Stamp Duty — market value and speculative redevelopment potential · F2J-C-2900

Transcon Sheth Creators Pvt. Ltd. & Anr. v. State of Maharashtra & Anr.

VALIDATED · ACTUAL COURT DOCUMENT

Court: Bombay High Court
Case number: W.P. No. 10725/2015 with C.A. No. 3397/2015
Decision date: 2026-08-31
Bench: Amit Borkar J.
Neutral citation: 2026:BHC-AS:35524
CNR: HCBM010488892015
Subject: Stamp Duty — market value and speculative redevelopment potential
Disposition: The petition was allowed, the enhanced valuation and deficit-duty demand were quashed, the original Rs.12-crore valuation restored and the deposit ordered returned with accrued interest.
Later history: Not verified — check the official court record before reliance (as of 19 Sep 2026)

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Source transparency: The local PDF is an actual court document retained from the complete public source. The official court portal is recorded separately. Verify the official record and subsequent history before reliance.

Holding (ratio)

A valuation authority must independently address the property's actual burdens, litigation, encroachments and restrictions; it cannot adopt an expert's speculative redevelopment figure merely because it is the latest report.

Operative order (extract)

The petition was allowed, the enhanced valuation and deficit-duty demand were quashed, the original Rs.12-crore valuation restored and the deposit ordered returned with accrued interest.

Scope limits

The holding is confined to the issues actually decided in the retained judgment; no view is attributed to the court on questions expressly left open or remanded.

Sources and completeness

PDF status: Complete searchable public court copy, retained unchanged
PDF origin: Downloaded unchanged from the complete public court-copy source
PDF pages: 26
Extracted words: 7,256
PDF SHA-256: 0a562ce6c4c7133e514c04071167a19bc924005b726444a2064ca611144762c4

Complete searchable judgment text

2026:BHC-AS:35524 CNR No : HCBM010488892015

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Shabnoor

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.10725 OF 2015

Transcon Sheth Creators Private Limited

& Anr. … Petitioners

V/s.

State of Maharashtra & Anr. … Respondents

WITH

CIVIL APPLICATION NO.3397 OF 2015

WRIT PETITION NO.10725 OF 2015

Ruhi Mary Thomas & Ors. … Applicants

SHABNOOR In the matter between:

AYUB Transcon Sheth Creators Private Limited

PATHAN

Digitally signed by

& Anr. … Petitioners

SHABNOOR AYUB

PATHAN V/s.

Date: 2026.08.31

14:51:54 +0530 State of Maharashtra & Anr. … Respondents

Mr. Girish S Godble, Sr. Advocate a/w Mr. Aditya

Shiralkar, Ms. Nuput Desai, and Mr. Ishaan Chaudhary

i/b I. C. Legal, for the Petitioners.

Mr. S. H. Kankal, AGP, for the State – Respondent Nos.1

and 2.

CORAM : AMIT BORKAR, J.

RESERVED ON : AUGUST 24, 2026

PRONOUNCED ON : AUGUST 31, 2026

JUDGMENT:

1. By the present Petition, filed under Articles 226 and 227 of

the Constitution of India, the Petitioners have challenged the order

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dated 15 September 2015 passed by the Chief Controlling Revenue

Authority, Maharashtra State, Pune. According to the Petitioners,

the said order suffers from clear errors and has been passed

without proper jurisdiction.

2. The brief facts which have given rise to the present Petition

are as follows. The dispute relates to a Deed of Conveyance dated

9 May 2007. The said Deed was adjudicated by the Collector of

Stamps and was registered on 1 August 2007 as Serial No. 5550 of

2007. By the said Conveyance, the subject property was conveyed

in favour of the Petitioners. The property consisted of 17 separate

plots of land. Some part of the said land was occupied by slum

dwellers. After adjudication, the market value of the subject

property was determined at about Rs. 12 crores, and stamp duty of

Rs. 60 lakhs was paid by the Petitioners. The Impugned Order

records that, after payment of the required stamp duty, the

Collector made his endorsement and issued the necessary

certificate on the instrument on 27 July 2007., on 12 March 2008,

a notice was issued seeking to invoke Section 53A of the

Maharashtra Stamp Act, 1958. Subsequently, the Joint Director,

Town Planning, Valuation Department, submitted various

Valuation Reports. The report dated 17 January 2009 was only a

provisional report. In that report, the market value of the property

was tentatively shown at about Rs. 50.12 crores. However, the

report made it clear that several deductions were still required to

be considered. These included development rights granted to other

developers in respect of different portions of the slum and non-

slum land forming part of the subject property. The report referred

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to 47 litigations pending before different Courts and Tribunals, for

which necessary information from the legal officers was still

awaited. It referred to exemptions and benefits which may be

available to the assessees in respect of the declared slum area.

