IN THE HIGH COURT OF SINDH AT KARACHI

Present:

Mr. Justice Nadeem Akhtar

Mr. Justice Fahim Ahmed Siddiqui

C.P.No. D-3522 of 2016

Mrs. Nighat Saimi and another.………………...…………………..Petitioners

Versus

Province of Sindh and 10 others………………..……………….Respondents

Date of Hearing : 07.02.2017

Mr. Muhammad Sohail Hassan, advocate for the petitioners

Mr. Miran Muhammad Shah, AAG Sindh

Mir Hussain, Standing Counsel

J U D G M E N T

.-.-.-.-.-.

FAHIM AHMED SIDDIQUI, J: The grievance of the petitioners is that the respondent No. 2 is avoiding to complete the proceeding of registration of sale-deed on the advice of respondent No. 3 in respect of a property purchased by the petitioners. The respondent No. 3, on a reference of respondent No. 2 issued the impugned guideline dated 30-05-2016, due to which stamp duty is being demanded according to valuation appears in court order instead of valuation table.

2. The facts of the case are that the petitioners have purchased a built-up old house bearing No. E-115, North Nazimabad, Karachi measuring 1633.33 sq. yd. situated in KDA Scheme No. 2 for the purpose of accommodation of their families. The location of property in question falls in the category of Class-I, as per valuation table issued by the respondent No. 3 wide notification No-CIS/SW/397/BOR/2010-2016. The said notification was issued in exercise of power conferred by section 27-A of the Stamp Act 1899. The petitioners have calculated the valuation of the property according to the yardstick provided within the valuation table which comes up to the tune of Rs.2,52,50,000/-and as per prescribed rate, the stamp duty is calculated as Rs.5,05,500/-. The sale-deed after affixing the requisite stamps was presented before the respondent No. 2 for registration. The respondent No. 2 after getting the signatures and thumb impressions of parties, adjourned the matter for want of court permission for sale in respect of minor co-sharer. The petitioners placed the copy of guardianship order of the concerned Family Court in which valuation of the property was calculated to ascertain the share of minor on the basis of Nazir report. The Nazir estimated the value of property within a range of Rs.7,25,00,000/- to Rs. 7,50,00,000/-. After looking at the valuation mentioned in the order, the respondent No. 2 declared the document produced for registration as undervalued. After impounding the document (sale-deed), he sought clarification from respondent No. 3. The respondent No. 3, through the impugned letter, declared that in view of the valuation pointed out in the order of the learned family judge, there is no need for clarification.

3. It is the case of the petitioners that the respondent No. 2 in view of the guidance letter received from respondent No. 3 is not ready to complete the formalities of registration. As there is no other remedy available to the petitioners, therefore, the instant petition was filed.

4. The learned counsel for the petitioner has addressed the Court at length. The gist of his arguments is that the petitioners have fulfilled their responsibility in respect of registration of the sale-deed and demand of respondents is unjust and unlawful. As per law, the property is properly valued in accordance to the valuation table issued by respondent No. 3 and the requisite stamp duty has already been paid. Per him, all the formalities are fulfilled by the petitioners, therefore, the act of respondents is null and void in the eyes of law. He requested for the relief claimed in the instant petition. He took reliance from 1976 SCMR 395 and 2016 SCMR 203.

5. On the other hand, learned AAG opposed the instant petition. According to him, the instant petition is not maintainable as there is a provision of appeal provided within the Registration Act and the petitioners may approach to the District Registrar under section 72 of the Registration Act. He contended that when there is a provision of appeal available in the statute, the petitioners cannot approach to this Court under constitutional jurisdiction.

6. We have heard the arguments advanced and have gone through the impugned Guidance Letter. We have also been enlightened from the Case-Laws relied by the learned counsel for the petitioners.

7. With intention to curb the tendency of evading taxes including stamp duty, registration fee, etc., on the compulsorily registerable document; pertaining to movable and immovable properties, the District Registrar and Chief Inspector of Stamp, BOR, used to issue lawful instructions and advices to the Sub-Registrars and other officials. The aim and object of issuing such directives and advices are with a view to recover the proper stamp duty and registration fee permissible under the law. The Sub-Registrars as well as other officials discharging their functions are also empowered under section 31 of the Stamp Act to conduct a summary enquiry to ensure that the proper value is mentioned in the instruments placed for registration. In this respect, they may seek guidance from the District Registrar and/or the Chief Inspector of Stamp. The impugned guidance letter was issued in response to such a request by the Sub-Registrar concerned. Now, we would see whether the guidance issued to Sub-Registrar is proper and according to law or whether the Sub-Registrar is interpreting it properly in discharging of his official function.

