In Re Vs Unknown On 23 December, 2009

In Re vs Unknown on 23 December, 2009
Madras High Court Madras High Court In Re vs Unknown on 23 December, 2009 DATED: 23-12-2009 CORAM: THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIAN Company Application No.1928 of 2009 In the matter of the Companies Act, 1956. In Re The Official Liquidator, High Court, Madras. .. Applicant ORDER This is an application filed by the Official Liquidator, seeking by way of general directions, a clarification as to whether he must execute a Sale Deed or a Certificate of Sale, as and when the property of a company in liquidation, is brought to sale in public auction. 2. Heard Mr.M.Jayakumar, learned Deputy Official Liquidator. 3. In normal circumstances, the question raised in this application may look odd, since a rose by any other name, would smell as sweet and the name tag or the nomenclature given to a document may not be relevant to ascertain its true character. But the question raised in this application is of significance in view of the implications of stamp duty. 4. It appears that there is an emerging trend, among the purchasers of properties in public auctions, to seek the issue of "Certificates of Sale" rather than "Deeds of Sale". This is on the premise that a Certificate of Sale does not require registration compulsorily, in view of the provisions of Section 17(2)(xii) of the Registration Act, 1908. There appears to be a school of thought that such Certificates of Sale do not also attract stamp duty, in view of the obligation cast upon the Registering Officer under Section 89(2) and (4) of the Registration Act, 1908, to file such Certificates of Sale in Book I, upon being forwarded to them. 5. The above view has found acceptance in a recent decision of this Court in Shree Vijayalakshmi Charitable Trust vs. The Sub-Registrar, Erode District {2009 (5) CTC 15}. Therefore, the Official Liquidator has come up with this application, seeking a clarification, citing the said decision of this Court in Shree Vijayalakshmi Charitable Trust case. 6. In Shree Vijayalakshmi Charitable Trust case, the purchaser of a property in public auction conducted by the Official Liquidator, sought to get the Certificate of Sale filed with the Registering Officer. But the Registering Officer demanded stamp duty as per the provisions of the Indian Stamp Act, 1899. Challenging the demand, the Trust filed a writ petition. Relying upon the decision of the Supreme Court in B.Arvind Kumar vs. Government of India {2007 (5) SCC 745} and the decision of a Division Bench of this Court in K.Chidambara Manickam vs. Shakeena {2008 (1) CTC 660}, the learned Judge allowed the writ petition filed by Shree Vijayalakshmi Charitable Trust, holding that the Sub Registrar cannot demand stamp duty on a Certificate of Sale issued by the Official Liquidator, when it is sought to be filed under Section 89 of the
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Registration Act, 1908. After holding so, the learned Judge pointed out that the law as it stands today is unfair to the Revenue in today's context and that the legislature should take note of the loophole in the law and plug it by necessary amendments. 7. But the question as to whether stamp duty is payable on a Certificate of Sale, was not examined in Shree Vijayalakshmi Charitable Trust, on a comparative analysis of all the provisions of the Transfer of Property Act, 1882, the Indian Stamp Act, 1899 and the Registration Act, 1908, and the issues of repugnancy and overriding effect of one Act over the other. Moreover, the question as to whether stamp duty was payable on a Certificate of Sale or not, was not decided either by the Supreme Court in B.Arvind Kumar case or by the Division Bench in K.Chidambara Manickam case. In any event, in B.Arvind Kumar, the Supreme Court was concerned with a Certificate of Sale issued by the Official Assignee, who stands on a different footing than the Official Liquidator. Similarly, in K.Chidambara Manickam, the Division Bench was concerned with a Certificate of Sale issued by the Authorised Officer of a Bank, in exercise of the power conferred under the SARFAESI Act, 2002. Therefore, neither the decision in B.Arvind Kumar nor the decision in K.Chidambara Manickam, is for the proposition that a Certificate of Sale does not attract stamp duty. Both these decisions do not deal with the issue of payment of stamp duty on Certificates of Sale issued by the Official Liquidator nor do they lay down any law that no stamp duty is payable on the Certificates of Sale issued by the Official Liquidator. It is on account of these material differences that it has become essential to explode the myth. 8. The confusion as to whether stamp duty as payable on a Sale Deed, is payable even on a Sale Certificate, has arisen, primarily on account of the omission to take note of the fundamental distinction between the field of operation of the Indian Stamps Act, 1899 and the Registration Act, 1908, the foundation of both of which, are to be traced to the Transfer of Property Act,1882. While the Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments, the Registration Act strikes only at documents and not at transactions, as is done by the Transfer of Property Act, 1882. Therefore, a comparative study of the provisions of all the three enactments alone would clear the congestion in the mind. From the perspective of Transfer of Property Act, 1882: 9. Let me analyse the issue on hand, first from the perspective of the provisions of the Transfer of Property Act, 1882. Section 3 of the Transfer of Property Act, 1882, defines the words (i) "immovable property" (ii) "instrument" and (iii) "registered". Section 4 of the Transfer of Property Act, declares that paras 2 and 3 of Section 54 and Sections 59, 107 and 123 of the Act, are to be read as supplemental to the Registration Act. Section 5 defines the expression "transfer of property" and Section 6 makes it clear that property of any kind may be transferred except as otherwise provided by this Act or by any other law for the time being in force. 10. Section 9 of the Transfer of Property Act, 1882, makes it clear that a transfer of property may be made without writing in every case in which a writing is not expressly required by law. Therefore, for solving the riddle posed in this application, one has primarily to see whether a sale is not expressly required by law to be in writing. 11. Sections 54 to 57 of the Transfer of Property Act, 1882, are grouped under Chapter III, under the heading "Of Sales of Immovable Property". Section 54 of the Transfer of Property Act, 1882, provides--(i) the definition of the word "sale" (ii) the manner in which a sale may be made and (iii) what a contract for sale of immovable property is. It requires reproduction, for busting the bubble. It reads as follows:- "54. "Sale" defined. - "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale how made. Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract for sale. - A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property." 