Court No. - 30
Case :- WRIT - C No. - 9817 of 2021 Petitioner :- Zircon Sugar Solutions Private Limited Respondent :- State Of U.P. And 2 Others Counsel for Petitioner :- Syed Fahim Ahmed,Anurag Khanna (Senior Adv.) Counsel for Respondent :- C.S.C.
Hon'ble Ajay Bhanot,J.
The petitioner has assailed the proceedings taken out under Section 47-A read with Section 33 of the Indian Stamp Act by issuance of a show cause notice dated 10.11.2020.
The impugned notice under Section 47-A read with Section 33 of the Indian Stamp Act records there was a shortfall in the payment of stamp duty arising from the sale of Chini mill at Ghughli, Tehsil Sadar, District Maharajganj which has caused loss to the State revenue. The petitioner is asked to show cause as to why it be not asked to deposit the deficient stamp duty along with the penalty and interest thereon.
Sri Anurag Khanna, learned Senior Counsel assisted by Sri Syed Fahim Ahmad, learned counsel for the petitioner has challenged the show cause notice by contending that it is beyond jurisdiction. The stamp duty had been determined with finality by the order dated 11.03.2011 passed under Section 31 of the Indian Stamp Act. The issue of liability cannot be reopened. The second contention of the petitioner is that the property was sold through public auction. The bid amount which ultimately became the sale consideration reflected the correct market value of the property at the time of the sale. Thirdly, the validity or otherwise of the sale is under challenge before the Supreme Court in SLP No. 16362 of 2010 (Rajiv Kumar Mishra Vs. State of U.P. and others) as well as in Special Leave to Appeal No. 26351 of 2016 Civil appeal No. 4766 of 2010.
In opposition Sri Sanjay Goswami, learned Additional Chief Standing Counsel on behalf of the State submits that the writ petition is not maintainable since it is against a show cause notice issued by an authority having jurisdiction to take out the impugned proceedings. The issues raised do not go to the root of the jurisdiction. The order dated 11.03.2011 is not relatable to Section 31 of the Indian Stamp Act. There was no final determination of stamp duty in terms of Section 31 of the Indian Stamp Act and further the certificate of sufficiency as contemplated under Section 32 of the Indian Stamp Act was never issued.
He calls attention to various fault lines in the order dated 11.03.2011 to demonstrate that the order is not final in nature.
Secondly, it is contended that the auction in issue was not reflective of the correct market price since it was not an auction contemplated in Article 18 Schedule 1-B of the Indian Stamp Act (U.P. Amendments). Thirdly, the duty determination is subject to the result of the SLPs pending before the Supreme Court.
I have heard learned counsel for the parties.
The first issue which needs consideration is whether the order dated 11.03.2011 purportedly passed under Section 31 of the Indian Stamp Act makes a final determination of the stamp liability. Section 31 of the Indian Stamp Act is extracted below for ease of reference:
“ 31. Adjudication as to proper stamp. —(1) When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and not less than 3[fifty naye paise]) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable.
(2) For this purpose the Collector may require to be furnished with an abstract of the instrument, and also with such affidavit or other evidence as he may deem necessary to prove that all the facts and circumstances affecting the chargeability of the instrument with duty, or the amount of the duty with which it is chargeable, are fully and truly set forth therein, and may refuse to proceed upon any such application until such abstract and evidence have been furnished accordingly: Provided that — (a) no evidence furnished in pursuance of this section shall be used against any person in any civil proceeding, except in an inquiry as to the duty with which the instrument to which it relates is chargeable; and (b) every person by whom any such evidence is furnished, shall, on payment of the full duty with which the instrument to which it relates, is chargeable, be relieved from any penalty which he may have incurred under this Act by reason of the omission to state truly in such instrument any of the facts or circumstances aforesaid.”
For the purpose of instrument in the instant controversy the prerequisite of proceedings under Section 31 require that person should produce the instrument before the Collector along with relevant affidavit and documents and evidences which have a bearing on the chargeability of the instrument. It has to be examined whether the order dated 11.03.2011 satisfies the jurisdictional prerequisites of Section 31 of the U.P. Stamp Act.
The order dated 11.03.2011 purportedly issued under Section 31 of the Indian Stamp Act by the Collector Stamps (ADM Finance and revenue) Maharajganj references at the outset a communication dated 25.02.2011 sent by the Managing Director of the U.P. State Sugar Mill Limited Vipin Khand, Gomti Nagar, Lucknow. Abstracting the content of the aforesaid letter it is stated that the decision for sale/ privatization of the sugar mills was taken by the State Government. The Government Order dated 29.06.2007 issued various guidelines for transparent disinvestment procedure and allied matters. The sale of sugar mill was made in accordance with the said guidelines. The composition of the committee designated as the Core Group Secretaries on disinvestment was thereafter disclosed in the order. The committee comprised of the Principal Secretary Rank Officers and is headed by the Chief Secretary Government of U.P. M/s IFCI, New Delhi was appointed as disinvestment consultant and M/s Chitlay New Delhi was appointed as legal consultant of the process.