8. Admittedly, it is a fact that the petitioner entered into a transaction in respect of a dwelling house for the purpose of accommodation of their families. One of the vendors of the said house namely Amanullah Iqbal Rajpoot is minor, who entered into the sale transaction through his mother Mst. Hina Iqbal, who is legally appointed guardian of his person and property. At the time of execution of the sale-deed, the concerned Sub-Registrar demanded the order of the competent court for appointment of guardian and power/permission of sale of the property on behalf of the minor. The learned family judge prior to appointing a guardian has conducted an inquiry about the worth of property to ascertain share of minor. The worth of property was ascertained through Nazir, who opined that the worth of property will be in between Rs.7,25,00,000/- to Rs.7,50,00,000/-. The purpose of ascertaining the value was nothing but to secure and safeguard the share of the minor. After ascertaining the valuation of property, the learned family judge directed to deposit the share of minor with Nazir to invest it in a government profitable scheme. When the Sub-Registrar had gone through the order of learned Family Court, he considered the said value as Market Value and demanded Stamp Duty on the instrument accordingly.

9. We consider that up to the extent of enquiry regarding appointment of the Guardian and the power of the Guardian, the sub-registrar is fully justified. However, the evaluation mentioned in the order was just an estimation done by an official of the court and the purpose of such estimation was to protect and safeguard the valuable rights of the minor. It is a run of the mill exercise usually done by the courts of law with the intention to protect the rights of minors, lunatics and invalid persons. We are clear in our minds that such estimation can never be termed or equated with the market value of the property.

10. In the impugned letter, the Assistant Inspector of Stamps has referred section 27-A of the Stamp Act 1899, and intimated that the valuation should be according to “Market Value” and when the court has declared the valuation then there is no need for clarification. From the guidance letter, it manifests that the valuation estimated by an official of the district courts (Nazir) is misconstrued as “Market Value” by the Assistant Inspector of Stamps. We cogitated about the impugned letter in the backdrop of the statutory provision and we are clear in our mind that the stance taken in the impugned letter is not correct. It is a routine practice of civil courts to get an arbitrary estimation of immovable property with an intention to safeguard the rights of minor or invalid litigants, without obtaining any actual and material offer from the real-estate market, and definitely such an estimation has no binding effect on anyone.

11. The question of stamp duty usually arises when after the sale of an immovable property, it is transferred through an instrument from seller to buyer. The ‘sale’ is defined in section 54 of Transfer of Property Act, 1882 as “a transfer of ownership in exchange for a price paid or promised or part paid and part promised”. “Such transfer, in the case of tangible immoveable property of the value of Rs.100/- and upwards, can be made only by a registered instrument.” Initially, Section 27 of the Stamp Act, 1899 deals with the matter of registration of such instruments, which is reproduced hereunder:

“27. Facts affecting duty to be set forth in instrument. The consideration (if any) and all other facts and circumstances affecting the chargeability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein.”

Conceivably, due to increasing tendency of evading stamp duty by the buyers and sellers by mentioning lesser amount of consideration, the legislature deemed it appropriate to amend the Stamp Act, 1899 and through Sindh Finance Act, 1986 such amendment is made by inserting section 27-A, which is reproduced hereunder:

“27-A. Valuation of urban immovable property. Where any instrument is chargeable with ad valorem duty under Article 31 of Schedule I, the value of property involved shall be calculated according to the evaluation table notified by the Collector in respect of properties situated in a particular area or locality:

Provided that where the value given in the valuation table, when applied to any property, appears to be excessive, the Commissioner may, on application made to him by the aggrieved person, determine its correct value and for that purpose the provisions of section 31 and section 32 shall apply mutatis mutandis.”

From the above provision of law, it is clear that usually ad valorem duty is required to be calculated and charged according to the valuation table. As per the proviso of the section 27-A, if in a case the value of property mentioned in the valuation table appears to be excessive then the aggrieved party may apply to Commissioner and the Commissioner shall determine the correct value of the property. It is worth noting that nowhere ‘Market Value’ is mentioned in section 27-A, even after insertion of this section, the parties are at liberty to declare amount of transaction excessive to ‘Table of Valuation’ and in such a situation their case will be dealt with according to section 27 instead of section 27-A of Stamp Act. It is also a fact that the sub-registrar has to register a document produce before him after completing all formalities and his satisfaction about the geniuses of the parties and the transaction between the parties. He is fully authorized to satisfy himself about the title of property in case of sale-deed or other relevant documents for transfer of immovable properties. He may demand proof of identity of parties or their witnesses etc., but he cannot question the valuation and/or consideration mentioned in the instrument. In this respect, we would like to take reliance from the case reported as Khalid Pervaiz Khan Tareen and another v. Deputy Commissioner/Registrar, Quetta and another (PLD 1994 Quetta 9):

“We have given our anxious thought to the arguments put forth by the learned counsel. A careful survey of the Registration Act, as well as Stamp Act; persuades us to hold that the fixation of valuation of the property is exclusively a matter between the seller and purchaser and both are not bound to fix the valuation of the property according to the market value and the Registrar is bound to register an instrument under section 71 of the Registration Act, provided it has been properly stamped. No doubt tendency is rapidly growing to evade the fixations of stamp duty etc. but in absence of statutory provisions of the law concerned parties cannot be directed to enter into a transaction on the basis of market value of the subject-matter. So much so on account of lacuna in the law, no check can be imposed by the Registrar in not mentioning the proper valuation of the property. Therefore, we are constrained to hold that the instruction in the letter regarding mentioning the market value of the subject-matter according to market rate is outside, the provisions of section 71 of the Registration Act.”

