Madras High Court’s reflections on Tamil Nadu’s increased property registration guidelines

A March 2023 circular from the Tamil Nadu government that increased the guideline value of properties in cities like Chennai, Coimbatore, and Madurai by 33% was invalidated by the Madras High Court on January 4, 2024. The purpose of the circular was to set the guidelines value in line with the current market value of properties, as announced by the finance minister in the State Assembly on March 20, 2023, who stated that the government had decided to increase the guideline value in light of the general increase in property value.

The government was permitted to raise the guideline value, but it had to follow the procedures outlined in the regulations, which call for the formation of an expert committee and a public hearing before enacting the increase, according to Justice P. Velmurugan, who had invalidated the circular on procedural grounds on that day.

The Tamil Nadu Stamp Rules were adopted by the state in 2010, and to change the guideline values, subcommittees were constituted for each district. The amendment was put into force by the rule in 2012. After that, the state changed the values once again in 2017, this time by lowering the state’s standard value for all land by 33%. With effect from April 1, 2023, the state raised the value equivalent by 33% while lowering the registration cost and other costs by the disputed circular of March 30, 2023.

The Chennai branch of CREDAI, together with two individual developers, Magnum Infra and Shree Mahalaxmi Enterprises, filed a petition and moved before the Madras High Court Bench to contest the proceedings.

The petitioners argued that it was a trite and well-established rule of law that an action should be carried out in a particular way or not at all when legislation required a specific act to be performed in a specific manner. It was argued that because the circular and the exercise that preceded it did not adhere to the legislative framework and that they are supposed to be reversed or quashed.

“There has been a 50% increase in such value as a result of artificially pegging the guideline value to the rates that were established nearly ten years ago,” CREDAI, together with two individual developers, Magnum Infra and Shree Mahalaxmi Enterprises added to its argument. The state rebutted against the plea, stating that neither CREDAI nor the other petitioners had Locus Standi to file the litigation.

Justice Velmurugan granted their demands, saying, “They have to get the subcommittee’s report/expert’s report and the statutory evaluation committee should fix it.” Before making any required alterations or amendments to the allegations, they must adhere to a procedure, such as requesting public objections. “In this case, they have not done it, and as pointed out by the petitioners, it has to be done in the manner known by law,” the court expressed. Also, the court raised its concern stating that the ‘Circular violates principles of natural justice’. In his order, Justice Velmurugan added, “The impugned circular is arbitrary and the same is quashed. The respondents have to follow 2017 guidelines, which are the last revised guidelines as per the rules, until new guidelines are framed in the manner known to law.” Hence Madras High Court quashes Tamil Nadu’s guideline value hike for property registration.

It was further stated that no legislative laws or guidelines of the Tamil Nadu Stamp (Constitution of Valuation Committee for Estimation, Publication, and Revision of Market Value Guidelines of Properties) guidelines, 2010, had been breached.