The writ petition has been filed challenging the order dated 29.7.2009 issued by the respondent calling upon the petitioner to pay a sum of Rs.10,39,122/- towards deficit stamp duty for entering the sale certificate dated 22.12.2006 in Book I.
2. The case of the petitioner-trust is that one Mr.P.S.Ramachandran was successful bidder of the property to an extent 59.25 = acres of lands situate in Irumbarai and Ayyampalayam Villages, Sathyamangalam Taluk and Mettupalayam Taluk, Erode District in an auction. By an order dated 25.8.2006 made in C.A.No.370 of 2006, the sale was confirmed in favour of Mr.P.S.Ramachandran for a sale consideration of Rs.1,73,43,642/-. Through order dated 20.12.2006 passed in C.A.No.2458 of 2006, this court directed the Official Liaquidator to issue "Certificate of sale" in favour of the nominee of Mr.P.S.Ramachandran in respect of the said lands, Mr.P.S.Ramachandran nominated the petitioner to be the auction purchaser and the auction consideration was paid. The possession of the property was given to the petitioner and Certificate of sale was issued to the petitioner by the Official Liquidator, High Court Madras on 22.12.2006.
3. The office of the Official Liquidator of this Court sent a copy of the sale certificate dated 22.12.2006 to the office of the respondent to file the same in Book-I as per
Section 89 of the Registration Act 1908. However it is seen that after a lapse of more than two years, the respondent sent the impugned dated 29.7.2009 demanding a sum of Rs.10,39,122/- which was said to be the deficit stamp duty payable for filing the sale certificate in Book-I as per year 2008 audit objection. Against the said order dated 29.7.2009 only, the present writ petition has been filed on the ground that the said 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 in B.Arvindkumar vs. Government of India and others reported in (2008) 5 SCC 745 to state that sale certificate does not require registration. Para 12 of the judgement is extracted hereunder:
"12. The plaintiff has produced the original registered sale certificate dated 29.8.1941 executed by the Official Receiver, City Station, Bangalore. The said deed certifies that Bhowrilal (father of the plaintiff) was the highest bidder at an auction-sale held on 22.8.1941, in respect of the right, title, interest of the insolvent Anraj Sankla, namely, the leasehold right in the property described in the schedule to the certificate (suit property), that his bid Rs.8350 was accepted and the sale was confirmed by the District Judge, Civil and Military Station, Bangalore on 25.8.1941. The sale certificate declared Bhowrilal to be the owner of the leasehold right in respect of the suit property. When a 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 authorised by the court, does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically provides that a certificate of sale granted to any purchaser of any property sold by a public auction by a Civil or Revenue Officer does not fall under the category of non-testamentary documents which require registration under sub-sections (b) and (c) of
Section 17(1) of the said Act. We therefore hold that the High Court committed a serious error in holding that the sale certificate did not convey any right, title or interest to plaintiff's father for want of registered deed of transfer."
5. In another judgement Division of Bench of this court in K.Chidambara Manickam Vs. Shakeena and others reported in (2008) 1 CTC 660 relying upon the judgement of the Hon'ble Supreme Court mentioned above held that sale certificate issued by the Authorised Officer under SURFAESI Act does not require registration as per
Section 17 (2) (XII) of the Registration Act.
6. Mr.D.Srinivasan, learned Additional Government Pleader submits that even though there is no necessity for the sale certificate to be registered, when it is submitted for registration, necessarily stamp duty has to be paid for registration of the document.
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 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 (XX of 1866), or the Indian Registration Act, 1871 (VIII of 1871), or the Indian Registration Act, 18l77 (III of 1877), or this Act came or comes into force, namely:-
(a) instruments of gift of immovable property;
(b) other non-testamentary instruments which purport 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;
(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account the creation, declaration, assignment, limitation or extinction 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 yearly rent;
(e) non-testamentary instruments transferring on assigning any decree or order of a court or any award when such decree or order or award purports or operates 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;
(f) Instruments of agreement relating to construction of multiunit house building on land by several persons as referred to in clause (i) of
Article 5 of the Schedule I to the Stamp Act, 1899 (Central Act II of 1899);
Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the term granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.
