Allowed

M/S. Vijaya Bank Employees Housing Co-Operative Society Ltd., v. the District Registrar and the Deputy Commissioner of Stamps

Karnataka HC11 Sept 2023WP/11465/2020

Case brief

AI extract

What is this about?

The High Court allowed writ petitions challenging orders passed under Section 39 of the Karnataka Stamp Act. The Court held the impounding of a joint development agreement by the Sub-Registrar was irregular as the documents were still to be executed. It quashed subsequent orders and directed the District Registrar to determine market value and stamp duty under Section 45A.

What did the court decide?

Impugned orders dated 23.12.2016 and KNAT orders dated 22.11.2019 were set aside/quashed. District Registrar directed to determine market value under Section 45A within three months.

M/S. Vijaya Bank Employees Housing Co-Operative… — Landlord and Tenant | Karnataka HC (2023)

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1 - NC: 2023:KHC:32721 WP No. 11465 of 2020 C/W WP No. 10054 of 2020

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11^TH DAY OF SEPTEMBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE R. NATARAJ WRIT PETITION NO. 11465 OF 2020 (GM-ST/RN) C/W WRIT PETITION NO. 10054 OF 2020 (GM-ST/RN)

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BETWEEN:

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M/S. VIJAYA BANK EMPLOYEES HOUSING CO-OPERATIVE SOCIETY LTD., NO.999/A, 1^ST FL. VIJAYA BANK LAYOUT, MSRS NAGAR, BILEKAHALLI, BENGALURU-560076 REP. BY ITS PRESIDENT, MR. VISHWANATH NAIK

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…PETITIONER (COMMON)

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(BY SRI. M.J. ALVA, ADVOCATE)

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AND:

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Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA

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THE DISTRICT REGISTRAR AND THE DEPUTY COMMISSIONER OF STAMPS, RAMANAGARA DISTRICT, RAMANAGAR-562120

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THE SUB-REGISTRAR RAMANAGARA DISTRICT, RAMANAGAR-562120.

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THE COMMISSIONER OF STAMPS AND THE CHIEF CONTROLLING REVENUE AUTHORITY, STATE OF KARNATAKA, BENGALURU-560001

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STATE OF KARNATAKA REP BY ITS PRINCIPAL SECRETARY, DEPARTMENT OF REVENUE, VIDHANA SOUDHA,BENGALURU-560001

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…RESPONDENTS (COMMON)

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(BY SRI. RAHUL CARIAPPPA, ADDITIONAL GOVERNMENT ADVOCATE FOR RESPONDENT NOS.1 TO 4)

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2 - NC: 2023:KHC:32721 WP No. 11465 of 2020 C/W WP No. 10054 of 2020

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IN W.P.NO.11465/2020:

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED JUDGEMENT DATED 22.11.2019 PASSED BY THE KARNATAKA APPELLATE TRIBUNAL, BENGALURU (CH-2) IN (REVENUE) APPEAL NO.214/2017 WHICH IS PRODUCED AT ANNEXURE-A AND ETC.,

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IN W.P.NO.10054/2020:

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THIS WP IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED JUDGMENT DATED 22.11.2019 PASSED BY THE KARNATAKA APPELLATE TRIBUNAL, BENGALURU (CH-2) IN (REVENUE) APPEAL NO.215/2017 WHICH IS PRODUCED AT ANNEXURE-A AND ETC.

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THESE PETITIONS, COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The common petitioner in these petitions has challenged an order passed by the respondent No.1 dated 23.12.2016 in case No.f£ÉÆÃPÀ/gÁ/EA¥ËAqï/Dgï.J£ï./03/2016-17.

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The petitioner and the owners of several properties situate in Muddapura - Karenahalli Viilage, Bidadi Hobli, Ramanagara Taluk and District entered into a Joint Development Agreement for developing the aforesaid lands for residential use in terms of which, the petitioner was entitled to

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3 - NC: 2023:KHC:32721 WP No. 11465 of 2020 C/W WP No. 10054 of 2020

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40% of the developed saleable area, while owners were entitled to 60% of the saleable area. This document when presented before the respondent No.2, was impounded under Section 33 of the Karnataka Stamp Act, 1957 (henceforth referred to as 'Act of 1957') and placed before the respondent No.1 to take out proceedings under Section 37 of the Act of 1957. The respondent No.1 exercising power under Section 37 passed an order under Section 39(1)(b) of the Act of 1957 and directed the petitioner to pay deficit stamp duty of Rs.45,42,072/- along with fine of Rs.100/-.

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Being aggrieved by the said order, the petitioner has filed these petitions.