3. The second report dated 12 September 2013 was only a

provisional report. It tentatively assessed the market value of the

property at about Rs. 52.61 crores. However, even this report

contained an important qualification. It stated that a deduction

was required in respect of 23,423 square metres of land forming

part of Plot No. 10, since there was an injunction restraining

development of that land. The third report dated 6 December 2014

was, in substance, a supplementary report to the earlier reports. It

again assessed the market value of the subject property at about

Rs. 52.61 crores. However, according to the Petitioners, the

matters relating to various deductions and other relevant factors,

which were specifically referred to in the earlier reports, were not

considered while arriving at the said valuation. By the Impugned

Order dated 15 September 2015, the Chief Controlling Revenue

Authority accepted the revised valuation of about Rs. 52.61 crores

on the basis of the report dated 6 December 2014. This was as

against the original adjudicated market value of about Rs. 12

crores. On that basis, the authority demanded alleged deficit stamp

duty of Rs. 2,03,07,750, together with penalty.

4. Mr. Godbole, learned Senior Advocate appearing for the

Petitioners, submitted that the Impugned Order is barred by

limitation under Section 53A of the Maharashtra Stamp Act, 1958.

He submitted that Section 53A permits the revisional power to be

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exercised within six years from the date of the Collector's

certificate. He relied upon the decision of this Court in Sony Mony

Electronics Ltd. v. State of Maharashtra, 2025 SCC OnLine Bom

2848, in which this Court has held that the period of six years

applies not only for starting the proceedings but for completing

them and passing the final recovery order. According to Mr.

Godbole, this Court rejected the contention that, once a notice is

issued within time, the authority can continue the proceedings for

an unlimited period. He submitted that the same principle has

been followed by this Court in Kolte Patil Developers Ltd. v. State

of Maharashtra, 2026 SCC OnLine Bom 677 . He pointed out that,

even in that case, some steps were taken within the period of six

years. However, the final recovery order was passed after expiry of

six years. This Court held that such an order was without

jurisdiction. Mr. Godbole submitted that the position is made clear

by the decision of this Court in Romell Real Estate Pvt. Ltd. v. State

of Maharashtra, 2026 SCC OnLine Bom 1462. In the said decision,

this Court approved the principles laid down in Sony Mony and

Kolte Patil. It was held that the period of six years covers the entire

process, from the commencement of the proceedings until the

reviewed assessment is completed. According to him, the

principles laid down in the said decision apply to the facts of the

present case.

5. Mr. Godbole submitted that, in the present case, the

certificate issued by the Collector is dated 27 July 2007., according

to him, the period of six years expired on 27 July 2013. However,

the Impugned Order was passed only on 15 September 2015. He

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submitted that the Impugned Order was thus passed after expiry of

the prescribed period of limitation. According to him, the authority

had no jurisdiction to pass such order and the Impugned Order is

liable to be quashed and set aside on this ground alone. He

submitted that even if the alternative reasoning in Sony Mony is

considered, the proceedings under Section 53A cannot be kept

pending indefinitely. This Court had considered two years from the

date of commencement of the proceedings as the maximum

reasonable period for completing them. In the present case, though

the notice was issued on 12 March 2008, the final order was

passed more than seven years. According to Mr. Godbole, the

issuance of notice within time cannot save the proceedings.

6. Mr. Godbole submitted that stamp duty is required to be

determined on the basis of the market value of the property as it

existed on the date when the instrument was executed. He relied

upon State of U.P. v. Ambrish Tandon, (2012) 5 SCC 566 , in which

the Supreme Court held that a subsequent use cannot decide the

stamp value and that the nature and use of the property must be

considered with reference to the date of purchase. He relied upon

State of Rajasthan v. Khandaka Jain Jewellers, (2007) 14 SCC 339,

in which the Supreme Court held that the relevant value is the

value prevailing on the date of sale or execution and not the value

at an earlier or later point of time. He submitted that the

Department has not applied the above test in the present case.

