Stamp Duty cannot be charged on resale of old properties, rules High Court
Mumbaikar’s who have been on the look out to purchase old properties but have stayed away because of prohibitive stamp duty rates have some good news. In a landmark judgement, presiding Judge Gautam Patel of the Bombay  High Court has put an end to the age-old practice of collecting stamp duty retrospectively on resale of old properties. The court also ruled against imposing hefty penalty for past sale agreements that are now regarded as insufficiently stamped or not registered. 
 
The ruling was passed by the court during a hearing of a petition involving the resale of a posh 3,300 sq. ft. apartment in Tahnee Heights Cooperative Housing Society at Napean Sea Road. The petitioner Lajwanti Godhwani had inherited this apartment from her father along with other legal heirs. The apartment was last sold in 1979, when the owners had paid a stamp duty of just Rs10. In those days, a sale agreement could be executed on a stamp paper of Rs5. Later down the line, in 1985 an amendment to the Maharashtra Stamp Act spelled out that stamp duty had to be paid at the ready reckoner rate declared every year by the government. Following this amendment, the government started imposing stamp duty retrospectively on resale old properties for which nominal duty had been paid decades ago. 
 
In this particular case, the flat was recently auctioned for Rs38 crores and when the buyer Vijay Jindal approached the registration office for registration of the documents, the collector of stamps refused to register the new sale agreement pursuant to the auction. They instead demanded stamp duty on the chain of agreements, contending that it was not adequately stamped. On the basis of the present ready reckoner rates, the stamp duty alone was around Rs2 crores. Vijay Jindal had purchased the property through a court receiver auction and hence decided to approach the Bombay High Court to ask the sellers to bear the liability on past stamp duty. While Lajwanti Godhwani agreed to bear the cost, other co-owners of the flat had refused to do so.  
 
Ruling on this case, Justice Gautam Patel held that stamp duty authorities had no right to collect the stamp duty, for inadequately stamped past documents of any property, at the time of registration of its subsequent sale. He observed that “Stamp (duty) is attracted by the instrument, not the underlying transaction, and not by any historical narrative in the instrument”. This implies that stamp duty should not be calculated retrospectively for a property that was sold at a time when the law was different. In his order, Justice Patel further clarified, “As regards the question of stamp duty on antecedent documents, there is no clear or well-considered response from that office”.
 
The court order reads that “neither the officer present or Himanshu Takke, Assistant Government Pleader (AGP) is able to state under which provision of law old documents prior to the amendments to the Stamp Act could be legitimately or lawfully said to unstamped or even insufficiently stamped if, according to the law as it stood that historical point in time, the document itself was not liable to stamp in the first place.” The ruling also records Mr Takke’s agreement that any assessment on stamp duty due would have to be on the basis of the law as it stood at the time of older transactions and not at today’s ready reckoner rates.
 
Hence, Justice Patel ruled that since there are no clear cut provisions in the law, about the recovery of stamp duty retrospectively, the stamp duty authorities have no authority to insist on payment on such past agreements.
 
Advocate Ajay Panicker who represented one of the original owners of the apartment said, “This is a landmark judgement by Justice Gautam Patel, as lakhs of old flat agreements are neither sufficiently stamped nor registered, and when the owners resell the flat, the collector of stamps, charges at the current rate and also imposes a penalty. With this order, this practice will come to an end.”
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    COMMENTS

    Neeta Date

    1 month ago

    The judgement reffered above was passed on 13th December 2018, then how this can be news after 8 months?

    BombayProperty com

    1 month ago

    Kindly Ensure your headlines aren't misleading. It should say Past Payments of Stamp Duties not Applicable. Catchy headlines shouldn't be created to give the wrong impression

    Rakesh Modi

    1 month ago

    Very good judgement. A tight slap to Registration departments/Revenue departments. Stamp duty, Registration is just an extraction of money by the government under revenue, but they even register fraud documents also as in my case when inspite of 4 names of we brothers & sister in share certificate, they registered agreement with only my eldest brother's name & when I complained this to them even with the order of CM Devendra Fadnavis, they refused to alter or call the parties for rectification citing reason as "they don't check the authenticity of the docs (means with a blind eye they scan agreements & register & extract money". After the court's order they can intimate fraudsters to rectify it., What a law?? This happened in Mumbai in 2019!!! ---Rakesh Modi - 9819993972

    REPLY

    Ramesh Bajaj

    In Reply to Rakesh Modi 2 weeks ago

    I agree with you. When my house was sold the sub registrar saw the Xerox copy of Share Certificate and asked to see the original. In the case of the office the share certificate stands in 3 names, but the Xerox copy of the share certificate attached (by the other shareholders) in the lease deed for 90 years does not show my name. The sub registrar did not even verify by seeing the original, saying that it is not his duty.

    Ramesh Poapt

    1 month ago

    will it be applicable in all states?

    Harish

    1 month ago

    Another Great Judgment by Justice Gautam Patel.

    Nilesh

    1 month ago

    thous who have paid stamp duty in similar type transaction should apply for refund.

    Jigar Sompura

    1 month ago

    Do i still have to pay stamp duty of previous owner under Ammnsty ? Coz i have already filed documents. I have paid mine but previous owner hasn't

    Ashok Thakkar

    1 month ago

    thous who have paid stamp duty in similar type transaction should apply for refund.

    Mumbai Infrastructure: Citizens’ Technical Advisory Committee Tries To Bridge the Gap
    On 14 March 2019, the Himalaya bridge floor at the northern end of the Chhatrapati Shivaji Maharaj Terminus (CSMT) gave way in part, causing six deaths.
     
    The incident happened in the island city during peak traffic, at a railhead, literally under the nose of the Municipal Corporation of Greater Mumbai (MCGM). CSMT is the jewel in the crown of Mumbai’s glory. 
     
     
    There was uncontrolled rage fanned by 24x7 national television coverage, and in typical developing-world style, scapegoats had to be immediately identified and punished to assuage the angry mob. The hapless assistant and executive engineers were arrested along with the audit consultant and the retired chief engineer (bridges). 
     
    And with astounding alacrity, bridges that had been steadily plying traffic and earlier deemed safe were, overnight, labelled unfit  for vehicular movement by a set of understandably nervous and overcautious audit engineers, and tagged for demolition. Without any thought spared for alternative travel routes and socio-economic losses that this would entail, many of the marked bridges were demolished without further ado. 
     
     
    The Formation of CTAC 
     
    Moneylife ran a couple of my stories on the topic in May 2019  under the title “Mumbai’s Crumbling Infrastructure” (Mumbai’s Crumbling Infrastructure: Are We Burning Our Bridges before Crossing Them? -Part 1 & Part 2,   which identified the flawed process of management and review of the existing infrastructure and  lack of institutionalised systems and procedures of maintenance. Moneylife followed it up with a talk on the same issue (Read: Mumbai’s Infrastructure Woes: Is Fear-Psychosis Leading to Poor, Unqualified Decisions?).  
     
    The ensuing discussion generated constructive suggestions and participants included renowned engineer Shirish Patel and politician and social worker Sanjay Nirupam, along with eminent activists and subject experts in the field. A proposal emerged to meet the municipal commissioner to discuss the possibility of a second review of some of the balance bridges marked for demolition by a set of eminent city engineers; a meeting (organised by Mr Nirupam and Sucheta Dalal) with the municipal commissioner  was held on the 26 June 2019 at the latter’s  office and resulted in the formation of a Citizens’ Technical Advisory Committee (CTAC) with three private engineers (Mr Patel as chairman of the committee, Dr VV Nori and I), a faculty member each from VJTI and IIT Bombay, and the chief engineer (bridges) from MCGM as member secretary. (Read: BMC Sets up New Advisory Panel on Bridges). 
     
    What follows is a brief account of the CTAC's work and the lessons learnt from a very interesting experience of a PPP (public-private partnership) in unchartered territory. As a preamble, the incumbent municipal commissioner, Praveen Pardeshi deserves full credit to have set up the committee against all odds. The position of the municipal commissioner of the Maximum City comes with a crown of thorns—but Mr Pardeshi appears to wear the crown stoically. 
     
    The objective of this account is to illustrate one among a myriad possibilities for constructive intervention by citizens’ initiatives and, going forward, put in place a template for formal procedures to engage with authorities effectively to create a win-win situation for the establishment and the public at large. 
     
    Encounter with the Bridges Department
     
    A kick-off meeting of CTAC was held at the office of the chief engineer (CE) bridges on the 28th June which was attended by the chief engineer, deputy chief engineer and numerous executive and superintending engineers of the bridge department, and CTAC members from the private sector. The bridges department has seen many mergers and demergers in its chequered history. An independent department originally, it was merged with the department of roads and traffic in mid-November 2006 and was again carved out as a separate department in 2013.
     
    Since then, the bridge department has had to deal with fatalities related to deficiencies or failures of—bridges on an annual basis and respond to angry citizens, politicians and face relentless media scrutiny. So there we were, sitting in a fledgling department (a six-year-old in the 132 year history of the mother MCGM) whose first chief engineer was presently in jail and two colleagues of the engineers seated across the table from us were still in custody. It is thus hardly surprising that the department would view any new external agency with suspicion. While the stated objectives of the CTAC were unarguably noble, it was foisted upon a department with frayed nerves. To them, CTAC was another nuisance to be dealt with. 
     
    The Hurdles
     
    The department informed CTAC that it had been conducting a comprehensive structural audit programme of 327 bridges under its purview since 2016 through three consultants. On further enquiry, it emerged that the department did not have standard operating procedures (and checklists) for conducting bridge audits and each consultant was conducting the audit based on individual capacity. Left to their devices, auditors simply tagged bridges which in their opinion were unfit for vehicular movement as 'fit for demolition'. 
     
     
    A more nuanced approach to bridge condition survey is called for, rather than a bipolar ‘good’ or ‘fit for demolition’ approach. Oftentimes, bridge life may be extended by simple retrofit measures. Bridge retrofit, wherever possible, can not only save capital expenditure, but also avoid undue inconvenience to citizens caused by extended route closures. Alternately, only a part of the bridge may need replacement. The foundations, for example could be in good condition and only the superstructure may need to be replaced.
     
    The department was not in possession of the original design documents, nor did it possess historical documentation of the repairs and modifications to each of the bridges, quite unlike the British legacy of auditing the bridges through its own in-house engineers and keeping a detailed repair and maintenance log for every bridge they built. Our first visit to the department left us with an uncomfortable feeling that the department was harried by the absence of systems, procedures, capacity-building programmes and a credible database of its assets. 
     
    CTAC’s Groundwork Begins
     
    In the aftermath of the 14th March incident (the Himalaya bridge had passed the safety audit), the audit of all bridges had been repeated and 29 bridges were deemed to be unsafe and were, thus, tagged for demolition. Of these, 15 had already been demolished prior to our meeting and the department was in a position to offer 10 bridges for review to the CTAC. Closure of some of these bridges had evoked a strong response from the community; so any small contribution to a quick resolution of the bridge closure issue would be of much value. 
     
     
    Subsequent to the meeting, CTAC commenced the exercise of reviewing the bridges. The objective of the CTAC was to inspect the bridges to see the possibility of temporarily opening the bridges to ease the travails of the public for about six months, until a more long-term solution was put in place. Audit reports for the bridges marked for inspection were shared by the department. 
     
     
    In the subsequent two weeks, CTAC conducted numerous site visits to five bridges at Juhu Tara, Oshiwara, Laxmi Baug at Ghatkbopar-Andheri Link Road, Krishna Kunj at Malad and the Dhobi Ghat bridge, along with BMC’s executive engineer and/or deputy chief engineer. 
     
    Corrosion Pervades
     
    All the bridges under review were minor bridges and showed a similar distress pattern—significant corrosion of the bottom reinforcement bars of the bridge deck slab. There was some minor deformation observed at some bridges. It was not possible to observe any cracking as access to the underside of the bridge was not possible.  
     
