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M/s. Sakthi & Co., Versus Shree Desigachary

2006 (4) TMI 542 - MADRAS HIGH COURT

C.R.P.No.3092 OF 1996 - Dated:- 7-4-2006 - The Hon'ble Mr.Justice M.Karpagavinayagam, Mr AR.Ramalingam And Ms.Justice K.Suguna For petitioner : Mr.V.Sitharanjandas, Veeranan. For respondent:Mr.M.V.Venkataseshan ORDER M.Karpagavinayagam, The above is the question, posed before this Full Bench. 2. Facts : "(i) The landlord, respondent herein, filed a petition, namely, R. C.O.P.No.131 of 1993 before the Rent Controller under Section 4 of the Tamil Nadu Buildings (Lease & Rent Control) .....

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alue from the Sub-Registrar's Office and the valuation register from the Municipality, and, on the basis of the reports of the Advocate Commissioner and the Chartered Engineer and also taking the guideline value at ₹ 250/- per square feet, fixed the fair rent at the rate of ₹ 2,642/- per month. (iv) The tenant/petitioner, challenging the said fixation of fair rent, filed R.C.A.No.136 of 1994 before the Rent Control Appellate Authority. (v) After hearing the counsel for the partie .....

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t (as he then was), by the learned counsel for the petitioner/tenant, is, that the authorities below should not have accepted the guideline value, maintained by the Sub-Registrar's Office, or, the valuation register, maintained by the Municipality, as the basis for fixation of fair rent, and they should have fixed the fair rent only on the basis of the market value of the land, considering the sale deeds executed by the parties, with reference to the land situated in the area, at the relevan .....

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katesan), rendered by Justice S.S. Subramani (as he then was), giving a contrary view, was brought to the notice of the learned single Judge, to the effect that the guideline value, as maintained by the Sub-Registrar's Office, cannot be accepted for fixing the fair rent and the market value of the property and the value, as per the sale deeds executed at the relevant point of time, alone would have to be taken into consideration. 6. In view of the above conflicting decisions, Justice K.P. Si .....

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adopted by the registering authorities would be acceptable basis for fixing fair rent in the absence of other materials. After referring to the judgment of the Supreme Court reported in 1995 (1) SCC 717, wherein the Supreme Court had held that the valuation register maintained by the municipality could not be relied upon for the purpose of fixing market value under Section 23 (1) of Land Acquisition Act, the learned Judge went further to observe that the judgment could not have any bearing on th .....

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Revision Petitions before this Court as well as several similar proceedings before the various Authorities under the Rent Control Act, the same issue arises for consideration, it would be desirable to have the issue resolved at the earliest, by a larger Bench. Therefore, the office is directed to place the papers before My Lord the Honourable the Chief Justice for reference before a Larger Bench." That is how the matter has been referred to this Full Bench, for deciding the issue in questi .....

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erroneously fixed by the Rent Controller and affirmed by the Appellate Authority on the basis of the guideline value adopted by the registering authorities. According to learned counsel, the guideline value should not have been adopted at all. It is contended that the said value is only for the purpose of collecting stamp duty on documents and it cannot be considered to be the market value of the property in question. Reliance is placed on a judgment of the Supreme Court in Land Acquisition Off .....

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re we are concerned with Sec.4 of the Act under which fair rent for the building is fixed." (ii) In 1997 (3) LAW WEEKLY 193 (Srinivasa Gounder v. K.Venkatesan), Justice S.S.Subramani observed as follows : "9. A Division Bench of our High Court has also held that for determination of market value for the purpose of fixation of fair rent under the Tamil Nadu Rent Control Act also, the same principle applies. In paragraph 30 of the judgment, reported in 1996-2-L.W.658 (K. Ramanathan (died .....

