Stamp Duty not applicable to Sale Certificate issued by DRT

By Legal Cell, Accommodation Times Bureau

WRIT – C No. – 20685 of 2005 at Allahabad : Avdhesh Tyagi & Another Vs. Commissioner Meerut Division & Others
HIGH COURT OF JUDICATURE AT ALLAHABAD Date of Decision – 24/9/2012
 Court Number – Not Specified
 Judgment Type – Final AFR
 Coram – Hon’ble Sabhajeet Yadav,J. 
 
 Petitioner’s Counsels – U.K. Saxena , Ajit Rai and Prateek Taygi 
 
 Respondent’s Counsel – C.S.C. HIGH COURT OF JUDICATURE AT ALLAHABAD

Heard
 
2. The
the said loan the bank obtained security document as well as guarantee and Smt. Vimla Tyagi created an equitable mortgage
of property of Khasra Plot No. 327 area 2 bighas, 13 biswas and 6 biswansis situated in village Shahpur, District Ghaziabad as 
security by depositing the original title deed. It appears that the borrower defaulted in repayment of financial facility provided by 
the said bank hence an Original application No. 14 of 2000 was filed by the Bank before the Debt Recovery Tribunal which was 
ultimately allowed and Recovery Certificate was issued. In pursuance of the said Recovery Certificate the Recovery Officer held
an auction of the aforesaid property of borrower in which the petitioners offered highest bid to the tune of Rs.2,60,000/-, which 
was accepted by Recovery Officer vide his order dated 3.7.2003 and a sale certificate was issued by Recovery Officer of the
Debt Recovery Tribunal-II, Delhi on 5.8.2003. Photostat copy of sale certificate dated 5.8.2003 is on record as Annexure-1 to the 
writ petition. In pursuance of aforesaid sale certificate the petitioners paid a sum of Rs.26,000/- as Stamp duty. It is stated that
the respondent no.3-Sub-Registrar-II, Ghaziabad has submitted a report on Ist October, 2003 to the respondent no.2-Addl.
Collector (F & R), Ghaziabad to the effect that the Stamp Duty paid by the petitioners is not in accordance with law and
there is a shortage of stamp to a tune of Rs. 4,03,500/-. 
On
after referred to as the Stamp Act, was initiated against the petitioners before Addl. Collector (F&R) Ghaziabad / the respondent 
no.2 wherein he has held that since auction of the said property was neither held by civil court nor revenue court,
therefore, auction sale and sale certificate issued by the Recovery Officer of the Tribunal is not covered by Article-18 of 
Schedule
is chargeable under Article-23 of Schedule I-B of Stamp Act on the market value of the property determined / prescribed
by the Collector
Deficient
aforesaid
issuance
respondent
the petitioners preferred an appeal before the respondent no.1-Commissioner, Meerut Division, Meerut, which too was
dismissed vide
11.3.2005 passed by respondent no.1 are on record as Annexures-3 and 4 respectively to the writ petition.  The petitioners

have challenged the aforesaid orders of the respondents no. 1 and 2 by instant writ
petition.

3. Learned counsel for the petitioners has submitted that the Debts Recovery Tribunal, which issued recovery certificate in 
exercise
referred
under
to
the
therefore,
18 of Schedule I-B of the Stamp Act. It is immaterial that such public auction was held by civil or revenue court or Collector
or other Revenue Officer or not.
is
court or Collector or other Revenue Officer, rather by U.P. Act No. 19 of 1981 and U.P. Act No. 22 of 1998, the scope of said 
Article
an officer, authority or body empowered under any law for time being in force to sell such property by public auction and to grant 
such certificate. Since Debt Recovery Tribunal is an authority or body empowered under Act 1993 to sell such property by public 
auction and Recovery Officer of the Tribunal is authorised to grant such sale certificate after holding public auction of the property 
secured by the bank to advance the loan, therefore, the stamp duty on such sale certificate of property is chargeable for a
consideration equal to amount of the purchase money specified in the sale certificate only as envisaged by Article-18 of
Schedule I-B of the Stamp Act and same cannot be charged on the basis of market value of the property constituting the 
subject matter of sale certificate according to Article-23 of said Schedule. 
Thus,
Article 23 of Schedule I-B of Stamp Act on the market value of the property, specified in the sale certificate, is wholly erroneous, 
illegal and is not sustainable under law. Accordingly the impugned orders passed by respondents no.1 and 2 asking the petitioners 
to
per month interest thereon from the date of sale certificate till actual payment is wholly illegal and is not sustainable in the eye of 
law. 

4. The submission of learned counsel for the petitioners appears to have substance and deserves to be accepted.
 Article 18 of Schedule I-B of Indian Stamp Act as amended upto date in its application to Uttar Pradesh is quoted as under:- 
Article-18 of Schedule I-B 
Description of Instrument 
Proper Stamp duty 

18. Certificate of sale (in respect of each 
{The same duty as a Conveyance property put up as a separate lot and sold), 
{No.23 clause (a)}, for a  granted to the purchaser of any property 
consideration equal to the amount 
sold by public auction by a Court or by of the purchase money only}.
an
being in force  to sell such property by public auction  and to grant such certificate}. 
———————————————————————————————— 

5. From a plain reading of Article 18 of Schedule 1-B as substituted by U.P. Act

No.19 of 1981 and U.P. Act No.22 of 1998 it is clear that in respect of property
put up for auction and sale a sale certificate is granted to the purchaser of
such property sold by public auction by a court or by an officer, authority or
body empowered under any law for time being in force to sell such property by
public auction and to grant such certificate. The stamp duty payable on such
certificate is described as same duty as on conveyance ( No.23 Clause (a)) for
consideration equal to the amount of the purchase money only.