12. Thus, Section 54 of the Transfer of Property Act, 1882, makes it compulsory for every sale of a tangible immovable property to be made only by a registered instrument, if its value is one hundred rupees and upwards. If the value is less than one hundred rupees, Section 54 gives an option to the maker to effect the transfer either by a registered instrument or by delivery of the property. The word "registered" is defined in section 3 of the Act to mean "registered in any part of the territories to which the Act extends, under the law for the time being in force regulating the registration of documents". The law regulating the registration of documents is the Registration Act, 1908 and hence the definition of the word "registered" appearing in para 2 of section 54 has to be understood in the light of that Act. That it is so, is also made clear by section 1 of the Transfer of Property Act, 1882, which reads as follows:- "1. Short title. - This Act may be called THE TRANSFER OF PROPERTY ACT, 1882. Commencement. - It shall come into force on the first day of July, 1882. Extent. - It extends in the first instance to the whole of India except the territories which, immediately before the 1st November 1956, were comprised in Part B States or in the States of Bombay, Punjab and Delhi. But this Act or any part thereof may by notification in the Official Gazette be extended to the whole or any part of the said territories by the State Government concerned. And any State Government may from time to time, by notification in the Official Gazette, exempt, either retrospectively or prospectively, any part of the territories administered by such State Government from all or any of the following provisions, namely:Section 54, paragraph 2 and Sections 3, 59, 107 and 123. Notwithstanding anything in the foregoing part of this section, section 54, paragraphs 2 and 3, and sections 59, 107 and 123 shall not extend or be extended to any district or tract of country for the time being excluded from the operation of the Indian Registration Act, 1908 (16 of 1908), under the power conferred by the first section of that Act or otherwise." Thus by section 1, the Transfer of Property Act makes it clear that the second para of section 54 requiring every sale of tangible immovable property for a value of rupees one hundred and above to be made only by a registered instrument, is applicable only in places where the Registration Act itself is applicable and not otherwise. Therefore it follows as a corollary that para 2 of section 54 of the Transfer of Property Act took note of the provisions of the Registration Act, 1908, including section 17(2) (xii) of the said Act. Otherwise, even while excluding under section 1, the areas to which para 2 of section 54 will not apply, the law makers could have excluded the instruments which did not require compulsory registration in view of section 17 (2) of the Registration Act also. 13. Though Section 54 of the Transfer of Property Act, 1882 made it compulsory for every sale of tangible immovable property valued at Rs.100/- and more, to be made only by a registered instrument, the Act does not spell out the consequences of the failure to do so. While Section 35 of the Indian Stamp Act makes an instrument not duly stamped and Section 49 of the Registration Act makes a document not duly registered,
inadmissible in evidence, there is no corresponding provision in the Transfer of Property Act, 1882. In other words, though the second paragraph of Section 54 of the Transfer of Property Act, makes it compulsory for every sale of tangible immovable property worth Rs.100/- and more to be only by a registered instrument, the Act does not contain a provision, similar to Section 35 of the Indian Stamp Act or Section 49 of the Registration Act. 14. In order to remove this anomaly, amendments were introduced to Section 4 of the Transfer of Property Act and to Section 49 of the Registration Act, by the Transfer of Property (Amendment) Act, 1885 and the Transfer of Property (Amendment) Supplementary Act, 1929 (Act 21 of 1929) respectively. By the former Amendment Act, the second part of Section 4 was inserted into the Transfer of Property Act, 1882. It reads as follows:- "And Sections 54, paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1877" By the Transfer of Property (Amendment) Supplementary Act, 1929, the year '1908' was substituted for '1877'. Similarly, the phrase "by any provision of the Transfer of Property Act, 1882" and a proviso were inserted to Section 49 of the Registration Act, by the very same Amendment Act 21 of 1929. 15. Section 49 of the Registration Act, 1908, prior to its amendment in 1929, read as under:"No document required by Section 17 to be registered shall (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered." By Section 10 of the Transfer of Property (Amendment) Supplementary Act, 1929, Section 49 was amended as under:"No document required by Section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power unless it has been registered: Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877, or as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877, or as evidence of part performance of a contract for the purposes of Section 53-A of the Transfer of Property Act, 1882, or as evidence of any collateral transaction not required to be affected by registered instrument." (By a further amendment by Act 48 of 2001, a portion of the proviso was deleted. The deleted portion would read as "or as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877, or as evidence of part performance of a contract for the purposes of Section 53-A of the Transfer of Property Act, 1882").
16. The effect of the 1929 Amendment to both the Transfer of Property Act and the Registration Act, came up for consideration before a 3-member Bench of the Apex Court in Raghunath vs. Kedar Nath {1969 (1) SCC 497} and the Court held as follows:"The inclusion of the words "by any provision of the Transfer of Property Act, 1882", by the Amending Act, 1929, settled a doubt entertained as to whether the documents of which the registration was compulsory under the Transfer of Property Act, but not under Section 17 of the Registration Act, were affected by Section 49 of the Registration Act. Section 4 of the Transfer of Property Act enacts that "Section 54, Paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1908". It was previously supposed that the affect of this section was merely to add to the list of documents of which the registration was compulsory and not to include them in Section 17 so as to bring them within the scope of Section 49. This was the view taken by the Full Bench of the Allahabad High Court in Sohan Lal's case (supra). The same view was expressed in a Madras Case Rama Sahu vs. Gowro Ratho {ILR (1921) 44 Mad 55} and by MacLeod, C.J., in a Bombay case Dawal vs. Dharma {ILR (1918) 41 Bom 550}. We are however absolved in the present case from examining the correctness of these decisions. For these decisions have been superseded by subsequent legislation, i.e., by the enactment of Act 21 of 1929, which by inserting in Section 49 of the Registration Act the words "or by any provision of the Transfer of Property Act, 1882", has made it clear that the documents in the supplemental list, i.e., the documents of which registration is necessary under the Transfer of Property Act but not under the Registration Act fall within the scope of Section 49 of the Registration Act and if not registered are not admissible as evidence of any transaction affecting any immovable property comprised therein, and do not affect any such immovable property. We are accordingly of the opinion that Ex.A-26 being unregistered is not admissible in evidence." 17. Thus, the 3-member Bench of the Apex Court made it clear in Raghunath that in view of the amendment to Section 49 of the Registration Act, 1908, the documents of which registration is necessary under the Transfer of Property Act, but not under the Registration Act, fall within the scope of Section 49 of the Registration Act and that if not registered, they are not admissible as evidence of any transaction affecting any immovable property comprised therein. The decision of the 3-member bench in Raghunath still holds the field and not overruled by any bench of coordinate strength or by a larger bench. 18. As we have seen above, the second part of Section 54 of the Transfer of Property Act makes every transfer of tangible immovable property of the value of Rs.100/- and above, to be made only by a registered instrument. However, Section 2(d) of the Transfer of Property Act, declares that nothing contained in the Act, shall be deemed to affect any transfer by operation of law or by or in execution of a decree or order of a Court competent jurisdiction. 19. Therefore the prescription in the second paragraph of Section 54 of the Transfer of Property Act (that a sale is to be only by a registered instrument) may not be applicable to (i) a sale by operation of law and (ii) a sale by or in execution of a decree or order of a Court of competent jurisdiction. 20. Way back in Sankaran vs. Narasimhulu {AIR 1927 Mad 1} a Full Bench of this Court (5 member Bench), with Krishnan, J., dissenting, held that a sale by the Official Receiver acting under the provisions of the Provincial Insolvency Act is not a transfer of property by operation of law or by or in execution of a decree or order of a Court of competent jurisdiction. Though the property vests in the Receiver by operation of law, the transfer by him is a transfer by one party to another and cannot be said to be a transfer by operation of law. While C.V.Kumaraswami Sastri, Officiating C.J., held that a sale by an Official Receiver acting under the provisions of the Provincial Insolvency Act, is not a transfer by operation of law or by or in execution of a decree of court, Ramesam, J., held in his separate opinion that a sale by an Official Receiver will not fall under the exemption clause under section 2(d). Similarly, Venkatasubba Rao, J., in his opinion held that " when the property vests in a Receiver on insolvency there is a transfer by operation of law, but when the Receiver transfers the property to an alienee, the alienation is a voluntary transfer and is as much an 'act of