On 18.06.2010 a decision was taken by the aforesaid committee for “disinvestment by slump sale”. In this regard extracts of notice cum request for qualification was issued (E.O.I cum R.F.Q and R.F.P) and request for proposal as well as disinvestment by slump sale was published in various newspapers on 21.06.2010 by the committee of Secretaries. The valuator submitted a valuation report in regard to the disinvestment policy of the State Government before the Committee of Secretaries to the Government of U.P. The disinvestment consultants fixed the reserved price on the foot of the valuation report and presented the same before the committee of Secretaries. The committee of Secretaries on 20.08.2010 determined the expected price of various mills including the mills in dispute.
On 13.08.2010 the E.O.I cum R.F.Q were received in respect of various mills including the mill in dispute. On 20.08.2010 the committee of Secretaries declared all the bidders to be eligible to participate in the next stage of final bidding. On 21.08.2010 all the eligible bidders were provided with the amended R.F.C. On 16.09.2010 the committee opened R.F.P/ final bid for the Hoogli unit (unit in issue). M/s Trikul Food and Agro Industries was the only bidder for the Hoogli mill and it submitted R.F.P. final bid for the said unit. On 17.09.2010 the group of Secretaries took a decision of proceeding further in accordance with the Government order dated 30.04.2009 and the Swiss Challenge Method was adopted. As per the procedure prescribed the E.O.I cum R.F.Q advertisement was placed in various newspapers inviting E.O.I cum R.F.Q. The bidders who responded to the said advertisement were as follows:
1. Gautam Realtors Pvt Ltd Varanasi
2. IB Commercial Pvt Ltd Mumbai.
3. IB Trading Pvt Ltd Fort Mumbai.
4. Namrata marketing (P) Ltd Delhi.
5. PNC Projects Pvt. Ltd New Delhi.
6. Sr Buildcom Pvt Ltd New Delhi.
7. Sri Radhey Intermediaries p Ltd Sakkarpur Delhi.
8. Reckon Power Industries p Ltd Delhi.
The bid submitted by the original bidder on 16.09.2010 and the bid submitted by the challengers on 01.11.2010 are thereafter extracted in the order. The impugned order thereafter references various Government Orders and the order dated 06.01.2011. M/s S.R. Buildcom Pvt Ltd was declared as the highest bidder challenger.
M/S S.R. Buildcom Pvt Ltd deposited the relevant documents which were examined by the disinvestment consultant M/s IFCI. Upon the aforesaid examination of the documents, the disinvestment consultant and the legal consultant submitted their report asserting that all documentation in regard to the SPV were consistent with the provisions of the RFP and the S.P.V. There was no objection to register and execute the slump sale agreement and the sale deed with the S.P.V M/s Zircon Sugar Solution Pvt Ltd (the petitioner).
With the aforesaid foreground, the order dated 11.03.2011 records that the slump sale agreement as well as the sale deed which was proposed to be executed were submitted along with the treasury challan of Rs. 200/- for determination of stamp duty. In the application for determination of the stamp duty Sri Vinay Preet Dubey, Managing Director of the U.P. State Sugar and Cane Development Ltd, Vipin Khand, Gomti Nagar submitted various Government Orders. The case was registered. A committee was constituted by the District Magistrate for evaluation of the stamp duty upon enquiry. The committee constituted by the District Magistrate was composed of ADM, Maharajganj assisted by S.D.M, Sadar Maharajganj, Tehsildar Sadar District Maharajganj, Sub-registrar, Sadar District Maharajganj, General Manager District Industrial Centre, Maharajganj, Executive Engineer P.W.D Maharajganj, District Government Counsel (Revenue), Maharajganj, District Government Counsel (Civil), Maharajganj.
The aforesaid committee submitted its report on 10.03.2011 to the Additional District Magistrate, Maharajganj. Thereafter the order extracts in detail the procedure for valuation and bidding which were created by the group of Secretaries and also the reports of disinvestment consultant and the legal consultant. The Government Order dated 04.01.2011 records the highest bid of 3.71 crores by the highest bidder (challenger No. 1 M/s S.R. Buildcon Pvt Ltd) is thereafter referenced. (This is a repetition in the order since the entire exercise of determining the stamp duty was predicated and governed by the report of the group of Secretaries).
The enquiry into the determination of stamp duty is taken forward by the Collector Stamps in the order dated 11.03.2011, by reciting that the unit in question was transferred by means of slump sale agreement which was held in public interest as well as State interest. The order dated 11.03.2011 thereafter proceeds to find that the decision for sale of the unit in question by Slump Sale agreement was taken in public interest and State interest by the State Government. It was made in accordance with various Government Orders, the reports of the disinvestment consultant and the legal consultant which clearly concluded that the highest bid amount with the sale deed effected on the highest bid amount of Rs.3.71 crores.