According to him, while valuing Plot No. 10, the Valuation Reports

have taken into consideration Slum FSI, Slum TDR and other

redevelopment benefits which had not come into existence as on 9

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May 2007. The specific case of the Petitioners is that, on the date

of the Conveyance, no SRA scheme had even been submitted and

no such scheme was in existence.

7. Mr. Godbole submitted that there was no SRA scheme in

existence in respect of the property at the relevant time. According

to him, the Valuation Reports have,, valued the property on the

basis of a future redevelopment project instead of valuing the land

which was conveyed on 9 May 2007. He submitted that the land,

as it existed on that date, was occupied by slum dwellers and was

subject to various encumbrances and difficulties. He submitted

that the Valuation Reports take into account the possible future

benefits of FSI and TDR but do not consider the costs and burdens

necessary for obtaining those benefits. According to him, the

valuation exercise is one-sided. The Reports consider the possible

value arising from future FSI and TDR but do not deduct the

expenses and difficulties connected with the same. These include

the presence of existing occupants, their rehabilitation, transit

accommodation, shifting expenses, corpus payments, development

expenditure, pending litigation, reservations, delay and deferment,

and the various steps which were required to be completed before

TDR could be generated.

8. Mr. Godbole submitted that, on the date of execution of the

instrument, as many as 47 litigations were pending in relation to

the subject property. According to him, this was an important

factor which would reduce the market value of the property and

proper deductions were required to be made on that account. He

submitted that the Impugned Order does not consider this material

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factor at all. Instead, the Valuation Reports proceed as if the

property was clear, freely saleable andly available for development.

According to him, that was not the condition of the property on 9

May 2007. The pending proceedings, adverse claims, injunctions,

occupation and other difficulties were existing features of the

property and would affect the price which a prudent and willing

purchaser would have agreed to pay.

9. Mr. Godbole relied upon the judgment of the Constitution

Bench of the Supreme Court in C.B. Gautam v. Union of India,

(1993) 1 SCC 78, particularly paragraph 30 thereof. He submitted

that the Supreme Court held that a dispute relating to title may

result in the property being sold for less than its fair market value.

He relied upon the judgment of the Division Bench of this Court in

Vimal Agarwal v. Appropriate Authority, 1994 SCC OnLine Bom

314, in which it was held that the valuation has to be adjusted by

considering such “minus factors”.

10. Mr. Godbole submitted that there is an independent error in

the manner in which the 2007 Valuation Guidelines have been

applied. According to him, the correct formula was the SDRR base

value plus 40 per cent, namely 1.4 times the base value.,

deductions were required to be made towards development

expenditure and deferment. However, according to him, the

Valuation Reports have effectively applied 1.6 times the base value.

He submitted that the applicable deduction of 15 per cent towards

area has not been given.

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11. Mr. Godbole submitted that the error going to the

jurisdiction of the matter is clear from the Impugned Order. The

authority has recorded the objections raised by the Petitioners,

including the objection that the 2014 report was based on an

incorrect method and that the pending matters relating to the

property were not considered. However, according to him, the

authority merely states that the report dated 6 December 2014 is

“proper” and, “hence”, accepts the same., the authority adopts the

revised valuation and raises the demand. He submitted that the

Impugned Order does not give any proper reasons for deciding the

main objections raised by the Petitioners. According to him, the

order does not explain why future SRA or TDR benefits could be

treated as having accrued on 9 May 2007. It does not explain why

the occupation of the property, pending litigation, reservations,

development expenses and deferment were treated as

unimportant. He submitted that the order does not give any

reasons for rejecting the independent Valuation Report produced

by the Petitioners. According to him, the specific and material

objections raised by the Petitioners have not been dealt with.

12. Mr. Godbole submitted that the authorities under the Act

have failed to consider the pending litigation concerning the plots

in question, which, according to him, would considerably reduce

their market value. He submitted that the market value has been

determined on the basis of an assumed future event which may or

may not happen. According to him, a possible future income

cannot be treated as a factor for deciding the market value of the

property described in the instrument for the purpose of calculating

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stamp duty. He submitted that, unlike proceedings under the

Income Tax Act, the market value of the property cannot be

determined on the basis of a possible future income.

13. Mr. Godbole submitted that the judgment of this Court in

Uma Niwas CHSL has been challenged before the Supreme Court.

However, according to him, only the operation of the order has

been stayed. He submitted that unless the entire judgment is

stayed by a superior Court, the observations and principles laid

down in the judgment continue to bind a subsequent Bench. In

support of this submission, Mr. Godbole relied upon the judgment

of the Supreme Court in Shree Chamundi Mopeds Limited v.

