M/s.Shree Vijayalakshmi Charitable Trust v. The Sub Registrar, Raja Street,P.Puliampaty,Mettupalayam Taluk,Erode District

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED:7-9-2009CORAMTHE HONOURABLE MR.JUSTICE N.KIRUBAKARANW.P.No.17833 of 2009M/s.Shree Vijayalakshmi Charitable Trust,Registered Trust, represented by itsTrustee Mr.A.Senthil Kumar,No.107-A Sen Gupta Street,Ram Nagar, Coimbatore-641 009. ... PetitionerVersusThe Sub Registrar,Raja Street,P.Puliampaty,Mettupalayam Taluk,Erode District. ... RespondentWrit Petition filed under Article 226 of Constitution of Indiapraying for the issuance of Writ of Certiorari to call for therecords of the respondent's notice signed and dispatched on 29.7.2009pertaining to 59.25 ½ Acres of F2, irrigation project lands situatedat Irumbarai and Ayyampalayam Villages of Sathyamangalam Taluk andMettupalayam Taluk of Erode District covered by the sale certificatedated 22.12.2006 and issued by the Official Liquidator of the HighCourt, Madras and quash the same. For Petitioner :Mr.K.Ramakrishna Reddy For Respondent :Mr.D.Srinivasan Additional Government Pleader ORDERThe writ petition has been filed challenging the order dated29.7.2009 issued by the respondent calling upon the petitioner to paya sum of Rs.10,39,122/- towards deficit stamp duty for entering thesale certificate dated 22.12.2006 in Book I. https://hcservices.ecourts.gov.in/hcservices/

2.The case of the petitioner-trust is that oneMr.P.S.Ramachandran was successful bidder of the property to anextent 59.25 ½ acres of lands situate in Irumbarai and AyyampalayamVillages, Sathyamangalam Taluk and Mettupalayam Taluk, Erode Districtin an auction. By an order dated 25.8.2006 made in C.A.No.370 of2006, the sale was confirmed in favour of Mr.P.S.Ramachandran for asale consideration of Rs.1,73,43,642/-. Through order dated20.12.2006 passed in C.A.No.2458 of 2006, this court directed theOfficial Liaquidator to issue "Certificate of sale" in favour of thenominee of Mr.P.S.Ramachandran in respect of the said lands,Mr.P.S.Ramachandran nominated the petitioner to be the auctionpurchaser and the auction consideration was paid. The possession ofthe property was given to the petitioner and Certificate of sale wasissued to the petitioner by the Official Liquidator, High CourtMadras on 22.12.2006. 3.The office of the Official Liquidator of this Court sent acopy of the sale certificate dated 22.12.2006 to the office of therespondent to file the same in Book-I as per Section 89 of theRegistration Act 1908. However it is seen that after a lapse of morethan two years, the respondent sent the impugned dated 29.7.2009demanding a sum of Rs.10,39,122/- which was said to be the deficitstamp duty payable for filing the sale certificate in Book-I as peryear 2008 audit objection. Against the said order dated 29.7.2009only, the present writ petition has been filed on the ground that thesaid communication was issued in contravention of Section 17(2)(Xii)and Section 89 of the Registration Act 1908.4.Mr.Ramakrishna Reddy, learned counsel for the petitioner,relied on a judgement of the Honourable Supreme Court inB.Arvindkumar vs. Government of India and others reported in (2008) 5SCC 745 to state that sale certificate does not require registration.Para 12 of the judgement is extracted hereunder:"12. The plaintiff has produced the originalregistered sale certificate dated 29.8.1941 executed by theOfficial Receiver, City Station, Bangalore. The said deedcertifies that Bhowrilal (father of the plaintiff) was thehighest bidder at an auction-sale held on 22.8.1941, inrespect of the right, title, interest of the insolventAnraj Sankla, namely, the leasehold right in the propertydescribed in the schedule to the certificate (suitproperty), that his bid Rs.8350 was accepted and the salewas confirmed by the District Judge, Civil and MilitaryStation, Bangalore on 25.8.1941. The sale certificatedeclared Bhowrilal to be the owner of the leasehold rightin respect of the suit property. When a property is sold by https://hcservices.ecourts.gov.in/hcservices/ public auction in pursuance of an order of the Court andthe bid is accepted and the sale is confirmed by the courtin favour of the purchaser, the sale becomes absolute andthe title vests in the purchaser. A sale certificate isissued to the purchaser only when the sale becomesabsolute. The sale certificate is merely the evidence ofsuch title. It is well settled that when an auction-purchaser derives title on confirmation of sale in hisfavour, and a sale certificate is issued evidencing suchsale and title, no further deed of transfer from the courtis contemplated or required. In this case, the salecertificate itself was registered, though such a