Sale Certificate Issued In Pursuance Of Confirmation Of Auction Sale Is Not Compulsorily Registrable: Supreme Court
The Supreme Court clarified that a sale certificate issued to the purchaser in pursuance of the confirmation of an auction sale is merely evidence of such title and does not require registration under Section 17(1) of the Registration Act.
The Sale Certificate would attract stamp duty only when the auction purchaser presents it for registration.
The appeal before the Apex Court arose from the judgment of the Punjab and Haryana High Court wherein the Writ Petition filed by the Respondent Company was allowed and the Registrar was directed to handover the original sale certificate to the Respondent Company and send a copy of the same to the Sub-Registrar under Section 89(4) of the Indian Registration Act, 1908.
The Division Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan held, “It is not the issuance of the sale certificate which transfers the title in favour of the auction purchaser. The title is transferred upon successful completion of the sale and its confirmation by the competent authority after all the objections against the sale have been disposed of.”
AOR Karan Sharma represented the Petitioners while AOR Siddharth Batra represented the Respondent.
The facts of the case suggested that a Company by the name M/s Punjab United Forge Limited was ordered to be wound up by the Company Judge of the High Court under the provisions of the Companies Act, 1956 and permission was granted to the Industrial Finance Corporation of India (IFCI) to sell the properties mortgaged with it and also the properties hypothecated with Andhra Bank. Consequently, the IFCI invited tenders. M/s Ferrous Alloy Forging Pvt. Limited, a sister concern of the Respondent Company, offered the highest bid and as a result the auction sale was confirmed. Thereafter, the Respondent Company moved an application requesting for execution of the conveyance deed in its favour but the same was declined. This request was ultimately accepted when the matter reached the Division Bench.
As per the Orders, the Respondent Company was held liable to pay the stamp duty on the immovable properties which had been put to auction. The stamp duty had to be paid on Rs. 2.25 crore as this was the valuation mentioned in the Tender. However, the Company’s Writ Petition was allowed and the High Court took the view that there was no occasion for fixation of stamp duty at the time of issuance of the sale certificate. Aggrieved thereby, the State approached the Apex Court.
The issue before the Bench was whether it is mandatory for the successful auction purchaser to deposit the stamp duty for the sale certificate to be issued to it in view of the provisions of the Stamp Act and the Registration Act.
After referring to a catena of judgements, the Bench said, “The position of law is thus settled that a sale certificate issued to the purchaser in pursuance of the confirmation of an auction sale is merely evidence of such title and does not require registration under Section 17(1) of the Registration Act.”
It was further clarified by the Bench that the sale certificate issued by the authorized officer is not compulsorily registrable. “Mere filing under Section 89(4) of the Registration Act itself is sufficient when a copy of the sale certificate is forwarded by the authorized officer to the registering authority”, it added.
Referring to Articles 18 and 23 of the first schedule to the Stamp Act, the Bench observed that when the auction purchaser presents the original sale certificate for registration, it would attract stamp duty in accordance with the said Articles. As long as the sale certificate remains as it is, it is not compulsorily registrable. It is only when the auction purchaser uses the certificate for some other purpose that the requirement of payment of stamp duty, etc. would arise.
The Bench also rejected the contention that the High Court should not have exercised its writ jurisdiction under Article 226 as Respondent Company had an alternate efficacious remedy of filing an appeal against the order of the Company Judge. Reliance was placed upon the judgment in Radha Krishan Industries v. State of H.P. reported in (2021) 6 SCC 771 wherein it has been observed that alternate remedy by itself does not divest the High Court of its powers under Article 226.
With such observations, the Bench dismissed the appeal.
Cause Title: The State of Punjab & Anr. v. M/s Ferrous Alloy Forgings P Ltd. [Neutral Citation: 2024 INSC 890]
Appearance:
Petitioners: AOR Karan Sharma, Advocate Abhishek Budhiraja
Respondent: AOR Siddharth Batra, Advocates Rhythm Katyal, Samar Ahluwalia, Archana Yadav, Chinmay Dubey, Shivani Chawla, Ayushmaan Bhutani