[Stamp Duty] Appellate authority has power to enhance the market value of the property in appeal of registrants of Sale Deed, Supreme Court

The SC on June 15, 2020 {THE INSPECTOR GENERAL OF REGISTRATION, TAMIL NADU AND ORS. vs K. BASKARAN} held that a statutory functionary exercising a power cannot be said to have delegated his functions merely by deputing a responsible and competent official to enquire and report, as that is the ordinary mode of exercise of any administrative power. It was held that if a statutory authority empowers a delegate to undertake preparatory work, and to take an initial decision in matters entrusted to it, but retains in its own hands the power to approve or disapprove the decision after it has been taken, the decision will be held to have been validly made if the degree of control maintained by the authority is close enough for the decision to be regarded as the authority’s own.

It was also held by the Bench, comprising of Justice UDAY UMESH LALIT and Justice INDU MALHOTRA, that a provision in a statute which is procedural in nature although employs the word “shall” may not be held to be mandatory if thereby no prejudice is caused. It was held that the determination of the question whether a provision is mandatory or directory would, in the ultimate analysis, depend upon the intent of the law-maker. And it was held that it has to be gathered not only from the phraseology of the provision but also by considering its nature, its design and the consequences which would follow from construing it in one way or the other.

The appeals before the SC in present case raised common questions touching upon the interpretation of Section 47A of the Indian Stamp Act, 1899 (‘the Act’, for short) and the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968 (‘the Rules’, for short) as amended from time to time.

The SC held that the fixation of timeline of three months in Rule 7 to be purely directory. The SC held that conclusion by the High Court holding the said provision to be mandatory is set aside, and no benefit on that ground can accrue to the Respondents.

The SC further held that for exercising revisional power “suo motu” or “on its motion”, the concerned authority must be satisfied that an order has been passed by the authority or officer subordinate to it. It was held that if an infirmity or illegality is brought to the notice or knowledge of the revisional authority, through normal and regular process of reporting by the subordinate officer or authority, the power of revision can certainly be exercised. 

It was held that while entertaining an appeal, if an obvious illegality is noticed by the revisional authority, it can certainly exercise suo motu power to undo the mistake, or rectify an error committed by the subordinate officer or  authority, subject to such restrictions as are imposed on the exercise of the power by the statute. It was held that there is nothing in the scheme of the Act which purports to restrict the exercise of suo motu power under Section 47-A, and confines it to cases where knowledge of any illegality or infirmity in the proceedings undertaken by the subordinate officers must be gathered from sources other than through a pending appeal. 

The question i.e. whether the appellate authority has power under Section 47A of the of the Indian Stamp Act, 1899 to enhance the market value of the property while deciding the appeal filed by the registrants - was answered in affirmative by the SC.

The SC held that the High Court completely erred in setting aside the exercise of power undertaken by the concerned authority. It was held that the exercise of power was definitely designed to obviate an obvious illegality and prejudice to the interest of the revenue. It was held that the exercise was, thus, absolutely correct, and there was no occasion to set aside the orders passed in pursuance thereof.

All the appeals were allowed by the SC. The order of the High Court under appeal was set aside and the orders passed by the appellate authority were restored.