(1-A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of
Section 53-A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement4 of the Registration and other Related Laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purpose of the said
Section 53-A.(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 Joint Stock Company, notwithstanding that the assets of such Company consists in whole or in part of immovable property; or
(iii) any debenture issued by any such company and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles the holder to the security afforded by a registered instrument, whereby the company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or nay interest therein to trustees upon trust for the benefit of the holders of such debentures; or
(iv) any endorsement upon or transfer of any debenture issued by any such company; or
(v) any document other than the documents specified in sub-section (1-A) not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest or
(vi) any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding; or
(vii) any grant of immovable property by the Government; or
(viii) any instrument of partition made by a Revenue Officer; or
(ix) any order granting a loan or instrument of collateral security granted under the Land Improvement "Act, 1871 (XXVI of 1871), or the Land Improvement Loans Act, 1883 (XIX of 1883); or
(x) any order granting a loan under the Agriculturists Loans Act, 1884 (XII of 1884), or instrument for securing the repayment of a loan made under that Act; or (x-a) any order made under the Charitable Endowments Act, 1890 (VI of 1890), vesting any property in a Treasurer of Charitable Endowments or divesting any such Treasurer of any property; or
(xi) any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the mortgage money and any other receipt for payment of money due under a mortgage when the receipt does not purport to extinguish the mortgage; or
(xii) any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Officer.
Explanation-- A document purporting or operating to effect a contract for the sale of immovable property shall not be deemed to require or ever to have required registration by reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole or any part of the purchase money.
(3) Authorities to adopt a son, executed after the Ist 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 of which registration is compulsory. Documents mentioned in Section 17(2) of the Act are not compulsorily registrable and do not fall under the category of non-testamentary documents which require registration under sub-section (b) and (c) of
Section 17(1) of the said Act.
9. Certain documents are specifically given in
Section 89 of the Act and the copies of those documents are required to be filed in Book-I by the Registrar, when sent by the Court/Officer
Section 89 reads as follows:
"89. Copies of certain orders, certificates and instruments to be sent to registering officers and filed ( or scanned)-- (1) Every officer granting a loan under Land Improvement Loans Act 1883 (XIX of 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 it scanned) (2) Every court granting a certificate of sale of immovable property under the code of Civil Procedure, 1908 (V of 1908), shall send a copy of such certificate to the registering officer within the local limits of whose jurisdiction the whole or any part of the immovable property comprised in such certificate is situate, and such officer shall file the copy in his Book No.1 or get it scanned.
2A: Every court passing an order for effecting or raising an attachment of immovable property under the Code of Civil Procedure, 1908 (Central Act V of 1908) shall send a copy of such order together with the memorandum giving the details of properties to the Registering Officer within the local limits of whose jurisdiction the whole or any part of the said immovable property is situated and such registering officer shall file the copy of such order in his Book No.1 or get it scanned."
10. What is Book-I? Details regarding Register-Books to be kept in several officer are given
Section 51 of the Act. Book-I to Book-5 are mentioned Section 51(1) (A). Book-I, " Register of non-testamentary documents relating to immovable property"
51(2) reads as follows:
12. Moreover
Section 51(2) distinctly mentions
Section 17 and 89 separately. Apart from that, documents mentioned in 17(1)(b)(c) are to be registered by the Registrar as per the procedures mentioned in Sections 52 to 67 of Part XI of the Registration Act. On the other hand the procedure for filing copy of the sale certificate finds place in
Section 89. Hence both procedures are different. For registration, stamp duty is must whereas for filing no stamp duty is necessary.
13. The legislature consciously used the word "register" in
Section 17 whereas the word "file" was employed in
Section 89 of the Act. Only when the purchaser goes for registration of sale certificate issued by the court officer,
Article 18 of the Indian Stamp Act would be attracted and stamp duty is to be paid as per
Article 23 of the Registration Act treating it as conveyance i.e. market value of the property. When the instrument is not submitted for registration and is being sent to the Registrar only for the purpose of filing in Book NO.1, it does not attract any stamp duty.
14. The earliest decision in this regard is by a Division Bench of this Court comprising Mr.Jusitce Kindersley and Mr.Justice Mutchins in Tirrappa Chetty Vs. Murugappa Chetti reported in I.L.R 7 Mad = 7 Madras 107 which held that "the certificate of purchase must be regarded as a registered document and a copy having been transmitted by the Court and filed by the Registrar under
Section 89 of the Act, that being the method of registration prescribed by the Act for sale of the certificate."
15. The judgement of the Supreme Court reported in 2007 (5) SCC 745 states:
" when a property is sold by public auction in pursuance of the 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 the absolute and the title vests in the purchaser. A sale Certificate is merely evidence of such title, no further deed of transfer from the court is contemplated. In this case, the sale certificate itself was registered, though such a sale certificate issued by a court or an officer authorised by the court, does not require registration."
16. In view of the above judgements and exemption granted under Section 17(2), the copy of the document is only required to be filed in Book I under the special procedure under
Section 89 of the Act. If stamp duty is required even for filing of the copy of instrument under
Section 89 of the Act, the exemption given under Section 17(2) of the Act would become meaningless. In that event, there is no necessity for the special procedure under
Section 89 of the Act and it would amount to violation of the Act. The Hon'ble Supreme Court in similar circumstances in Shanti Devi.L. vs Recovery Officer reported in AIR 1991 SC 1880 after comparing "registration" under
Section 17 with "filing" under
Section 89 of the Act held that though the processes are different, the purchaser at a court or revenue sale is under no disadvantage because of lack of registration and transfer of title is not vitiated by non-registration of certificate and directed the Registrar to file the copy of the sale certificate in Book-I.
17. The Office of the Official Liquidator, High Court, Madras wrote a letter dated 15.3.2007 to the respondent/Registrar enclosing a copy of certificate of sale dated 22.12.2006 to be filed in Book-I as per
Section 89 of the Act.
Section 89 of the Act is very categorical that the registering officer has to file the copy of such certificate in Book-I and it is the bounden duty of the officer to file the copy in his Book No.1 or get it scanned.
18. When such is the position, the sale certificate would have come under Section 17 (2) (xii)of the Registration Act 1908. As long as the sections 17(2) and
89 are there in the Registration Act, the court can only go by the statue and quash the order which are ultravires of the Act. In view of the categorical pronouncement of the judgement of the Supreme Court and also the judgement of this court and also in view of provisions given in the Registration Act, the court holds that court auction sale certificate sent to the Registration for filing in Book-I would not attract stamp duty. The respondent has got no power and jurisdiction to issue the impugned order because of
Section 17(2) (xii) and 89(2) of the Registration Act and cannot demand stamp duty. Hence the impugned order is liable to be set aside.
19. As the copy of the document is sought to be filed under
Section 89 of the Act in Book No.1 of the Registrar Office, it is in a way amounting to registering the document which will be reflected in the encumbrance certificate of the property. Though the transaction through sale certificate is a "sale" as per
Section 54 of the Transfer of Property Act, the sale certificate is exempted as compulsorily registrable document under Section 17(2) of the Act. It is an instrument of conveyance as defined under
Section 2(10) of the Indian Stamp Act 1899, passing of right, title, interest in the immovable property and this court opines that the sale certificate should be treated as normal sale deed which is compulsorily registrable under
Section 17(i) of the Act. Merely because the property was purchased in court auction, it does not fail to convey the title of the property i.e. it conveys title to the purchaser as held 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) received assent of Governor General on 18th December, 1908 and the Act came into force on Ist January,1908. During that time, the people might not have shown interest to purchase court auctioned property, as it was considered to be a distress sale. There is a saying in Tamil " Mik g[Fe;;j tPLk; mkPdh te;j brhj;Jk; tps';[email protected] (The house in which the turtle entered and the property which was attached by Ameena can not prosper). Hence this court feels that above should have been the reason why the policy makers at that point of time, would have encouraged the people to participate in the court auction by giving concession through exemption under
Section 17(2) of the Act.
21. Today the Indian Economy is robust and the country is advanced 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 and financial institutions have come into existence. For speedy recovery of loans, Acts like the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002) and The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 have been enacted by the parliament and through which banks can auction the mortgaged properties by simple procedures. In view of that every day, we are coming across many advertisements in newspapers regarding court sales. Nowadays people are not fighting shy to purchase those properties in the court auction. In fact there has been heavy competition to buy the court auction properties. Hence the concession which was believed to have been 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 to the world that the documents have been executed by registering the said documents under Stamp Act, but also one of the important sources of revenue to the State. Many properties are sold by court auction regularly and because of exemption given under Section 17(2) and
89, heavy loss occurs to the government. If the revenue is lost by Section 17(2) and Section
89 of the Registration Act, suitable steps should be taken in the public interest by the legislature/parliament to plug the loop-hole in the Act by way of suitable amendment. In this case, the value of the property is Rs.1,73,43,642/-. If the said transaction is done in the normal course, it would have earned a revenue of Rs.10,39,122/-, which is being sought to be levied by the respondent. However in view of Section 17(2) (xii) and Section
89 of the Act, the Exchequer looses Rs.10,39,122. This court hopes that this case would be an eye opener and expects legislature/parliament to bring suitable amendments in
Sections 17 and
89 of the Registration Act.
23. With the above observations, the impugned order is quashed and the respondent is directed to file the copy of the sale certificate dated 22.12.2006 in Book-I. Accordingly the writ petition is allowed. No costs. Consequently the connected M.P.Nos.1 and 2 are closed.
vk To:
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