1. As common questions of law arise for determination in these cases, I propose to dispose of them by a common order.
2. Under a registered Gift deed dated 5-4-1980 (Annexure-A in W.P.No. 21236 of 1983) one Smt.Vedavalli gifted immoveable Property bearing Municipal No 21/1, 5th Temple Street, Malleswaram, Bangalore, fully described in the Schedule to the said Deed to the petitioner in W.P No. 21236 of 1983. In the said deed, the value of the said property was stated as Rs. 10,000/- and the stamp duty payable thereon under the Karnataka Stamp Act, 1957 (Karnataka Act 34 of 1957) (hereinafter referred to as the Act) was paid which also has been registered by the concerned Registering Officer under the Indian Registration Act of 1908.
3. On a reference made by the Registering Officer of the said document, the Special Deputy Commissioner for Detection of Under valuation of Stamps, Bangalore (herein-after referred to as the D.C.) issued show-cause notice No. MVD. 1287/80-81 to the petitioner in W.P.No. 21236 of 1983 (Annexure-B) in Form No.II (hereinafter referred to as the Form No.2 notice) specified in the Karnataka Stamps (Prevention of Under valuation of Instruments) Rules, 1977 (hereinafter referred to as the Rules) framed under the Act to determine the proper market value of the property, levy the proper stamp duty thereon and recover the difference to be found due under the Act. On receipt of the said notice (Annexure-B), the petitioner appeared before the D.C. and moved for extension of time for filing her objections. But, the D.C. without acceding to the same, determined the market value and directed the Tahsildar for Detection of Under valuation of Stamps, Bangalore (hereinafter referred to as the Tahsildar) to recover a sum of Rs. 3,840/- as difference of duty from the petitioner, in compliance of which, the said Tahsildar by his notice No. GAL. 52/83-84 dated 9-11-1983 (Annexure-D) has called upon the petitioner to pay a sum of Rs. 3,840/- as difference of stamp duty, the validity of which is challenged by her under Article 226 of the Constitution.
4. Under registered sale deeds dated 10-7-1980 and 25-5-1979 (Annexure-A) the petitioners in W.P.Nos. 21273/83 and 7244/84 respectively have purchased different pieces of lands situated in the City of Bangalore from their vendors for Rs. 21,000/- and Rs. 15,200/- respectively on which the stamp duty then payable under the Act has been paid, which have also been registered by the concerned Registering Officer.
5. On a reference made by the concerned Registering Officer of the said sale deeds, the D.C. issued notices to the petitioners in Form No.2 to fix the proper market value and recover the proper stamp duty under the Act as in the other case (Annexure-B). In response to those notices, the petitioners filed their objections, inter alia, contending that the proper market value had been specified in their sale deeds and the proper stamp duty under the Act had been paid. But, the D.C. without affording an opportunity of hearing to the petitioners thereafter and following requirements of Rules 6 and 7 of the Rules determined the market value and directed the Tahsildar to recover Rs. 2460/- and Rs. 6135/-from the petitioners respectively as difference of stamp duty, in compliance of which, the Tahsildar by his demand notices dated 8-11-1983 and 9-4-1984 respectively (Annexure-D) has called upon the petitioners to pay the aforesaid amounts, the validity of which are challenged by them under Article 226 of the Constitution.
6. Sri K.J. Shetty, Learned Counsel for the petitioners, contend that the determination of market value and the consequent stamp duty payable thereon, even if there was under valuation as claimed by the D.C. that had been disputed before him, was required to be completed in conformity with Rules 4 to 7 of the Rules and not in an adhoc manner as had been done by the D.C.
7. Sri M. R. Achar, Learned Government Advocate, appearing for the respondents, sought to support the impugned demands.
8. In their Petitions, the petitioners have asserted that the D.C. except for issuing Form 2 notice, had not complied with all other requirements of that rule. Rule 6 and Rule 7 of the Rules; that in making the provisional and final determination of the market value, he had not taken into consideration the factors enumerated in Rule 5 of the Rules ; the determination made and the demands issued were in contravention of those Rules and arbitrary. Every one of them have also asserted that along with Form II notices, they had not received copies of the references received by the D.C and they were not afforded 21 clear days to file their objections.
9. In denial of the allegations made by the petitioners, the respondents have not filed their returns and have not also produced their records. In this view, this Court has necessarily to accept the facts stated by the petitioners to the effect that the D.C. had not annexed copies of the references received by him from the Sub-Registrar, had not given 21 clear days for filing objections, had not made the provisional and final determination under Rules 6 and 7 of the Rules and examine the legal contentions on that basis only. Even otherwise, an examination of Form II notices and demands issued by the Tahsildar also support their assertions on facts. With this finding on facts, it is necessary to examine the legal contentions urged for the petitioners.
