UP Zamindari Abolition & Land Reforms Act Can't Be Applied To Determine Market Value Under Stamp Act: Allahabad High Court

The Allahabad High Court has held that the U.P. Zamindari Abolition and Land Reforms Act, 1950 cannot form the basis of determination of market value under the Indian Stamp Act, 1899.

Justice Syed Qamar Hasan Rizvi held,

“There is no doubt that the provisions of U.P. Zamindari Abolition and Land Reforms Act, 1950 encompasses different object and cannot be applied for the purpose of determination of the value of the land insofar it relates to Indian Stamp Act. Such determination is not controlled in any manner by the provisions of U.P. Zamindari Abolition and Land Reforms Act 1950. Notification under Section 143 of the U.P. Zamindari Abolition and Land Reforms Act, 1950 can at best be one of the factors for consideration at the time of determination of the market value under the Indian Stamp Act and relevant Rules as prescribed under the U.P. Stamp (Valuation of Property) Rules, 1997.”

It also held that the market value cannot be solely based on whether a property is for residential or commercial use. The Court held,

“In other words, in a particular case, nature of land and its current use may not be the sole factor to assess the market value of the same. Rather, the prevalent rates at which the properties adjacent to the subject matter of instrument are being sold and purchased shall also be taken into consideration for determining the market value of the said property.”

Petitioner purchased a plot of land for which she paid stamp duty of Rs. 46,00,000/- per hectare. She pleaded that she had paid 150% excess cost due to proximity to a village residential area. Total value came to be about Rs. 20,53,000/- and total stamp duty paid was Rs. 92,650/-.

Due to deficiency being pointed out in payment of stamp duty, the Collector, Barabanki ordered a deficiency of Rs. 4,28,850/- and imposed penalty of Rs. 1 lakh on the petitioner. it was also recorded that despite the sale deed defining the land as agricultural, there was no agricultural activity on the land but there were some shops and a primary health centre on different sides of the plot.

Petitioner further pleaded that the order was ex-parte and when she applied for recall of the order, the Collector recalled the order with the condition of the deposit of 25% amount of the stamp duty. Petitioner deposited Rs. 1 lakh plus Rs. 32,250/-. However, impugned order was passed by the Collector which was upheld in revision. Accordingly, petitioner approached the High Court.

She submitted that the remaining amount of stamp duty had already been deposited by her. However, it was pleaded that the value of the aara machine, trees on the land and the land itself were wrongly calculated by the Sub-Registrar. Inter alia, it was argued that the land was recorded as an agricultural land under the UPZALR Act but the stamp deficiency was calculated based on potential future use of the land.

In Ram Gopal versus State of U.P. and others, the Allahabad High Court had held that before passing an order under Section 47-A of the Indian Stamp Act, the Collector or its authority must do an inspection of the property after informing the concerned party. It held that ex-parte inspection cannot form the sole basis for order under Section 47-A.

Similar order was passed by the High Court in Ram Khelawan @ Bachcha versus State of U.P. and another.

Justice Rizvi held that the 'notice' to the petitioner as contemplated under Rule 7(3) of the U.P. Stamp (Valuation of Property) Rules, 1997 was not served in the present case and there was no evidence on record to demonstrate otherwise. It further held that no oral or documentary evidence was recorded before forming a conclusion regarding deficiency of stamp and only report submitted by the Niab-Tehsildar was relied upon, which is a contravention of the Stamp Act.

The Court further relied on Ajay Agarwal versus Commissioner, Reena Gupta versus State of U.P. and others and Smt. Leela Devi Shah versus State of U.P. and others where Allahabad High Court held that burden to prove that market value of land is higher than that declared is on the State and must be supported by material evidence.

“Rather, the prevalent rates at which the properties adjacent to the subject matter of instrument are being sold and purchased shall also be taken into consideration for determining the market value of the said property. Further, evidence of bona fide sales between prudent vendor and prudent vendee of land, situated near-about land possessing same or similar advantageous features would furnish basis to determine the market value,” held Justice Rizvi.

The Court relied on Haroon Ahmad & Ors. versus State of U.P. and Sunil Jaiswal and Others versus State of Uttar Pradesh and Others where the Allahabad High Court had held market value of a property cannot be question only because there was no notification under Section 143 of the U.P. Zamindari Abolition & Land Reforms Act, 1950. It was held that “Section 143 of the U.P. Zamindari Abolition & Land Reforms Act, 1950 is for a different purpose and cannot control the determination of the market value under the Indian Stamp Act, 1899.”

Accordingly, it was held that

“Presumption of usage of subject matter of instrument in future for some commercial purposes cannot be the ground of invocation of the provisions of the Indian Stamp Act for alleged deficiency in stamp duty. The Collector even could not cite any exemplar to show that the properties adjacent or around the subject matter of instrument have been sold or purchased at the commercial rate. Thus, the findings on the basis of which the impugned deficiency of stamp duty has been determined is unsustainable.”

Holding that impugned orders suffered from serious perversity and were based on irrelevant presumptions without appreciation of any oral or documentary evidence by the Collector, the Court quashed them with a direction to the Collector to refund the amount deposited by the petitioner during the pendency of the writ petition.

Case Title: Smt Raziya Kahtoon Versus State of U.P Thru Prin Secy Stamp and Registration Lko and Ors [WRIT - C No. - 19818 of 2017]

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