The order thereafter categorically finds that there is a possibility that the gross valuation of the property according to the circle rate is higher than the value which was fetched by the auction.
(Emphasis Supplied) However, the sale was approved by the concerned Principal Secretary and also by the high level committee headed by the Chief Secretary. On this footing it is recorded that it will not be advisable to take a decision contrary to the high level committee and the Government Order. As such it would be proper to fix the valuation of the property at Rs. 3.71 Crores which is the amount disclosed in the slump sale agreement. The stamp duty was accordingly fixed at Rs. 18.55 lakhs. Thereafter another reference was made to the committee set up by the District Magistrate to determine the valuation of the property and the committee of secretary headed by the Chief Secretary, Government of U.P and the decision taken. Yet again reference is made to the committee set up by the District Magistrate and also the sale amount as determined by the committee of secretary headed by the Chief Secretary Government of U.P and the Government Order as aforesaid.
On the back of the preceding narrative the order dated 11.03.2011 concludes by finding that the highest bid amount of Rs. 3.71 Crores as recorded in the Government Order dated 04.01.2010 and the report of the committee set up by the District Magistrate on the basis of Government Order dated 04.01.2010 regarding the highest bid of Rs. 3.71 crores and the report of the committee set up by the District Magistrate dated 10.03.2011 the property is valued at Rs. 3.71 crores which is the highest bid amount. The stamp duty is evaluated at Rs.
18.55 lakhs accordingly.
Under Section 31 of the Stamp Act Collector Stamps is a statutory authority who is required to make an independent valuation of the stamp duty based on relevant facts and considerations. In the instant case as is evident from the order of the Collector Stamps dated 11.03.2011, the Additional District Magistrate/Collector Stamps entirely abdicated his independent decision making capacity. The decision failed to take into relevant considerations for determining the market value of the property. The findings were completely subservient to the Government Orders and decisions of the high level committee headed by the Chief Secretary Government of U.P.
The said order places sole reliance on the decisions taken by the committee headed by the Chief Secretary and the report submitted by the disinvestment committee for determining the market value to the exclusion of all relevant considerations. The order dated 11.03.2011 reflects administrative propriety of an officer adhering to decisions of superiors. It does not depict independent application of mind of a statutory authority to relevant considerations as contemplated under Section 31 of the Indian Stamp Act. It is noteworthy that the order dated 11.03.2011 also records that valuation recommended by the committee headed by the Chief Secretary and other government authorities do not faithfully depict the true market value of the disputed property.
The order dated 11.03.2011 is clearly not relatable to Section 31 of the Indian Stamp Act.
Further it is noteworthy that no sufficiency certificate contemplated under Section 32 of the Indian Stamp Act was issued to the petitioners. The final determination of the stamp liability can be concluded after issuance of a certificate under Section 32 of the Indian Stamp Act.
In the wake of the preceding discussion the impugned show cause notice cannot be faulted for undertaking the enquiry to determine the correct market value of the property which was transferred under the slump sale agreement.
The second issue relates to the auction which was conducted for the sale of the unit in question. The submission of the State that the auction process was not fully transparent and open as to come within the ambit of Article 18 Schedule 1-B of the Indian Stamp Act, this is a matter of fact which needs to be determined by the competent authority.
It is to be seen whether the bidders had knowledge and an equal opportunity to challenge bids made by rivals to better their own bids in an open process or not. Further the ingredients of auction as contemplated under Article 18 Schedule 1-B of the Indian Stamp Act are satisfied in the instant case or not also need to be examined independently.
In the wake of the preceding discussion the matter is remitted to the Collector Stamps, Maharajganj to decide the same expeditiously preferably within a period of four months from the receipt of copy of this order downloaded from the official website of the High Court of Judicature at Allahabad. The concerned Court/ Authority/ Official shall verify the authenticity of such computerized copy of the order from the official website of High Court Allahabad and shall make a declaration of such verification in writing in accordance with law consistent with the observation made in the judgment.
It is open to the parties to make all submissions in accordance with law before the Collector Stamps.
The writ petition is disposed of with the above direction.
The show cause notice does not call for any interference. It is open to the parties to raise all submissions as per law before the Collector Stamps. It is also provided that the determination made by the Collector Stamps shall be subject to the final decision of the Supreme Court in SLP No. 16362 of 2010 (Rajiv Kumar Mishra Vs. State of U.P. and others) as well as in Special Leave to Appeal No. 26351 of 2016 Civil appeal No. 4766 of 2010.
Order Date :- 28.7.2021 Nadeem Ahmad