12. According to section 27-A of the Stamp Act, the Commissioner or Chief Inspector of Stamps may determine the correct value of property but again he has no suo moto power to do so. He will interfere and proceed under Section 31 and 32 of Stamp Act on the application of an aggrieved person, who thinks that the actual value of property is lesser than the ‘Valuation Table’. Section 32 pertains to certification after proceeding under section 31, therefore, we consider that regarding the present issue, section 31 of the Stamp Act is important, which is reproduced as under:

“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 fifty paisa 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 enquiry 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.”

From the above provision, it is clear that Commissioner or Chief Inspector of Stamp can only interfere in the matter of stamp duty when someone approaches him or the document is brought before him. It is also evident that he may decide the issue on the basis of an affidavit or other evidence but again the aforesaid provision of law is silent about ‘Market Value’. We are of the view that for the purpose of its stamp value, the consideration or worth of the property mentioned in the document ought to be considered by the authority. We have edified in respect of our view from a Full Bench judgment of the Hon’ble Supreme Court reported as Deputy District Officer (Revenue) Lahore and others v. Raja Muhammad Yousuf and others (2016 SCMR 203)wherein it is held:

“The Stamp Act is a self-contained law on the subject of stamps and provides for the payment of stamp duty on different kinds of "instruments". Section 10 of the Stamp Act states that, "Except as otherwise expressly provided in this Act, all duties with which any instruments are chargeable shall be paid, and such payment shall be indicated on such instruments by means of stamps (a) according to the provisions herein contained; or (b) when no such provision is applicable thereto as the Provincial Government may by rule direct." Section 17 of the Stamp Act stipulates that, "all instruments chargeable with duty and executed by any person in Pakistan shall be stamped before or at the time of execution".

13. In the instant matter, the worth of property is mentioned by the concerned family judge for a particular purpose and of course such valuation is not binding on anybody else as it is not a decree of court. We are of the view that even if a property is sold out on the basis of a decree, the sale consideration mentioned in the instrument will be the basis for calculation of stamp duty without having any influence of sale price received in pursuance of decree. The Sub-Registrar and Inspector of Stamp has no authority to question the valuation of property if it is in accordance to notified ‘Valuation Table’. However, if the property is sold out for a lesser price then the valuation table, the authorities may recourse to the proviso of section 27-A and section 31 otherwise not. In all other cases, the worth of property in accordance with the ‘Valuation Table’ is acceptable for the purpose of calculation of stamp duty. In this respect, we again fortify our view from the case of Deputy District Officer Revenue (supra) wherein the Hon’ble bench speaks as:

“We have also noted that in some of the judgments, including the impugned judgment dated 18th June 2008, it is presumed that if stamping is done on the basis of a notified valuation table which is not the sale price as mentioned in the decree it would be tantamount to modifying the decree of the court. With respect this is an incorrect understanding of the matter. The amount of stamp duty applicable at the time of the registration of a document, albeit a document executed pursuant to a court decree, and the stamp duty affixed thereon on the basis of a notional or deemed value, does not mean that it is tantamount to modifying the decree. These are two distinct matters. The sale deed prepared pursuant to a decree in a suit for specific performance is neither modified nor can it be presumed to be modified. The registration officer cannot change the contents of a document which is presented for registration, and is only concerned with determining the applicable stamp duty on the date when the document is presented for registration.”

The Hon’ble bench of the Apex Court in the case of Deputy District Officer Revenue (supra) further speaks:

“Conveyance/sale deeds prepared pursuant to a decree in a suit for specific performance shall be stamped in accordance with stamp duty as is applicable under the Stamp Act on the date that the same is presented for registration, however, if a valuation table has been notified pursuant to section 27-A(1) of the Stamp Act then the applicable stamp duty will be calculated in accordance therewith in respect of documents wherein the sale consideration that is mentioned is less than that specified in the said valuation table.”

14. Summing up the above discussion, we declare that the act of the respondent No. 2 (Sub-Registrar North Nazimabad) seeking guidance in respect of the Sale Deed of petitioners from Inspector of Stamp was least necessary. Similarly, the direction/guidance given in the impugned ‘guidance letter’ as well as act of impounding the document on the pretext of market value or value mentioned in the order of Family Judge is contrary to law as such the same are set aside. The respondent No. 2 (Sub-Registrar North Nazimabad Town) is directed to register the sale-deed of the petitioners in accordance with law on the basis of notified valuation table and without getting any influence from the exterior matters. The instant petition is allowed in above terms.

JUDGE

JUDGE