Conclusion: The Future Of Sale Certificate Registration Under SARFAESI

Major issues:

Issue 1: Whether the “authorized officer” defined under Rule 2(a) of the Rules, 2002 can be equated with a Civil or Revenue Officer for the purpose of Sections 17(2)(xii) and 89(4) of the Registration Act, 1908?

Issue 2: Whether a Sale Certificate issued by the Authorized Officer under the provisions of the SARFAESI Act read with Rules, 2002 requires registration?

Relevant Legal Provisions:

• Rule 2(a) of the Security Interest (Enforcement) Rules, 2002 provides that
  1. “Authorized officer” means an officer not less than a chief manager of a public sector bank or equivalent, as specified by the Board of Directors of

Board of Trustees of the secured creditor or any other person or authority exercising powers of superintendence, direction and control of the business or affairs of the secured creditor, as the case may be, to exercise the rights of a secured creditor under the Act.”²

• Rule 9(6) of the Security Interest (Enforcement) Rules, 2002 provides that

“9. Time of sale, issue of Sale Certificate and delivery of possession, etc.

(6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the Authorized Officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the Form given in Appendix V to these rules.”³

• Section 17(2)(xii) of the Registration Act, 1908 provides that

“17. Documents of which registration is compulsory

(2) Nothing in clauses (b) and (c) of sub-Section (1) applies to—

(xii) any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue-Officer.”⁴

• Section 89(4) of the Registration Act, 1908 provides that

“89. Copies of certain orders, certificates and instruments to be sent to registering officers and filed. —

(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 immovable property comprised in the certificate is situate, and such officer shall file the copy in his Book No. 1.”⁵

Analysis: Issue 1

Authorized Officers under the SARFAESI Act:

• The legal debate surrounding the issuance of Sale Certificateby Authorized Officer under SARFAESI Act has to be compulsorily registrable or not under the Registration Act stems from the various conflicting judgments of High Courts on whether such Authorized Officer would come under the ambit of “Civil or Revenue Officer” or not. However, it is pertinent to mention that no statute defines the term Civil Officer or Revenue Officer. Therefore, every court has gone through their interpretation of the term while deciding the disputed stance.
• In the ruling by the Madhya Pradesh High Court in Mid India Power and Steel Ltd. v.

M.P. Audyogik Kendra Vikas Nigam (Indore) Ltd^.6, the court adopted a literal interpretation of the term assigned to the meaning of Civil and Revenue Officer and held that Section 17(2)(xii) of the Registration Act does not include Authorized Officer as defined under the Rule 2(a) of the Rules, 2002 within the ambit of the term Civil or Revenue Officer.

• Similar view was taken by the Madras High Court in R. Thiagrajan v. Inspector General of Registration⁷ where it was made explicitly clear that Sale Certificateshall not require registration if it is issued by either the court or the court officer.
• Building upon these rulings, the Andhra Pradesh High Court while following the ratio of Mid India Power and R. Thiagrajan, observed in Munirathnam Reddy Kamsani v. District Registrar⁸, the judicial restraint in bringing the Authorized Officer into the definition of Civil or Revenue Officer. Due to the silent legislative approach regarding the definitions of Civil and Revenue Officers, various High Courts have interpreted the term in its strict sense, thus, leaving no scope for the inclusion of Authorized Officers within the ambit of Civil Officer or Revenue Officer.

• The judgment in R. Thiagrajan was overruled in Esjaypee Impex, wherein it was held that an Authorized Officer of the Bank under the SARFAESI Act would be a Revenue Officer in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act.

Authorized Officer under other statutes:

• Statutes such as Income Tax Act, 1961, Recovery of Debts Due to Banks Act, 1993, Insolvency and Bankruptcy Code, 2016, have recognised the role of officer authorized under the provision of these statutes as of a Civil officer or a Revenue officer. For instance, in the context of RDB Act, the Madras High Court in Meera Thinakaram v. State of Tamil Nadu⁹, highlighted that a Sale Certificateissued under the Income Tax Rules by the Tax Recovery Officer serves merely as a document evidencing the conveyance that has already taken place. Therefore, such certificates do not necessitate registration under the Registration Act.
• With regards to the registration of the Sale Certificateby the Tax Recovery Officer, the Supreme Court in Shanti Devi L. Singh v. Tax Recovery Officer¹⁰, unequivocally stated that certificate of sale issued in a court sale or by a revenue officer (in this case, a Tax Recovery Officer) does not need registration. It was opined that the term 'Revenue Officer' is wide and comprehensive enough to include the Tax-Recovery Officer who effects a compulsory sale for the recovery of an income-tax demand.

Issue 2:

• In B. Arvind Kumar v. Government of India and others, the Supreme Court, while referring to Section 17(2)(xii) of the Registration Act, held that when a property is sold in public auction in pursuance of an order of the Court and the bid is accepted and the Court confirms the sale in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser.

• In the recent judgment of the Supreme Court in Esjaypee Impex, it was held that as per the procedural requirements as envisaged under both the Acts, Section 89(4) read with Section 17(2)(ii) of the Registration Act only requires the Authorized Officer to forward a copy to the Registering Authority for the purpose of filing in Book I.
• Following this judgment, the Supreme Court in Realty Associates v. General Manager and Authorised Officer¹¹, extended its view and observed that filing of such certificate under Section 89 has the same effect as registration and thus, does not require further action by such Authorised Officer. These cases were upheld in Inspector General of Registration v. G. Madhurambal.¹²

In resolving conflicting judgments of High Courts, the Supreme Court's view in Esjaypee Impex has been deemed to be the definitive approach on the issuance of Sale Certificates by Authorized Officers being exempt from registration under Section 17(2)(xii) in conjunction with Section 89(4) of the Act. Similar view was taken by the Apex Court in Inspector General of Registration

v. G. Madhurambal¹³, clarifying that filing of such certificates holds the same effect of registration under the Act. Subsequently, in the Bell Towers Enterprises LLP v. State of Tamil Nadu¹⁴, while adjudicating a refund request for registration charges, Madras High Court upheld the view taken in Esjaypee Impex and held the registration of the sale certificates to be exempted. Furthermore, the Andhra Pradesh High Court in the recent ruling of Pavan Chandra Chit Fund v. Union of India¹⁵ reaffirmed the said view and directed the bank's Authorized Officer to forward the copy of the certificate of sale without any registration charge under the Registration Act, 1908.

Views are personal.

1 (2021) 11 SCC 537

2 Rule 2(a) of the Security Interest (Enforcement) Rules, 2002.

3 Rule 9(6) of the Security Interest (Enforcement) Rules, 2002.

4 Section 17(2)(xii) of The Registration Act, 1908.

5 Section 89(4) of the Registration Act, 1908.

6 2010 SCC OnLine MP 40.

7 2019 SCC OnLine Mad 9085.

8 2020 SCC OnLine AP 991.

9 2012 SCC OnLine Mad 1046.

10 (1990) 3 SCC 605.

¹¹ 2021 SCC OnLine SC 3522.

¹² 2022 SCC OnLine SC 2079.

¹³ Ibid.

¹⁴ 2022 SCC OnLine Mad 8784.

¹⁵ 2024 SCC OnLine AP 777.