Allowed

Chettinad Academy of Research v. The Inspector General of Registration

Madras HC29 Aug 2023WP/8512/2023

Case brief

AI extract

What is this about?

The High Court held that Registering Authorities cannot demand stamp duty when accepting a Sale Certificate issued under the SARFAESI Act via Section 89(4) of the Registration Act, as this communication creates an entry in Book I with the same effect as registration, unless impediments under Section 22A or 22B exist.

What did the court decide?

Directing Registering Authorities to accept Sale Certificates under Section 89(4) without stamp duty and make entries in Book I within four weeks.

Chettinad Academy of Research Vs The Inspector… — Writ and Judicial Review | Madras HC (2023)

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W.P.Nos.8512 of 2023 etc., batch

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 29.08.2023

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CORAM

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THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM

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W.P.Nos. 8512, 7690, 10734, 17403, 7015, 16940, 17081, 17322, 18053, 20193 & 20482 of 2023

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and W.M.P.Nos.16255 & 17258 of 2023

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W.P.No.8512 of 2023:

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Chettinad Academy of Research and Education, Rep. by its Authorised Signatory, S.Hariharan, Having its registered office at No. 603 , 5th Floor, “Chettinad Towers”, Anna Salai, Chennai-06

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... Petitioner

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Vs.

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1.The Inspector General of Registration, O/o. the Inspector General of Registration, 100, Santhome High Road, Chennai-28.

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2.The Sub Registrar, Konnur Sub Registrar office, Ambattur, Chennai 53

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3.Asset Reconstruction company (India)Ltd., Rep. by its Authorised officer, The Ruby, 10th Floor, No. 29, Senapati Bapat Marg, Dadar (west), Mumbai-400 028. ... Respondents

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https://www.mhc.tn.gov.in/judis

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W.P.Nos.8512 of 2023 etc., batch

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Prayer :- Writ petition filed under Article 226 of the Constitution of India praying for issuance of a writ of Mandamus, directing the respondents 1 and 2 to permit to file the sale certificate dated 13th March, 2023 issued by the 3rd respondent and make the entries in Book I maintained by him as contemplated under Section 89 (4) of the Registration Act, 1908 and the law laid down by the Hon'ble Supreme Court of India and this Hon'ble Court, thereby not to insist upon the levy of stamp duty and registration charges while making the entries in Book I of the Sale Certificate dated 13th March 2023 issued by the 3rd respondent.

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For Petitioner : Mr.M.S.Krishnan, Senior Counsel for Mr.T.Balaji For Respondents (for R1 & R2) : Mr.R.Ramanlaal Additional Advocate General, assisted by Mr.T.Arun Kumar Additional Government Pleader (for R3) : Mr.Ashwin Shanbhag

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COMMON ORDER

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The Writs on hand had been instituted to direct the respondents 1 and 2 to file the Sale Certificate dated 13.03.2023 issued by the 3rd respondent and make entries in Book No.1 maintained by the Registration Department as contemplated under Section 89(4) of the Registration Act 1908.

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https://www.mhc.tn.gov.in/judis

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W.P.Nos.8512 of 2023 etc., batch

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Detailed adjudication of facts may not be required since the issue raised in these writ petitions is whether the Sale Certificate issued by the authorised officer under the SARFAESI Act is to be entered in the Book No.1 by the Registering Authority under the Registration Act.

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The secured creditor, holding first charge over the property, initiated auction to recover the dues. The properties were sold through public auction. The highest bidder who purchased the property was issued with a Sale Certificate by the Authorised Officer. Under Section 89(4) of the Registration Act, the Authorised Officer issued a communication to the Registering Authority concerned to make entries in Book No.1 by following the procedures as contemplated under Section 89(4) of the Registration Act. Since, the said exercise was not done by the Registering Authority, the petitioners are constrained to move the present Writ Petitions.

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The learned Senior Counsel appearing on behalf of the writ petitioners mainly contended that the issue in this regard is no more res intregra and repeatedly affirmed by the Hon'ble Supreme Court of India. In this context, the learned Senior Counsel appearing on behalf of the Writ https://www.mhc.tn.gov.in/judis 3/12

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W.P.Nos.8512 of 2023 etc., batch

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petitioners drew the attention of this Court with reference to the judgment

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of the Apex Court in the case of Esjaypee Impex Private Limited Vs.

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Assistant General Manager and Authorised Officer, Canara Bank, reported in 2021 (11) SCC 537 , wherein the Hon'ble Supreme Court held as follows:

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“16.We are of the view that the mandate of law in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act, 1908 only required the authorised officer of the Bank under the SARFAESI Act to hand over the duly validated sale certificate to the auction -purchaser wit a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration Act.”

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The findings in paragraph 16 of Esjaypee Impex Private Limited case, the Hon'ble Supreme Court issued clarifications in the case Reality

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Associates Vs. The Assistant General Manager and Authorized Officer

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in SLP(C) No.29752/2019 dated 29.10.2021. The clarification reads as under:

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“The direction has already been passed on 05.01.2021 for the duly validated certificate to be issued to the auction purchaser with a copy forwarded to the

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https://www.mhc.tn.gov.in/judis

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W.P.Nos.8512 of 2023 etc., batch

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registering authorities to be filed in Book I as per Section 89 of the Registration Act. We may note that the effect of filing of the copies under the said Section 89 has the same effect as registration and obviates the requirement of any further action. The compliance of our direction already made on 05.01.2021 will not be impeded by any High Court judgment. Our order to be duly complied by the registering authority.

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The applications stand disposed of.”

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Subsequently, the Apex Court in SLP(C) No.16949/2022 in the

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case of Inspector General of Registration versus G. Madhurampal passed an order on 11.11.2022 as under:

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“It is logically so as this issue has been repeatedly settled and if one may say, a consistent view followed for the last 150 years. We may refer to the judgments by the Madras High Court in the Board of Revenue No.2 of 1875 (In Re: Case Referred) dated 19.10.1875 opining that a certificate of sale cannot be regarded as a conveyance subject to stamp duty, by the Allahabad High Court in Adit Ram V. Masarat-un-Nissa opining that a sale certificate is not an instrument of the kind mentioned in clause (b) of Section 17 of the Act III of 1877 and is not compulsorily registrable and this Court's view in Esjaypee Impex Pvt.

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https://www.mhc.tn.gov.in/judis

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W.P.Nos.8512 of 2023 etc., batch

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Ltd. V. Asst. General Manager and Authorised Officer, Canara Bank opining that the mandate of law in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act, 1908 only required the Authorised Officer of the Bank under the SARFAESI Act to hand over the duly validated Sale Certificate to the Auction Purchase with a copy forwarded to the Registering Authorities to be filed in Book I as per Section 89 of the Registration Act and order of this Court in M.A.No.19262/2021 in SLP(C) No.29752/2019 dated 29.10.2021 opining that once a direction is issued for the duly validated certificate to be issued to the auction purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration Act, it has the same effect as registration and obviates the requirement of any further Action.

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It is time that the authorities stop filing unnecessary special leave petitions only with the objective of attaining some kind of a final dismissal from this Court every time. Costs this time has been spared but will not be spared the next time.

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The needful be done in terms of the impugned judgment(s) within 15 days from today.

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The special leave petitions are dismissed.”

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https://www.mhc.tn.gov.in/judis

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W.P.Nos.8512 of 2023 etc., batch

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The learned Additional Advocate General, appearing on behalf of the 'State' made a submission that the Government suffered revenue loss on account of such registration of Sale Certificates made without recovering the stamp duty. The auction purchasers, mostly private individuals, are not entitled to file the benefit under Section 89(4) of the Act since the transfer of property was made in favour of individual persons in the case of an auction sale under the SARFASI Act. However, the amendments made in this regard are already under challenge before this Court and an Interim stay was granted.

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The learned Additional Advocate General drew the attention of this Court with reference to the Writ Appeal Nos.1271, 1134 & 1270 of 2023, filed against the orders passed by the learned Single Judges. In yet another Writ Appeal No.2162/2022, the Hon'ble Division Bench granted an Interim Stay and the Writ Appeal is pending. However, those Writ Appeals may not be a ground for keeping the present Writ Petitions pending or to follow the judgement of the Hon'ble Division Bench of this Court. More so, the three judges Bench of the Hon'ble Supreme Court of India in the case of https://www.mhc.tn.gov.in/judis 7/12

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Pvt. Ltd.

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W.P.Nos.8512 of 2023 etc., batch

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2021 (11) SCC 537, reiterated the principles in the case of Esjaypee Impex

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Pvt. Ltd. , cited supra. Thus, this Court has to follow the said precedents for

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the purpose of considering the present writ petitions.

