BALLYFABS INTERNATIONAL LIMITED Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) The Single Bench while dealing with the instant writ petition noticed several decisions of a Co-ordinate Bench rendered in cases of Vitarich Agro Food India ltd Vs State of West Bengal (WP no. 1236 W of 2017), Glovi Infracon LLP Vs. Inspector General of Registration and CSR and Anr. (2017 SCC Online Cal 9368), VPH Real Estate Private Ltd. and Anr. Vs. Directorate of Registration and Stamp Revenue, Finance Department and Ors (WP 1069 of 2015) wherein it is held that the authorized officer under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "SARFAESI Act ") conducting a sale of the mortgaged property is not a court sale or a sale conducted by an authorized officer of the Court or a company sale, but rendered the dissenting view upon interpreting the provisions contained in Sec. 47A and Sec. 2 (16B) of the Indian Stamp Act and Sec. 3 of the West Bengal Stamp (Prevention of Undervaluation Instruments) Rules, 2001 holding that once the sale is affected by an authorized officer under SARFAESI Act by making wide publication in the widely circulated newspapers shall be regarded as the open market sale and, therefore, the registering authority cannot have any reason to believe that the sale price has been shown under-valued having not sold in the open market. The Single Bench referred the matter to the Chief Justice for following reference:

(2.) The Chief Justice has referred this matter to this Bench to answer such aforesaid reference.

(3.) The submission of the petitioners is primarily based upon two judgments which, according to them, are occupying the field in this regard. 4.The reference is made to a judgment of the Supreme Court in case of V.N. Devadoss Vs. Chief Revenue Control Officer-Inspector and Ors reported in 2009 (7) SCC 438 and the Special Bench judgment of this court in case of State of West Bengal Vs. Sati Enclave Private Ltd. and Ors. reported in 2010 (3) CHN (Cal 651). It is arduously submitted by the learned Advocate for the petitioners that in the aforesaid reports the question which fell for consideration was whether the sale conducted by the court or by statutory authorities like Board for Industrial and Financial Reconstruction and Direction(BIFR) and Appellate Authority for Industrial and Financial Reconstruction (AAIFR) or Asset Sales Committee can be regarded as a sale fetching a price in open market and, thus, is kept outside the purview of Sec. 47A of the Stamp Act. It is arduously submitted that if a property is sold in open market by a statutory authority fetching the best price, it would be regarded as a sale in open market and, therefore, the registering authority cannot have any reason to believe that the said price is not a true and correct reflection of the market price under Sec. 47A of the said Act. It is further submitted that mere reduction of the reserve price cannot be a reason to believe that the price fetched therein is not a price which would be fetched if the sale is made in the open market as a concept of fixing the reserve price is distinct and different from the concept of ascertaining the market price. It is vehemently submitted that the expression 'reason to believe ' cannot be imported if the sale is conducted by an authorized officer under the SARFAESI Act if such sale is conducted by wide circulation inviting the prospective buyer. According to the Counsel for the petitioner the stand of the registering authority that the sale conducted by the court or its authorized officer or Company Court or the BIFR or AAIFR are exempted from the purview of Sec. 47A is too narrow the interpretation assigned in the aforesaid decisions. The ratio of the aforesaid judgment as would be culled out therefrom leaves no ambiguity that if the sale is conducted by an authorized officer in exercise of the power conferred in the statute by making wide publication in the widely circulated newspapers having no relation or nexus with the prospective buyer will be regarded as open market sale and thus, immuned from the purview of Sec. 47A of the Act. A distinction has to be drawn to the sale between two private individuals and the sale conducted on open advertisement inviting the public to offer the price which appears to have been misconstrued by the registering authorities by giving narrower interpretation to the judgment of the Apex Court in Devadoss (Supra) and Sati Enclave (Supra). It is further submitted that Sec. 47A of the Act can only be activated if the registering authority has reason to believe that the consideration price shown in the instrument has been fraudulently under-valued to evade the stamp duty which can be reasonably perceived in case of a private sale but has no manner of application if the sale is conducted in open market by a statutory authority in exercise of the powers conferred in the statute itself. The learned Counsel thus concluded that sale by an authorized officer under the SARFAESI Act is an open market sale having conducted after wide publication and, therefore, there is no justification in the stand of the registering authority over the inapplicability of the decisions rendered in V.N. Devadoss (Supra) and Sati Enclave (Supra). 5.The State respondent however, submits that Sec. 13 (4) (a) of the SARFAESI Act empowers the creditor to take possession of the secured assets of the borrower in the event the borrower failed to discharge his liability in its entirety within the period so specified and to transfer by way of lease, assignment or sale of the secured assets to recover its debts. Rule 8(5) of the SARFAESI Rules mandates that before effecting sale of the secured assets if it is an immovable property, the authorized officer shall obtain a valuation of the property from the approved value and in consultation with the secured creditor may fix a reserve price before it proceeds to sell the whole or any part of the immovable property/secured assets. It is further submitted that the sale would not be confirmed under Rule 9(2) if the sale price is less than the reserve price. Taking clue therefrom, it is submitted that by reducing the reserve price which was initially fixed and thereafter confirming the same is in violation of the aforesaid provisions. It is further submitted that the sale by an authorized officer under the SARFAESI Act and the Rules is not a sale conducted by the court and, therefore, the registering authority is within its competence to invoke the provisions contained under Sec. 47A of the Stamp Act. The reliance was placed upon a judgment of the Single Bench of this court in case of Anil Kamal Singh Vs. State of West Bengal reported in 2016 SCC Online Cal 7460 wherein it is held that an authorized officer under the SARFAESI Act cannot be regarded as a court by repelling the contention that such sale if accepted would defeat the purpose of the Act and the Rules. It is vociferously submitted that the open market sale has to be construed in the perspective of the sale conducted by the court or its officer or the Company Court and not by an authorized officer under the SARFAESI Act. It is further submitted that there is no ambiguity that the reserve price cannot be attributed to the valuation of the property as they operate in different sphere as held in Anil Kumar Srivastava Vs. State of UP and Anr. reported in 2004 (8) SCC 671. The learned Counsel further submits that it is an ardent duty of the authority to fetch the best price based on the correct valuation report and fixation of the reserve price and placed reliance upon a judgment of Supreme Court in case of Ramkishun and Ors. Vs State of UP and Ors. reported in 2012 (11) SCC 511. 6.It is thus submitted that the purpose behind the incorporation of Sec. 47A of the Indian Stamp Act and Rule 3 of the West Bengal Stamp (Prevention of Undervaluation Instruments) Rules, 2001 are to prevent the rampant evasion of the Stamp Duty by undervaluing the instrument and the moment the registering authority has reason to believe that the valuation shown in the instrument is not a market price as defined in Sec. 2 (16)(B) of the said Act. There is no fetter in invoking the aforesaid provision. It is further submitted that the sale conducted by the court or its officer or the company court or the statutory authority like BIFR and AAIFR are outside the purview of Sec. 47A of the Act provided such sale is conducted strictly in terms of the parameters set forth in Sati Enclave (Supra). According to the learned Advocate any sale conducted by the authority not mentioned above shall be subject to Sec. 47A of the Act and, therefore, any interpretation which runs counter to the above decision shall open a floodgate for all and sundry to wriggle out from the clutches thereof and would render the purpose and object behind its incorporation otiose.