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Fathima, T.H.S. v. T.K.Kader Mohideen), where I held that for determination of the market value, transaction between a willing purchaser and a willing seller will have to be considered, and I also held that the value fixed by the Government for the purpose of stamp duty has no relevance. In paragraph 17 of the judgment, I have said thus :- "..The Government fixes the value only for the purpose of Stamp Duty i.e., for the purpose of its revenue. The value is fixed for the locality and not f .....

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been kept for the purpose of determining stamp duty, the same cannot be accepted as correct." 8. On a reading of the above observations, it is clear that Justice S.S.Subramani decided the issue in two cases, namely, 1996-2-L.W.6 37 (Rahmath Fathima, T.H.S. v. T.K.Kader Mohideen) and 1997 (3) LAW WEEKLY 193 (Srinivasa Gounder v. K.Venkatesan), holding, that for determination of market value, transaction between a willing purchaser and a willing seller will have to be considered and the guide .....

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5 (1) Supreme Court Cases 717 (Land Acquisition Officer, Eluru & Others v. Jasti Rohini and Another), stating that the opinion given by the Supreme Court that the value fixed for the purpose of collecting stamp duty cannot be considered to be the market value would not apply to the present case, as the Supreme Court did not deal with the Rent Control Act and, on the other hand, it had dealt with only the Land Acquisition Act. However, the decision reported in 1995 T.L.N.J.226 (N.Sulaiman v. .....

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learned counsel for the parties : (i) In (1994) 4 SUPREME COURT CASES 595 (JAWAJEE NAGNATHAM v. REVENUE DIVISIONAL OFFICER), the Supreme Court held as follows : "5. The question, therefore, is whether the Basic Valuation Register is evidence to determine the market value. This Court in Special Land Acquisition Officer v. T.Adhinarayan Setty (AIR 1959 SC 429) in paragraph 9 held that the function of the Court in awarding compensation under the Act is to ascertain the market value of the lan .....

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ena of decisions, vide, Periyar and Pareekanni Rubbers Ltd. v. State of Kerala ((1991) 4 SCC 195). Therefore, it is settled law that in determining the market value, the Court has to take into account either one or the other three methods to determine market value of the lands appropriate on the facts of a given case to determine the market value. Generally, the second method of valuation is accepted as the best. The question, therefore, is whether the Basic Valuation Register would form foundat .....

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de sales between willing prudent vendor and prudent vendee of the lands acquired or situated near about that land possessing same or similar advantageous features would furnish basis to determine market value...." (ii) In (1995) 1 SUPREME COURT CASES 717 (LAND ACQUISITION OFFICER, ELURU AND OTHERS v. JASTI ROHINI AND ANOTHER), the Supreme Court observed as under : "7. The reasonable method to determine the market value of the acquired land is on the evidence of transactions of bona fid .....

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o be bona fide transactions etc. These factors must be established as a fact by examining either the vendor or the vendee. Marking of certified copies of sale deeds are not proof of either the contents or the circumstances in which it came to be executed. Bona fide sale or series of sales or small pieces of land do not furnish the sole basis to determine market value. Bona fide sales may furnish evidence of the market conditions for consideration. Fixation of market value on the basis of the bas .....

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isional Officer, Adilabad (AIR 1983 A.P.155), the Andhra Pradesh High Court has held that the fixation of market value cannot be made on the basis of the value noted in the market value register maintained by the Government and the Court has to take into account the price which a selling (sic willing) purchaser is prepared to pay to a willing vendor. This view has been confirmed by the Supreme Court in the same case, which was later taken before the Supreme Court in Jawajee Naganatham v. Revenue .....

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This Court also in Collector, Nilgiris v. M/s.Mahavir Plantations Pte.Ltd. (AIR 1982 Madras 138) has held that to adopt figures prepared in the valuation guideline would be dangerous because they offer no guarantee of the truth or correctness of data. The Delhi High Court in Inder Prasad v. Union of India (AIR 1985 Delhi 304) also has repeated the same expression that the price which a willing seller might reasonably expect to obtain from a willing purchaser is the test to determine the market v .....

