2021 (9) TMI 1389 - HC - VAT and Sales Tax

Court rules auction purchaser not required to register sale certificate under SARFAESI Act, Section 17(2)(xii).

The Court ruled in favor of the petitioner, a businessman who acquired a property through a bank auction under the SARFAESI Act. The Court held that the ... Registration of sale certificate with the Registration Authority - Bank auction - Account declared as NPA - HELD THAT:- This Court is of the view that as the petitioner has purchased the property in issue through an auction which was held under the provisions of the SARFAESI ACT, his case is squarely covered by the judgment of Hon’ble Supreme Court in B. Arvind Kumar’s case [2007 (5) TMI 657 - SUPREME COURT] and he cannot be called upon to register the sale certificate. Section 17 (1) of the Registration Act provides that the documents have to be registered, if the property to which they relate, is situated in a district in which the provisions of the Indian Registration Act are applicable. Sub-section (2) of the said Section, which starts with a non-obstetric clause, provides that nothing in Clause ‘B’ and ‘C’ of sub-section (1) shall, inter alia, apply to any certificate of sale granted to the purchaser of any property sold by a public auction by a Civil or Revenue Officer. This is specifically contained in sub-clause (xii) of sub-section (2) of Section 17 of the Act - Hon’ble Supreme Court in B. Arvind Kumar’s case has taken into consideration the statutory provisions of Section 17 (1) as also Section 17 (2) (xii) of the Registration Act,1908, while holding that when an auction purchaser derives title on confirmation of sale in his favour and as the sale certificate is issued, evidencing such sale and title, then no further deed of transfer from the Court is contemplated or required. As the petitioner herein has purchased the property in auction held by respondent No.5, under the provisions of the SARFAESI ACT, he is clearly protected by the provisions of Section 17 (2) (xii) of the Registration Act and the sale certificate does not requires any registration. The act of the respondent/State vide Annexure P-3 (Colly) and calling upon the petitioner to have the sale certificate is illegal and contrary to the provisions of Section 17 (2) (xii) of the Registration Act and therefore, not sustainable in the eyes of law. Petition allowed. Issues:1. Interpretation of provisions of SARFAESI Act 2002 in relation to auction of property.2. Requirement of registration of sale certificate under Section 17 of the Indian Registration Act.Analysis:1. The petitioner, a businessman, participated in a bank auction conducted under SARFAESI Act for a property. The auctioned property was declared NPA and sold to the petitioner. The petitioner was asked to register the sale certificate with the Registration Authority, which he challenged in the present petition.2. The petitioner relied on a Supreme Court judgment which held that upon confirmation of sale in favor of the auction purchaser and issuance of a sale certificate, no further deed of transfer is required. The petitioner argued that based on this judgment, he should not be required to register the sale certificate under the Registration Act.3. The State argued that as per Section 17 of the Registration Act, documents creating rights or interests over a certain value must be registered. However, the Court noted that Section 17(2)(xii) exempts certificates of sale granted to auction purchasers from mandatory registration under the Act.4. The Court observed that the petitioner's case falls within the ambit of the Supreme Court judgment cited, and he should not be compelled to register the sale certificate as he acquired the property through an auction conducted under SARFAESI Act.5. Section 17(2)(xii) specifically exempts sale certificates issued to auction purchasers from registration requirements. The Court reiterated the Supreme Court's interpretation that no further deed of transfer is needed once a sale certificate is issued to the auction purchaser confirming the sale and title.6. Consequently, the Court allowed the writ petition, quashed the directive to register the sale certificate, and directed the respondent-authority not to enforce the registration requirement. The Court held that the petitioner, having purchased the property through a SARFAESI Act auction, is protected by the provisions of Section 17(2)(xii) of the Registration Act, and the sale certificate does not need registration.7. The judgment clarified that the respondent's action of requiring registration of the sale certificate was illegal and contrary to the law. The writ petition was allowed, and all related applications were disposed of, with any interim orders being vacated.