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2023 (3) TMI 159 - HC - GSTRejection of request of the petitioner for registration of the Sale Certificate - rejection for registration on the sole ground that property was provisionally attached under Sec.83 of the G.S.T. Act - petitioner was a prior mortgagee in the year 2017, whereas the provisional attachment was passed by the G.S.T. authorities on 18.12.2021 - petitioner would mainly contend that even applying Rule 55-A of the Registration Rules, the socalled provisional attachment has lapsed by operation of law itself - constitutional validity of Rule 55-A of the Registration Rules - subordinate Legislation is ex facie found to be in conflict with the provision of the Parent Act and Transfer of Property act as well as constitutional rights. HELD THAT - This Court has encountered with several Writ Petitions challenging the orders of the Registering authority refusing to register the documents or transaction permitted under law. Though the rule 55(A) has not been directly challenged this Court is of the view that when a subordinate Legislation is ex facie found to be in conflict with the provision of the Parent Act and Transfer of Property act as well as constitutional rights, the sub ordinate legislation will have to yield to substantive law governing the field and constitution as pointed out by the Supreme Court in Government of Andra Pradesh vs Lakhsmi Devi 2008 (2) TMI 850 - SUPREME COURT wherein it is held that The Constitution is the highest law of the land, and no law which is in conflict with it can survive. Since the law made by the legislature is in the second layer of the hierarchy, obviously it will be invalid if it is in conflict with a provision in the Constitution (except the directive principles which, by Article 37, have been expressly made non-enforceable). Prior to the insertion of Rule 55-A the Registrar could refuse to register a document if it fell within any of the categories in Section 22-A B of the Act or under Section 34 or if the case fell within any of the circumstances set out in Rule 162 of the Registration Rules. However, it has become a practice for Sub-Registrar s to refuse registration of documents citing internal circulars requiring them to produce title deeds to scrutinize title etc. Several writ petitions have come up before this Court challenging such refusals. In one such case, the issue was whether once a sale agreement is registered by the vendor, the subsequent documents in respect of the same immovable property could be refused to be registered by the Registrar. In other words, once an agreement for sale is registered under the Registration Act, whether the vendor is debarred from effecting any agreement or transfer in respect of the same immovable property. As there were conflicting decisions of single judges the matter was directed to be placed before a Division Bench - The reference was eventually answered by the Division Bench in N. RAMAYEE VERSUS THE SUB-REGISTRAR, REGISTRATION DEPARTMENT AND ORS. 2020 (11) TMI 1100 - MADRAS HIGH COURT , where it was held that it cannot be said that merely because agreement for sale is registered without obtaining decree of declaration that such agreement is void, subsequent transfer is prohibited and cannot be registered. We hold that as discussed in our judgment, Registrar has no right to refuse to register the subsequent document on the basis that agreement of sale was already registered in respect of same property. In VANNARAKKAL KALLALATHIL SREEDHARAN VERSUS CHANDRAMAATH BALAKRISHNAN AND ANR. 1990 (3) TMI 371 - DELHI HIGH COURT , the Supreme Court made it clear that an agreement of sale entered before the order of attachment can be taken to its logical conclusion and a sale deed can be executed even after the order of attachment. The issues have been thoroughly deliberated and elaborately discussed in Ramayee s case, which has also been affirmed by the Supreme Court, this Court is of the view that the effect of the first proviso is to set at naught to the above declaration of law by the Supreme Court and the Division Bench and it nullifies the several provisions of the Transfer of Property Act, as stated above. The authorities under the Registration Act have no jurisdiction to make rules which have the direct and immediate effect of restraining transactions which are permitted under the Transfer of Property Act. Such a restriction would be clearly illegal and violative of a citizen s right to deal with his property and would clearly infringe Article 300-A of the Constitution. It does not bear repetition that Article 300-A has now been recognised as a human right. It is also well settled by the decision of the Supreme Court in J.K. Industries Ltd. v. Union of India, 2007 (11) TMI 401 - SUPREME COURT that a subordinate legislation may be struck down as arbitrary or contrary to statute if it fails to take into account vital facts which expressly or by necessary implication are required to be taken into account by the statute or the Constitution. Furthermore, Rule 55-A is a delegated legislation which cannot go beyond the scope of the Parent Act viz., the Registration Act as well the Transfer of Property Act which is the substantive law governing the transfer of immovable properties. Hence, the first proviso is clearly ultra vires and unconstitutional. In the case at hand, provisional attachment was passed by the G.S.T. authorities. The registration of the Sale Certificate was rejected for this reason. It is relevant to note that the petitioner was a prior mortgagee in the year 2017, whereas the provisional attachment was passed by the G.S.T. authorities on 18.12.2021. This order has already lapsed by operation of law. Sec.83(2)of G.S.T.Rule makes it clear that every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1). Therefore, provisional attachment made by the second respondent vide order dated18.12.2021 has ceased to have effect, after expiry of a period of one year. There is no material to show any final order of attachment, or any subsequent order passed by the second respondent pursuant to the aforesaid order. As this Court has held that the first proviso to Rule 55-A has been found to be invalid and ultra vires, the respondent cannot refuse to register the document - The respondent cannot refuse to register the Sale Certificate as sought for by the petitioner - Petition allowed.
