Circle rate alone can’t determine value of property: HC

New Delhi:

The Delhi High Court said circle rate cannot be the sole basis to determine the value of a property. It said that “at best it can be one of the factors” and “nothing beyond”.

“Circle rate is nothing but a guidance given by the higher ranking administrative officer to the subordinate officer whenever any instrument comes up for registration under the Act. On the basis of this circle rate, the registering authority can, at best, mechanically determine the valuation of the instrument, but whenever a dispute arises, the exact market valuation, ought to be arrived at, by the Collector…..,” a bench of Chief Justice D N Patel and Justice C Hari Shankar said.

The court’s judgment came on an appeal by a private company that had challenged an order of a single judge who had set aside an order passed by the Collector of Stamps, Delhi government, fixing the market value on the basis of the circle rate. The single judge had also sent back the matter to the collector of stamps.

This order was challenged by the Collector of Stamps and on November 15, 2019, the bench held circle rates cannot be the only governing factor.

“….suffice it to say that the circle rates are not the only factors to be kept in mind by the Collector. The circle rate can be one of the factors to be kept in mind by the Collector for determination of the value under section 47A of the Indian Stamp Act, 1899, especially, when the person who has approached for registration of the sale deed is disputing the valuation pointed out by the registering authority.

The court also “deprecated” the mechanical approach of the Collector only to follow the circle rates.

According to the plea, the company had struck a deal for a purchase of a property worth Rs 36,00,00,000 and paid stamp duty of Rs 2,16,00,000. However, the registering authority objected that there was an under valuation in the transaction because the circle rates are higher.

The matter was referred to the Collector for fixing market value under the Indian Stamp Act, 1899. On July 22, 2017, the collector passed an order on the basis of the circle rate against which an appeal was preferred. However, it was dismissed and hence the petitioners moved the Delhi High Court.