SARFAESI sale certificate registration cannot be refused for borrower tax dues where no statutory refusal ground exists.

A Sub-Registrar cannot refuse registration of a SARFAESI sale certificate merely because income-tax dues remain pending against the borrower. The secured creditor's priority under SARFAESI, reinforced by sections 26E and 35, prevails over inconsistent claims to statutory dues, and no judicial or quasi-judicial restraint on the sale was shown. Registration may also be refused only on grounds recognised by section 71 of the Registration Act and rule 171 of the Karnataka Registration Rules; third-party tax dues are not among them. The refusal was therefore unsustainable, and registration of the sale certificate was directed, along with a direction to align registration practice with the governing law.

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Issues: (i) Whether a Sub-Registrar can refuse registration of a sale certificate issued in SARFAESI proceedings on the ground that income-tax dues are pending against the borrowers; (ii) Whether the refusal to register is justified when the grounds for refusal are not covered by the Registration Act and the Karnataka Registration Rules.

Issue (i): Whether a Sub-Registrar can refuse registration of a sale certificate issued in SARFAESI proceedings on the ground that income-tax dues are pending against the borrowers.

Analysis: The sale certificate arose from enforcement under the SARFAESI Act. Section 26E gives priority to secured creditors over all other debts, including taxes and other public dues, after registration of security interest. Section 35 gives the Act overriding effect over inconsistent laws. In the absence of any judicial or quasi-judicial restraint against the sale, statutory dues claimed by the Income Tax Department could not displace the secured creditor's priority or furnish a lawful basis to deny registration.

Conclusion: The refusal to register on the ground of pending income-tax dues was unjustified and unsustainable.

Issue (ii): Whether the refusal to register is justified when the grounds for refusal are not covered by the Registration Act and the Karnataka Registration Rules.

Analysis: A registering officer can refuse registration only on grounds recognised by Section 71 of the Registration Act and Rule 171 of the Karnataka Registration Rules. The reasons enumerated in those provisions did not apply to the petitioner's document. Once the statutory requirements for registration were complied with, the Sub-Registrar had no jurisdiction to invent an additional ground based on third-party tax dues.

Conclusion: The Sub-Registrar had no authority to refuse registration on the stated ground, and mandamus to register the document was warranted.

Final Conclusion: The writ petition succeeded, registration of the sale certificate was directed, and the State was also directed to issue a circular aligning the registration practice with the governing rules and the law on secured creditor priority.

Ratio Decidendi: A registering authority cannot refuse registration of a SARFAESI sale certificate on the basis of pending tax dues of the borrower when the refusal ground is not sanctioned by the Registration Act or the applicable Registration Rules, and the secured creditor's priority under SARFAESI overrides inconsistent claims.

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