Issues Involved:
1. Validity of Rule 55-A of the Tamil Nadu Registration Rules. 2. Impact of the provisional attachment under Sec. 83 of the G.S.T. Act on the registration of the Sale Certificate. 3. Rights of a secured creditor vis-à-vis provisional attachment by tax authorities. 4. Interpretation of relevant provisions of the Transfer of Property Act and the Registration Act. Issue-wise Detailed Analysis: 1. Validity of Rule 55-A of the Tamil Nadu Registration Rules: The court examined Rule 55-A, which restricts the registration of documents unless the previous original deed and an Encumbrance Certificate are produced. The court noted that this rule could lead to several absurd results, such as preventing the registration of a will if the property is mortgaged or if co-owners refuse to produce the original deed. The court highlighted that this rule is contrary to the principles of the Transfer of Property Act, which allows for successive transfers of property subject to existing rights. The court referenced the Division Bench decision in Ramayee v Sub-Registrar, which held that the Registrar has no right to refuse registration based on the existence of a prior agreement. The court concluded that Rule 55-A is unworkable and invalid as it goes beyond the powers conferred on the Inspector General of Registration and is ultra vires and unconstitutional. 2. Impact of the Provisional Attachment under Sec. 83 of the G.S.T. Act on the Registration of the Sale Certificate: The court noted that the provisional attachment under Sec. 83 of the G.S.T. Act was passed on 18.12.2021 and had already lapsed by operation of law, as such attachments cease to have effect after one year. The court emphasized that the provisional attachment could not be a valid ground for refusing the registration of the Sale Certificate. 3. Rights of a Secured Creditor vis-à-vis Provisional Attachment by Tax Authorities: The court observed that the petitioner bank was a secured creditor with a mortgage registered in 2017, prior to the provisional attachment by the G.S.T. authorities in 2021. The court held that the rights of the secured creditor could not be overridden by a subsequent provisional attachment, especially when the attachment had lapsed. 4. Interpretation of Relevant Provisions of the Transfer of Property Act and the Registration Act: The court extensively discussed the provisions of the Transfer of Property Act, emphasizing that there is no bar on successive transfers of property, and any subsequent transfer is subject to the rights created by earlier transfers. The court referred to various sections of the Transfer of Property Act, including Sections 6, 7, 41, 42, 43, 48, 53, 56, and 57, to illustrate that even unauthorized transfers can be validated under certain conditions. The court also cited the Supreme Court's decision in Suraj Lamp & Industries (P) Ltd. v. State of Haryana, which held that an agreement of sale does not create any interest over the property. Additionally, the court referenced the Supreme Court's decision in V.K. Sreedharan v. Chandramaath Balakrishnan, which stated that an agreement for sale creates an obligation attached to the ownership of the property, and the attachment cannot override this obligation. Conclusion: The court quashed the impugned order dated 17.10.2022, directing the respondent to register the Sale Certificate within 15 days. The writ petition was allowed, with the court holding that Rule 55-A is invalid and ultra vires, and the provisional attachment under Sec. 83 of the G.S.T. Act had lapsed, making it an invalid ground for refusing registration.
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