Adjudication of deficit stamp duty and penalty without reasonable opportunity of hearing is legally unsustainable.

The petitioner purchased leasehold rights for a property in Indore via a registered sale deed in 2008 for ₹34,00,000 and paid stamp duty of ₹3,40,100.

The Sub-Registrar referred the matter to the Collector of Stamps alleging undervaluation.

On 26/09/2009, the Collector, proceeding ex-parte, determined the market value to be ₹80,67,000, assessed a deficit duty of ₹14,50,260, and imposed a five-times penalty of ₹72,51,300.

A Revenue Recovery Certificate (RRC) was issued in 2009, and the Board of Revenue dismissed the petitioner’s revision in 2012.

In 2020, the Tehsildar issued a public notification to auction the property to recover the dues, prompting this writ petition challenging the prior orders and the auction notice.

1. Whether the impugned orders were passed in violation of the principles of natural justice and the mandatory procedure for notice under the 1975 Rules.

2. Whether the Collector’s ex-parte determination of market value and imposition of a five-times penalty without physical verification or legal reasoning was sustainable.

3. Whether the writ petition was barred by delay and laches, given the underlying order attained finality in 2012.

Section 47-A(2) of the Indian Stamp Act, 1899, which mandates that the Collector must provide a "reasonable opportunity of being heard" and conduct an inquiry before determining market value.

Rules 4 and 5 of the Madhya Pradesh Prevention of Undervaluation of Instruments Rules, 1975, which prescribe the specific forms for notice and the criteria for determining market value.

The principle from Harvinder Kaur v. State of Madhya Pradesh, requiring "reasons to believe" for referrals.

The Full Bench decision in Mustaq Bai v. State of Madhya Pradesh regarding the bypass of limitation when orders are passed without jurisdiction.

The Court observed that while the respondents claimed notices were sent, there was no substantive evidence on record to prove effective service in compliance with Rule 4 of the 1975 Rules.

The Court found that the Collector failed to adhere to the foundational requirement of Section 47-A(2) by bypassing a "reasonable opportunity of being heard," which rendered the subsequent ex-parte adjudication and the five-times penalty under Section 40(b) legally unsustainable.

The Court noted that the authorities ignored the 2007-2008 Collector Guidelines and failed to follow the valuation parameters set out in Rule 5, such as distinguishing between residential and commercial use.

Regarding the delay, the Court held that the 2020 auction notification created a continuing cause of action and that jurisdictional errors violating natural justice warrant interference despite the passage of time.

The Court remanded the matter to the Collector of Stamps, Indore, for a fresh determination on merits in accordance with law and the prevailing guidelines.

The petitioner was directed to appear before the Collector on 06/04/2026 to file a reply.

No order as to costs was made.