parties' as any transfer by a private individual". The separate but concurring opinion of the 5th Judge Curgenven, J., hits the nail on the head and is as follows:- "No difficulty seems to be presented by the words 'transfer by operation of law,' which, however widely they may be construed, cannot cover a sale by a Receiver of an insolvent's property. Such a sale is frequently a matter of discretion and so a voluntary act on the part of the Receiver, as the purchase is on the part of the buyer, and although the Receiver may be a public officer, the transaction is not the less an act of parties on that account. The ordinary rules relating to stamps and registration apply to such sales." The last line of the above passage, to the effect that ordinary rules relating to stamps and registration apply to such sales, is of significance. 21. Again in Kamsala Narasappa vs. Hussain Sab {AIR 1935 Mad 55}, a Division Bench held that an Official Receiver selling the property of the insolvent, cannot be regarded as a Civil Officer for the purpose of Section 89 of the Registration Act and consequently the Sale Deed executed by him would not be exempt under Section 17(2)(xii) of the Registration Act. It was also not a sale by or in execution of a decree or order of a Court, covered by Section 2(d) of the Transfer of Property Act. 22. Though a Full Bench of 5 Judges in Sankaran vs. Narasimhulu {AIR 1927 Mad 1} and a Division Bench of 2 Judges in Kamsala Narasappa vs. Hussain Sab {AIR 1935 Mad 55}, held that an Official Receiver selling the property of an insolvent is neither selling it in execution of a decree of a Court nor could it amount to a sale by a Civil Officer within the meaning of Section 89 of the Registration Act, another Division Bench took a view, which at first blush, may appear to be different. It was in S.Arumugham vs. C.K.Venugopal Chettiar {1994 (1) LW 491}. In that case, it was held by the Division Bench that an order passed by the Judge of an Insolvency Court (marked in that case as Ex.D-7) annulling the adjudication and directing the Official Assignee to transfer to the guarantor, the assets of the insolvent that were in excess, was held to be a transfer by order of Court. After holding so, the Division Bench held in para 18 of its judgment that Ex.D-7 did not require registration under Section 54 of the Transfer of Property Act, since Section 2(d) of the Act exempted transfers by orders of Court from the purview of the Act. Though the Division Bench made a reference in paras 20 and 22 of its decision to the decision of the Full Bench in Sankaran vs. Narasimhulu, it appears that the Division Bench was inclined to take the view that it did, on account of the fact that Ex.D-7 in that case was actually an order of Judge Clerk presiding over the Insolvency Court. Ex.D-7 in that case was neither a Certificate of sale nor an Instrument executed by the Official Assignee conveying the property. This aspect is clear from the facts recorded in para 12 of the judgment of the Division Bench where the Bench noted that in Application No.211 of 1947 in I.P.No.30 of 1946, the Insolvency Court accepted the composition and annulled the adjudication vide Ex.D-7. Therefore, what the Division Bench was concerned with, in S.Arumugham case, was actually an order of the Insolvency Court and not a Certificate of Sale or any instrument executed by the Official Assignee himself. In such circumstances, it is not possible to think that a certificate of sale issued by the Official Assignee was held in S.Arumugham case, to be a transfer by operation of law or by or in execution of a decree. As a matter of fact, in S.Arumugham, the Division Bench actually professed to follow the ratio laid down by the Full Bench in Sankaran. 23. In Official Liquidator of Globe Associate (P) Ltd (In Liquidation) vs. H.P.Sharma {ILR 1971 Delhi 49}, a Full Bench of the Delhi High Court went into the question whether the sale by a Liquidator is a sale by the Court or by operation of law. Referring to Section 456(2) of the Companies Act, 1956, the Full Bench held that it is only the custody of the property of the company that is being wound up, which is deemed to vest and that the property as such, does not vest in the Court. The Full Bench also referred to Section 529 of the Companies Act, 1956 and held that unlike in the case of Bankruptcy, the estate of the company being wound up, does not vest either in the Court or in the Liquidator. Consequently, the Court held that the sale by the Liquidator is not a sale by operation of law nor is it a sale by an order of Court and that it is a transaction between the company acting through the Liquidator and the Transferee. An order of the Court in this regard is only a manner provided for the exercise of that power. 24. Once it is found that the sale by the Official Liquidator is not a transfer by operation of law or by or in execution of a decree of Court, then it would not fall within the exception under Section 2(d) of the Transfer of Property Act. If it would not fall within the parameters of Section 2(d), then the second paragraph of
Section 54 of the Transfer of Property Act, requiring every sale of tangible immovable property for Rs.100/and more to be made only by a registered instrument, would automatically apply. Therefore the sale has to comply with the statutory requirement under the second paragraph of Section 54. From the perspective of the Indian Stamp Act, 1899: 25. Having considered the provisions of the Transfer of Property Act, now let me move on to the provisions of the Indian Stamp Act, 1899. In that Act, Section 3 is the charging section which provides the list of instruments chargeable to duty. It reads as follows:"3. Instruments chargeable with duty. - Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefor respectively, that is to say (a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899; (b) every bill of exchange payable otherwise than on demand, or promissory note drawn or made out of India on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India; and (c) every instrument (other than a bill of exchange or promissory note) mentioned in that Schedule, which, not having been previously executed by any person, is executed out of India on or after that day, relates to any property situate, or to any matter or thing done or to be done, in India and is received in India: Provided that any increase in the amount of duty chargeable under the Madras Stamp (Amendment) Act, 1922 (Madras Act VI of 1922) or the Madras Stamp (Increase of Duties) Act, 1943 (Madras Act XVI of 1943), shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this section and executed before the first day of April 1922: Provided further that any increase in the amount of duty chargeable under the Madras Stamp (Increase of Duties) Act, 1962, shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this section and executed before the date of commencement of that Act: Provided also that any increase in the amount of duty chargeable under the Indian Stamp (Tamil Nadu Amendment) Act, 1973, shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this section and executed before the 1st July 1973: Provided