T.K. Basu, J.
1. This is an application under Article 226 of the Constitution of India praying for the quashing of a notice issued under the Indian Stamp Act. 1899 as applicable to Tamil Nadu.
2. The facts and circumstances relating to the making of the present application may be briefly noted.
3. The petitioner No. 1 is a Company Incorporated under the appropriate laws of the United Kingdom. The principal place of business of the petitioner No. 1 in India is at 2. Netaji Subhas Road, Calcutta withinthe jurisdiction of this Court. The petitioner No. 2 is the agent of the petitioner No. 1 in respect of its business in India.
4. Besides the petitioner No. 1, the petitioner No, 2 was also the agent of the following Companies incorporated under the appropriate laws of United Kingdom for their business in India.
1. The Consolidated Tea & Lands Co (India) Limited.
2. The Amalgamated Tea Associates Co. Ltd.
3. The Kanan Devan Hills Produce Co. Ltd.
4. Achabam Tea Co. Ltd.
5. The Borhat Tea Co. Ltd.
6. The Chubwa Tea Co. Ltd.
5. By an agreement dated the 30th Dec., 1975 between the petitioner No. 1 and the Companies mentioned in the immediate, preceding paragraph hereof (hereinafter referred to as the Sellers) and the petitioner No. 2 the sellers agreed to sell and the petitioner No. 2 agreed to buy as a going concern the Indian business of the sellers for the following consideration :
(i) One Rupee each for the goodwill of James Finlay and of each of the Tea Companies.
(ii) Rs. 12 crores for the Immoveable properties, plant and machinery, office furniture, patents, licences, motor cars and other vehicles and implements and other moveable property (other than current assets).
(iii) The book value as at the close of business on 31st December, 1975 for all assets taken over other than those mentioned in (i) and (ii) above, as reduced by the amount of all liabilities and obligations as mentioned in Clause 3 thereof (other than liability for gratuity and other retirement benefits for the employees as may be taken over in terms of Clause 6 thereof).
Provided always that verification of all such assets taken over other, than those mentioned in (i) and (ii) above and of the liabilities and obligations taken over by the purchaser in terms of Clause 3 thereof shall be carried out by a firm of Chartered Accountants acceptable to James Finlay and the purchaser or, failing agreement between James Finlay and the purchaser, by a firm of Chartered Accountants to be nominated by the President of the Institute of Chartered Accountant in India and the certificate of such firm as to the consideration payable in terms of this Item (iii) shall be conclusive and final and binding on lames Finlay, the Tea Companies and the purchaser.
6. It was further agreed that out of sum of Rs. 12 crores the petitioner No. 2 would issue shares at par in respect of a sum of Rs. 218 lakhs and the balance sum would be credited in the books of the petitioner No. 2 as an unsecured loan carrying simple interest at the rate of 11 % per annum from the 1st January, 1976.
7. This agreement was expressly subject to the consent and approval of the Reserve Bank of India and the Bank of England.
8. The Second Schedule of the agreement specifically provided the break up of the consideration in respect of each, of the sellers.
9. Thereafter there was a Supplemental agreement between the parties abovenamed dated the 31st December, 1976 the. details whereof are not really material for our purpose.
10. At all material times, until the time hereinafter mentioned, the petitioner No. 1 was the owner inter alia of Pachamalia Estate, Uralikkal Estate, Velonie Estate, Selaliparai Estate (since amalgamated with Uralikal and Velonie Estates) and Valpari Estate in Anamalai Hills Village, Tamil Nadu, comprising of immovabe properties. The other major properties and assets of the petitioner No. 1 in India were ;
Nahorani and Nahortoli Tea Estates in the State of Assam and Devicolam, Periakanal and Pullivassal Estates in the State of Kerala.
11. The said Tea Estates including the said immoveable properties situated in the State of Tamil Nadu were agreed to be sold to the petitioner No. 2 under the said agreement dated 30th December, 1975.
12. Thereafter the petitioners approached the Reserve Bank of India for its sanction and/or permission to the aforesaid transaction. The Reserve Bank of India by its letter dated 9th February, 1977 duly approved of the said agreement. The letter of the Reserve Bank of India is material for the purpose of this application and is set out in full.
