By TIOL News Service

CHENNAI, OCT 07, 2016: THE ISSUE IS - Whether registration of 'sale certificate' of a mortgaged property sold by a bank in an auction sale, in compliance with the provisions under the Registration Act, can be denied by the Sub Registrar on mere ground of attachment of such property. NO IS THE VERDICT.

Facts of the case:

A property being vacant plot bearing Plot No.39 "FLOS CARMELI", Pondicherry Revenue Village, was attached by the Tax recovery officer for the alleged tax dues of Smt. Devaki and the said attachment was recorded in the books of the Sub-registrar of Puducherry. Originally, the said property was owned by Smt Devaki, who mortgaged it by depositing the original title deeds with the assessee Bank with an intention to create mortgage to secure the facilities availed by her concerns, for the total existing limit of Rs.37.50 crores. Accordingly, the credit facilities availed by Devaki and her family concerns were enhanced to a total limit of Rs.54 crores and the mortgage of the said property stood extended for the enhanced limits by a constructive deposit. During the subject year, the business concerns of Devaki committed default in repayment of the dues after having availing huge credit limits in the name of her concerns. On account of default in payment of dues, the assessee being the mortgagee, initiated proceedings against various mortgaged properties, including the subject property under SARFAESI Act. Accordingly, the subject property was brought for sale by publishing E-Auction Sale Notice and the reserve price for the said property was fixed as Rs.1,36,00,000/-. Pursuant to the E-Auction Sale Notice, bids were submitted by prospective purchasers and accordingly auction was confirmed in favour of one Mr.Abdul Kader being the highest bidder for the said property at Rs.1,38,00,000/-, who paid the entire bid amount. Accordingly, the assessee Bank issued a Sale Certificate to Mr. Kadar. When the Sale Certificate was presented for registration with Smt.Devaki, she refused to entertain the same stating that the Tax recovery officer had passed an order of attachment against the said property. In pursuence of the same, the assessee had preferred the present petition seeking issuance of Mandamus, to direct the Sub-registrar to receive, register and return the Sale Certificate within a time frame.

On appeal, the High Court has held that:

++ this is well settled principle of law that the order of attachment cannot be a bar to register the document. It is clear that the sale of any property, pending the order of attachment, is void only as against the claims enforceable under the order of said attachment and not in respect of other claims. Hence, if a document is presented for registration in compliance with the provisions under the Registration Act, the Sub Registrar cannot deny the registration of the same unless there is interim order from the competent Court restraining him from registering the document and he is empowered to deny the registration of the document within the frame of provisions of the Registration Act and Rules framed thereunder, particularly, on the grounds enunciated under Rule 55, viz., if the document is forged, impersonation by the parties, if the executing party is a minor or a lunatice, etc. Therefore, in the absence of any interim order from the competent Court nor any of the grounds available under Rule 55, the Sub Registrar cannot deny the registration.

(See 2016-TIOL-2399-HC-MAD-IT )