also that any increase in the amount of duty chargeable under the Indian Stamp (Tamil Nadu Amendment) Act, 1975, shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this section and executed before the commencement of that Act: Provided also that any increase in the amount of duty chargeable under the Indian Stamp (Tamil Nadu Second Amendment) Act, 1975, shall not have the effect of increasing the duty payable in respect of instruments specified in clause (a) or clause (c) of this section and executed before the 1st August, 1975: Provided also that no duty shall be chargeable in respect of (1) any instrument executed by, or on behalf of, or in favour of, the Government in case where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument; (2) any instrument for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ship or vessel registered under the Merchant Shipping Act, 1894 or under Act XIX of 1838, or the Indian Registration of Ships Act, 1841 (X of 1841), as amended by subsequent Acts." 26. A careful reading of the charging Section 3 shows that every instrument about which a mention is made in Schedule I to the Act, is chargeable with duty indicated therein. The last proviso to Section 3 makes only two exceptions to the general liability imposed by the Section. The first exception is in respect of any instrument executed by or on behalf of or in favour of the Government. The second exception is in relation to an
instrument for the sale or transfer of any ship or vessel etc. 27. Therefore, all instruments, except those covered by the last proviso to Section 3 are chargeable with duty indicated in Schedule I, if the instrument is of such a nature as is covered by Schedule I. Section 2(14) of the Indian Stamp Act, 1899, defines an "Instrument" "to include every document by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded" Though the Indian Stamp Act, does not define a sale, it defines a conveyance. Section 2(10) of the Indian Stamp Act, 1899, defines "Conveyance" "to include a conveyance on sale and every instrument by which property, whether movable or immovable is transferred inter vivos and which is not otherwise specifically provided for by Schedule I." Therefore, sale is included within the definition of the word "conveyance" under the Act. 28. Article 18 under Schedule I of the Indian Stamp Act, 1899, fixes the stamp duty on a Certificate of Sale as follows:"18. Certificate of Sale (in respect of each property put up as a separate lot and sold), granted to the purchaser of any property sold by public auction by a Civil or Revenue Court or Collector or other Revenue Officer (a) where the purchase money does not exceed Rs.10 One Rupee.
(b) Where the purchase money exceeds Rs.10 but does not exceed Rs.25 Two Rupees.
(bb) where the purchase money exceeds Rs.25 but does not exceed Rs.50 Three Rupees.
(c) In any other case The same duty as a Conveyance (No.23) for a market value equal to the amount of the purchase money only."
29. Article 23 under Schedule I of the Indian Stamp Act, 1899, fixes the stamp duty on a deed of conveyance as follows:"23. Conveyance, (as defined by Section 2(10)), not being a Transfer charged or exempted under No.62
(a) of immovable property situated within the Chennai Metropolitan Planning Area and the Urban Agglomeration of Madurai, Coimbatore, Salem and Tiruchirappalli and the City of Tirunelveli Eight Rupees for every Rs.100/- or part thereof of the market value of the property which is the subject matter of conveyance. (b) of any other property - Seven Rupees for every Rs.100/- or part thereof of the market value of the property which is the subject matter of conveyance." 30. Therefore, by virtue of the provisions of the Indian Stamp Act, 1899, a "Certificate of Sale" issued by a Revenue or Civil Court or Collector or Revenue Officer is chargeable with duty prescribed in Article 18 under Schedule I. A deed of conveyance, whether titled as a "deed of sale" or otherwise, is chargeable with duty prescribed in Article 23. A combined reading of Articles 18 and 23 would show that if the purchase money of a property sold by public auction exceeds Rs.50/-, the same duty is payable, irrespective of whether it is a certificate of sale or a deed of conveyance/sale. The person by whom such duty is payable is also spelt out in Section 29(f) of the Act, leaving no room for any doubt that stamp duty is certainly payable even on a certificate of sale. 31. Section 35 of the Indian Stamp Act, makes it clear that no instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties, authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any Public Officer, unless such instrument is duly stamped. The proviso to Section 35 makes exception to 5 categories of instruments, from the operation of the main provision. A certificate of sale does not fall under any of these exceptions listed in the proviso to Section 35. Therefore, irrespective of and de hors the provisions of the Registration Act, a certificate of sale issued to the purchaser of a property sold by public auction, by a Civil or Revenue Court or Collector or other Revenue Officer, is required to be stamped as per Article 18 (read with Article 23 if the purchase money exceeds Rs.50/-) of Schedule I of the Indian Stamp Act. From the perspective of the Registration Act: 32. Now coming to the provisions of the Registration Act, it is seen that the Act defines the words "immovable property", "lease" and "movable property". It does not define the word "sale". Section 17 (1) of the Act provides a list of documents, of which registration is compulsory. Section 17 (2) makes it clear that the provisions of Section 17(1)(b) and (c) are not applicable to certain documents. One of the documents listed in Section 17(2) is a certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Officer. Section 17 requires
reproduction, since the issue on hand revolves around the same. Therefore, it is reproduced as follows:"17.(1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No.XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely:- (a) instruments of gift of immovable property; (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property; (c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and (d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent; (e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property: Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees. (1-A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53-A of the Transfer of Property Act, 1882 (4 of 1882), shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001 and, if such documents are not registered on or after such commencement, then they shall have no effect for the purposes of the said Section 53-A. (2) Nothing in clauses (b) and (c) of sub-section (1) applies to (i) any composition deed; or (ii) any instrument relating to shares in a Joint Stock Company, notwithstanding that the assets of such Company consist in whole or in part of immovable property; or (iii) any debenture issued by any such Company and not creating, declaring, assigning, limiting or extinguishing any right, title or interest, to or in immovable property except in so far as it entitles the holder to the security afforded by a registered instrument whereby the Company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures; or (iv) any endorsement upon or transfer of any debenture issued by any such Company; or (v) any document other than the documents specified in sub-section (1-A) not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest; or (vi) any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding; or (vii) any grant of immovable property by the Government; or (viii) any instrument of partition made by a Revenue Officer; or