 
6. Now question arises for consideration as to whether the recovery officer appointed u/s 7 (1) of the Act, 1993 who has
granted sale certificate to the petitioners is an officer or authority and Debt Recovery Tribunal is body empowered under
any law for time being in force to sell such property by public auction and to grant such certificate as referable to Article
18 of schedule 1-B of the Stamp Act?

7. In order to find out accurate answer to this question, it would be useful to refer Section 3 clause (1), Section 7 (1), Section 17 
clause
 
“Section-3 Establishment of Tribunal.- (1) The Central Government shall, by notification, establish one or more Tribunals, to be 
known
this Act. 
 
Section-7.
other officers and employees as that Government may think fit. 
 
Section-17.
jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts 
due to such banks and financial institutions. 
 
Section-18. Bar of Jurisdiction.- On and from the appointed day, no court or other authority shall have, or be entitled to
exercise, any jurisdiction, powers or authority( except the Supreme Court, and a High Court exercising jurisdiction under
articles 226 and 227 of the Constitution) in relation to the matters specified in section 17.
 
Section-19 Application to the Tribunal.– 
(1) …….. 
(22) The Presiding Officer shall issue a certificate under his signature on the basis of the order of the Tribunal to the Recovery 
Officer
Section-25 Modes of recovery of debts.– The Recovery Officer shall, on receipt of the copy of the certificate under sub-section (7) 
of Section 19, proceed to recover the amount of debt specified in the certificate by one or more of the following modes, namely:- 
(a)
(b) arrest of the defendant and his detention in prison; 
(c) appointing a receiver for the management of the movable or immovable properties of the defendant. 

Section -31.- Transfer of pending cases.-(1) Every suit or other proceeding pending before any court immediately before the date 
of establishment of a Tribunal under this Act, being a suit or proceeding the cause of action where on it is based is such that it 
would
date to such Tribunal: 
Provided that nothing in this sub- section shall apply to any appeal pending as aforesaid before any court. 

 
8. From a bare survey of the aforesaid provisions of the Act 1993, it clear that under Section 3 of the Act, the Central Government 
is empowered to establish one or more Tribunals, to be known as the Debts Recovery Tribunal, to exercise the jurisdiction, 
powers and authority conferred on such Tribunal by or under the said Act. By virtue of Section 7 of the Act 1993, the Central 
Government is empowered to provide the Tribunal [with one or more Recovery Officers] and such other officers and employees as 
that Government may think fit. By virtue of Section 17 of the Act, 1993, A tribunal is entitled to exercise, on and from the appointed 
day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery 
of
to a Tribunal, means the date on which such Tribunal is established under sub section (1) of section 3 of the Act. Section 18 of the 
Act 1993, creates bar of jurisdiction of courts and other authorities whereby it is provided that on and from the appointed day, no 
court
a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the matters specified in Section 17 
of the Act. 
 
9. Section 19 of the Act 1993 deals with the procedures of Tribunal which provides procedure for recovery of debts due to the 
bank from any person, on application made by a bank or a financial institution and under Clause 22 of Section 19 of the Act, the 
Presiding
Officer for recovery of the amount of debt specified in the certificate. Under section 25 of the Act 1993, modes of recovery of debts 
have been provided which inter alia envisages attachment and sale of the movable or immovable property of the defendant by 
the
provides that every suit or other proceeding pending before any court immediately before the date of establishment of a Tribunal 
under this Act, being a suit or proceeding the cause of action where on it is based is such that it would have been, if it had arisen 
after
nothing in this sub-section shall apply to any appeal pending as aforesaid before any court. 
 
10. Thus, in view of aforesaid statements of law contained in various provisions of the Act, 1993, it is clear that  since by virtue

of Section-18 read with Section-31 of the Act, the jurisdiction of court and other authority is barred for
exercising the jurisdiction and powers conferred on the Tribunals constituted and established under
the said Act from the appointed date and Tribunal alone is entitled to recover the Debts due to the
Banks and financial institutions, therefore, there can be no scope for doubt to hold that Debt Recovery

Tribunal is an authority or body empowered under law for time being in force i.e. under the Act 1993
to sell the property of defendants before the Tribunal, who are borrowers and/or guarantor of the loan
through Recovery Officers as such Recovery Officers are authorised to sell property of such defendants
by public auction for recovery of debts specified in the certificate issued by the Tribunal and to grant
sale certificate to the purchaser of the property, as such, in my considered opinion, such sale certificate
granted by Recovery Officer is fully covered by Article-18 of Schedule I-B of Stamp Act. It is immaterial
that aforesaid sale certificate was not granted by the civil or Revenue court, Collector or Revenue
Officer.

 

expressing any opinion on the merit of sale
consideration, as to whether property of such value could be sold by the
Tribunal for lesser amount specified in sale certificate or not because of the
reason that same is not under challenge before this court, I am of the considered
opinion that sale certificate issued by the Recovery Officer of the Tribunal is
fully covered under Article-18 Schedule I-B of the Stamp Act, therefore, the
petitioners are liable to pay stamp duty for a consideration equal to the amount
of purchase money only specified in the sale certificate. They are not liable
to pay stamp duty under Article-23 of Schedule I-B on the market value of the
property, determined/fixed by the Collector under Stamp Act. The view taken by
the respondents no. 1 and 2 contrary to my view is wholly erroneous, therefore,
cannot be sustained. Accordingly impugned orders passed by respondents no.1
and 2 are hereby quashed.

11.

 
Thus writ petition succeeds and is allowed.





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