The Delhi High Court, in Trilok Nath v. Khem Chand and Ors, criticized the unfortunate practice of under valuation of immovable property in India for evading income tax.
The observation was made by Justice Valmiki J Mehta while hearing an appeal wherein the appellant sought for a declaration that he was the owner of a certain property in West Delhi. He claimed that he had taken a loan of Rs 1 lakh from one Khem Chand but never got back the property on repayment, the latter produced sale deed and registered power of attorney to prove sale effected in 2006. The property was transferred to one Ms. Kamla Devi by Khem Chand in 2007. She, in turn, had sold the property to Devender in 2011.
The Single Judge of the High Court held that the third party rights originating from registered sale deed were protected by the Transfer of Property Act making the present owner the rightful owner of the property and Nath, in any case, had failed to prove repayment of a of alleged loan amount.
The appellant further claimed that the sale deed presented by the defendant is illegal, since Khem Chand himself has admitted that the suit property was transferred to Kamla Devi for Rs.3. 25 lakh and the circle rates at the time of filing of the written statement was Rs.5 lakh.
To this contention, Justice Valmiki J Mehta said that “Unfortunately undervaluing of immovable properties so as to either pay less stamp duty or for other reasons of concealment of income etc, is ripe in this country…”
“..however, the appellant/plaintiff cannot take any benefit of the same in view of the provision of Section 25 of the Indian Contract Act, 1872 which specifies that inadequacy of consideration is not a ground for cancelling of a contract,” he said.
Dismissing the appeal, he said thar “In any case, it is very much possible that the declared consideration need not have been the actual consideration, and which of course this Court does not deal with or is not concerned with….”
Read the full text of the Judgment below.