(ix) any order granting a loan or instrument of collateral security granted under the Land Improvement Act, 1871, or the Land Improvement Loans Act, 1883; or (x) any order granting a loan under the Agriculturists Loans Act, 1884, or instrument for securing the repayment of a loan made under that Act; or (xa) any order made under the Charitable Endowments Act, 1890, vesting any property in a Treasurer of Charitable Endowments or divesting any such Treasurer of any property; or (xi) any endorsement on a mortgage-deed acknowledging the payment of the whole or any part of the mortgage-money, and any other receipt for payment of money due under a mortgage when the receipt does not purport to extinguish the mortgage; or (xii) any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Officer. Explanation. - A document purporting or operating to effect a contract for the sale of immovable property shall not be deemed to require or ever to have required registration by reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole or any part of the purchase money. (3) Authorities to adopt a son, executed after the first day of January 1872, and not conferred by a will, shall also be registered." 33. While section 17(1) deals with documents which require registration compulsorily and sub section (2) thereunder lists the exceptions thereto, Section 18 of the Indian Registration Act deals with documents which could be registered at the option of the parties. It reads as follows:"18. Any of the following documents may be registered under this Act, namely:(a) instruments (other than instruments of gift and wills) which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of a value less than one hundred rupees, to or in immovable property; (b) instruments acknowledging the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; (c) leases of immovable property for any term not exceeding one year, and leases exempted under Section 17; (cc) instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of a value less than one hundred rupees, to or in immovable property; (d) instruments (other than wills) which purport or operate to create, declare, assign, limit or extinguish any right, title or interest to or in movable property; (e) wills; and (f) all other documents not required by Section 17 to be registered." 34. A perusal of section 18 shows that it covers even instruments acknowledging the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest and leases of immovable property for any term not exceeding one year, and leases exempted under Section 17. Merely because the registration of these documents have been made optional, it does not follow as a corollary that all these documents are exempt even from payment of stamp duty. Take for instance, a receipt or promissory note, which do not require registration. Despite the fact that they do not
require registration, they are nevertheless chargeable with duty under the Stamp Act. Similarly, the lease of an immovable property for a term not exceeding one year does not require registration. But it does not mean that no stamp duty is payable on such a document. Therefore, it is totally incorrect to say that if a document does not require registration compulsorily, then no stamp duty is also required to be paid. The provisions of the Stamp Act and the provisions of the Registration Act, operate on parallel lines. Neither of them contain a non abstante clause, so as to exclude the operation of the other. Therefore, the option given under the Registration Act to the makers of certain documents, to register them or not, is not to be construed as an exemption from payment of stamp duty. 35. A combined reading of --- (i) Sections 1, 4 and the second paragraph of Section 54 of the Transfer of Property Act (ii) Section 3 read with Articles 18 and 23 under Schedule I of the Indian Stamp Act and (iii) Sections 17 (2)(xii), 18, 49 and 89 of the Registration Act, would show (i) that every certificate of sale should be duly stamped; and (ii) that despite the registration of the same being optional, it is not admissible in evidence under Section 35 of the Stamp Act and Section 49 of the Registration Act, unless it is duly stamped and registered, in view of the law laid down by the 3-member Bench of the the Apex Court in Raghunath vs. Kedar Nath {1969 (1) SCC 497} 36. Having seen the statutory provisions in all the 3 Acts, let me now turn to the decision in B.Arvind Kumar vs. Government of India {2007 (5) SCC 745}, which forms the basis for the decision in Shree Vijayalakshmi Charitable Trust. One of the questions that arose for consideration in B.Arvind Kumar (as seen from paragraph 8 of the judgment), was whether the plaintiff's father did not secure any right in the suit property, as the sale certificate in his favour was not followed by a registered deed of transfer. In paragraph 12 of the said judgment, the Supreme Court answered the issue on the following lines:- "12. The plaintiff has produced the original registered sale certificate dated 29.8.1941 executed by the Official Receiver, Civil Station, Bangalore. The said deed certifies that Bhowrilal (father of the plaintiff) was the highest bidder at an auction-sale held on 22.8.1941, in respect of the right, title, interest of the insolvent Anraj Sankla, namely, the leasehold right in the property described in the schedule to the certificate (suit property), that his bid of Rs.8,350/- was accepted and the sale was confirmed by the District Judge, Civil and Military Station, Bangalore on 25.8.1941. The sale certificate declared Bhowrilal to be the owner of the leasehold right in respect of the suit property. When a property is sold by public auction in pursuance of an order of the Court and the bid is accepted and the sale is confirmed by the Court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such title. It is well settled that when an auction-purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the Court is contemplated or required. In this case, the sale certificate itself was registered, though such a sale certificate issued by a Court or an Officer authorised by the Court, does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically provides that a certificate of sale granted to any purchaser of any property sold by a public auction by a Civil or Revenue Officer does not fall under the category of non-testamentary documents which require registration under sub-sections (b) and (c) of Section 17(1) of the said Act. We therefore hold that the High Court committed a serious error in holding that the sale certificate did not convey any right, title or interest to plaintiff's father for want of a registered deed of transfer." But the case before the Supreme Court in B.Arvind Kumar, arose out of a suit filed by the appellant therein, whose father purchased the superstructures as well as the leasehold rights in a land, in a public auction conducted by the Official Receiver, after the owner of the superstructure was adjudicated as insolvent. The land had earlier been granted by way of lease in perpetuity to the insolvent, by the Military Authorities. After several years of the issue of the sale certificate by the Official Receiver and after the death of the father of the appellant, the Military Authorities dispossessed him forcibly. Therefore, he filed a suit for declaration and for recovery of possession of the property. Though the trial Court rejected the prayer for declaration of title, it ordered delivery of possession. On appeal by the defence authorities, the High
