Case Note & Summary
The appeal arose from a judgment of the Madhya Pradesh High Court dismissing a writ petition filed by M/s. MSD Real Estate LLP challenging notices dated 04.06.2020 issued by the Additional Tehsildar (Recovery) and the Building Officer of the Municipal Corporation, Indore. The property in question, Lantern Hotel, was subject to a Deed of Assent executed on 21.04.2005 by the Trustees of H.C. Dhanda Trust. The Collector of Stamps issued a notice for deficiency in stamp duty, and by order dated 22.09.2008, held the deed to be a Gift Deed, determining a deficiency of Rs.1,28,09,700/- and imposing a penalty of ten times, i.e., Rs.12,80,97,000/-. H.C. Dhanda Trust challenged this order in the High Court, which was dismissed on 30.03.2017. An SLP was filed in the Supreme Court, where an interim order was passed on 10.11.2017 staying the penalty subject to payment of stamp duty within one month. However, the stamp duty was not paid, and the interim order ceased to operate. The stamp duty was eventually deposited on 07.11.2019. The appellant purchased the property by registered sale deed dated 27.11.2019 and applied for development permission, which was granted on 18.11.2019. Mutation was also effected. On 20.11.2019, the appellant and Jogesh Dhanda submitted an application to the Collector of Stamps along with six post-dated cheques totaling Rs.12,80,97,025/- towards the penalty. The Collector issued a letter dated 23.11.2019 acknowledging receipt of the cheques and stating that no stamp duty was outstanding. Despite this, the Additional Tehsildar issued a recovery notice on 04.06.2020 for Rs.8,80,97,095/- as outstanding penalty, and the Municipal Corporation rejected the building permission application on the same day. The High Court dismissed the writ petition, holding the appellant liable to pay the penalty and that the payment by post-dated cheques could not be approved. The Supreme Court, after hearing the parties, noted that the appellant had already deposited the stamp duty and given post-dated cheques for the penalty, which were accepted by the Collector. The Court observed that the recovery notice was premature and that the building permission cancellation was unjustified. The Court also noted that subsequent actions by the Municipal Corporation, including cancellation of mutation and initiation of eviction proceedings, were illegal and beyond jurisdiction. The Court allowed the appeal, set aside the High Court judgment, and quashed the notices dated 04.06.2020. The Court also directed that the post-dated cheques be cleared and that the appellant be entitled to pursue building permission afresh. The Court further set aside the subsequent orders dated 25.07.2020, 28.07.2020, and 27.07.2020 issued by the Municipal Corporation.
Headnote
A) Stamp Duty - Deficiency and Penalty - Liability of Subsequent Purchaser - Indian Stamp Act, 1899, Sections 33, 47-A - The appellant purchased property after stamp duty deficiency was determined. The court held that the appellant, having purchased the property, is liable to pay the penalty amount, but the recovery notice was premature as the appellant had already deposited the stamp duty and given post-dated cheques for the penalty, which were accepted by the Collector. (Paras 2-11) B) Municipal Law - Building Permission - Cancellation - Madhya Pradesh Municipal Corporation Act, 1956 - The Municipal Corporation cancelled building permission on the ground of non-payment of penalty. The court held that since the appellant had undertaken to pay the entire penalty and the Collector had accepted the cheques, the cancellation was unjustified. (Paras 5-12) C) Property Law - Mutation - Cancellation - The Municipal Corporation cancelled mutation citing pending proceedings. The court held that no proceedings regarding title were pending, and the cancellation was illegal. (Paras 10-12)
Issue of Consideration
Whether the appellant, as a subsequent purchaser, is liable to pay the penalty amount for stamp duty deficiency and whether the cancellation of building permission and mutation was justified.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court judgment dated 10.06.2020, and quashed the notices dated 04.06.2020 issued by the Additional Tehsildar (Recovery) and the Building Officer, Municipal Corporation, Indore. The Court directed that the post-dated cheques given by the appellant be cleared, and the appellant be entitled to pursue building permission afresh. The Court also set aside the subsequent orders dated 25.07.2020, 28.07.2020, and 27.07.2020 issued by the Municipal Corporation.
Law Points
- Subsequent purchaser liability for stamp duty penalty
- Payment of penalty by post-dated cheques
- Building permission cancellation
- Mutation cancellation
- Interim orders and their effect
