Bombay High Court: In a petition challenging the order of the Collector of Stamps who determined duty on the market valuation of Rs 8,34,91,500 instead of the auction consideration of Rs 2,01,31,000, a Single Judge Bench of N. J. Jamadar, J., held that stamp duty must be adjudicated on the basis of the consideration discovered in the Debt Recovery Tribunal (‘DRT’) auction. The impugned order was quashed and the Collector directed to adjudicate the duty on the auction price accordingly.
Background:
The case arose from the sale of a secured asset through auction conducted by the Recovery Officer of the DRT. The petitioner purchased the property for Rs 2,01,31,000 and was issued a sale certificate. However, the Collector of Stamps determined duty on a market valuation of Rs 8,34,91,500, imposing duty and penalty. Aggrieved, the petitioner challenged this determination, asserting that auction consideration reflects the true market value.
The petitioner contended that stamp duty must be levied on the auction price, as the auction process itself is a transparent method of discovering market value. On the other hand, the respondent argued that under Rule 4(6) of the Maharashtra Stamp (Determination of True Market Value Property) Rules, 1965 (‘1965 Rules’) and the Circular dated 15-12-2021, duty must be based on market value and not on auction consideration. The respondent also raised a preliminary objection regarding maintainability, pointing to the availability of an alternate statutory remedy of appeal under the Maharashtra Stamps Act, 1958 (‘Stamp Act’).
Analysis and Decision:
The Court emphasised that mere availability of an alternate remedy does not preclude the High Court from entertaining a petition, as the availability of an alternate efficacious remedy has been construed to be a self-imposed restraint on the exercise of the writ jurisdiction. The Court highlighted that in case of availability of statutory remedy of appeal against an order assailed in writ petition, ordinarily, the aggrieved party must be relegated to exhaust the statutory remedy.
The Court noted that where the issue to be decided in writ petition against an order passed by the Statutory Authority involves a pure question of law and does not warrant investigation into facts, in such cases, the High Court may examine the issue without relegating the party to the alternate remedy. The Court referred to Godrej Sara Lee Ltd. v. E&TOCAA, (2023) 109 GSTR 402, wherein it was held that the availability of an alternative remedy does not operate as an absolute bar to the “maintainability” of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law.
The Court observed that in the case in hand the legal question that crops up for consideration is, if a property is purchased in an auction sale conducted through the aegis of DRT, whether the stamp-duty should be determined on the consideration at which the property was purchased or on the market value as may be determined by the Collector of Stamps. The Court noted that it appears to be a question of law and much investigation into the facts is not warranted. In this view of the matter, this Court is persuaded to entertain the petition despite availability of a statutory remedy of appeal, as the core controversy can be resolved by applying the principles of law.
The Court emphasised that if a property is sold in a Court auction, after following a rigorous process aimed at discovery of the optimum price, such price, in effect, represents the price of the property at which a willing buyer was prepared to purchase the subject property, with all its advantages and disadvantages, in a competitive bidding. The Court further observed that such a sale has the imprimatur of the Court, and an order of acceptance of the bid implies that, in the given situation, the bid at which the property was sold, in the view of the Court, represented the true market value of the property.
The Court relied on the decision of Supreme Court in Registrar of Assurances v. ASL Vyapar (P) Ltd., (2024) 17 SCC 572, where it was observed that the provision of Section 47A of the Indian Stamp (West Bengal Amendment) Act, 1919 cannot be said to have any application to a public auction carried out through court process/receiver as that is the most transparent manner of obtaining the correct market value of the property.
The Court emphasised that in the case in hand where the consideration at which the subject property was sold in an auction conducted by the Recovery Officer towards the satisfaction of the recovery certificate does not represent the true market value, cannot be countenanced. The Court highlighted that under Rule 8(5) of the Security Interest (Enforcement) Rules, 2002, the Authorised Officer must obtain valuation from an approved valuer and fix the reserve price. The Court further observed that the Authorised Officer is empowered to sell the secured asset by quotations, tenders, private treaty or public auction including e-auction. In the present case, the Court noted, the Recovery Officer resorted to sale of the property by holding public auction through online electronic bidding.
The Court emphasised that as the property was sold in a public auction through online bidding and the bid of the petitioner, which matched the reserve price, was accepted, it would not be permissible for the Authorities under the Stamp Act to contend that the market value would be determined in accordance with Rule 4(6) of the 1965 Rules and not on the basis of the consideration fetched in the auction. The Court highlighted that the procedure of sale adopted by the Recovery Officer was conducive for discovery of the fair market value. Therefore, the impugned order determining the stamp duty on the basis of the market value, as determined by the Collector of Stamps, and not on the basis of the consideration at which the property was purchased, cannot be legally sustained.
Accordingly, the Court allowed the petition, quashed the impugned order, and directed the Collector to adjudicate the stamp duty on the sale certificate on the basis of the auction consideration of Rs 2,01,31,000 within four weeks. The Court made the rule absolute in the aforesaid terms with no order as to costs.
[Shweta Aditya Malhotra v. Collector of Stamps, 2026 SCC OnLine Bom 301, decided on 28-01-2026]
Advocates who appeared in this case:
For the Petitioner: Saurish Shetye, a/w Pavan Pandey and Devendra Agarwal, i/b Prem Kumar Pandey
For the Respondent: J. P. Patil, AGP