salecertificate issued by a court or an officer authorised bythe court, does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically providesthat a certificate of sale granted to any purchaser of anyproperty sold by a public auction by a Civil or RevenueOfficer does not fall under the category of non-testamentary documents which require registration undersub-sections (b) and (c) of Section 17(1) of the said Act.We therefore hold that the High Court committed a seriouserror in holding that the sale certificate did not conveyany right, title or interest to plaintiff's father for wantof registered deed of transfer."5.In another judgement Division of Bench of this court inK.Chidambara Manickam Vs. Shakeena and others reported in (2008) 1CTC 660 relying upon the judgement of the Hon'ble Supreme Courtmentioned above held that sale certificate issued by the AuthorisedOfficer under SURFAESI Act does not require registration as perSection 17 (2) (XII) of the Registration Act.6.Mr.D.Srinivasan, learned Additional Government Pleadersubmits that even though there is no necessity for the salecertificate to be registered, when it is submitted for registration,necessarily stamp duty has to be paid for registration of thedocument.7.It is relevant to note Section 17 of the Registration Act,which is extracted as follows:-"17. Documents of which registration is compulsory--(1) The following documents shall be registered, if theproperty to which they relate is situate in a district inwhich, and if they have been executed on or after thedate on which, Act No.XVI of 1864, or the IndianRegistration Act, 1866 (XX of 1866), or the IndianRegistration Act, 1871 (VIII of 1871), or the IndianRegistration Act, 18l77 (III of 1877), or this Act cameor comes into force, namely:- https://hcservices.ecourts.gov.in/hcservices/ (a) instruments of gift of immovable property;(b) other non-testamentary instruments which purportoperate to create, declare, assign, limit or extinguish,whether in present or in future, any right, title orinterest whether vested or contingent, of the value ofone hundred rupees and upwards, to or in immovableproperty;(c) non-testamentary instruments which acknowledgethe receipt or payment of any consideration on accountthe creation, declaration, assignment, limitation orextinction of any such right, title or interest; (d) leases of immovable property from year to year,or for any term exceeding one year, or reserving a yearlyrent;(e) non-testamentary instruments transferring onassigning any decree or order of a court or any awardwhen such decree or order or award purports or operatesto create, declare, assign, limit or extinguish, whetherin present or in future, any right, title or interest,whether vested or contingent, of the value of one hundredrupees and upwards, to or in immovable property;(f) Instruments of agreement relating toconstruction of multiunit house building on land byseveral persons as referred to in clause (i) of Article 5of the Schedule I to the Stamp Act, 1899 (Central Act IIof 1899);Provided that the State Government may, by orderpublished in the Official Gazette, exempt from theoperation of this sub-section any leases executed in anydistrict, or part of a district, the term granted bywhich do not exceed five years and the annual rentsreserved by which do not exceed fifty rupees.(1-A) The documents containing contracts to transferfor consideration, any immovable property for the purposeof Section 53-A of the Transfer of Property Act, 1882 (4of 1882) shall be registered if they have been executedon or after the commencement4 of the Registration andother Related Laws (Amendment) Act, 2001 and if suchdocuments are not registered on or after suchcommencement, then, they shall have no effect for thepurpose of the said Section 53-A. https://hcservices.ecourts.gov.in/hcservices/ (2) Nothing in clauses (b) and (c) sub-section (1)applies to --(i) any composition deed; ;or(ii) any instrument relating to shares in a JointStock Company, notwithstanding that the assets of suchCompany consists in whole or in part of immovableproperty; or(iii) any debenture issued by any such company andnot creating, declaring, assigning, limiting orextinguishing any right, title or interest, to or inimmovable property except in so far as it entitles theholder to the security afforded by a registeredinstrument, whereby the company has mortgaged, conveyedor otherwise transferred the whole or part of itsimmovable property or nay interest therein to trusteesupon trust for the benefit of the holders of suchdebentures; or(iv) any endorsement upon or transfer of anydebenture issued by any such company; or (v) any document other than the documents specifiedin sub-section (1-A) not