Registrar of Assurance & Anr Vs ASL Vyapar Pvt ltd & Anr (Supreme Court)
Date-10th November, 2022
Sub- Whether Registrar while registering any immovable property ,the value of which has been determined in a court monitored public auction can apply the provisions of Section 47A of the Indian Stamp Act (West Bengal Amendment) Act, 1990 to allege undervaluation of the property and demand higher stamp duty?

A three judges bench of Supreme Court in this case was dealing with an important issue regarding determination of valuation of a property which itself was arrived in a court monitored auction sale ,the price of which was arrived at after advertisement in a widely circulated newspaper. Moreover, the price was substantially low in view of more than 100 tenants being there. In a connected matter, the price of the properties was arrived by the Official liquidator where the company was being ordered to be wound up. The registrar in both these cases demanded differential stamp duty in view of Section 47A of the Act. In SLP before SC, the state argued that the auction sale was often stressed sale and did not reflect the true market price. It was also argued that in view of Section 47 of the Act, the order passed by the Revenue authority could not be challenged before a court of law. The Supreme Court of India however observing that Section 47A of the Act cannot be said to have any application to a public auction carried out through court process/receiver as that is the most transparent manner of obtaining the correct market value of the property, also noted that undervaluation is not uncommon as payments are made through different method(referring to cash payments). Nevertheless, the fact that there are tenants in a property leads to substantial erosion of market value and when the Court monitored price has been arrived at , leading the Registrar to have a say on such valuation would amount to Registrar sitting in appeal over the decision of the court permitting the sale. Thus the Registrar’s appeal was dismissed.

This decision will have far reaching implication on all Real Estate transactions and it can definitely be used even in income tax proceedings to buttress the fact that encumbrances can lead to price being lower.

Ramesh Patodia
11-11-2022