Church of South India Trust Association CSI CINOD Secretariat,

Madras, (1992) 3 SCC 1.

14. On the other hand, Mr. Kankal, learned AGP, submitted that

Respondent No. 2 received a question raised in the Legislative

Assembly regarding possible undervaluation of the document and

the resulting short payment of stamp duty. According to him,

Respondent No. 2,, considered it necessary to verify whether the

allegation was correct and accordingly exercised the powers

available under Section 53A of the Maharashtra Stamp Act, 1958.

He submitted that Section 53A gives the Chief Controlling Revenue

Authority the power, within six years from the date of the

certificate issued by the Collector under Sections 32, 39 or 41, to

call upon the concerned party to produce the instrument. After

giving the concerned party a reasonable opportunity of being

heard, the authority can examine whether proper stamp duty was

chargeable and whether any duty had been paid short. If a deficit

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is found, the authority can direct its recovery.

15. According to Mr. Kankal, after receiving the Legislative

Assembly question raised by a duly elected representative,

Respondent No. 2 issued a notice dated 12 March 2008 and called

upon the Petitioners to produce the document. He submitted that

the Chief Controlling Revenue Authority gave several opportunities

of personal hearing to the concerned party from time to time. After

considering the submissions made by the Petitioners, the authority

passed the order dated 15 September 2015 directing the

Petitioners to pay deficit stamp duty of Rs. 2,03,07,750.

16. Mr. Kankal submitted that the market value was determined

in accordance with Rules 3 and 6 of the Maharashtra Stamp

(Determination of True Market Value) Rules, 1995, read with

Section 3 of the Maharashtra Stamp Act. He submitted that the

valuation mentioned in the report of the Joint Director, Town

Planning, was made by an expert authority. Relying upon Section

28 of the Maharashtra Stamp Act, he submitted that all relevant

facts are required to be stated in the instrument for the purpose of

determining the market value of the property described therein.

He, therefore, submitted that the Petition deserves to be dismissed.

REASONS AND FINDINGS:

17. I have considered the Petition, the Impugned Order dated 15

September 2015, the Deed of Conveyance, the submissions of Mr.

Godbole, learned Senior Advocate for the Petitioners, and those of

Mr. Kankal, learned AGP for the Respondents. So far as the

question of limitation under Section 53A is concerned, I do not

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find it necessary to decide that question in this Petition. In case of

M/S. Sahyog Homes Ltd vs The State Of Maharashtra, Writ

Petition No. 6437 of 2015, this Court has referred the questions

arising from Sony Mony Electronics Ltd. v. State of Maharashtra,

2025 SCC OnLine Bom 2848, Kolte Patil Developers Ltd. v. State of

Maharashtra, 2026 SCC OnLine Bom 677 and Romell Real Estate

Pvt. Ltd. v. State of Maharashtra, 2026 SCC OnLine Bom 1462 to a

larger Bench. The question of limitation is kept open. The present

Petition can be considered on the question of market value on

merits.

18. The Deed of Conveyance was placed before the Collector of

Stamps for adjudication. The Collector determined the market

value at Rs.12 crores and stamp duty of Rs.60 lakhs was paid. The

order of the Chief Controlling Revenue Authority records that

Rs.60 lakhs was deposited and that the endorsement or certificate

was made on the document on 27 July 2007. The question which

now arises is whether the subsequent valuation of

Rs.52,61,54,916/-, rounded off to Rs.52,61,55,000/-, can be

accepted on the material available on record.

19. Before considering the valuation report, it is necessary to see

what was purchased by the Petitioners. The property was not a

vacant property, free from disputes and ready for development.

The recitals in the Deed show that several difficulties were

attached to the property. There were earlier Development

Agreements with Conwood Developers Private Limited and rights

had been created under those agreements. The Deed refers to

proceedings filed by members of the Vendor Society. The Deed

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specifically states: “There are above 45 suits filed by and against

the Vendor”. It refers to an injunction restraining creation of third

party rights in respect of a portion of the property. The Deed

records that there were “several claims made by several persons”

and a claim made by one of the original owners of the land. It

states, “There are several encroachments on the larger properties.”

