Sale Certificate Issued After Court Auction Not Compulsorily Registrable; Auction Purchaser Need Not Deposit Stamp Duty To Get It : Supreme Court
The Supreme Court observed that the successful auction purchaser doesn't need to deposit stamp duty for the issuance of a sale certificate pursuant to the auction done in a court proceedings. The Court clarified that the stamp duty would be payable only when the auction purchaser uses the certificate for some other purpose, but not when the certificate remains as it is.
“The position of law discussed above makes it clear that sale certificate issued by the authorised officer is not compulsorily registrable. Mere filing under Section 89(4) of the Registration Act itself is sufficient when a copy of the sale certificate is forwarded by the authorised officer to the registering authority. However, a perusal of Articles 18 and 23 respectively of the first schedule to the Stamp Act respectively makes it clear that when the auction purchaser presents the original sale certificate for registration, it would attract stamp duty in accordance with the said Articles. As long as the sale certificate remains as it is, it is not compulsorily registrable. It is only when the auction purchaser uses the certificate for some other purpose that the requirement of payment of stamp duty, etc. would arise.”, the bench comprising Justice JB Pardiwala and Justice R Mahadevan said.
Also, the Court held that the sale certificate issued by the public authority would not require registration under Section 17(1) of the Registration Act because the certificate doesn't transfer the title but is merely evidence of a title.
“The position of law is thus settled that a sale certificate issued to the purchaser in pursuance of the confirmation of an auction sale is merely evidence of such title and does not require registration under Section 17(1) of the Registration Act. It is not the issuance of the sale certificate which transfers the title in favour of the auction purchaser. The title is transferred upon successful completion of the sale and its confirmation by the competent authority after all the objections against the sale have been disposed of.”, the Court said.
The case involves M/s Punjab United Forge Limited, ordered to be wound up by the Company Judge, with IFCI authorized to sell its mortgaged properties. Respondent-M/s Ferrous Alloy Forgings Pvt. Ltd. won the auction, and the sale was confirmed by the liquidator and High Court. When the respondent applied for a sale certificate, the Registrar demanded stamp duty on a higher valuation, prompting the respondent to challenge this through a writ petition.
The High Court ruled in favor of the respondent, stating that a sale certificate does not require stamp duty at the time of issuance.
Aggrieved, the State appealed to the Supreme Court, which considered whether stamp duty is mandatory for issuing a sale certificate under the Stamp Act and Registration Act. The Court upheld the High Court's findings, clarifying that the sale certificate is evidence of title but does not transfer it. The title passes upon the sale's confirmation by the competent authority.
Citing Municipal Corporation of Delhi v. Pramod Kumar Gupta (1991), the Court reiterated that sale certificates neither transfer title nor require stamp duty. It also referenced M/s Esjaypee Impex Pvt. Ltd. v. Canara Bank (2021) and Inspector General of Registration v. G. Madhurambal (2022), affirming that filing the certificate under Section 89(4) suffices for registration.
The appeal was dismissed.
Appearances:
For Petitioner(s) Mr. Karan Sharma, AOR Mr. Abhishek Budhiraja, Adv.
For Respondent(s) Mr. Siddharth Batra, AOR Mr. Rhythm Katyal, Adv. Mr. Samar Ahluwalia, Adv. Ms. Archna Yadav, Adv. Mr. Chinmay Dubey, Adv. Ms. Shivani Chawla, Adv. Mr. Ayushmaan Bhutani, Adv.
Case Title: THE STATE OF PUNJAB & ANR. VERSUS M/S FERROUS ALLOY FORGINGS P LTD. & ORS.
Citation : 2024 LiveLaw (SC) 920