9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (5) TMI 1388 - HC - Indian LawsJurisdiction of Sub-Registrar to refuse registration of a sale certificate due to pending Income Tax dues against the borrowers - Sale certificate - Whether the SARFAESI Act has precedence over other statutory dues, including those of the Income Tax Department - Petitioner purchased a property in a public auction conducted by Canara Bank (3rd respondent) under the SARFAESI Act - Sub-Registrar refused registration citing pending Income Tax dues against the borrowers. HELD THAT - The Apex Court in the case of Punjab National Bank v. Union of India 2022 (2) TMI 1171 - SUPREME COURT , considering the entire spectrum of law holds that dues of the secured creditor, the Bank or any other financial institution will have priority over the dues of the Central Excise Department under the Central Excise Act. The Apex Court holds the provisions of the SARFAESI Act, 2002 will have overriding effect on the provisions of the Central Excise Act. If the Central Excise Act found in the judgment of the Apex Court is paraphrased with that of the Income-Tax Department/dues under the Income-Tax Act, the reasons so rendered by the Apex Court would become applicable to the facts of the case at hand as well. The Sub-Registrar, though not in writing, orally refused to register the document on the score that dues of the Income-Tax Department are pending against the borrowers, is a reason which is unavailable to the Sub-Registrar, even if it were to be in writing. The Sub-Registrar can act only within the four corners of the Registration Act and the Registration Rules framed by the State. The Sub-Registrars refuse to register the documents - the documents could be sale certificates or documents creating charge over the property. The Sub-Registrars, on grounds that are not available to them, refuse to register the documents, sometimes on the score that the software in the Registration Department or the Sub-Registrar's office is not made to be in tune with the necessities of registration of documents of the Banks and therefore, it is not registered and in certain cases, it is the statutory dues by the borrower or the holder of the document, which are not cleared and therefore, would not be registered. All these are reasons beyond the statute. Unless the Sub-Registrar notices any violation as obtaining under Rule 171 of the Rules, the Sub-Registrar does not have jurisdiction to refuse registration of a document. Therefore, it is necessary for the State Government to issue necessary circular in terms of Rule 171 of the Rules and the law laid down by the Apex Court in the judgment supra, so that every person who goes for registration of documents should not be denied registration except in accordance with the observations supra as acts of Sub-Registrars are driving every person who is denied registration to the doors of this Court unnecessarily and if the Sub-Registrar would not register a document, if it is found to be in tune with law, the delay in registration would be attributable only to those Sub-Registrars, who will be saddled with exemplary costs when such cases are brought before this Court seeking a direction for registration of a document. Thus, writ petition is allowed.
Issues Involved:
1. Registration of Sale Certificate 2. Jurisdiction of Sub-Registrar 3. Priority of Secured Creditor's Rights 4. Compliance with Registration Act and Rules Summary: 1. Registration of Sale Certificate: The petitioner sought a writ of mandamus directing the 2nd respondent/Sub-Registrar to register the sale certificate dated 30th September, 2022, issued by the 3rd respondent (Canara Bank) in favor of the petitioner. The property in question was auctioned under the SARFAESI Act due to loan default by the original owners, and the petitioner emerged as the successful bidder. 2. Jurisdiction of Sub-Registrar: The Sub-Registrar refused to register the sale certificate citing pending Income Tax Department claims against the borrowers. However, the court noted that the Sub-Registrar has no jurisdiction to deny registration after compliance with all necessary requirements, as per Section 71 of the Registration Act and Rule 171 of the Karnataka Registration Rules, 1965. 3. Priority of Secured Creditor's Rights: The court emphasized that u/s 26-E and 35 of the SARFAESI Act, the rights of secured creditors have precedence over other debts, including statutory dues like taxes. The court cited the Apex Court's judgment in *Punjab National Bank v. Union of India* (2022) and other cases, affirming that secured creditors' rights override claims by departments like Income Tax or Central Excise. 4. Compliance with Registration Act and Rules: The court found that none of the reasons for refusal listed in Rule 171 of the Karnataka Registration Rules were applicable in this case. Therefore, the Sub-Registrar's refusal to register the document was beyond his jurisdiction. Order: (i) The writ petition is allowed. (ii) Mandamus issued to the 2nd respondent/Sub-Registrar to register the document forthwith upon receiving a copy of this order. (iii) The State Government is directed to issue a Circular to all Sub-Registrars in the State in tune with this order. (iv) The Circular should reference the Rules and the Apex Court judgment quoted in this order. (v) Compliance with issuance of the Circular to be reported within eight weeks from the receipt of this order.
|
