Is circle rate the sole factor to determine the value of a property under the Indian Stamp Act? Delhi HC answers

The Delhi High Court has held that “circle rate” is not the sole factor to determine the value of a property under Section 47A of the Indian Stamp Act, 1899 [as amended by the Indian Stamp (Delhi Second Amendment) Act, 2001]..The Court has said, .“Circle rate is nothing, but, a guidance given by the higher ranking Administrative Officer to the subordinate officer whenever any instrument comes up for registration under the Act. On the basis of this circle rate, the Registering Authority can, at best mechanically determine the valuation of the instrument, but, whenever the dispute arises, the exact market valuation, ought to be arrived at, by the Collector as mandated by Section 47A of the Act.”Delhi High Court .The order was passed by a Division Bench of Chief Justice DN Patel and Justice C Hari Shankar in an appeal preferred against an order passed by a Single Judge Bench in a writ petition..The writ petition was preferred by one CTA Apparels (Respondent), challenging an order passed by Collector of Stamps, Delhi Government, fixing the market value of a property on the basis of circle rate..The order was set aside by the Single Judge Bench and the matter was remanded back to the Collector of Stamps for fresh consideration.The Collector of Stamps (Collector) thereafter moved an appeal before the Division Bench..The Respondent had decided to sell his property for a consideration of Rs 36,00,00,000 and thus paid Rs 2,16,00,000 as stamp duty on the sale amount. .However, the registering authority referred the matter to the Collector for the determination of the value of the property upon which the stamp duty was to be paid. .The Collector calculated the value of the propoerty as Rs 71,61,59,700 on the basis of the circle rates which resulted in a difference of Rs 35,61,59,700 in the valuation of the property. .The Collector argued that in view of Section 27 and Section 47A of the Indian Stamp Act, there was a presumption that valuation of property was on the basis of the prescribed circle rate, unless the presumption is rebutted..It was also submitted that the Collector relied upon the copies of sale deeds of the surrounding properties to arrive at the valuation. .The Respondent, on the other hand, argued that circle rate prescribed by the Government was not a conclusive piece of evidence so far as market value was concerned. .It was submitted that circle rates were a mere probability and exact market value had to be determined by the concerned Authority in accordance with Section 47A of the Act..After hearing the parties, the Court stated that it was “not in agreement” with the Collector’s contentions..The Court held that circle rate was not a conclusive evidence for the valuation and only gave “guidance” to the Collector for determination of the value under Section 47A of the Act, 1899..Stating that circle rate was only one of the factors for determination of the valuation, the Court also listed the other factors which must be appreciated before arriving at value of the property..These are as follows:.The area of the plot in question or the property in question; The use of the property in question; Nature of property in question like its age; The width of the road upon which the property is situated; The nature of the adjacent properties; The nature of use of the adjacent properties;Other existing market factors which vary from time to time;The urgency of the sale by the owner of the property ie. if it is a distress sale;Buyer's need to the purchase of the property..In view of the above, the Court "deprecated" the mechanical approach of the Collector while determining the valuation on the basis of the circle rate and upheld the order passed by the Single Judge Bench. .The Court thus ordered,"With the aforesaid observations, this Letters Patent Appeal is hereby dismissed as we see no reason to interfere with the judgment and order dated 14th March, 2019 passed by the learned Single Judge in W.P.(C) 3587/2018 since no error was committed by the learned Single Judge in appreciating the aforesaid facts of the matter.".The Collector was represented by Standing Counsel Ramesh Singh with Advocates Ankur Chhibber, Chirayu Jain, Nikunj Arora.Respondent was represented by Senior Advocate Amit Sibal with Advocates Venancio D’costa, Divij Kumar, Rohit Jolly..Read the Order: