HONOURABLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION NOs. 17600 of 2011 and 32791 of 2013 Date:24.01.2014
W.P.No.17600 of 2011
Between:
Indian Bank, ARM Branch, Coimbatore, Rep.by its Chief Manager …. Petitioner And The Sub-Registrar, Nagari Mandal, Puttur Tq., Chittoor, Chittoor Dist, A.P., and others …. Respondents
W.P.No.32791 of 2013
Between:
K.S. Devarajan S/o K D subramania Mudaliar R/o 1-105, K R Koil Street, Ekambarakupam, Nagari mandal, Chittoor district …. Petitioner(s) And State of A P, Rep by its Principal Secretary to Government, Revenue (Registration) Department, A P Secretariat, Hyderabad and others …. respondents This Court made the following :-
HONOURABLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION NOs. 17600 of 2011 and 32791 of 2013 COMMON ORDER:
W.P.No. 17600 of 2011 is instituted by Indian Bank seeking a declaration that inaction on the part of the Sub Registrar-Nagari, Chittoor (1st respondent) in registering the sale certificate issued by the bank in favour of Sri K.S. Devarajan, Managing Partner of M/s. Victory Promoters (petitioner in W P No. 32791 of 2013) relating to the property to an extent of Ac.17.11 cents in Survey Nos. 249/1, 242/2, 241/1, situated in T.R. kandriga Village, Nagari mandal, Chittoor district as illegal.
2. W.P.No. 32791 of 2013 is instituted by auction purchaser Mr K.S.Devarajan praying to issue a direction to the Sub Registrar-Nagari, Chittoor district (4th respondent herein) to receive the sale certificate dated 02.02.2011 issued by Indian Bank in favour of petitioner in respect of property to an extent of Ac.17.11 cents in Survey Nos. 249/1, 242/2, 241/1, situated at T.R. Kandriga Village, Nagari mandal, Chittoor district without reference to order dated 3.12.2010 in I A No. 333/2007 in I D No. 170 of 2007 on the file of the Industrial Tribunal cum labour Court, Anantapur and the order in P.W. No.01/2010 dated 2.8.2010 of the Deputy Commissioner of Labour, Tirupati
3. Since issue for consideration in both writ petitions is same, both writ petitions are disposed by this common order. For the sake of convenience, parties as arrayed in W P No. 32791 of 2013 are reflected in the order.
4. Petitioner purchased property to an extent of Ac.17.11 in Survey Nos. 249/1, 242/2, 241/1, situated at T.R. Kandriga Village, Nagari mandal, Chittoor district together with the buildings constructed thereon and other fixed assets in an auction conducted on behalf of Indian Bank, ARM Branch, Coimbatore for a sale consideration of Rs.2,52,20,000/-. In confirmation of the sale, sale certificate was issued by Indian Bank on 2.2.2011 and possession was delivered to the petitioner. Petitioner and officer of the Indian Bank have requested the Sub Registrar, Nagari, Chittoor district (4th respondent herein) to register the sale certificate. The request of the petitioner and the bank was rejected on the ground that disputes are pending on the said property. The 4th respondent placed reliance on circular memo dated 10.3.2010 issued by the Commissioner and Inspector General of Registration and Stamps based on the instructions in the Standing Order No. 213 (b). Aggrieved thereby, Indian Bank filed W.P. No. 17600 of 2011 seeking a direction to the Sub Registrar, Nagari, Chittoor district to register the sale certificate in favour of the petitioner. This Court by interim order dated 13.12.2011 directed the Registering Authority to receive, entertain and process the document presented for registration in accordance with the Act and the Rules thereunder and if the document is in conformity with the Act and Rules, the Registering Authority should process and register the same.
5. On receipt of the communication regarding the interim orders passed by this Court, petitioner by letter dated 5.1.2013 requested the 4th respondent to inform the stamp duty and registration charges payable taking the sale price as Rs.2,52,20,000/-. By reply dated 8.1.2013 petitioner was directed to furnish information regarding existence of buildings and other fixed assets. By letter dated 4.3.2013, 4th respondent informed the petitioner that the market value of the property is worked out to Rs.7,12,61,252/- and stamp duty has to be determined based on the said market value. He has also informed the petitioner that Labour Court passed orders in I A No. 333 of 2007 in I D No. 170 of 2007 prohibiting sale of property concerned, therefore, document for registration cannot be accepted. By letter dated 30.9.2013 petitioner informed the Sub Registrar, that the valuation of the property at higher rate than what is shown in the sale certificate is not valid and requested to determine the stamp duty based on the value of the property as shown in the sale certificate. Though, no reply is given, petitioner was informed that the Commissioner and Inspector General of Stamps has filed counter affidavit in W P No.17600 of 2011 expressing the stand of the department that the valuation has to be as per the principles for determination of the market value and not based on the value shown in the sale certificate. Aggrieved thereby, the petitioner instituted this writ petition.
6. Heard Sri E.Manohar, learned senior counsel for petitioner, learned Government Pleader for Registration and Stamps for respondents 1 to 4 and Sri Ambadipudi Satyanarayana for respondents 5 and 6 and petitioner in W.P.No. 17600 of 2011.
7. Learned senior counsel submitted that the sale certificate issued by Indian Bank is a document which should be admitted for registration by the Registering Authority and refusal to register the said document and insisting for entering into document of sale is wholly illegal, contrary to provisions of Section 17(2) (ii) of Registration Act, 1908.
8. Learned senior counsel submits that valuation for determination of the stamp duty should be on the basis of value of the property shown in the sale certificate issued in pursuance to sale conducted in an auction by the bank and the market value of the property has no relevance and valuation should only be the criteria. He further submits that as per proviso to Section 47-A (6) the value shown in the instrument executed by the respondent bank is the market value of the property. Learned senior counsel therefore submits that in view of the express provision contained in proviso to Section 47 (6), the insistence by Registering Authority to pay stamp duty as per market value determined by him is illegal. Learned senior counsel further submits that the sale transaction through which petitioner has purchased the property is governed by “The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002” (for short SARFAESI Act). Section 13 (6) of the SARFAESI Act, provides for issuance of certificate of sale and certificate issued to the petitioner is in conformity with the said provision. Rules 8, 9(6), (9) and (10) and Appendix 5 of the Rules made under the SARFAESI Act also deal with this specific aspect, therefore the payment of stamp duty is only based on the valuation indicated in the sale certificate.
9. Learned senior counsel further submits that the rejection of the document for registration on the ground that the order of Industrial Tribunal operates against such registration is illegal. The Registering Authority erred in not appreciating the stand taken by the petitioner that such order is not binding either on the petitioner or on the Registering Authority and also on the bank and that no such order is valid on the same issue in view of the decision of the Division Bench of this Court in W.P. No. 6450 of 2010.
10. In support of his contentions, learned senior counsel placed reliance on the following decisions:
MISS SHRADDHA GOEL Vs. COLLECTOR (MARKET VALUATION), SANGAREDDY AND OTHERS
[1]
, B.ARVIND KUMAR Vs. GOVERNMENT OF INDIA AND OTHERS
[2]
, V.N. DEVADOSS Vs. CHIEF REVENUE CONTROL OFFICER-CUM-INSPECTOR AND OTHERS
[4]
CHIDAMBARA MANICKAM Vs SHAKEENA AND OTHERS
[3]
, K
11. Sri Ambudipudi Satyanarayana, learned counsel supplemented the arguments advanced by the learned senior counsel Sri E Manohar and further submits that the sale certificate issued by the bank alone should be accepted for registration and there is no need for the bank to enter into a deed of sale with the petitioner, that the sale certificate is proper deed of conveyance of title and therefore insistence by the Registering Authority to submit formal sale deed is wholly illegal.
12. Though confronted with the provisions of statue as well as precedents on the issue, there was spirited defense by learned Assistant Government Pleader justifying the action of the department for insisting for proper sale deed, higher stamp duty and prohibiting undertaking of deeds of conveyance when there is an order by Court of law in view of the provisions of the Registration Manual as well as the circulars issued by the Commissioner.
13. Learned Assistant Government Pleader submits that Section 89 (1) of the Indian Registration Act, casts duty on the officer issuing the sale certificate to send a copy of the sale certificate to the Registering officer who shall file a copy of the same in book No.1. Thus any sale certificate issued would be entered into book No.1 and kept in the register but insofar as registration of the deed of conveyance and issuing the certificate thereon is concerned, it is mandatory to submit the document in proper form and sale certificate cannot be treated as a document for registration.
14. Learned Assistant Government Pleader further submits that Section 17 (1) (e) of the Registration Act, would govern the subject instrument. Irrespective of the value shown in the sale certificate the stamp duty has to be determined based on the market value as per the records of the Registering Authority, as revised by the Government from time to time when the instrument is presented for registration and not based on a declaration given by the parties or shown in sale certificate. He further submits that present sale certificate is not issued by any officer of the Government or by the Court but the same is issued by an officer of the bank, therefore, it does not stand on the same footing as a certificate prescribed under Section 17 (2) (xii) of Registration Act. He further submits that since there is an order of restraint by the learned Industrial Tribunal concerning the same property and Authority under Payment of Wages Act, which are binding on the Registering Authority, until that order is vacated the property cannot be processed for registration and such course would invite wrath of the Industrial Tribunal and Payment of Wages authority and attract severe consequences and unless the dispute is resolved no such document can be entertained.
15. Based on the submissions made by the counsels on either side, the points that arise for determination are:
(1) Whether the rejection of the Registering Authority in entertaining the document for registration on the ground that there is an order of restraint by the Industrial Tribunal and authority under the Payment of Wages Act, concerning the same property, is valid ?
(2) What is the stamp duty payable by the petitioner for registration of sale document for the property purchased in pursuance to sale conducted by respondent bank? and
(3) Whether it is mandatory for the petitioner and the bank to subscribe to a deed of sale and present for registration or the sale certificate issued at the time of conducting the sale is sufficient for the purpose of registration?
POINT NO.1:
16. M/s. Parkins Textile (P) Limited, Coimbatore borrowed funds from Indian Bank, Coimbatore. The company went into losses and on 26.9.2006 company declared lockout. At the instance of agitating workers who are deprived of employment and salaries, the Government of A P referred the dispute for adjudication by Industrial Tribunal cum Labour Court at Anantapur, which was numbered as I.D.No. 170 of 2007. The issue for consideration was justification for lockout and the rights of employees engaged by the company. On behalf of the workers Union I.A.No. 333 of 2007 was filed praying for attachment of the immovable properties of the company. At the same time, Regional Provident Fund Commissioner, Cuddapah, proposed to sell one of the items of the properties mortgaged by the company with the bank to recoup the provident fund dues payable by the company. Having come to know of such steps, the Bank instituted W.P.No.
25020 of 2008 challenging the said sale proposal. By order dated 24.11.2008, this Court granted interim stay of auction.
17. To recover money lent respondent bank invoked provisions of SARFAESI Act.
18. M/s Parkins Textile Labour Union filed W.P No. 5785 of 2010 opposing the sale notice dated 16.2.2010 issued by the bank. The stand of the union was there are dues payable to workmen and unless the dues are cleared the properties cannot be sold. The said writ petition was dismissed by judgment of Division Bench, dated 15.3.2010 holding that the dues payable to the workmen cannot be treated as prioritized liability on the borrowed assets under the Securitization Act and therefore, the sale cannot be interdicted.
19. The W.P.No.6450 of 2010 instituted by Employees Union on the same cause was also dismissed by order dated 22.3.2010. Thus, by this time, the company as well as workers and employees of the company are very well aware of the orders passed by this Court primarily holding that payment of salary and allowances to the employees of the company cannot be categorized as prioritized liabilities and bank alone has got the prioritized liabilities under the Securitization Act. However, Industrial Tribunal passed orders on 03.12.2010 in I.A. No. 333 of 2007 in I.D. No. 170 of 2007 directing attachment of the property.
20. On 10.2.2011, the Industrial Tribunal cum Labour Court passed final orders issuing several directions to the company. Final order does not deal with earlier interim order. Company instituted W.P.No.13243 of 2011 challenging the said order. Almost simultaneously, Authority under Payment of Wages Act passed similar interim orders.
21. Compelled by the pro-active approach of the workers in interfering with the possession and enjoyment of the property by the petitioner, petitioner filed I.A. NO.250 of 2011 in I.A. No.333 of 2007. As Interlocutory Application was not disposed of for long time, petitioner was compelled to institute W.P. No. 12809 of 2011 challenging the attachment order dated 3.12.2010. By order dated 13.4.2011 made in W.P. No. 15575 of 2011 this Court directed the Labour Court to consider and dispose of Interlocutory Application for raising the attachment. By order dated 28.3.2012, Labour Court dismissed Interlocutory Application on the ground that Industrial Dispute itself was disposed of by order dated 10.2.2011. Left with no option, petitioner instituted W.P. No.12723 of 2012 against the order dated 28.3.2012 in I.A. No. 250 of 2011 and permission for registration of the property purchased by him. On further counseling received by the petitioner, petitioner withdrew W.P No. 12809 of 2011 and W.P. No. 12723 of 2012 by order dated 1.9.2013.
22. As noticed above, by the time order was passed on 03.12.2010 by the Industrial Tribunal-cum-Labour Court, Anantapur in I.A.No.333 of 2007 in I.D.No.170 of 2007, the property was vested with the Bank and Bank had also taken possession. When proclamation of sale was challenged, Division Bench of this Court upheld the sale notice dated 16.02.2010 in W.P.Nos.5785 of 2010 and 6450 of 2010. The sale conducted by the Bank was in accordance with the judgment of Division Bench of this Court. Petitioner purchased the property in pursuant to sale notice dated 16.02.2010 and sale certificate was issued on payment of total sale consideration. I.D.No.170 of 2007 was finally disposed of on 10.02.2011, which contained several directions to the company (employer) with reference to service grievances of the employees. Earlier interim order is not continued. No further orders are passed by the Industrial Tribunal with reference to this property. After the disposal of I.D., earlier restraint order does not subsist. Payment authority under Payment of Wages Act also could not have imposed a restriction when subject is covered by decision of this Court. In the above analysis, the stand of the Registering Authority in refusing to entertain the document for registration on the ground that there is an order of restraint by the Industrial Tribunal and authority under the Payment of Wages Act, is wholly erroneous. There was total non application of mind to the issue involved. In spite of bringing to his notice judgment of the Division Bench of this Court, the Registering Authority erred in refusing to process the document for registration.
23. For the purpose of consideration of Points 2 and 3, it is necessary to look into the relevant provisions, which have a bearing on the issues:
Section 17 (1) (b) of the Registration Act, 1908 reads as under:--
Section 17 (1) :-- The following documents shall be registered, if the property to which they relate is situate in a district in which and if they have been executed on or after the date on which, Act No.XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely:--
(a) …..
(b) :--other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future; any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;
…….
…… Section 51 (1) (A) of the Registration Act, 1908 reads as under:--
Section 51:-- Register-books to be kept in the several offices:--
(1) The following books and the information storage devices as specified in sub section (1) of the Section 16 shall be kept in the several offices hereinafter named, namely:--
A:--In all Registration Offices:--
BOOK-1 : “Register of non-testamentary documents relating to immovable property.
…… …… Section 89 (1) of the Registration Act, 1908 reads as under:--
Section 89 (1):Copies of certain orders, certificates and instruments to be sent to registering officer and filed:-- Every officer granting a loan under the Land Improvement Loans Act, 1883, shall send a copy of his order to the registering officer within the local limits of whose jurisdiction the whole or any part of the land to be improved or of the land to be granted as collateral security, is situate, and such registering officer shall file the copy in his Book No.1 (or get scanned-Added by A.P.Act 16 of 1999 w.e.f. 31.12.1999) Proviso to Section 47-A (6) of the Indian Stamp Act,1899 reads as under:-
Section 47-A: Instruments of conveyance, etc. under-valued, how to be dealt with:
…….
…… (6) For the purposes of this Act, market value of any property shall be estimated to be the price which in the opinion of the Collector or the appellate authority, as the case may be, such property would have fetched or would fetch if sold in the open market on the date of execution of any instrument referred to in sub-section (1) Provided that in respect of instruments executed by or on behalf of the Central Government or the State Government or any authority or body incorporate by or under any law for the time being in force and wholly owned by Central/State Government, the market value of any property shall be the value shown in such instrument.
Relevant portion of Schedule 1-A of the Indian Stamp Act, 1899 reads as under:--
Description of instrument Proper stamp duty
Section 13 (6) of the SARFAESI Act reads as under :-
13: Enforcement of Security Interest:--
…….
(6) Any transfer of secured asset after taking possession thereof or take over of management under sub section (4), by the secured creditor or by the manager on behalf of the secured creditor shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset.
Rule 9 (6) of the Security Interest (Enforcement) Rules, 2002 reads as under:--
9. Time of sale, issue of sale certificate and delivery of possession, etc:--
…….
(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorized officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the form given in Appendix V to these rules.
POINT NO.2:
24. Section 47-A prior to introduction of proviso to sub section 6 was considered in several decisions of this Court. Some of those decisions are enclosed to the writ petition and some of the decisions are circulated during the course of arguments.
25. Even before the introduction of proviso to Section 47-A, the view taken by this Court in the decisions cited by the learned Senior Counsel, is that the stamp duty should be determined based on the valuation shown in the sale certificate and irrespective of the market value of the said property. The object underlying the said dicta is, provision in Section 47-A is aimed at prohibiting the private parties undertaking illegal transactions by under- valuing the property to evade stamp duty and that the funds to the exchequer should not be illegally be deprived. It is held that when auction is conducted in pursuance to the statutory mandate by the Court or State or instrumentality of the State, no intention to manipulate the stamp duty and under-valuing the property can be inferred, more particularly when the same is confirmed in an open auction.
26. Suffice it to record the law laid down by this Court in W.A. No. 355 of 1998 dated 11.3.1998, Division Bench of this Court held that Section 47-A needs to be interpreted in a manner which is conducive to intention of the legislature. It is further held as under:
“…..In our view, exercise of jurisdiction under Section 47-A of the Act can only be had in the event of there being any reason to believe that the market value of the property being the subject matter of the instrument has not been truly set forth in the instrument. Therefore, some deliberate omission or malfeasance is to be assumed in the event of invocation of Section 47-A”.
27. The above decision was prior to introduction of proviso to Section 47-A (6). In view of the proviso now incorporated, on Point No.2, I am impelled to hold that while undertaking registration of the document on the property purchased by petitioner in an open auction conducted by the bank, the valuation mentioned in the certificate of sale shall alone be criteria to determine the stamp duty payable for registration.
POINT NO.3:
28. The sale certificate is covered by provision contained in Section 17(1)(b) of the Registration Act. This is a non-testamentary instrument which creates, declares and assigns in present or in future right, title or interest in the petitioner. Therefore, this is also a document as contemplated by Section 17(1) (b) and there is no need for the petitioner to enter into a formal deed of conveyance and sale certificate alone is sufficient. This is further amplified by provision contained in Section 13 (6) of the SARFAESI Act read with Rule 9 (6) of the Rules made there under.
29. In B.ARVIND KUMAR case (cited supra) one of the issues that fell for consideration was “Whether the plaintiff’s father did not secure any manner of right, title or interest in the suit property, as the sale certificate in his favour was not followed by a registered deed of transfer? Dealing with the said issue, the Hon’ble Supreme Court held as under:
“…..When the property is sold by public auction in pursuance of an order of the Court and the bid is accepted and the sale is confirmed by the Court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such title. It is well settled that when an auction purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the Court is contemplated or required. In this Case, the sale certificate itself was registered, though such a sale certificate issued by a court or an officer authorized by the court, does not require registration.”
30. As per the decision in Aravind Kumar, there is no requirement of any further deed of transfer, if the sale certificate is issued by a Court or Officer authorized by Court and does not require registration also. In the instant case, petitioner intend to register the sale certificate issued in his favour and as held above, the sale certificate conveys the valid transfer of ownership. Thus, the insisting by the registering authority to enter into a formal deed of transfer and present the same for registration is erroneous. Point No.3 is answered accordingly.
31. In view of the above findings, the writ petitions are allowed. The Sub-Registrar, Nagari (4th respondent in W.P.No.32791 of 2013) is directed to receive the sale certificate dated 02.02.2011 issued by the Indian Bank, Zonal Office, Chittoor, in favour of the petitioner in respect of the property situated in S.F.No.249/1 admeasuring Ac.13.06 cents, 242/2 admeasuring Ac.2.10 cents, 241/1 admeasuring Ac.1.95 cents, totaling Ac.17.11 cents and 1/3rd share of bore and 10 HP electric motor pump set, channels strelts etc. in S.F.No.293/3 of T.R.kandriga Village, Nagari Mandal, Chittoor District together with the buildings constructed thereon and other fixed assets and register the same as per the value shown in the sale certificate as market value for determination of stamp duty and release the document within a period of four (04) weeks from the date of receipt of copy of this order.
Miscellaneous petitions if any pending in these writ petitions shall stand closed.
JUSTICE P.NAVEEN RAO Date:24-01-2014 Tvk/kkm HONOURABLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION NOs. 17600 of 2011 & 32791 of 2013 Date: 24.01.2014 Tvk/kkm
[1] 2006(5)ALT 237
[2] (2007) 5 SCC 745
[3] (2009) 7 SCC 438
[4] AIR 2008 MADRAS 108 (1)