'James Finlay & Co. Ltd., 2. Netaji Subhas Road. Calcutta-700001.
Sale as a 'going concern' of the business undertakings in India of the seven sterling tea companies belonging to Finlay Group of U. K. and those of Indian branches of James Finlay & Company Ltd.'
'With reference to your letter dated 19th November, 1975, you have our approval forthe sale of the undertakings in India, as going concerns of James Finlay & Company Limited, the Consolidated Tea and Lands Company (India) Ltd., the Amalgamated Tea Estates Company Limited, the Anglo American Direct Tea Trading Company Limited, the Kanan Devan Hills Produce Company Limited, Achabam Tea Company Limited, the Borhut Tea Company Limited and the Chubwa Tea Company Limited to Tata-Finlay Limited on the basis of the terms and conditions set out in the Sale Agreement dated 30th December, 1975 as modified by your letter no. 08/01/08/05 dated 14th Dec., 1976.
2. This approval is effective from 31st December, 1976 and may be treated as requisite permissions/approvals to the parties concerned for all actions taken and to be taken in pursuance of the said Agreement read with the said letter dated 14th Dec., 1976.
3. Please note that the above approval is subject to the following terms and conditions :
(a) The valuation of the fixed assets to be acquired by Tata-Finlay Ltd. from the above companies shall be Rs. 11.50 crores (Rupees Eleven crores and fifty lakhs) of which Rs. 1.98 crores (Rupees one crore and ninety eight lakhs) will be met by issue of equity shares worth Rs. 1.98 crores (Rupees one crore and ninety eight lakhs) as fully paid-up to the said seven sterling companies other than James Finlay Company Ltd. The balance of Rs. 9.52 crores (Rupees nine crores and fifty two lakhs) after meeting the stamp duty and registration charges, Would be treated as loan to Tata-Finlay Ltd. to be repatriated to U. K. in five equal annual instalments with interest at 5% (five per cent) subject to tax on deferred instalments.
(b) Repatriation of the amount due to the sterling companies in respect of net current assets minus liabilities as on 31st Dec., 1975 shall be subject to the normal Ex-change Control regulations and the remittance will be allowed subject to production of a 'No objection Certificate' from Tax Authorities in respect of applicable taxes,
(c) Tata-Finlay Ltd. will obtain approval under MRTP Act and shall abide by such conditions as may be decided to be imposed on it.
(d) The sale will be effective from 1st Jan., 1976 in terms of the aforesaid agreement.
Sd/- T. R. Devarajan
13. In terms of the said agreement read with line supplemental agreement the petitioner No. 1 duly transferred the immovable properties mentioned hereinabove to the petitioner No. 2 for a consideration of Rupees 75,08,224 payable by allotment of shares for a sum of Rs. 17 lakhs in the petitioner No. 2 and the balance to be treated as a loan by the petitioner No. 1 to the petitioner No. 2 repayable with interest at the rate of 5% per annum from 1st January, 1976. In terms of the said deed of transfer the petitioner No. 1 was liable to pay the Stamp Duty payable on the transfer.
14. On or about 13th December, 1978 to the utter surprise of the petitioners a notice dated the 13th December, 1978 was issued from the Office of the respondent No. 4 alleging that a reference has been received under Section 47-A (1) of the Indian Stamp Act, 1899 from the Joint-Sub-Registrar No. 1 Madras Registering Office being the respondents Nos. 2 and 3 for determining the market value of the said properties, transferred by the petitioner No. 1 to the petitioner No. 2. By the aforesaid letter, the petitioners were asked to submit their representation within 21 days from the date of the notice to show that the market value of the properties have been truly and correctly set forth in the instrument of transfer.
15. Along with the said notice, the reference made by the respondents Nos. 2 and 3 was also enclosed. From the documents it appeared that the respondents were alleging that the market value of the transferred properties was estimated to be Rs. 2,04,87,330 and the stamp duty payable was Rupees 22,53,610.50.