     
    Drone photography was able to capture the corrosion of the reinforcement but not any cracks in the concrete. The deterioration has likely been caused by a combination of all or some of these factors: a) inadequate cover to the reinforcement bars at the time of construction of the bridge; b) original concrete did not have adequate denseness and durability; c) environment was highly aggressive/ corrosive/polluted; and d) Poor implementation of an inspection and maintenance programme.
     
     
    The CTAC was of the opinion that the bridges at Oshiwara and Juhu Tara did not show any noticeable distress at the piers and foundations. While reinforcement corrosion of the slab was evident in the photographs, CTAC did not believe that the bridge was in imminent danger of a sudden and brittle failure and suggested that the bridge be opened in a phased manner to light vehicles and BEST buses (but not trucks) almost immediately, after the removal of overburden load due to incremental topping over the years and after some other minor modifications were implemented. Bridge deformation was to be monitored. 
    Retrofit as the Right Strategy
     
    Retrofit to the bridge at Laxmi Baug was already underway during CTAC’s visit to the site. The retrofit strategy entailed providing additional steel girders supported on freshly raised outcrops of the supporting piers over the bridge slab and supporting a chequered plate ramp on steel joists, thus relieving the underlying concrete slab of any superimposed load of vehicular traffic. CTAC was in agreement with this retrofit strategy as it ticked all the right boxes for a good strengthening system. The retrofit was quick, clean (almost no concreting involved and the steel members could be cut to size and brought to site), reversible and had salvage value when the bridge would be demolished. 
     
    The Krishna Kunj bridge at Malad had been load tested and the testing agency had recommended allowing light vehicles (no trucks) to be plied over it. CTAC  concurred with the decision. The Dhobi Ghat bridge had been forced open by residents and users at the time of CTAC’s visit. The committee was of the opinion that while the bridge could be opened for light vehicular traffic, an entry barrier needed to be in place for disallowing truck movement.
     
    CTAC cleared all of the five bridges inspected by them for light vehicular movement with minor or no modifications up till 11 July 2019, barely 14 days since its formation. The balance five bridges, that were marked for demolition, were not offered for inspection to CTAC as they had already been opened to light traffic. 
     
    MCGM in a Dilemma
     
    The MCGM bridges department found itself in an awkward situation. Prior to CTAC’s bridge inspection and recommendations, the department had received a divergent opinion from VJTI for the bridges at Juhu Tara and Oshiwara. The faculty member had recommended strengthening the deck slab of the bridge by laying a 300mm reinforced concrete slab over the existing deck. 
     
     
    The consultants in CTAC were not in favour of this solution and considered it an uncalled for expenditure of the state’s resources—a waste of the public’s time and the BMC’s money. In their opinion, during construction the additional concrete would add further deadweight to the underlying deck slab. There was no value being attained by providing this additional slab and its absence was no worse than its presence. 
     
    No Records
     
    A strong case was made for this solution by the faculty member and the bridges department, based on the deformations for these bridges obtained during load testing of the bridge. But ironically there was no report of the load tests (these are expensive tests) available with MCGM for any of the bridges. 
     
    The procedure of the purported test, based on oral accounts, involved the use of  tubes and measuring water levels which in CTAC’s opinion seemed to have been unnecessarily primitive when sophisticated instruments for measuring levels are available and a code --Indian Roads Congress IRC:SP:51-2015 “Guidelines for Load Testing of Bridges”—specifies how load testing should be done. The testing records kept were incomplete and casual and no final report was submitted to the department. In such a situation, CTAC was unable to draw reliable conclusions about the overall safety (or lack of it) of the bridge from the load test. All that could be said was that if the bridge had sustained the load of a battery of 32 tonne trucks, followed by partial elastic recovery, the bridge could safely carry light-weight traffic, including buses but not trucks. 
     
