurisdiction under section 33(1) of the Act though no power whatsoever under section 33(1) of the Act has been ever conferred upon the respondent no.2 being the Sub-Registrar of Assurances and despite the same, respondent no.2 in his show cause notice has stated that respondent no.3 has impounded document in question.

¶57

5.5) He further submitted that bare reading of section 33(1) of the Act shows that the said power could be exercised by a person who by law or consent of the parties has the authority to receive the evidence. In the present case, neither of the respondents no.2 or 3 had the authority to receive evidence by law nor with the consent of the parties.

¶58

5.6) He further submitted that provisions of section 33(1) (2) and (3) provides that document in question can be impounded only by a person in-charge of a public office who is determined by the State Government to be the person in-charge of public office.

¶59

5.7) He submitted that bare reading of the communication dated 17^th September, 2014 along with notification dated 27^th September, 1991 proves that neither respondent no.2

¶60

Page 7 of 10

¶61

C/SCA/677/2015 JUDGMENT

¶62

nor respondent no.3 have been determined by the State Government to be public offices nor the respondents no. 2 and 3 have been determined by the State Government to be the person in-charge of public offices. He therefore, submitted that the reliance placed upon the notification dated 27^th September, 1991 is misconceived inasmuch as the said notification is neither issued for determining any offices to be public offices nor any officer to be in-charge of the public offices under section 33(1)(2) and (3) of the Act. He submitted that said notification is issued for the purpose of conferring powers of Collector upon the respective Deputy Collectors within the State of Gujarat for exercising the powers of Collector. He therefore, submitted that the impugned action of the respondents be quashed and set aside.

¶63

On the other hand learned Assistant Government Pleader Ms. Shruti Pathak for the respondents submitted that in view of the facts of this case, irrespective of circular dated 30^th April, 2011, the stamp duty would be levied on the transaction entered into by the petitioner no.1 bank as there was transfer made by the petitioner no.1 bank by conveyance executed in favour of petitioner no.2. Therefore, no interference is required by this Court in exercise of powers under Articles 226 and 227 of the Constitution of India against the action of the respondents.

¶64

Having heard learned advocates for the respective parties and having gone through the materials on record, it is not in dispute that sale certificate is issued by the Recovery Officer of the petitioner no.1 bank on 10^th March, 2014 in

¶65

Page 8 of 10

¶66

C/SCA/677/2015 JUDGMENT

¶67

favour of the purchaser being petitioner no.2 which is a conclusive evidence and proof as regards the purchase of property by petitioner no.2 from petitioner no.1 bank which was presented for registration under the provisions of the Registration Act, 1908 before respondent no.3 on 7^th July, 2014.

¶68

It is also not in dispute that that circular dated 30^th April, 2011 issued by the Inspector General of Registration whereby the petitioner no.1 bank is made liable to make the payment of double stamp duty is struck down by the Division Bench of this Court in case of Canara Bank (supra) wherein Division Bench of this Court has held as under :

¶69

“19. Our final conclusions in the matter are as under:

¶70

(A) The Circular dated 30^th April 2011, Annexure-F to this petition, issued by the respondent no.3 is held to be ultra vires the provisions of the Gujarat Stamp Act, 1985 and Article 265 of the Constitution of India.

¶71

(B) The impugned order dated 21^st November 2011 passed by the respondent no.1 is declared to be illegal and is accordingly set aside.

¶72

(C) The order passed by the District Magistrate or the Chief Metropolitan Magistrate, as the case may be, under Section 14 of the SARFAESI Act 2001 could not be termed as an instrument as defined under Section 2, Clause (i) of the Gujarat Stamp Act, 1958 creating any right or liability in favour of the secured creditor so as to bring it within the sweep of the definition of conveyance as defined in Section 2, Clause (g) of the Act, 1958. In the same manner, the panchnama drawn at the time of taking over of the physical possession of the secured asset pursuant to the order passed by the District Magistrate or the Chief Metropolitan

¶73

Page 9 of 10

¶74

C/SCA/677/2015 JUDGMENT

¶75

Magistrate, as the case may be, in exercise of powers under Section 14 of the Act 2002 would also not create any special right in favour of the secured creditor so as to bring such a panchnama within the sweep of the definition of the term instrument as defined under Section 2, Clause (i) of the Act.”

¶76

In view of aforesaid settled legal position, the respondents cannot withhold the registered document for deficit stamp duty as sale of property by the petitioner no.1 -Bank in question to recover its dues was on behalf of the borrower and therefore, such transaction is liable for levy of stamp duty only once.

¶77

The petition succeeds and is allowed. The impugned reference dated 8^th July, 2014 made by respondent no.3 to respondent no.2 and initiation of proceeding under section 39(1)(b) of the Act based on such reference by respondent no.2 and the impugned notice dated 18^th July, 2014 are hereby quashed and set aside. The respondents are directed to return the original sale certificate dated 10^th March, 2014 to the petitioners within a period of 30 days from the date of receipt of a copy of writ of this order.

¶78

Petition is accordingly disposed of. Rule is made absolute to the aforesaid extent. No order as to cost.

¶79

(BHARGAV D. KARIA, J)

¶80

RAGHUNATH R NAIR

¶81

Page 10 of 10

Surat People'S Co-Operative Bank Ltd. v. State of Gujarat

Case brief

What is this about?

What did the court decide?

Surat People'S Co-Operative Bank Ltd. v. State of Gujarat

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Rathwa Rajubhai Bachalabhai Vs State of Gujarat, through Chief Secretary

Indsur Global Limited through Authorised Signatory/Legal Officer Manisha Vyas Vs Madhya Gujarat Vij Company Limited

Agriculture Produce Market Committee Patan Vs State of Gujarat

Associated Construction Corporation Vs Union of India

Virjibhai Kurjibhai Ravani Vs State of Gujarat

Hiteshbhai Shamjibhai Baldaniya Vs State of Gujarat