Court reversed the decree of the trial Court and dismissed the suit. Among other things, the reasoning given by the High Court of Karnataka in that case was that the sale certificate issued in favour of the plaintiff's father was not followed by a registered instrument transferring the lessee's interest and that consequently no title was conveyed in the suit land to the plaintiff's father. It is in that context that when the matter was taken to the Supreme Court by the plaintiff, the Supreme Court held on issue No.2 as extracted above. 37. A perusal of the entire judgment in B.Arvind Kumar shows (i) that the question as to whether stamp duty was payable under the Indian Stamp Act on a certificate of sale issued by the Official Assignee, was not at all in issue in that judgment and (ii) that in any case, the sale certificate issued by the Official Receiver in favour of the appellant's father in that case was found to have already been registered. Therefore, the judgment in B.Arvind Kumar, which forms the basis for the decision in Shree Vijayalakshmi Charitable Trust, is not a judgment for the proposition that no stamp duty is payable on a certificate of sale despite the express provisions of the Indian Stamp Act, 1899. Moreover, an Official Assignee/Receiver in an insolvency action stands on a diferent footing than an Official Liquidator as pointed out by the Full bench of the Delhi High Court. 38. Section 89 (2) and (4) of the Registration Act, on which reliance is placed in Shree Vijayalakshmi Charitable Trust, does not also say that the Sub Registrar is duty bound to ignore the provisions of the Indian Stamp Act and file a copy of the certificate of sale issued by the Court or the Revenue Officer, as the case may be, in his Book No.1. Section 89 of the Registration Act, reads as follows:- "89. (1) Every Officer granting a loan under the Land Improvement Loans Act, 1883, shall send a copy of his order to the registering officer within the local limits of whose jurisdiction the whole or any part of the land to be improved or of the land to be granted as collateral security, is situate, and such registering officer shall file the copy in his Book No.1. (2) Every Court granting a certificate of sale of immovable property under the Code of Civil Procedure, 1908, shall send a copy of such certificate to the registering officer within the local limits of whose jurisdiction the whole or any part of the immovable property comprised in such certificate is situate, and such officer shall file the copy in his Book No.1. (3) Every officer granting a loan under the Agriculturists' Loans Act, 1884, shall send a copy of any instrument whereby immovable property is mortgaged for the purpose of securing the repayment of the loan, and if any such property is mortgaged for the same purpose in the order granting the loan, a copy also of that order, to the registering officer within the local limits of whose jurisdiction the whole or any part of the property so mortgaged is situate, and such registering officer shall file the copy or copies, as the case may be, in his Book No.1. (4) Every Revenue Officer granting a certificate of sale to the purchaser of immovable property sold by public auction shall send a copy of the certificate to the registering officer within the local limits of whose jurisdiction the whole or any part of the property comprised in the certificate is situate, and such officer shall file the copy in his Book No.1." In its application to the State of Tamil Nadu, Section 89 has been amended to include 3 sub-sections viz., sub-sections (5), (6) and (7). Similarly, by a State Amendment, Section 89-A has been inserted, empowering the Government to make rules for filing copies of documents. By Section 89-A (2-A), every Court passing an order effecting or raising an attachment of immovable property, should communicate a copy giving details of the property and the Registering Officer is obliged to file the same in Book-I. The Registering Officer is thus obliged to perform a crucial role. But the role is not restricted to the Registration Act alone. He is also obliged to perform a role under the Indian Stamp Act. Therefore, if an instrument is presented to him for registration, he is expected to examine whether proper stamp duty as per the provisions of the Indian Stamp Act has been paid or not. 39. In Shanti Devi L. Singh vs. Tax Recovery Officer and Others {1990 (3) SCC 605}, the Apex court was concerned with a case where two properties were sold by the Tax Recovery Officer of the Income Tax Department, in a public auction, for realisation of the income tax dues of their owners. Upon confirmation of sale, the Tax Recovery Officer issued necessary certificates of sale in favour of the highest bidders. The copies of the sale certificates were forwarded by the Tax Recovery Officer to the concerned Sub Registrar, for making necessary entries in Book No.1, in accordance with Section 89 (2) and (4) of the Registration Act, 1908. The Sub Registrar and the Collector of stamps refused to have the property registered, unless the requisite stamp duty was paid on the certificates of sale. Even the Tax Recovery Officer took a stand that no
stamp duty was payable. But the Sub-Registrar refused to budge in, forcing the auction purchasers to file writ petitions as was done in the case of Shree Vijayalakshmi Charitable Trust. The writ petitions were dismissed by the Delhi High Court and the issue landed up before the Supreme Court. 40. Three questions were formulated for consideration, by the Supreme Court in para 5 of its decision, which read as follows:"5. On the above facts, three different and separate questions arise for consideration: (1) What is the action to be taken by the Sub-Registrar when the copy of a certificate of sale is forwarded to him by the TRO? (2) Is the vendee in a sale by the TRO entitled to ask the TRO (sic Sub-Registrar) to make entries regarding the transfer in his records on the basis of the copy of the certificate of sale sent to him by the TRO? (3) What is the procedure to be followed by the Sub-Registrar when the original certificate of sale is produced before him by the vendee? 41. On the first question, the Supreme Court held that by virtue of sub-sections (2) and (4) of Section 89, whenever a certificate of sale is issued by a Court or a Revenue Officer, a copy of such certificate is to be sent to the Registering Officer within the local limits of whose jurisdiction, the property is situate. Upon receipt of the copy of the certificate of sale, the Registering Officer shall file the copy in his Book No.1. Therefore, the Court held on issue No.1 that when a copy of the certificate of sale is received by a Registering Officer, he should act in terms of Section 89 (4) and file the same in Book No.1. 42. The second question as framed for consideration by the Supreme Court in Shanti Devi L. Singh, in paragraph 5 of its decision was slightly different from the second question actually taken up for consideration in paragraph 7. It was whether the filing of the copy of the certificate of sale in Book No.1 within the meaning of Section 89 tantamounted to the registration of the document under the Registration Act or whether the concept of filing a copy of the certificate of sale in Book No.1 was different from the concept of registration. On this aspect, the Supreme Court found that the registration of a document under the Act is conditional on the fulfilment of several requirements laid down in Sections 32 to 35. Once a document is admitted for registration, the Registering Officer is bound to follow the procedure laid down in Sections 51 to 67. 43. After tracing the procedure for registration of a document, laid down in the Registration Act, the Supreme Court noted in paragraph 8 of its decision, the difference between the process of filing and the process of registration. They are as follows:"But there appear to be vital difference between the two processes: (i) It is the original of a document that is registered whereas only copies or memoranda are filed; (ii) The executant of a document which is required to be registered, has to present it for registration and go through the attendant and subsequent processes described above. A copy to be filed under Section 89 or memoranda that are filed under Sections 64 to 66 is simply transmitted to the concerned Sub-Registrar for being filed. Apparently, the procedure of presentation is dispensed with in regard to the latter because they are issued by public authorities discharging their official duties. (iii) Additional particulars relevant to a document admitted to registration need to be got endorsed thereon from time to time as contemplated in Sections 58 and 59 but this rule does not apply to a copy or memorandum filed under the Act. (iv) When a document is registered, the entirety of the document has to be copied out into the relevant book and the original document returned to the person who presents the document with necessary endorsements. This requirement is absent in the case of a copy or memorandum which is just filed. (v) Where a document is registered, a certificate of registration has to be issued which will be admissible to prove the due registration of the document."