     
    (Bridge Load Testing: Image for representation purpose only)
     
    The MCGM bridges department demanded a safety guarantee from CTAC if its opinion was to be heeded. It was disingenuous of the bridges department to make a request as such, since it had not issued a formal letter of appointment regarding the constitution of the Citizens Technical Advisory Committee and its terms of reference. (This was also the reason, I believe, why the faculty from IIT refused to participate in any of the proceedings of the CTAC). 
     
     
    (Bridge Load Testing: Image for representation purpose only)
     
    CTAC was a voluntary initiative to enable the bridges department to identify the key issues and challenges with respect to safety of their bridges. It was not a body formed for formal structural audit commissioned by MCGM. Nevertheless, two of the CTAC members gave such a certification in writing. One would assume that the demand for such a certificate implies that if it is given, it will be accepted and acted upon by opening the bridge to traffic.
     
    BMC Disregards but CTAC Persists
     
    Despite receipt of the written assurance from two members of the CTAC in their personal capacity, the department went ahead with the faculty member’s advice of providing an additional reinforced concrete slab of 300mm at the Juhu Tara bridge. The CTAC was, understandably, upset with the decision. After a meeting with the municipal commissioner, a second visit to the Oshiwara bridge was organised and, based on the visit, CTAC was able to impress upon the department that providing the 300mm additional slab on the Oshiwara bridge was not necessary. Lakhs of rupees would be saved in the process, besides further months of inconvenience of the public. Let us see what actually happens. 
     
    Recommendations
     
    It would be very useful for the bridges department of MCGM to undertake a capacity building exercise for its team and its consultants’ teams to ensure competency, consistency and credibility in the bridge inspection, audit and maintenance programme. An institutionalised training programme also helps in seamless induction of new engineers into the system.
     
    The writer would like to acknowledge the pivotal role played by Moneylife Foundation and Sanjay Nirupam and Sucheta Dalal, especially, in enabling the entire endeavour. Shirish Patel and Dr VV Nori have contributed significantly to  the writing of this report. 
     
    (Alpa Sheth is managing director of VMS Consultants Pvt Ltd, a structural engineering firm in Mumbai. Ms Sheth is co-founder and managing trustee of Structural Engineers Forum of India -SEFI (www.sefindia.org) and is a member of many drafting groups of the Bureau of Indian Standards.)
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    Sunil

    1 month ago

    Brilliant initiative. I hope the authorities listen to the CTAC and take their suggestions on board. A regular update with the challenges faced would be most welcome.

    Jharkhand villagers shun online PDS scheme due to network issues
    The online Public Distribution System (PDS) in Jharkhand has become a headache for many, especially for those living in far-flung areas where network issues persist.
     
    To check corruption in the PDS scheme, an online process was introduced in the state whereby the beneficiaries have to put their thumb impression on the machine kept at the ration shop to get the foodgrains under the scheme.
     
    But, the machine operates on a network, and clear weather is a must for the machine to catch signals. Hence, ration is denied to the people on several occasions. 
     
    In Tilma village of Khunti district, Kariya Munda and other villagers often spend their day at the ration shop waiting for the network so that they can get their foodgrains. 
     
    "Every day, my son asks when will they get lunch or dinner to which I reply that unless the network is accessed, they cannot get proper food," Kariya said. 
     
    Not only in Khunti, but other parts of the state are also suffering due to poor network. In Dumka and Chaibaasa, people have to even climb tress to get the network. The network doesn't catch sometimes due to heavy rains, sometimes when the server is down or for other issues.
     
    Ration dealer Sunita Purty said "unless the thumb impression is made, the ration cannot be given. The online system prevents ration distribution without thumb impression".
     
    For the last few days, the villagers are making rounds for getting foodgrains from the PDS shops. They can be seen roaming along the roads with the machine and antenna, in search of network. Many times their efforts fail following which the ration is denied.
     
    An angry villager said the manual system was better as there is no improvement in the online system and their children are suffering.
     
    Women said they had to leave behind their farm work to come to the ration shops where they have to wait for long hours.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • User

    COMMENTS

    Anil Kumar

    1 month ago

    Wow. Wasn't aware this level of digitization at village level - ration disbursal basis bio metrics!

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