itself creating, declaring,assigning, limiting or extinguishing any right, title orinterest of the value of one hundred rupees and upwardsto or in immovable property, but merely creating a rightto obtain another document which will, when executed,create, declare, assign, limit or extinguish any suchright, title or interest or (vi) any decree or order of a Court except a decreeor order expressed to be made on a compromise andcomprising immovable property other than that which isthe subject matter of the suit or proceeding; or(vii) any grant of immovable property by theGovernment; or (viii) any instrument of partition made by a RevenueOfficer; or(ix) any order granting a loan or instrument ofcollateral security granted under the Land Improvement"Act, 1871 (XXVI of 1871), or the Land Improvement LoansAct, 1883 (XIX of 1883); or https://hcservices.ecourts.gov.in/hcservices/ (x) any order granting a loan under theAgriculturists Loans Act, 1884 (XII of 1884), orinstrument for securing the repayment of a loan madeunder that Act; or(x-a) any order made under the Charitable EndowmentsAct, 1890 (VI of 1890), vesting any property in aTreasurer of Charitable Endowments or divesting any suchTreasurer of any property; or(xi) any endorsement on a mortgage-deedacknowledging the payment of the whole or any part of themortgage money and any other receipt for payment of moneydue under a mortgage when the receipt does not purport toextinguish the mortgage; or(xii) any certificate of sale granted to thepurchaser of any property sold by public auction by aCivil or Revenue Officer.Explanation-- A document purporting or operating toeffect a contract for the sale of immovable propertyshall not be deemed to require or ever to have requiredregistration by reason only of the fact that suchdocument contains a recital of the payment of any earnestmoney or of the whole or any part of the purchase money.(3) Authorities to adopt a son, executed after theIst day of January 1872, and not conferred by a will,shall also be registered."8.Section 17 (1) of the Act speaks about the documents ofwhich registration is compulsory. Documents mentioned in Section 17(2) of the Act are not compulsorily registrable and do not fall underthe category of non-testamentary documents which require registrationunder sub-section (b) and (c) of Section 17(1) of the said Act. 9.Certain documents are specifically given in Section 89 ofthe Act and the copies of those documents are required to be filed inBook-I by the Registrar, when sent by the Court/Officer Section 89reads as follows:"89. Copies of certain orders, certificates andinstruments to be sent to registering officers and filed( or scanned)-- (1) Every officer granting a loan under LandImprovement Loans Act 1883 (XIX of 1883), shall send a copyof his order to the registering officer within the locallimits of whose jurisdiction the whole or any part of theland to be improved or of the land to be granted ascollateral security, is situate, and such registering https://hcservices.ecourts.gov.in/hcservices/ officer shall file the copy (in his Book No.1 or get itscanned)(2) Every court granting a certificate of sale ofimmovable property under the code of Civil Procedure, 1908(V of 1908), shall send a copy of such certificate to theregistering officer within the local limits of whosejurisdiction the whole or any part of the immovableproperty comprised in such certificate is situate, and suchofficer shall file the copy in his Book No.1 or get itscanned.2A: Every court passing an order for effecting orraising an attachment of immovable property under the Codeof Civil Procedure, 1908 (Central Act V of 1908) shallsend a copy of such order together with the memorandumgiving the details of properties to the Registering Officerwithin the local limits of whose jurisdiction the whole orany part of the said immovable property is situated andsuch registering officer shall file the copy of such orderin his Book No.1 or get it scanned."10.What is Book-I? Details regarding Register-Books to be keptin several officer are given Section 51 of the Act. Book-I to Book-5are mentioned Section 51(1) (A). Book-I, " Register of non-testamentary documents relating to immovable property"51(2) reads as follows:(2) In Book-I shall be filed, (i) true copies of all documents and (ii) all memoranda registered under Sections 17,18 and 89which relate to immovable properties, and are not wills" 11.Article 18 of the Indian Stamp Act states about stamp dutyfor the registration of certificate of sale, which is extracted asfollows:"18 Certificate of Sale (In respect of eachproperty put up as a separate lot and sold), granted tothe purchaser of any property sold by public auction bya Civil or Revenue Court or Collector or other RevenueOfficer--(a) Where the purchase money does not exceed Rs.10; One rupee. https://hcservices.ecourts.gov.in/hcservices/ (b) Where the purchase money exceeds Rs.10 but doesnot exceed Rs.25; Two rupees.