10. Section 45(l)(A) of the Act introduced by the Act No. 12 of 1975 referred to in Form No. II notice, is the substantive provision that has conferred power to deal with under valuation of market value and stamp duty. Under this provision, power is conferred on the Registering Officer to register the document presented before him, report to the D.C. that he had reason to believe that the market value of the immoveable property detailed in the deed registered by him, had not been properly valued. On receipt of such reference, the D.C. is required to afford an opportunity of hearing, then make an order and communicate the same, which is appealable to the District Judge of the area. The D.C. is also empowered to take notice of a transaction suo motu and deal with the same thereunder, which, however, is subject to the period of limitation stipulated therein.
11. The Rules framed by Government supplement and carryout the object of Section 45(1)(A) of the Act. The Rules make elaborate provisions for dealing with the reference received and deciding the same. The manner and method of determining the market value or the procedure is dealt in Rules 4, 6 and 7 of the Rules.
12. Rule 4 provides for issue of a preliminary or first show-cause notice in Form No. II. Form No. II notice is the very first notice to be issued by the D.C. which requirement has been complied with in all these three cases.
13. Along with the first notice issued under Rule-4 in Form No. 2, the D.C. is required to enclose or annex a copy of the reference received by him from the Registering Officer. The object of this requirement is to enable the person to make his effective representation to the show-cause notice and the material on which that notice is issued by the D. But the D.C. had issued notice in Form No. II somewhat inadvertently, without enclosing a copy of the reference received by him and overlooking the relevant column in that form. Without any doubt, the D.C. acted illegally in not annexing copies of the reference received by him.
14. In the notice issued in Form No. II, the person to whom it is addressed is required to be given 21 days time from the date of its service for filing his objections, which undoubtedly can be extended for sufficient cause. According to the petitioners, they were not given the minimum time or the extension sought in W.P. No. 21236 of 1983.
15. On receipt of the objections by the person to whom a notice is issued, the D.C. is required to make a provisional order determining the market value. In making that detormination, the D.C. is required to take into consideration the factors enumerated in Rule 5. The factors enumerated in Rule 5 with reference to different kinds of property are very detailed and elaborate.
16. As to how the matters should be dealt thereafter is set out in Rules 6 and 7 of the Rules and it is now necessary to ascertain their true scope and ambit as also Rule 5 of the Rules that enumerates the factors to be taken into consideration in making a provisional order under Rule 6 of the Rules.
17. On making a provisional order under Rule 4(4) with due regard to the factors enumerated in Rule 5 the D.C. is required to send a copy of that order also indicating the difference of duty payable in Form No. III over again giving an opportunity to that person to file his objections within such reasonable time he may fix. On receipt of the objections, if any, to be filed before him or otherwise, the D.C, is required to afford an opportunity of oral heating to such person on a date to be fixed thereto, hear such person if he chooses to appear before him and then make a final order under Rule 7 of the Rules. In the final order to be made, the D.G. is enjoined to consider the evidence placed and the objections urged before him. On making such an order, the D.C. is required to communicate the same to the person to whom notices had been issued as also to the Registering Officer on whose reference he initiated proceedings.
18. When the D.C. initiates suo motu proceedings, he is required to follow the above requirements except annexing copy of the reference and sending a copy of his order to the Registering Officer.
19. On the pleas urged and otherwise it is manifest that the D.C. had not followed more than one substantial requirements in determining the market value of the concerned properties which will be the basis for determining the difference of stamp duty. When that is so, the demands made by the Tahsildar on the basis of perfunctory and illegal determinations made by the D.C. cannot be upheld.
20. Earlier, I have noticed that proper notices under Rule 4 in Form 2 had been issued to the petitioners however without annexing the references. In this view, it is proper to maintain Form No. 11 notices with a direction to the D.C. to supply copies of references received by him, affording 21 days to the petitioners to file their representations and objections.
21. In the light of my above discussion, I make the following orders and directions -
(i) I quash the determination made by the D.C. on the references received by him from the Registering Officer and the consequent demand notices issued to the petitioners by the Tahsildar.
(ii) I uphold Form No. II notices issued to each of the petitioners. But, 1 direct the D.C. to forward to each of the petitioners the respective references received by him from the concerned registering officer giving them 21 days for filing their representations and objections from the dates of service of those references and that when any of the petitioners files his/her written representations/objections within 21 days of their receipt or such extended time, then the D. C. shall redetermine the matters in accordance with law and the observations made in this order and recover such amounts as are found due in accordance with law.
22. Writ Petitions are disposed of in the above terms.