44. After pointing out the above differences between the process of filing and the process of registration, the Court held in para 9 that though the processes are different, the purchaser at a Court or Revenue sale is under no disadvantage because of lack of registration, in view of the fact that under Section 17(2)(xii), the certificate of sale is not a compulsorily registrable document and consequently the transfer of title in his favour will not be vitiated by non registration. However, the Supreme Court pointed out that what the Sub-Registrar is required to do was only to file the copy of the certificate in Book No.1 and not to copy out the certificate or make any other entries in Book No.1. This, in the opinion of the Court, would be sufficient to put an intending purchaser of the very same property, on notice of the auction sale conducted by the Court or Revenue. 45. After answering the modified second issue as above, the Supreme Court took up for consideration another question in para 10 of its decision. This question was whether the certificate of sale was liable to stamp duty and if so, what the consequences were. On this question, even at the threshold, the Court upheld the view of the Delhi High Court, with reference to Sections 3 and 29 (f) read with Article 18 under Schedule I of the Stamp Act, that in the case of a certificate of sale, necessary stamp duty is to be paid by the auction purchaser, unless by a contract to the contrary, the liability is shifted to the Government. After giving a preliminary finding to the said effect in para 10 of its judgment, the Apex Court made certain important observations in para 11. Therefore it is reproduced as follows:- "11. There are two provisions in the Stamp Act which provide for the adjudication of stamp duty. Under Section 31, it is open to the executants of any document, at any stage but within the time limit set out in Section 32, to produce a document before the Collector of Stamps and require him to adjudicate on the question whether the document should bear any stamp duty. The Collector thereupon may adjudicate the stamp duty himself or refer the matter to the Chief Controlling Revenue Authority of the State. In turn, it is open to the Chief Controlling Revenue Authority to refer the matter to the High Court for an authoritative decision (Sections 32 and 56). This procedure could have been followed by the petitioners if they wished to seek an answer to the question whether the certificate of sale is liable to stamp duty but they have not done it and the time limit under Section 32 has run out. The other provision that may become applicable is Section 33. Under this section, if any document (and this includes a certificate of sale) is presented to the Registrar for registration and the Registrar is of opinion that it is a document which should bear stamp duty but that it has not been stamped, it is his duty to impound the document and send it on to the Collector of Stamps for necessary adjudication (Section 38). This contingency has also not happened. The third contingency, also provided for in Section 33 is when a party wishes to rely upon the certificate of sale as a piece of evidence before a Court or an authority entitled to take evidence. Such Court or authority will also have to impound the document and shall not admit the same in evidence unless the stamp duty chargeable and the stipulated penalty are paid. This situation has not arisen so far but may arise at some time in future. It is unnecessary to anticipate the same and decide the issue. We shall therefore leave the issue of stamp duty to be adjudicated upon in the normal course, as and when found necessary, and express no views thereon at this stage." 46. Thus the Court made it clear in para 11 of its decision that when a document including a certificate of sale is presented to the Registrar for registration and the Registrar is of the opinion that the document was liable to stamp duty, he is entitled to impound the document and send it to the Collector of Stamps for adjudication. The Court further pointed out that by virtue of Section 33 of the Stamp Act, a Court or authority will also have the power to impound the document, as and when produced as a piece of evidence and that it shall not admit the document in evidence, unless the stamp duty chargeable and the stipulated penalty are paid. 47. After steering clear of the doubt with regard to the liability to pay stamp duty even on a certificate of sale, the Supreme Court took up for consideration in para 12 of its decision, the question as to whether the Sub-Registrar has no jurisdiction to refuse registration, on the ground that the document (certificate of sale) is insufficiently stamped. On this issue, the Court held as follows:- "We should, however, like to deal with a contention raised in the grounds that even if the certificate of registration is sought to be presented for registration by the petitioners, the Sub-Registrar has no jurisdiction to refuse registration on the ground that the document is insufficiently stamped. As already pointed out, Section 17(2)(xii) of the Registration Act makes it clear that the certificate of sale issued in a Court sale or by a Revenue Officer does not need
registration. (Though this provision, like Section 89, relates only to a certificate of sale granted to the purchaser of any property sold by public auction by a Civil Court or Revenue Officer, for the same reasons as have been set out earlier, we think that the certificate issued by the TRO is also covered by this provision). It is, therefore, clear that it is not obligatory on the purchaser of property in a tax recovery sale to get the certificate of sale registered in order to perfect his title. However, if he presents the original certificate of sale to the Registration Officer for registration, the Registration Officer will have to comply with the relevant statutory provisions in this regard." 48. Thus, it is very clear that the Registration Officer has a duty to comply with the relevant statutory provisions, whenever a certificate of sale is presented to him for registration. The relevant statutory provisions, which a Registering Officer is obliged to take note of and also comply with, are not to be traced merely to the Registration Act, but also to be traced to the Indian Stamp Act. Interestingly, the decisions in B.Arvind Kumar and Shanthi Devi L.Singh were by 2 member Benches of the Hon'ble Apex Court. But the earlier decision of the 3 member Bench in Raghunath vs. Kedar Nath {(1969) 1 SCC 497} with particular reference to the amendment to section 49 of the Registration Act, was not brought to the notice of the court in both those cases. Therefore, the decision in Raghunath still holds the field. 49. The provisions of the Stamp Act and the Registration Act are not in pari materia. The Stamp Act is a purely fiscal Act providing for the payment of Government revenue, while the Registration Act has as its objective, the conservation of evidence, assurance of title, publicity of documents and prevention of fraud. The provisions of the Registration Act, do not have overriding effect upon the provisions of the Indian Stamp Act or even the Transfer of Property Act. There is no non abstante clause in Section 17(2) of the Registration Act. Therefore, it is incorrect to say that a certificate of sale need not be stamped in accordance with the Indian Stamp Act merely because it does not require compulsory registration by virtue of Section 17(2)(xii) of the Registration Act. It is equally incorrect to say that the Sub Registrar is obliged to shut his eyes to the provisions of the Stamp Act, merely because of the obligations imposed under Section 89(2) and (4) of the Act. 50. What then is the role played by the Registering Officer under Section 89 of the Registration Act ? To find an answer to this question, we may have to have a bird's eye view of the provisions of several other statutes. 51. There are provisions in very many fiscal statutes, creating a charge on the properties of the assessees, who commit default in payment of a variety of taxes. For instance, the Tamil Nadu General Sales Tax Act creates a charge under Section 24(2). The charge so created, can be communicated by the concerned Assessing Officer to the Sub Registrar of the area within whose jurisdiction the property is situate. The Sub Registrar is obliged to make necessary entries in his Books in order to enable persons who propose to deal with the properties, to have notice of the encumbrances so created on the property. Similarly, as per the Madras Amendment, an order of attachment before judgment passed under the Order 38, Rules 5 and 6 CPC are also to be communicated to the Sub Registrar under Rule 11-B. These activities will actually fall within the duties imposed upon the Sub-Registrar under Section 89 of the Registration Act. 52. The provisions of Order 21, CPC also throw some clue. Order 21, Rules 85 and 87 of the Civil Procedure Code read as follows:"85. Time for payment in full of purchase money. - The full amount of purchase-money payable shall be paid by the purchaser into Court before the Court closes on the fifteenth day from the sale of the property: Provided that, in calculating the amount to be so paid into Court, the purchaser shall have the advantage of any set off to which he may be entitled under Rule 72." "87. Notification on re-sale. - Every re-sale of immovable property, in default of payment of the purchase-money within the period allowed for such payment, shall be made after the issue of a fresh