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The learned counsel for the petitioner submitted that when the document is presented before the respondent No.2 and if the respondent No.2 is of the opinion that the document presented does not carry the prescribed stamp duty, he is entitled to determine the estimated market value of the property transacted and communicate the same to the parties and unless the parties pay the duty on the basis of such valuation, he shall keep the process of registration of such

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NC: 2023:KHC:32721 WP No. 11465 of 2020 C/W WP No. 10054 of 2020

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document pending and refer the matter along with a copy of such instrument to the respondent No.1 for determination of the market value of the property and proper duty payable thereon. He further contended that under the Karnataka Stamp (Prevention of Undervaluation of Instruments) Rules, 1977, (for short, 'the Rules of 1977'), an elaborate procedure is prescribed when the proceedings under Section 45A of the Act of 1957 is taken out. He referred to Rule 4 of the Rules of 1977 and submitted that respondent Nos.1 and 2 have not followed the Rules of 1977 but have proceeded on the assumption that the document is undervalued and have impounded the document under Section 33 of the Act of 1957. He, therefore, submitted that the impugned orders passed by the respondent No.1 suffer from procedural irregularity and they also prejudice the petitioner inasmuch as it is unable to establish before the respondent No.1 that the assessment of the market value by the respondent No.2 is baseless.

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Per contra, the learned Additional Government Advocate for respondent Nos.1 to 4 submitted that the respondent No.2 had impounded the document under Section 33 of the Act of 1957 and thereafter, it referred the matter to

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the respondent No.1, who was bound to take proceedings under Section 37 of the Act of 1957 and pass appropriate orders under Section 39 of the Act of 1957 and therefore, no fault could be found with respondent No.1 in passing the impugned orders.

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I have considered the submissions made by the learned counsel for the petitioner and the learned Additional Government Advocate for respondent Nos.1 to 4 in both these petitions.

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The documents in question are joint development agreements entered into between the petitioner and certain owners of certain lands lying in Muddapur Karenahalli village, Bidadi hobli, Ramanagara Taluk and District, as well as a developer. Therefore, when the documents were presented for registration and if the respondent No.2 felt that sufficient stamp duty was not paid, the respondent No.2 was entitled to assess the market value of the property and thereafter, call upon the petitioner to pay the deficit stamp duty. In the event of failure on the part of the petitioner to pay the stamp duty, it was the duty of respondent No.2 to keep the registration of the

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document/s pending and thereafter, refer the matter to the District Registrar / respondent No.1 for determination of the market value and the payable stamp duty. Thereupon, the respondent No.1 would take up proceedings as prescribed under the Rules of 1977 referred above and based on the manner of determination of the market value as set out in Rule 5 of the Rules of 1977, would pass appropriate orders determining the market value and the proper stamp duty payable.

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As rightly contended by the learned counsel for the petitioner, respondent No.2 could not have impounded the documents which were presented for registration as they were still to be executed and it was for the respondent No.2 to determine the correct market value and the proper stamp duty payable. He, therefore, could not have exercised power under Section 33 of the Act of 1957. Consequently, reference of the cases to the respondent No.1 to take out the proceedings under Section 37 of the Act of 1957 and determine the stamp duty under Section 39 of the Act of 1957 did not arise.

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NC: 2023:KHC:32721 WP No. 11465 of 2020 C/W WP No. 10054 of 2020

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In that view of the matter, as rightly contended by the learned counsel for the petitioner, the entire procedure adopted by the respondent No.2 and the respondent No.1 is wholly irregular and in a way prejudices the petitioner inasmuch as the petitioner cannot have any say to convince the respondent No.1 that the stamp duty payable would be far less than what is determined.

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In view of the above, these petitions are allowed. The order dated 23.12.2016 passed by the respondent No.1 in proceedings No. f£ÉÆÃPÀ/ gÁ/EA¥ËAqï/Dgï.J£ï./02/2016-17 which

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is impugned in W.P. No.11465/2020 and the order dated 23.12.2016 passed by the respondent No.1 in proceedings No. f£ÉÆÃPÀ/gÁ/EA¥ËAqï/Dgï.J£ï./03/2016-17 which is impugned in W.P. No.10054/2020 are set aside. In both these petitions, the respondent No.1 shall consider the reference made by the respondent No.2 as reference under Section 45A of the Karnataka Stamp Act, 1957 and thereafter, take out proceedings in accordance with law and determine the market value based on the spot inspection report and also determine the proper stamp duty payable on the respective joint

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8 - NC: 2023:KHC:32721 WP No. 11465 of 2020 C/W WP No. 10054 of 2020

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development agreement/s dated 04.07.2016. This exercise shall be completed by the respondent No.1 within a period of three months from the date of receipt of a certified copy of this order. The release of the documents shall be considered only after the respondent No.1 passes appropriate orders.

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In view of the above, the order dated 22.11.2019 passed by the Karnataka Appellate Tribunal, Bengaluru in (Revenue) Appeal No.214/2017 which is impugned in W.P. No.11465/2020 and the order dated 22.11.2019 passed by the Karnataka Appellate Tribunal, Bengaluru, in Appeal No.215/2017 which is impugned in W.P. No.10054/2020 are also quashed.

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In view of disposal of W.P. No.10054/2020, I.A. No.1/2023 for stay in the said petition does not survive for consideration and the same stands disposed off.

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Sd/JUDGE

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PMR-para Nos.1 to 4 sma- para No.5 till the end List No.: 1 Sl No.: 22

M/S. Vijaya Bank Employees Housing Co-Operative Society Ltd., v. the District Registrar and the Deputy Commissioner of Stamps

Case brief

What is this about?

What did the court decide?

M/S. Vijaya Bank Employees Housing Co-Operative Society Ltd., v. the District Registrar and the Deputy Commissioner of Stamps

Case brief

What is this about?

What did the court decide?

What the court decided

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