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Section 17 of the Registration Act speaks about documents of which registration is compulsory. Therefore, if any person is presenting a Sale Certificate for registration under Section 17 of the Registration Act, the Registering Authority is empowered to recover the Stamp Duty as applicable and register the Sale Certificate by following the procedures as contemplated. But, if the Sale Certificate issued under the SARFAESI Act by the Authorised Officer has been communicated to the Registering Authority under Section 89(4) of the Registration Act, then the Registering Authority shall file the copy of the sale certificate in his Book No.1 or get it scanned. In such circumstances, the Registering Authority shall not recover the Stamp Duty since, the process of Registration under Section 17 has not undergone.

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The procedure to be followed under Section 17 and under

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Section 89(4) are distinct and different. Section 89(4) was intended in

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respect of the recovery of public dues and thus, the process contemplated https://www.mhc.tn.gov.in/judis 8/12

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W.P.Nos.8512 of 2023 etc., batch

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under Section 17 of the Registration Act has been waived. Thus, the Authorised Officer is at liberty to communicate the sale certificate to the Registering Authority by specifically quoting the provision under Section 89(4) of the Registration Act and in the event of any such preceding or any such communication from the Authorised Officer under the SARFAESI Act, the Registering Authority has to make entries in his Book No.1 or get it scanned as contemplated under Section 89(4) of the Registration Act. The entry of Sale Certificate in Book No.1 under Section 89(4) of the Registration Act has the same effect as registration and obviates requirement of no further action. In the case of G.Madhurampal cited supra, the Hon'ble Apex Court reiterated the above position.

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The interpretation, as offered by the learned Additional Advocate

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General with reference to the purpose, object and the context of Section 89(4) of the Registration Act, deserves no further consideration in the present writ petitions in view of the fact that the Hon'ble Supreme Court has reiterated the legal position in more than one occasion and thus, the said position is to the followed. Thus, the following orders are passed:

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(i) The Authorised Officer, under the SARFAESI Act, shall

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communicate the copy of the Sale Certificate to the Registering Authority https://www.mhc.tn.gov.in/judis 9/12

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W.P.Nos.8512 of 2023 etc., batch

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under Section 89(4) of the Registration Act.

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(ii) On receipt of any such communication along with the sale certificate from the Authorised Officer, the Registering Authority shall make entry in his Book No.1 or get it scanned.

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(iii) In the event of any person, presenting the sale certificate for registration under Section 17 of the Registration Act, the Registering Authority shall receive and register the same by following the procedures as contemplated under the Registration Act by recovering the required Stamp Duty as contemplated.

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(iv) The registering authority, on receipt of the Sale Certificate is empowered to ascertain whether there is any impediment for registration with reference to Section 22A or 22B of the Registration Act. If the Sale Certificate is hit by any of the provisions of the Registration Act, then the registering authority shall refuse to make entries in the relevant register.

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(v) The said exercise is directed to be completed by the Registering Authority within a period of four (4) weeks from the date of receipt of copy of this order if the sale certificate has been already communicated by the Authorised Officer under Section 89(4) of the Registration Act.

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(vi) The respondents are directed to follow the above directions based on the individual facts involved in each of the Writ Petitions.

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https://www.mhc.tn.gov.in/judis 10/12

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W.P.Nos.8512 of 2023 etc., batch

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Accordingly, with the above directions, these writ petitions stand disposed of. No costs. Consequently, connected miscellaneous petitions

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are closed.

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29.08.2023

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Index : Yes Speaking Order Neutral Citation : Yes (sha)

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1.The Inspector General of Registration, O/o. the Inspector General of Registration, 100, Santhome High Road, Chennai-28.

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2.The Sub Registrar, Konnur Sub Registrar office, Ambattur, Chennai 53

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3.Asset Reconstruction company (India)Ltd., Rep. by its Authorised officer, The Ruby, 10th Floor, No. 29, Senapati Bapat Marg, Dadar (west), Mumbai-400 028.

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https://www.mhc.tn.gov.in/judis

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W.P.Nos.8512 of 2023 etc., batch

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S.M.SUBRAMANIAM. J.,

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(sha)

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W.P.Nos.7015, 7690, 8512, 10734, 17403, 16940, 17081, 17322, 18053, 20193 & 20482 of 2023