Partly allowed

Virjibhai Kurjibhai Ravani v. State of Gujarat

Gujarat HC10 Oct 2019SCA/9689/2015

Case brief

AI extract

What is this about?

In a writ petition under Article 226, the High Court of Gujarat quashed an order rejecting an appeal against additional stamp duty on technical grounds of delay and non-payment of 25% deposit. The court remanded the matter to the appellate authority for fresh consideration on merits.

What did the court decide?

The impugned order dated 25.02.2014 quashed; matter remanded to respondent no.2 for fresh de novo consideration on merits upon deposit of 25% deficit stamp duty.

Virjibhai Kurjibhai Ravani Vs State of Gujarat — Pension and Retirement Benefits | Gujarat HC (2019)

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C/SCA/9689/2015 JUDGMENT

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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R/SPECIAL CIVIL APPLICATION NO. 9689 of 2015

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FOR APPROVAL AND SIGNATURE:

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HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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

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2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?

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

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VIRJIBHAI KURJIBHAI RAVANI

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Versus

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STATE OF GUJARAT & 3 other(s)

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Appearance:

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MR SATYAM Y CHHAYA(3242) for the Petitioner(s) No. 1 MR DHAWAN JAYSWAL ,AGP for the Respondent(s) No. 1,2,3,4

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CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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Date : 10/10/2019

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ORAL JUDGMENT

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

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Having regard to the controversy involved in the present

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C/SCA/9689/2015 JUDGMENT

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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.

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By this petition under Articles 226 of the Constitution of India, the petitioner has prayed for the following reliefs :

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“(A) The Hon'ble Court may be pleased to admit and allow this Special Civil Application;

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(B) The Hon'ble Court be pleased to issue a appropriate writ order or direction for quashing and setting aside order dated 17.02.2012 passed by the Deputy Collector (Stamp Duty & Valuation) Divison-1, Surat.

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(C) The Hon'ble Court be pleased to issue a appropriate writ order or direction for quashing and setting aside order dated 25.02.2014 passed by the respondent no.2 and thereby directed the appellate authority i.e respondent no.2 to decide appeal filed by the petitioner under section 53 of the Act on its merits as per the provisions of the Act read with Rules.

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(D) Pending hearing and final disposal of the petition, Hon'ble Court may be pleased to stay, execution, operation and implementation of the order dated 17.02.2012 passed by the Deputy Collector (Stamp Duty & Valuation) Division-1, Surat as well as order dated 25-02-2014 passed by the respondent no.2.

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(E) The Hon'ble Court may be pleased to grant such other and further relief/s as deemed just and proper by this Hon'ble Court in the interest of justice.”

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Brief facts of the case are as under :

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4.1) The petitioner is owner and occupier of piece of parcel of immovable property admeasuring 95.00 sq yards i.e. 79.44.08 sq mtrs of Ward No.11, Nondh No. 188 paikee

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C/SCA/9689/2015 JUDGMENT

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Western Portion of the land and property admeasuring 109.3 sq. yards i.e. 91.42 sq. mtrs of Ward No.11, Nondh No. 177/1 situated at Bhagatalao main road, Suart.

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4.2) One M/s. Dharmesh Exports wanted to avail the benefit of loan/credit facilities from United Western Bank Ltd. The petitioner agreed to mortgage the said property as security and thus property in question was subject matter of simple mortgage deed registered at Sr. no. 2367 dated 24^th March, 2004 with Sub-Registrar Surat-4 (Katargam) for granting loan to M/s. Dharmesh Exports.

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4.3) It is the case of the petitioner that the mortgage deed was executed only for security purpose and therefore the same falls within the purview of Article 6 of the Gujarat Stamp Act, 1958 (“the Act” for short) and accordingly, appropriate stamp duty as envisaged under the Act was paid at the time of execution of above referred mortgage deed.