The Deed refers to a suit filed by the Vendor for specific

performance of the earlier Conwood Agreements and states that

the said suit was pending., these disputes and difficulties were not

something which came up after the transaction. They were existing

when the transaction was entered into. The Deed shows that the

Purchaser agreed to purchase the property despite these

difficulties. The Purchaser had inspected the title documents and

the larger properties. The Purchaser agreed to take the property

“on as-is-where-is basis”. The Deed records that the Purchaser

agreed to purchase the properties “with the full knowledge of

existing litigations and encumbrances”. It was agreed that the

pending litigations would be dealt with, settled, prosecuted or

defended by the Purchaser at its own risk, cost and consequences.

20. The fact that the Purchaser accepted the litigation and

encumbrances does not mean that those matters had no effect on

the value of the property. In fact, the Purchaser was taking the

property together with those burdens. A purchaser would consider

the risk of litigation, encroachments and difficulties in

development while deciding the price which he is willing to pay.

These circumstances have a bearing on the price which a willing

purchaser would agree to pay. The Deed contains material showing

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how the price of Rs.12 crores came to be agreed. It refers to the

earlier negotiations, the Escrow Agreement and the Resolution

passed in the Special General Meeting of the Society. In particular,

the Deed records that by Resolution dated 15 July 2006 passed at

the Special General Meeting, the offer of the Purchaser of

Rs.12,00,00,000/- for the larger properties was accepted on “as-is-

where-is” basis. This is material existing at the time of the

transaction and shows the circumstances in which the price was

accepted. In these circumstances, the submission of Mr. Godbole

that the property could not have been treated as a clear property

having and unrestricted development potential has substance. The

Deed supports this submission. At the same time, the mere

existence of litigation and encumbrances does not mean that Rs.12

crores must be accepted as the true market value. The authority

was entitled to examine the valuation. But while doing so, it was

required to consider the property in the condition in which it

existed on the relevant date. Both its advantages and

disadvantages had to be considered.

21. This is where the decision in Vimal Agarwal becomes

relevant. This Court stated:

“When the fair market price is to be determined on the basis

of comparable sale instances, every sale instance relied upon

by the appropriate authority or by the aggrieved party has to

be considered on its own merits.”

22. The same judgment states that the “advantages or

disadvantages” of the property have to be considered and that

suitable adjustments have to be made for the “plus and minus

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factors”. The Court observed that the determination of fair market

value “cannot be a guess work” and “cannot be left to conjectures

and surmises”.

23. The valuation report relied upon by the authority does not

show that the positive as well as negative features of the property

were considered. The valuation appears to have been made by

giving values to the different plots and arriving at the total figure

of about Rs.52.61 crores. However, the report does not show how

the value was reduced on account of the litigation, encumbrances,

restrictions and other burdens which existed on 9 May 2007.

24. The Valuation Report dated 17 January 2009 was

provisional. It referred to development rights given to other

developers concerning different portions of the land. It referred to

47 litigations and stated that inputs from the legal officers were

awaited. It referred to deductions and benefits concerning the

slum portion., the report showed that several matters were still

required to be considered before the final valuation could be

made. The second report dated 12 September 2013 was

provisional. It referred to a deduction concerning 23,423 square

metres of land in Plot No.10 because development was under

injunction. The third report dated 6 December 2014 retained the

valuation at about Rs.52.61 crores. The difficulty is that the

material pointed out by the Petitioners concerning the earlier

restrictions and deductions is not shown to have been considered

before the same figure was accepted. The authority has not

explained why the factors which had earlier been considered

relevant for making deductions had later ceased to have any effect

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upon the market value.

25. The manner in which the valuation report was accepted is

clear from the Impugned Order. In paragraph 4.3, the authority

records:

“This Authority believes that the said report is proper and

hence accepts the same.”

26. Thereafter, in paragraph 4.4, the authority accepts the

valuation of Rs.52,61,54,916/- and proceeds to calculate the

alleged deficit stamp duty. In my view, the statement “believes that

the said report is proper and hence accepts the same” cannot by be

treated as a proper reason for determining the market value. The

question before the authority was whether the valuation stated in

that report represented the true market value of the particular

property conveyed on 9 May 2007. For deciding that question, the

authority was required to consider the objections of the Petitioners,

the condition of the property, the litigations, encroachments,

injunction, development restrictions, existing rights and the other

relevant circumstances appearing from the Deed.

27. Mr. Kankal submitted that the valuation was prepared by the

Joint Director of Town Planning and Valuation, who is an expert,

and that Rules 3 and 6 of the Maharashtra Stamp (Determination

of True Market Value of Property) Rules, 1995 were followed.