(bb)Where the purchase money exceeds Rs.25 does notexceed Rs.50; Three rupees.(c) In any other case. The same duty as a conveyance (No.23) for amarket value equal to the amount of the purchase moneyonly.12.Moreover Section 51(2) distinctly mentions Section 17 and89 separately. Apart from that, documents mentioned in 17(1)(b)(c)are to be registered by the Registrar as per the procedures mentionedin Sections 52 to 67 of Part XI of the Registration Act. On the otherhand the procedure for filing copy of the sale certificate findsplace in Section 89. Hence both procedures are different. Forregistration, stamp duty is must whereas for filing no stamp duty isnecessary. 13.The legislature consciously used the word "register" inSection 17 whereas the word "file" was employed in Section 89 of theAct. Only when the purchaser goes for registration of salecertificate issued by the court officer, Article 18 of the IndianStamp Act would be attracted and stamp duty is to be paid as perArticle 23 of the Registration Act treating it as conveyance i.e.market value of the property. When the instrument is not submittedfor registration and is being sent to the Registrar only for thepurpose of filing in Book NO.1, it does not attract any stamp duty.14.The earliest decision in this regard is by a DivisionBench of this Court comprising Mr.Jusitce Kindersley and Mr.JusticeMutchins in Tirrappa Chetty Vs. Murugappa Chetti reported in I.L.R 7Mad = 7 Madras 107 which held that "the certificate of purchase must be regarded as aregistered document and a copy having been transmitted bythe Court and filed by the Registrar under Section 89 ofthe Act, that being the method of registration prescribedby the Act for sale of the certificate."15.The judgement of the Supreme Court reported in 2007 (5) SCC745 states: " when a property is sold by public auction inpursuance of the order of the court and the bid isaccepted and the sale is confirmed by the court in favourof the purchaser, the sale becomes the absolute and thetitle vests in the purchaser. A sale Certificate is merely https://hcservices.ecourts.gov.in/hcservices/ evidence of such title, no further deed of transfer fromthe court is contemplated. In this case, the salecertificate itself was registered, though such a salecertificate issued by a court or an officer authorised bythe court, does not require registration."16.In view of the above judgements and exemption granted underSection 17(2), the copy of the document is only required to be filedin Book I under the special procedure under Section 89 of the Act.If stamp duty is required even for filing of the copy of instrumentunder Section 89 of the Act, the exemption given under Section 17(2)of the Act would become meaningless. In that event, there is nonecessity for the special procedure under Section 89 of the Act andit would amount to violation of the Act. The Hon'ble Supreme Court insimilar circumstances in Shanti Devi.L. vs Recovery Officer reportedin AIR 1991 SC 1880 after comparing "registration" under Section 17with "filing" under Section 89 of the Act held that though theprocesses are different, the purchaser at a court or revenue sale isunder no disadvantage because of lack of registration and transfer oftitle is not vitiated by non-registration of certificate and directedthe Registrar to file the copy of the sale certificate in Book-I. 17.The Office of the Official Liquidator, High Court, Madraswrote a letter dated 15.3.2007 to the respondent/Registrar enclosinga copy of certificate of sale dated 22.12.2006 to be filed in Book-Ias per Section 89 of the Act. Section 89 of the Act is verycategorical that the registering officer has to file the copy of suchcertificate in Book-I and it is the bounden duty of the officer tofile the copy in his Book No.1 or get it scanned.18.When such is the position, the sale certificate would havecome under Section 17 (2) (xii)of the Registration Act 1908. As longas the sections 17(2) and 89 are there in the Registration Act, thecourt can only go by the statue and quash the order which areultravires of the Act. In view of the categorical pronouncement ofthe judgement of the Supreme Court and also the judgement of thiscourt and also in view of provisions given in the Registration Act,the court holds that court auction sale certificate sent to theRegistration for filing in Book-I would not attract stamp duty. Therespondent has got no power and jurisdiction to issue the impugnedorder because of Section 17(2) (xii) and 89(2) of the RegistrationAct and cannot demand stamp duty. Hence the impugned order is liableto be set aside. 