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4.4) Thereafter in the year 2012, almost after more than period of six years from the date of execution of mortgage deed, the respondent no.4- Deputy Collector (Stamp Duty & Valuation) Division-1, Surat initiated proceedings and under section 39 of the Act, passed the impugned order dated 17^th February, 2012 levying additional stamp duty of Rs. 6,30,000/- with 15% interest towards penalty.

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4.5) It is the case of the petitioner that said order was

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never served upon the petitioner and petitioner was not aware about passing of the impugned order.

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4.6) As soon as the petitioner received notice of recovery in the year 2014, the petitioner filed an appeal under section 53(1) of the Act before respondent no.2 along with an application for condonation of delay in the said appeal.

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4.7) However the appeal filed by the petitioner came to be rejected by impugned order dated 25^th February, 2014 on the ground of delay and non payment of 25% stamp duty.

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Heard learned advocate Mr. Satyam Chhaya for the petitioner and learned Assistant Government Pleader Mr. Dhawan Jayswal for the respondents.

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Learned advocate for the petitioner submitted that both the impugned orders are illegal, arbitrary, unjust and against the settled legal proposition. He submitted that impugned order dated 17^th February, 2012 passed by respondent no.4 was against the Scheme of the Act and beyond the jurisdiction conferred under the authority as per the provisions of law. He further submitted that on perusal of the impugned order dated 17^th February, 2012, it is apparent that photocopy of mortgage deed no. 2467 dated 24^th March, 2007 was impounded under section 33 read with section 39 of the Act. He further submitted that as per the provisions contained in section 33 read with section 39 of the Act, Collector cannot impound the

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photocopy of an instrument and the initiation of proceedings under section 39 of the Act after impounding the photocopy of the instrument was beyond the jurisdiction of the said authority.

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6.1) He further submitted that the authorities failed to appreciate that the petitioner was never a beneficiary of the loan/credit facilities availed by M/s. Dharmesh Exports from United Western Bank Ltd. He further submitted that the petitioner had executed deed of mortgage only as collateral security and petitioner was not beneficiary of the transactions, therefore, case of the petitioner would fall under provision of Article 6 of Schedule-1 of the Act and therefore, stamp duty which was paid at the time of execution of the mortgage deed was proper and there is no evasion of stamp duty at the end of the petitioner.

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6.2) He further submitted that the authorities have considered Article 20(a) of Schedule-1 of the Act while computing and/or determining the market value as well as stamp duty. However, as per the scheme of the Act and settled legal position, the case of the petitioner would not fall within the purview of Article 20 and the same would fall within the purview of Article 6 of the Act.

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6.3) He submitted that the copy of the impugned order dated 17^th February, 2012 was never served upon the petitioner though required under Rule 7 of the Rules and therefore, the petitioner was not aware about the impugned

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C/SCA/9689/2015 JUDGMENT

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order dated 17^th February, 2012 being passed. He further submitted that as soon as the petitioner came to know about such order, the petitioner immediately preferred an appeal under section 53 of the Act which was rejected vide order dated 25^th February, 2014 on the ground of delay. He further submitted that as per settled legal proposition, the date of knowledge should be considered while deciding the period of 90 days for presenting the appeal and if the litigant is not aware about the order being passed, the legitimate right of preferring appeal ensured under the statutory provisions cannot be taken away by the appellate authority on technical ground.

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6.4) He submitted that insofar as payment of 25% stamp duty is concerned, the petitioner is ready and willing to deposit the same if the appellate authority considers the matter on merits.

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6.5) He submitted that the appellate authority passed the impugned order dated 25^th February, 2014 even without issuing notice to the petitioner and the said order is a non speaking order and same is passed in breach of principles of natural justice.

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6.6) He submitted that loan availed by M/s. Dharmesh Exports is already paid by the said entity and the impugned proceedings have been started almost at the time of completion of six years.

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6.7) He submitted that as per sections 7,33 and 39 of the Act, impounding of photocopy and initiation of proceedings on such impounding was without jurisdiction and hence the proceedings being void ab initio is liable to be quashed.