There is no difficulty in accepting that an expert valuation report

can be relevant material. But merely because a report has been

prepared by an expert, every conclusion in that report cannot be

accepted without examination. The authority was still required to

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consider whether the report dealt with the condition of the

property.

28. Rule 4 refers to classification of properties having regard to

“the type of the land, types of construction, location and

situational advantages or disadvantages of property”. Rule 6

requires consideration of “all the relevant factors and evidence

placed before his” while determining the true market value., the

Rules do not support a method where the possible advantages of

the property are considered but the disadvantages are left out.

Therefore, the submission of Mr. Kankal that the valuation was

made under Rule 3 and Rule 6 cannot be accepted in its entirety.

In the present case, a valuation exercise was undertaken. The

difficulty is that the Impugned Order does not show how the

material disadvantages affecting the property were considered

while arriving at the final figure.

29. Mr. Kankal relied upon Section 28 and submitted that the

necessary particulars have to be stated in the instrument. In the

present case, the Deed contains material regarding litigation,

encroachments, injunction, earlier development arrangements,

claims and the “as-is-where-is” basis of the transaction. The

authority had material before it from which the condition of the

property could be understood. The submission of Mr. Godbole that

valuation has to be made with reference to the condition of the

property on the relevant date requires consideration. In Ambrish

Tandon, the Supreme Court observed in paragraph 15:

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“Merely because the property is being used for purpose at

the later point of time may not be a relevant criterion for

assessing the value for the purpose of stamp duty. The nature

of user is relatable to the date of purchase and it is relevant

for the purpose of calculation of stamp duty.”

30. The principle which follows is that a later development or

later condition of the property cannot be brought into the earlier

date for increasing the stamp value. What has to be considered is

the condition and relevant circumstances of the property on the

date of the transaction. The same principle is found in Khandaka

Jain Jewellers. In paragraph 20, the Supreme Court stated:

“What is relevant in fact is the valuation of the property at

the time of the sale.”

31. The Supreme Court stated:

“Therefore, the market value of the instrument has to be

seen at the time of the execution of the sale deed, and not at

the time when agreement to sale was entered into.”

32. Though that case arose under the Rajasthan statute, the

principle regarding the relevant date for valuation is useful in the

present case. The authority has to determine the value relevant to

the transaction under consideration. A later value cannot be

substituted for the value on the relevant date. The Deed does not

show that on 9 May 2007 there was an completed redevelopment

scheme which gave the Purchaser a available development benefit.

On the contrary, the Deed records earlier development

arrangements, pending litigation and restrictions. A possible future

benefit could not be treated as if it was available to the Purchaser

on the date of the transaction.

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33. Mr. Godbole submitted that future FSI, TDR and SRA related

benefits could not be treated as an existing asset as on 9 May

2007. There is substance in this submission. A future possibility

cannot be treated as present market value. For obtaining such

future development benefits, different steps and expenditure may

be required. There may be litigation, rehabilitation obligations,

and uncertainty. All these circumstances can affect the price which

a purchaser would be ready to pay on the relevant date. The Deed

shows these difficulties. It refers to pending litigation,

encroachments and claims. It refers to an injunction in respect of a

portion of the property. The Purchaser accepted the burden of the

pending disputes. The Purchaser accepted the property on “as-is-

where-is” basis.

34. The importance of such circumstances is held in C.B. Gautam

. In paragraph 30, the Supreme Court observed:

“There might be some dispute as to the title of the

immovable property as a result of which it might have to be

sold at a price lower than the fair market value”

35. The Supreme Court held that there may be “other genuine

reasons” because of which a property may be sold for a price lower

than the market value. C.B. Gautam does not hold that every

property having a dispute must be given a fixed percentage of

deduction. That is not the principle. The principle is that where

genuine disadvantages affect the property, those disadvantages are

relevant for deciding the price which a willing purchaser would

agree to pay. The authority cannot determine the value as if such

disadvantages did not exist.

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36. The reasoning in Vimal Agarwal is to the effect that the

authority has to consider the “plus factors” and “minus factors”

and make suitable adjustments for arriving at the fair market

value. A property having litigation, encumbrances and

development restrictions cannot be treated in the same manner as

a property having clear title and and unrestricted development

potential. Therefore, I find that the valuation in the report dated 6

December 2014, insofar as it proceeds on the higher prospective

value of the different plots without showing corresponding

deductions for the burdens affecting the property, cannot be

accepted as a reliable determination of the true market value.

