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TMI Blog2024 (5) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... isions 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as 'the SARFAESI Act' for short) to recover the amount. Sale of the property was conducted on 19-03-2022. The petitioner participates in the auction, emerges as the successful bidder and pays the entire consideration as necessary in law. After receipt of the entire consideration, the Bank issues a sale certificate in favour of the petitioner on 30-09-2022. It is an admitted fact that as on today, the borrowers/owners of the property have not challenged the sale or initiated any proceedings against the sale of the property, as the challenge is not pending before any judicial or quasi judicial fora. 4. The petitioner desirous of getting the sale certificate registered approaches the jurisdictional Sub-Registrar i.e., the Sub-Registrar of JP Nagar/2nd respondent. The petitioner pays entire stamp duty as necessary under the Stamp Act and all other necessary fee through challan and sits with the Sub-Registrar to get the sale certificate registered. No written endorsement is issued, but the averment in the petition is, that certain claims of the Income Tax Department are pending against the borrowers of the property and, therefore, the sale certificate cannot be regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstand that the document would not be registered. The reason was that a claim of the Income-Tax Department still hangs on the head of the borrowers of the property and, therefore, the document cannot be registered. Whether such discretion is available to the Sub-Registrar is what is required to be noticed. The document of registration i.e., the sale certificate had emanated from the proceedings under the SARFAESI Act. Section 26-E of the SARFAESI Act, reads as follows: 26E. Priority to secured creditors.--Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. Explanation.--For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein. Rule 171 reads as follows: 171. Reasons for refusal to register.- When registration is refused, the reasons for refusal shall be at once recorded in Book 2. They will usually come under one or more of the heads mentioned below. (i) Section 19.- that the document is written in a language which the Registering Officer does not understand and which is not commonly used in the district, and that if is unaccompanied by a true translation or a true copy; (ii) Section 20.- that it contains unattested interlineations, blanks, erasures, or alterations which in the opinion of the Registering Officer require to be attested; (iii) Section 21(1) to (3) and Section 22.- that the description of the property is insufficient to identify it or does not contain the information required by Rule 15; (iv) Section 21(4).- that the document is unaccompanied by a copy or copies of any map or plan which it contains; (v) Rule 50.- that the date of execution is not stated in the document or that the correct date is not ascertainable or altered so as to make it unascertainable; (vi) Section 23, 24, 25, 26, 72 ,75 and 77.- that it is presented after the prescribed time; (vii) Section 32, 33, 40 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied before admitting a document to registration has not been paid. The reasons indicated in Rule 171 are self-explanatory. While it is an admitted fact that none of those reasons found in the statute i.e., Rule 171 are even present in the case at hand. The refusal to register a document as observed is dealt with under Section 71 of the Registration Act and Rule 171 of the Rules, a perusal of which will nowhere creates any impediment for the 2nd respondent/Sub- Registrar to register the said document. All the nuances necessary for registration have been complied with by the petitioner. The reason for denial of registration by respondent No.2 - Sub-Registrar is that the dues of the Income-Tax Department pending against the borrowers. In the considered view of this Court, in the light of Section 35 quoted supra of the SARFAESI Act, 2002 the said reason though not in writing could not have been projected by the Sub-Registrar to deny registration. The issue whether other statutory dues pending against the borrowers would entail non-registration of a document, need not detain this Court for long, or delve deep into the matter. 11. The Apex Court in the case of PUNJAB NATIONAL BANK v. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Appeal No. 3627 of 2007 filed against the judgment [UTI Bank Ltd. v. CCE, 2006 SCC OnLine Mad 1182 (FB)] of the Full Bench, vide order dated 12-2-2009 [CCE v. UTI Bank Ltd., 2009 SCC OnLine SC 1950] held as under: (UTI Bank case [CCE v. UTI Bank Ltd., 2009 SCC OnLine SC 1950] , SCC OnLine SC para 1) 1. Having gone through the provisions of the Securitisation Act, 2002, in the light of the judgment of the Division Bench of this Court in Union of India v. SICOM Ltd. [Union of India v. SICOM Ltd., (2009) 2 SCC 121] , we find that under the provisions of the said 2002 Act, the appellants did not have any statutory first charge over the property secured by the respondent Bank. In the circumstances, the civil appeal is dismissed with no order as to costs (emphasis supplied) 45. Hence the reasoning given by the High Court stands strong and has been affirmed by this Court. 46. This Court in Dena Bank v. Bhikhabhai Prabhudas Parekh Co. [Dena Bank v. Bhikhabhai Prabhudas Parekh Co., (2000) 5 SCC 694] , wherein the question raised was whether the recovery of sales tax dues (amounting to crown debt) shall have precedence over the right of the bank to proceed against the property of the borr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urity Interest Act, 2002 held that : (SCC OnLine Bom paras 19-20) 19. Considering the language of Section 35 and the decided case law, in our opinion it would be of no effect, as the provisions of the SARFAESI Act override the provisions of the Central Sales Tax Act and as such the priority given to a secured creditor would override Crown dues or the State dues. 20. Insofar as the SARFAESI Act is concerned a Full Bench of the Madras High Court in UTI Bank Ltd. v. CCE [UTI Bank Ltd. v. CCE, 2006 SCC OnLine Mad 1182 (FB)] has examined the issue in depth. The Court was pleased to hold that tax dues under the Customs Act and Central Excise Act, do not have priority of claim over the dues of a secured creditor as there is no specific provision either in the Central Excise Act or the Customs Act giving those dues first charge, and that the claims of the secured creditors will prevail over the claims of the State. Considering the law declared [Ed. : The reference appears to be to Dena Bank v. Bhikhabhai Prabhudas Parekh Co., (2000) 5 SCC 694] by the Supreme Court in the matter of priority of State debts as already discussed and the provision of Section 35of the SARFAESI Act we are in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(zc) to (zf) of the SARFAESI Act, 2002, read with provisions contained in Section 13 of the SARFAESI Act, 2002, the Secured Creditor will have a first charge on the secured assets. Moreover, Section 35 of the SARFAESI Act, 2002 inter alia, provides that the provisions of the SARFAESI Act, shall have overriding effect on all other laws. It is further pertinent to note that even the provisions contained in Section 11-E of the Central Excise Act, 1944 are subject to the provisions contained in the SARFAESI Act, 2002. 51. Thus, as has been authoritatively established by the aforementioned cases in general, and Union of India v. SICOM Ltd. [Union of India v. SICOM Ltd., (2009) 2 SCC 121] in particular, the provisions contained in the SARFAESI Act, 2002, even after insertion of Section 11-E in the Central Excise Act, 1944 w.e.f. 8-4-2011, will have an overriding effect on the provisions of the 1944 Act. 52. Moreover, the submission that the validity of the confiscation order cannot be called into question merely on account of the appellant being a secured creditor is misplaced and irrelevant to the issue at hand. The contention that a confiscation order cannot be quashed merely becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 13. The Sub-Registrar can act only within the four corners of the Registration Act and the Registration Rules framed by the State. If none of the circumstances under Rule 171 of the Rules are found, the Sub-Registrar has no jurisdiction to refuse registration of a document; the document in the case at hand is the sale certificate. 14. Scores and scores of cases are filed before this Court where the Sub-R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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