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6.8) He submitted that delay caused in filing the appeal was due to time taken for collection of some documents and due to social and other difficulties and therefore, the petitioner could not follow up the matter for some time. He further submitted that there was no illegal intention on part of the petitioner to delay the filing of the appeal.

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6.9) He submitted that the authorities below have not given any reason as to how the market value is computed to determine the amount of stamp duty and in absence of any reason, the impugned order dated 17^th February, 2012 would not be tenable in law.

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On the other hand learned Assistant Government Pleader Mr. Dhawan Jayswal relying upon the averments made in the affidavit in reply filed on behalf of respondent no.4 submitted that petitioner had registered a deed for simple mortgage being deed no. 2367 on 24^th March 2004 for the land bearing part no. 177-A and 188-A in city survey ward no.11 of Surat and petitioner had paid requisite stamp duty of Rs.2,80,000/-. He submitted that value of property was Rs. 1,50,00,000/- against which the petitioner has paid stamp duty of Rs. 2,80,000/-. He submitted that during the test check of the document registered with Sub-

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C/SCA/9689/2015 JUDGMENT

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Registar IV, Katargam, Surat it came to the notice that the document was styled and registered as equitable mortgage and on further examination of the recitals of the document, it was revealed that the mortgagor had stood as guarantors for the losses/advantages granted to the borrowers by banks. Therefore, the audit party took a specific objection that such document was to be treated as 'Bond'. It was therefore, submitted that petitioner is liable to pay deficit stamp duty as instrument is to be classified as 'Bond' and liable to levy of stamp duty as per Article 20 of the Schedule 1 of the Act.

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7.1) Learned Assistant Government Pleader further submitted that it is specifically mentioned in the para 4 of the audit objection dealing with short levy of stamp duty that due to misclassification of document Mortgage is treated as Equitable Mortgage. He further submitted that the audit party has specifically observed and categorically noted that under Article 6 of the Bombay Stamp Act, 1958 if an equitable mortgage contains recitals of title deed of the property, stamp duty is required to be levied accordingly. He further submitted that subsequent to audit objection, the Sub-Registrar requested the Deputy Collector vide communication dated 22^nd September, 2005 to take appropriate steps. He further submitted that after taking into consideration the audit objection, the first notice came to be issued to the petitioner under section 33 of the Act on 30^th November, 2005 and subsequently five other notices were issued to the petitioner.

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C/SCA/9689/2015 JUDGMENT

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7.2) He further submitted that it was after notice issued to the petitioner on 14^th November, 2011, the petitioner replied that he shall not be liable and responsible to pay stamp duty as asked for under the notices. He further submitted that the contention of the petitioner that the authorities have not initiated the proceedings within a period of six years is misconceived inasmuch as the first notice came to be issued on 30^th November, 2011 after the document came to be registered on 24^th March, 2004.

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7.3) He further placed reliance upon the provisions under section 32A, 33 and 39 of the Act and submitted that the competent authority can examine the document within specific period to determine the market value of the property which is the subject matter of conveyance and levy the deficit stamp duty, if proper stamp duty has not been paid. He further submitted that the respondent authorities have examined the instrument and it was found that he petitioner had paid Rs. 2,80,000/- and therefore, Rs. 6,20,000/- is deficit amount to be paid.

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7.4) He submitted that the contention on behalf of the petitioner that orders were not served upon the petitioner is nothing but a bare contention to mislead the Court inasmuch as it is established on fact that on 14^th November, 2011, the reply has been submitted by the petitioner.

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7.5) He submitted that the appellate authority has rightly rejected the appeal on the ground of delay and non payment of 25% of the duty. Section 53 of the Act provides that an application has to be presented before the authority within a period of 90 days. Sub-section (1) of section 53 provides that it is always to the satisfaction of the Chief Controlling Revenue Authority on sufficient reasons to condone delay. However, it is also mandatory that such application is to be forwarded with 25% amount of duty which is levied. The petitioner did not submit the application as per the provision of the Act with 25% of duty. He therefore, submitted that no interference is called for while exercising powers under Articles 226 and 227 of the Constitution of India in the impugned orders.