proclamation in the manner and for the period hereinbefore prescribed for the sale." 53. But the High Court (Madras) Amendment to Rules 85 and 87 brought about a change, so as to include a liability on the Court auction purchaser to pay, along with the purchase-money, the amount intended for general stamp. Therefore in their application to the State of Tamil Nadu, Order 21, Rules 85 and 87 would read as under:- "85. Time for payment in full of purchase money and of stamp for certificate of sale. The full amount of purchase-money payable and the general stamp for the certificate under Rule 94 or the amount required for such stamp, shall be deposited into Court by the purchaser before the Court closes on the fifteenth day from the sale of the property: Provided that in calculating the amount of purchase money to be so deposited, the purchaser, shall have the advantage of any set-off to which he may be entitled under Rule 72. 87. Notification on re-sale. - Every re-sale of immovable property, in default of payment of the amounts mentioned in Rule 85 within the period allowed for such payment, shall be made after the issue of a fresh proclamation in the manner and for the period hereinbefore prescribed for the sale." 54. The State Amendments to Order 38, Rule 11-B, CPC correspond to the State Amendments to Section 89-A of the Registration Act. Even other States have brought about similar amendments, to clear the confusion. Thus a liability to pay stamp duty is spelt out even in Order 21, Rules 85 and 87. Therefore, the non applicability of the requirement of compulsory registration to a certificate of sale, in view of Section 17(2)(xii) of the Registration Act, cannot be construed to mean that the requirement to pay stamp duty is also dispensed with. Such an interpretation would lead to a disastrous conclusion that Section 17(2) of the Registration Act, overrides - (a) Section 3 read with Articles 18 and 23 of Schedule I of the Indian Stamp Act and (b) paragraph-2 of Section 54 of the Transfer of Property Act, 1882. 55. As stated earlier, there is not even a non abstante clause in Section 17(2) of the Registration Act. Therefore, Section 17(2) cannot be taken to exclude the operation of the provisions of the Stamp Act and the Transfer of Property Act, in so far as certificates of sale are concerned. On the other hand, it was by the Transfer of Property (Amendment) Supplementary Act, 1929 (Act 21 of 1929), that both Section 4 of the Transfer of Property Act and Section 49 of the Registration Act were amended. 56. There is one more crucial issue. Section 17(2)(xii) refers only to a Certificate of Sale granted to the purchaser of a property in public auction by a Civil or Revenue Officer. Section 89(4) uses the term "Revenue Officer" alone. The question as to who is a Civil or Revenue Officer, did not fall for consideration either in the decision of the Division Bench in K. Chidambara Manickam or in any other decision. The only case where this question was considered, was in Shanti Devi L. Singh. But in that case, the Supreme Court was concerned with a sale made by the Tax Recovery Officer of the Income Tax Department. Since the Tax Recovery Officer was collecting the revenue due to the Government, by selling the property of the Assessee in public auction, the Supreme Court extended the meaning of the term "Civil or Revenue Officer" to a Tax Recovery Officer in Shanti Devi L. Singh case. If a person selling a property in public auction is not a "Civil or Revenue Officer", the sale made by him will not fall under Section 17(2)(xii). If he is not a "Revenue Officer", it will not also fall under Section 89(4). 57. The term "Revenue Officer" is defined in "Advanced Law Lexicon by P.Ramanatha Iyer" as "an Officer employed in or about the business of any branch of the public revenue". This definition was culled out from the Explanation to Section 125 of the Indian Evidence Act, 1872. In Sheopatsingh vs. Harishchandra {AIR 1958 Rajasthan 324}, it was held that the term "Revenue Officer" will include such Officers of the Income Tax, Sales Tax and Irrigation Department. Again in Gopi Parshad vs. State of Punjab {AIR 1957 Pun. 45}, it was held that the expression 'revenues' means "the income of the nation derived from its taxes, duties or other sources, for the payment of the nation's expenses". It is a term generally used in referring to income of a Government or governmental sub
division and as so used means all the public moneys which the State collects and receives from whatever source and in whatever manner. In Kishore Chandra Deo Bhanj vs. Raghunath Misra {AIR 1959 SC 589}, the Village Accountants were also held to be Revenue Officers. 58. Similarly, the term "Civil Officer" is defined in "Advanced Law Lexicon by P.Ramanatha Iyer" as "any Officer holding appointment under the Government except in the Military or Naval Service, whether the duties are Executive or Judicial or in the highest or the lowest departments". The term "Civil Officer" has to be understood only in the context of "civilians" as opposed to persons in Military Service. It is doubtful, if an Official Liquidator can be equated to a Civil Officer or a Revenue Officer, so as to make the certificate of sale issued by him come within the purview of Section 17(2)(xii) of the Registration Act, 1908. I do not think that an Official Liquidator can be considered to be a "Revenue Officer" within the meaning of Section 89(4) since he is not collecting revenue for the Government. Even assuming for the sake of argument that he can be equated, Article 18 under Schedule-I of the Indian Stamp Act makes a certificate of sale issued by a Revenue Officer also liable to stamp duty. The term "Revenue Officer" appearing both in Article 18 under Schedule-I of the Indian Stamp Act and also in sections 17(2)(xii) and 89(4) of the Registration Act, are to be given the same meaning and to be construed to indicate the same person. 59. Therefore, the only conclusion that one can draw by a combined reading of the provisions of the Transfer of Property Act, 1882, the Indian Stamp Act, 1899 and the Registration Act, 1908 is that by whatever name the instrument is called (whether certificate of sale or Sale Deed), the instrument is chargeable with stamp duty, under Article 18 read with Article 23 of Schedule I to the Stamp Act. While the Official Liquidator can leave the choice to the auction purchaser to choose the title to or the nomenclature of the document, neither he nor the purchaser has any choice with regard to the liability to pay stamp duty. 60. In view of the above, this application is disposed of, with a direction to the Official Liquidator to issue a certificate of sale or execute a Sale Deed, as per the choice of the auction purchaser. But while doing so, the Official Liquidator shall indicate that the auction purchaser is obliged to pay stamp duty for the sale value, calculated at the rate prescribed in Article 18 read with Article 23 of Schedule I to the Stamp Act, in the case of a certificate of sale or at the rate prescribed in Article 23 in the case of a Sale Deed. The Official Liquidator shall also put the auction purchaser on notice that if they do not pay stamp duty and do not choose to have the document registered, it may become inadmissible in evidence, in view of section 35 of the Stamp Act and Section 49 of the Registration Act Henceforth, the Official Liquidator shall also indicate in the Tender Notifications and Forms that necessary stamp duty is payable as per the provisions of Article 18 read with Article 23 of Schedule I to the Stamp Act. 61. The application is disposed of with the above directions. No costs. Svn
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In Re vs Unknown on 23 December, 2009