SC upholds cancellation of building permission for non-payment of penalty on deficient stamp duty

M/S. MSD Real Estate LLP vs. The Collector of Stamps & Anr. [Civil Appeal No. 3194 of 2020]

[17.09.2020] – Stamp Duty – Cancellation of development permission

Brief: In this case, the Supreme Court upheld the order of cancellation of building permission after finding that the appellant had in its application suppressed the fact that it had by that date not paid penalty imposed for payment of appropriate stamp duty by the seller of the property who sold property to the Appellant vide a registered sale deed. Further, the Court observed the High Court has also allowed the Appellant to re-file for building permission once the penalty is paid.

Important Paragraphs

2. This appeal has been filed against the judgment of the High Court of Madhya Pradesh at Indore dated 10.06.2020 by which the writ petition filed by the appellant challenging the notice dated 04.06.2020 issued by Additional Tehsildar (Recovery), District Indore as well as notice dated 04.06.2020 issued by 2 Building Officer, Zone No.09, Municipal Corporation Indore has been dismissed.

15. We have considered the submission of the parties and perused the record.

16. In pursuance of the order of the Collector dated 22.09.2008, Trustees of H.C. Dhanda Trust were liable to deposit stamp duty as well as penalty. In SLP(C) Diary No.30539 of 2017 the interim order granted by 14 this Court on 10.11.2017 having not been complied with there was no interim order operating and the Trustees of H.C. Dhanda Trust were liable to deposit the stamp duty and penalty. Although deficiency of stamp duty was deposited through the Treasury Challan dated 01.11.2019 but the penalty was not deposited and only post-dated cheques between dates 25.02.2020 to 25.05.2020 were submitted on behalf of the appellant and Jogesh Dhanda. The High Court has rightly observed that facility to deposit the penalty by post-dated cheques cannot be approved and the appellant being subsequent purchaser was liable to deposit the amount of penalty which was outstanding against the property and which was subject matter of the gift deed dated 21.04.2005. The High Court has rightly not interfered with the order dated 04.06.2020 issued by the Addl. Tehsildar (Recovery) demanding an amount of Rs.8,80,97,025/- which was outstanding on the above date.

17. We by our order of the date passed in C.A. Nos……………………of 2020 (arising out of SLP(C) Nos. 10972- 10973 of 2020) allowing the appeals partly, held: “In result the appeals are allowed the order of the Collector of Stamps dated 22.09.2008 is modified to the extent that penalty imposed of ten times of Rs.12,80,97,000/- is modified into five times penalty i.e. Rs.6,40,48,500/-. The appeals are partly allowed to the above extent.

18. The order of Collector dated 22.09.2008 having been modified and the amount of penalty having been reduced to the extent of half of the ten times penalty, respondents are to take steps in compliance to the said order. Shri Sibal has submitted that total deposit as on date by the appellant towards the penalty is about RS.8.8 crores. The issue of penalty as imposed by the order of the Collector of Stamps dated 22.09.2008 having already been decided by order of even date in C.A. Nos……………………of 2020 (arising out of SLP(C)Nos.10972- 10973 of 2020) all the parties are to act in accordance with the said judgment.

19. Now, we come to order dated 04.06.2020 which was under challenge in the writ petition before the High Court by which the Municipal Corporation, Indore has cancelled the building permission granted earlier was rejected. The High Court while considering the aforesaid by its judgment in paragraph 8 has held:

“8. So far as order dated 4.6.2020 issued by the Building Officer of Indore Municipal Corporation is concerned, at this stage, no interference is called for as the petitioner has failed to deposit the penalty amount and this fact was suppressed in the application submitted for building permission. After the deposit of the stamp duty and the penalty, the Municipal authorities are directed to reconsider the application for building permission.”

20. The above observation of the High Court amply protects the rights of the appellant. In view of the deposit made by the appellant towards the penalty, the appellant is free to apply for building permission which is to be considered by the Municipal Corporation as observed by the High Court in its judgment and order dated 10.06.2020. Nothing more is required to be said about the order dated 04.06.2020 issued by the Office of the Municipal Corporation.

21. Now, we come to the submission of Shri Sibal with regard to orders and notices issued by the Municipal Corporation and other State Authorities subsequent to filing of this appeal. The orders and notices issued by the Municipal Corporation and other State Authorities which have been brought on record by the IA No. 72517/2020 are all subsequent actions which were not subject matter of the writ petition before the High Court and cannot be taken into consideration in this appeal.

22. With regard to subsequent notices, actions and orders, as noticed above, brought on record by IA noted above the said issues cannot be entertained in this appeal. We give liberty to the parties to seek such remedy with regard to subsequent actions and orders as 18 permissible in law. The appeal is disposed of accordingly.