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Having heard learned advocates for the parties and having considered the documents on record, it is undisputed that the petitioner mortgaged the property in question as security deposit, so M/s. Dhamesh Exports could avail the benefit of loan/credit facilities. Respondent no.4 initiated proceedings under section 39 of the Act and passed the impugned order dated 17^th February, 2012 levying additional stamp duty of Rs. 6,30,000/- with 15% interest towards penalty. The petitioner filed an appeal under section 53(1) of the Act before respondent no.2 along with an application for condonation of delay in the said appeal which came to be rejected by impugned order dated 25^th February, 2014 on the ground of delay and non payment of 25% of deficit stamp duty payable by the petitioner.

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C/SCA/9689/2015 JUDGMENT

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Without going into merits of the case and deliberating on the rival submissions advanced by both the sides, it would be appropriate to remand the matter back to the concerned authority as the impugned order has been passed rejecting the appeal of the petitioner only on the ground of delay and non payment of 25% of the deficit stamp duty.

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Section 53 of the Act provides for appeal/revision before Chief Controlling Revenue Authority and reads as under :

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“53. Control of and statement of case to Chief Controlling Revenue Authority. - (1) The powers exercisable by a Collector under [Chapter III [***], Chapter IV and Chapter V] and under clause (a) of the first proviso to section 27 shall in all cases be subject to the control of the Chief Controlling Revenue Authority:

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[Provided that the Chief Controlling Revenue Authority shall not entertain an application made by a person under sub-section (1),unless,-

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(a) such application is presented within a period of [ninety days] from the date of order of the Collector.

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[Provided that if the Chief Controlling Revenue Authority is satisfied that such person was prevented for sufficient reasons from presenting the application within the period specified above, he may allow such person to present the application within a further period of ninety days on payment of non refundable amount of rupees one thousand for every thirty days or part thereof.

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(b) such person deposits twenty-five per cent, of the amount of duty or as the case may be amount of difference

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of duty payable by him in respect of subject matter of the instrument for which application has been made:]

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(2) If any Collector, acting under section 31 [section 32A,] section 39 or section 40, feels doubt as to the amount of duty with which any instrument is chargeable, he may draw up a statement of the case, and refer it, with his own opinion thereon, for the decision of the Chief Controlling Revenue Authority.

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(3) Such authority shall consider the case and send a copy of its decision to the Collector, who shall proceed to assess and charge the duty (if any) in conformity with such decision.”

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Thus on perusal of the above provision, it appears that the respondent authorities have the power to condone delay on arriving at satisfaction about the grounds of delay. The petitioner is also ready and willing to deposit 25% of deficit stamp duty, if the appellate authority considers the matter on merits. Therefore, it would be in the interest of justice to remit the matter back to respondent no.2 for fresh de novo consideration of the matter on merits on the basis of available material on record.

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The Petition is therefore, partly allowed. The impugned order dated 25^th February, 2014 passed by respondent no.2 is quashed and set aside. The matter is remanded back to respondent no.2 for fresh de novo consideration on merits on the basis of available material on record. The petitioner shall deposit 25% of the deficit stamp duty as levied before the concerned authority within

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a period of 15 days from the date of receipt of this order. Upon deposit of such stamp duty, the respondent no.2 shall hear the matter on merits after giving opportunity of hearing to the petitioner at the earliest and preferably within three months.

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

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(BHARGAV D. KARIA, J)

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RAGHUNATH R NAIR

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Virjibhai Kurjibhai Ravani v. State of Gujarat

Case brief

What is this about?

What did the court decide?

Virjibhai Kurjibhai Ravani v. State of Gujarat

Case brief

What is this about?

What did the court decide?

What the court decided

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