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in the sale deed, as held in Varadarajulu v. Venkatakrishnan (1959) (1) M.L.J. (Notes of cases 9), the valuation given in the sale deed has to be accepted. As a matter of fact, the Supreme Court in Lakshmi Ammal v. Madhavakrishnan (AIR 1978 S.C.1607) would point out that the question of court fee is a peripheral issue and when there is reasonable doubt, benefit must be given to the party, who pleads for the lesser court fee." (iv) In 1996 (II) CTC 60 (U.P.JAL NIGAM, LUCKNOW v. KALRA PROPER .....

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was right in accepting the valuation made by the Collector and in directing to pay the compensation on that basis. After the judgment in Nagnatham case, 1994 (4) SCC 595, the Division Bench of the High Court of Allahabad in State of U.P. v. Shau Singh, 1995 (1) H.V.D.191, had held that the rates fixed for the collection of stamp duty cannot be relied upon to determine market value. Therefore, the instructions issued by the Government for determination of the market value on the basis of basic va .....

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7) which provides for dealing with instruments of conveyance which are undervalued. The guideline value is a rate fixed by authorities under the Stamp Act for purposes of determining the true market value of the property disclosed in an instrument requiring payment of stamp duty. Thus the guideline value fixed is not final but only a prima facie rate prevailing in an area. It is open to the registering authority as well as the person seeking registration to prove the actual market value of prope .....

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ies made therein regarding the value of properties cannot be a substitute for market price. Such entries will not foreclose the enquiry of the Collector under Section 47-A of the Act or fetter the discretion of the authorities concerned to satisfy themselves on the reasonableness or otherwise of the value expressed in the documents." 24. This scheme of the enactment and the Rules contemplate that guideline value will only afford a prima facie basis to ascertain the true or correct market va .....

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y, its worth will not be any higher in the context of assessing the true market value of properties in question to ascertain whether the transaction has resulted in any offence so as to give a pecuniary advantage to one party or the other." (vi) In (2005) 12 SUPREME COURT CASES 59 (RANVIR SINGH AND ANOTHER v. UNION OF INDIA), the Supreme Court observed as under : "31. Furthermore, it is well settled that the sale deeds pertaining to the portion of lands which are subject to acquisition .....

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-A of the Indian Stamp Act. The same is meant to be a guide for collection of revenue and the stamp duty. It is mainly for collection of stamp duty for registration of an instrument. The Notification under Section 47-A, which is meant to be a guide for collection of revenue, cannot form basis for determination of the market value. The Government fixes the value, as indicated above, only for the purpose of stamp duty i.e., for the purpose of its revenue. The value is fixed for the locality and no .....

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lands adjacent to the lands acquired and possessing similar advantages. Evidence of bona fide sales between willing prudent vendor and prudent vendee of the lands acquired or situated near about that land possessing same or similar advantageous features would furnish basis to determine market value. (3) A number of years purchase of the actual or immediately prospective profits of the lands acquired. 15. It is a settled law, as laid down in the judgments referred to above, that in determining th .....

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e the Court to determine the market value correctly. 16. In view of the above ratio decidendi fixed by the Supreme Court, the fixation of market value on the basis of guideline value or valuation register, summoned from Sub-Registrar's Office and the Engineer, is illegal and unsustainable. 17. The view expressed by Justice S.S.Subramani, in our view, is correct, as it is in consonance with the principles laid down by the Supreme Court. The other view expressed by Justice Srinivasan is not co .....

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et value mentioned thereunder in instrument brought for registration. (2) Evidence of bona fide sales between willing prudent vendor and prudent vendee of the lands acquired or situated near about that land possessing same or similar advantageous features would furnish basis to determine the market value. In this case, the guideline value alone has been considered, which, in our view, is illegal. (3) The Rent Controller and the Rent Control Appellate Authority, in the present case, are not right .....

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