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Circle Rate not sole factor to determine Property’s value: Delhi HC

February 13, 2020

By Rupin Chopra and Reetika Wadhwa

On January 31, 2020, the Hon’ble Delhi High Court has held that under Section 47A of the Indian Stamp Act, 1899, circle rate is not the only factor to determine the value of a property.[1]

The writ petition filed by CTA Apparels (hereinafter referred to as the ‘Petitioner’) challenged an order passed by the Collector of Stamps, Delhi Government, fixing the market value of a property as per the circle rate. The order was set aside by the Single Judge Bench and the matter was referred back to the Collector of Stamp for re-consideration. Thereafter, the Collector moved an appeal before the Division Bench of the Delhi High Court.

Brief Facts and arguments:

  • Samir Dev Sharma (hereinafter referred to as the ‘vendor’) executed a sale deed a property in East Delhi. The Petitioner paid a sum of INR 2,16,00,000 as stamp duty and a sum of 36,00,000 as registration of the said sale deed.
  • The matter was referred by the registering authority to the collector for the determination of the value of the property on which the stamp duty was imposed.
  • The Collector valued the said property as INR 71,61,59,700 on the basis of the circle rates that resulted in a difference of INR 35,61,59,700 from the price specified in the sale deed.
  • The Collector stated that Section 27 and Section 47A of the Indian Stamp Act presumes that valuation of property is based on the prescribed circle, unless the presumption is rebutted.
  • It was submitted that the collector relied upon the copies of sale deeds of surrounding properties to arrive at the valuation.
  • The Respondent, on the other hand, submitted that circle rates were based on probability and exact market value was to be determined by the concerned Authority in accordance with Section 47A of the Indian Stamp Act.

Court’s Order and Observation

Circle rate is nothing, but, a guidance given by the higher ranking Administrative Officer to the subordinate officer

The Delhi High Court rejected the collector’s contentions and held that circle rate was not a conclusive evidence for the valuation and works as a mere guidance to the collector for determining the value under Section 47A.

The Court stated that circle rate was one of the factors for determination of the value of a property and provided a list of other factors for valuing property:

  • The area of the plot or the property in question
  • Nature of the Property
  • The use of the property
  • The width of the road upon which the property is located
  • The nature of the adjacent properties
  • The urgency of sale by the owner
  • Other existing market factors which vary from time to time
  • Need of the Buyer to Purchase the Property

The Court said that “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 the dispute arises, the exact market valuation, ought to be arrived at, by the collectors as mandated by Section 47A of the Act.”

[1] W.P. (C) 3587/2018

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