37. The Deed records that offers for purchase had been received

and that the Purchaser's offer was the best offer accepted by the

Vendor. The transaction was supported by the Resolution of the

Special General Meeting accepting the offer of Rs.12 crores on “as-

is-where-is” basis. This does not make Rs.12 crores conclusive.

However, it is contemporaneous material showing the price which

was agreed after negotiations and with knowledge of the condition

of the property. The authority has not dealt with this circumstance.

If the Department wanted to reject the negotiated consideration of

Rs.12 crores and replace it by a value of more than Rs.52 crores,

the authority was required to explain why the transaction could

not be relied upon. It was required to explain why the offer

accepted by the Society was not a genuine offer and why the

litigation, encumbrances and other burdens accepted by the

Purchaser did not have an effect on the price. No such exercise is

found in the Impugned Order. There is no finding that the

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transaction was not at arm's length. There is no finding that the

Vendor and Purchaser had colluded to suppress the consideration.

There is no finding that the consideration of Rs.12 crores was

artificial. There is no finding based upon any comparable sale of a

similar property having similar litigation, restrictions and other

conditions which had fetched a higher price.

38. The fact that the authority obtained a Town Planning Report

does not remove the requirement of proper valuation. As stated in

Vimal Agarwal:

“The determination of the fair market value must be based

on evidence on record. It cannot be a guess work. The figure

of fair market value cannot be left to conjectures and

surmises.”

39. In the present case, the record does not show the

comparative exercise and proper adjustments which were

necessary for determining the fair market value.

40. Mr. Godbole submitted that the 2007 Valuation Guidelines

were wrongly applied and that the appropriate factor was 1.4

times the SDRR base value instead of 1.6 times, along with the

claimed deduction of 15 per cent area. A formula can be applied

only after the correct property and its circumstances are

considered. If the factual basis is not correctly taken, applying a

formula to that basis cannot result in a correct market value.

41. Mr. Kankal submitted that the annual statement of rates and

the statutory guidelines provide the basis for determining market

value. This can be accepted to the extent that such rates and

guidelines are relevant material. But they cannot be treated as the

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answer in every case, particularly where the property has special

circumstances. The Rules contemplate enquiry and consideration

of other evidence where the true market value cannot be arrived at

only from the statement of rates. In the present case, the litigation,

encroachments, injunction and development difficulties required

consideration. The authority has stated that the objections raised

by the Petitioners were based on factors which were “not

applicable to present case”. But the Impugned Order does not

explain why those factors were not applicable. This is important

because those objections concerned the value of the property. Once

the Petitioners placed before the authority material regarding

litigation, development restrictions and other difficulties, the

authority was required to give reasons for rejecting those

objections.

42. A fair hearing requires that the material submissions made

by a party be considered. The authority has to consider the

submissions and documents placed before it and decide whether

they have any effect upon the conclusion. In the present case, the

Petitioners had placed valuation material and written submissions.

But the Impugned Order does not show a consideration of that

material against the Department's valuation report.

43. I have considered whether the existence of several litigations

and encumbrances is sufficient to hold that Rs.12 crores was the

true market value. The existence of these difficulties does not

establish the figure of Rs.12 crores. These factors were required to

be considered while determining the true market value. The

Department has not shown that they were considered in the

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manner required by the valuation principles.

44. I have considered the submission that future redevelopment

potential may have some value in the market. That submission

cannot be rejected. A purchaser may be willing to pay something

for future potential. But such potential cannot be treated as a

present and certain benefit without considering the uncertainty,

expenses, delay, legal difficulties and other conditions which may

come in the way of obtaining that benefit. In the present case, the

valuation report does not show that this exercise was undertaken.

The Court has to determine the true market value of the property

on the relevant date. The Court is not required to decide what the

property could become after several years. Future development

possibility could be considered only to the extent that a willing

purchaser, knowing the existing difficulties, would have taken that

possibility into account while agreeing to the price.

45. The Deed shows that the Purchaser was taking considerable

risks. It records pending litigation, encroachments, claims and the

obligation of the Purchaser to deal with those matters at its own

risk. These matters would affect the decision of a purchaser. A

purchaser would not pay for future benefits as if those benefits

were certain.

46. The Impugned Order suffers from a basic difficulty. The

method of valuation gives a picture of the property as though its

development potential was readily available. The Deed shows that

obstacles existed. The valuation gives importance to the possible

future benefit but does not show corresponding consideration of

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the existing difficulties.