16. It is this notice dated the 13th Dec., 1978 which is challenged before me in the present application.
17. Mr. Sankar Ghose appearing on behalf of the petitioners drew my attention to the provisions of Section 47-A (1) and (2) of the Indian Stamp Act, 1899 as applicable to Tamil Nadu which provide as follows:
'(1) If the registering office appointed under the Indian Registration Act, 1908 (Central Act 16 of 1908) while registering any instrument of conveyance, exchange or gift has reasons to believe that the market value of the property which is the subject matter of conveyance, exchange or gift has not been truly set forth in the instrument, he may, after registering such instrument, refer the same to the Collector for determination of the market value of such property and the proper duty payable thereon.
(2) On receipt of a reference under Sub-section (1), the Collector shall, after giving the parties reasonable opportunity of being heard and after holding an enquiry in such manner as may be prescribed by rules made under this Act, determine the market value of the property which is the subject-matter of conveyance, exchange or gift und the duty as aforesaid. The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty.'
18. It was submitted by Mr. Ghose that, on a true construction of the above mentioned statutory provisions, they are intended to apply to those private transfers which the registering authority has reason to believe has been undervalued with the object of evading the payment of the proper stamp duty payable thereupon. It was submitted with reference to the approval of the Reserve Bank of India to the transaction in the instant case, the terms of which I have set out in full that there can be no question of any undervaluation of the property transferred or the evasion of any stamp duty payable thereupon. It was submitted that in the facts and circumstances of the present case the registering authority could not possibly have any reason to believe that the document sought to be registered does not truly set forth the market value of the property. Thus, the condition precedent for the assumption of jurisdiction under Section 47-A (1) and (2) not being there the impugned notice and proceedings on the basis thereof should be held to be without jurisdiction and should be quashed.
19. Learned advocate appearing on behalf of the respondents faintly contended that this Court has no jurisdiction to entertain this application. This submission was on the basis that all the respondents have their office at Tamil Nadu outside the jurisdiction of this Court.
20. This submission, however, in my view. is without any merit. This is because as stated in paragraph 14 of the petition and as will appear from the impugned notice itself it was addressed to the petitioner No. 1 at 2, Netaji Subhas Road. Calcutta. It would necessarily follow that it must have been received by the petitioner No. 1 at the above address which is very much within the jurisdiction of this Court. It cannot be disputed that the receipt of the impugned notice is an essential part of the cause of action in this case. As such this submissionon behalf of the respondents on the question of lack of jurisdiction must be rejected.
21. I must say that on the merits of the contention on behalf of the petitioner no effective answer was put forward by the respondents.
22. In my view, the contention on behalf of the petitioner is sound and should be accepted. Clearly the scheme of Section 47-A of the Indian Stamp Act, 1899 is to deal with those cases where private parties by arrangement deliberately undervalue the property which is the subject-matter of transfer with a view to defraud the Government of legitimate revenue by way of stamp duty. It that scheme is kept in mind it is very difficult to see how that section can be held to be attracted in the instant case. Undoubtedly, the modus operandi of the transfer and the valuation were privately agreed upon but there is no dispute that the entire arrangement was placed before the Reserve Bank of India for its sanction and approval. It cannot be disputed that the Reserve Bank of India, after such enquiry as they must have deemed fit and proper, sanctioned and approved of the arrangement. As is apparent from the document approving the transfer the Reserve Bank of India imposed certain conditions of its own which were accepted by the parties. That being the position, the question of the Registering Officer having reason to believe that the market value of the property has not been truly set forth in the instrument of transfer does not arise in the facts and circumstances of the present case. Without intending to lay down any broad proposition as to whether Section 47-A of the Indian Stamp Act, 1899 would be inapplicable in all such cases, it is enough to hold that the section is not attracted in the facts and circumstances of the instant case. That being so. the impugned notice and all proceedings on the basis thereof must be held to be without jurisdiction and void
23. The contention of the petitioner therefore succeeds.
24. In the result this application succceds and the Rule is made absolute.
25. There will be a writ in the nature of certiorari quashing the reference No. 74 of 1977 dated the 3rd December, 1977 and there will be a writ in the nature of Mandamus directing the respondents to forbear from giving effect thereto in any manner whatsoever. There will also be a writ in the nature of Mandamus directing the respondents to forthwith, recall, cancel and Withdraw the notice dated the 13th December, 1978 and to forbear from giving effect thereto in any manner whatsoever. 26. There will be no order as to costs.