19.As the copy of the document is sought to be filed underSection 89 of the Act in Book No.1 of the Registrar Office, it is ina way amounting to registering the document which will be reflectedin the encumbrance certificate of the property. Though thetransaction through sale certificate is a "sale" as per Section 54 ofthe Transfer of Property Act, the sale certificate is exempted as https://hcservices.ecourts.gov.in/hcservices/ compulsorily registrable document under Section 17(2) of the Act. Itis an instrument of conveyance as defined under Section 2(10) of theIndian Stamp Act 1899, passing of right, title, interest in theimmovable property and this court opines that the sale certificateshould be treated as normal sale deed which is compulsorilyregistrable under Section 17(i) of the Act. Merely because theproperty was purchased in court auction, it does not fail to conveythe title of the property i.e. it conveys title to the purchaser asheld by the Apex Court in AIR 1991 SC 1880 (Shanthi Devi.L. Vs.Recovery Officer). 20. The registration Act 1908 (Act No.XVI of 1908) receivedassent of Governor General on 18th December, 1908 and the Act cameinto force on Ist January,1908. During that time, the people mightnot have shown interest to purchase court auctioned property, as itwas considered to be a distress sale. There is a saying in Tamil "Mik g[Fe;;j tPLk; mkPdh te;j brhj;Jk; tps';fhJ@ (The house in whichthe turtle entered and the property which was attached by Ameena cannot prosper). Hence this court feels that above should have been thereason why the policy makers at that point of time, would haveencouraged the people to participate in the court auction by givingconcession through exemption under Section 17(2) of the Act. 21.Today the Indian Economy is robust and the country isadvanced in many fronts including industries and technology.Information technology has made the country to have steady growth.Transactions in commerce and trade are more. Many multinationals andfinancial institutions have come into existence. For speedy recoveryof loans, Acts like the Securitisation and Reconstruction ofFinancial Assets and Enforcement of Security Interest Act, 2002 (54of 2002) and The Recovery of Debts Due to Banks and FinancialInstitutions Act, 1993 have been enacted by the parliament andthrough which banks can auction the mortgaged properties by simpleprocedures. In view of that every day, we are coming across manyadvertisements in newspapers regarding court sales. Nowadays peopleare not fighting shy to purchase those properties in the courtauction. In fact there has been heavy competition to buy the courtauction properties. Hence the concession which was believed to havebeen given by the policy maker during the enactment of the Act 1908,is no more necessary.22. The object of the registration is not only to give notice tothe world that the documents have been executed by registering thesaid documents under Stamp Act, but also one of the important sourcesof revenue to the State. Many properties are sold by court auctionregularly and because of exemption given under Section 17(2) and 89,heavy loss occurs to the government. If the revenue is lost bySection 17(2) and Section 89 of the Registration Act, suitable stepsshould be taken in the public interest by the legislature/parliamentto plug the loop-hole in the Act by way of suitable amendment. In https://hcservices.ecourts.gov.in/hcservices/ this case, the value of the property is Rs.1,73,43,642/-. If the saidtransaction is done in the normal course, it would have earned arevenue of Rs.10,39,122/-, which is being sought to be levied by therespondent. However in view of Section 17(2) (xii) and Section 89 ofthe Act, the Exchequer looses Rs.10,39,122. This court hopes thatthis case would be an eye opener and expects legislature/parliamentto bring suitable amendments in Sections 17 and 89 of theRegistration Act. 23. With the above observations, the impugned order is quashedand the respondent is directed to file the copy of the salecertificate dated 22.12.2006 in Book-I. Accordingly the writ petitionis allowed. No costs. Consequently the connected M.P.Nos.1 and 2 areclosed.vk Sd/- Asst.Registrar/True Copy/ Sub.Asst.RegistrarTo:1.The Sub Registrar, Raja Street, P.Puliampaty, Mettupalayam Taluk, Erode District.2.The Secretary, Department of Ministry of Law and Justice, (Legislative Department) New Delhi.3.The Secretary, Registration Department, Fort St.George, Chennai.+ 1 cc to Government Advocate SR.45338+ 1 cc to M/s.K. Ramakrishna Reddy, Advocate 44589W.P.No.17833 of 2009 SAI(CO)EU 1.10.2009.