47. I find that the authority has not dealt with the several

litigations referred to in the material. The Deed states that “There

are above 45 suits filed by and against the Vendor”. The valuation

material referred to 47 litigations. There may be some difference

in the number because the documents may relate to different dates

or different categories of proceedings. That difference is not

necessary for deciding the present matter. What is important is that

a number of litigations existed and their effect upon the market

value had to be considered. The same reasons apply to the

injunction affecting the concerned portion. The Deed records the

injunction concerning 28,000 square yards. The later valuation

material held development restrictions concerning Plot No.10.

Land which is subject to such restriction cannot be valued in the

same manner as unrestricted land without considering the effect of

that restriction upon its market value.

48. Mr. Kankal submitted that the authority had given several

opportunities of hearing to the Petitioners. To that limited extent,

the submission can be accepted. The Impugned Order records

several dates on which the matter was taken up for hearing. The

question before this Court is whether the order shows

consideration of the objections and documents placed by the

Petitioners. In my view, it does not.

49. The final conclusion of the authority is that the report is

“proper” and it is accepted. This cannot be treated as sufficient

when the earlier reports contained qualifications and provisional

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aspects and when the Petitioners had raised specific objections

regarding the valuation. The authority was required to

independently determine the market value. It could not accept the

latest figure because it appeared in the latest report.

50. I find that the Department has not established from the

material on record that Rs.52,61,54,916/- was the true market

value of the property on the relevant date. The said figure is not

supported by proper consideration of the condition of the property

and the disadvantages affecting it. Consequently, the demand of

Rs.2,03,07,750/- towards alleged deficit stamp duty cannot be

sustained.

51. As regards the original valuation of Rs.12 crores, there is

contemporaneous material supporting the same. The Collector had

determined the market value at Rs.12 crores and stamp duty of

Rs.60 lakhs was paid. The Deed records the offer of Rs.12 crores,

its acceptance by the Society, the “as-is-where-is” basis of the

transaction and the Purchaser's acceptance of the existing litigation

and encumbrances. I am conscious that merely because the

Collector had earlier adjudicated the document, such adjudication

does not become beyond the statutory power of revision. The

existence of an earlier valuation cannot prevent a later

examination. However, where the revised authority seeks to

replace the earlier adjudicated value of Rs.12 crores by a figure of

more than Rs.52 crores, the material before the authority must

show why the earlier valuation was wrong and why the new figure

represents the true market value. Such an exercise is not found in

the present case.

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52. Considering the material as a whole, I find that the figure of

Rs.12 crores is supported by the transaction between the parties,

the contemporaneous offer accepted by the Society, the Special

General Meeting Resolution, the “as-is-where-is” basis and the

known litigation and encumbrances. The Department has not

placed on record any comparable transaction concerning a

property having similar burdens which would justify replacing the

value of Rs.12 crores by Rs.52.61 crores. I hold that the market

value of the subject property for the purpose of the Conveyance

cannot be enhanced to Rs.52,61,54,916/- on the basis of the

Valuation Report dated 6 December 2014. The valuation made by

the Collector at Rs.12 crores has not been displaced by sufficient

and reasoned material. The stamp duty remains payable on the

value of Rs.12 crores as adjudicated.

53. For all these reasons, the Impugned Order dated 15

September 2015 cannot be sustained on merits. The finding that

the market value of the property was Rs.52,61,54,916/- and the

consequential demand of Rs.2,03,07,750/- towards deficit stamp

duty are liable to be quashed and set aside. The original

adjudication made by the Collector of Stamps, determining the

market value at Rs.12 crores and the stamp duty at Rs.60 lakhs,

stands restored.

54. In view of the foregoing discussion, and upon overall

assessment of the material record, the following order is passed:

i) The writ petition is allowed;

ii) The impugned order dated 15 september 2015 passed

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by respondent no. 2 is quashed and set aside;

iii) The petitioners shall be entitled to withdraw the

amount deposited by them in this Court in furtherance of the

order dated 27 october 2015, together with the interest

accrued thereon, if any. The amount shall be permitted to be

withdrawn by the petitioners upon due verification by the

registry;

iv) The question regarding limitation under section 53a of

the Maharashtra Stamp Act, 1958 is kept open and is not

decided by this court;

v) The petition is disposed of in the above terms. There

shall be no order as to costs.

vi) In view of disposal of the Writ Petition, all pending

interlocutory application(s) stand disposed of as infructuous.

(AMIT BORKAR, J.)

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