Auction Purchaser Not Liable To Registration Fees/ Stamp Duty U/S Section 89(4) Of Registration Act: Madras High Court

As contemplated under Section 89(4), when a copy of the sale certificate is submitted to the registering officer for the purpose of filing it in Register of non-testamentary documents, such officer cannot refuse to file the same on the grounds of non-payment of stamp duty and registration fees. This is because the sale certificate in itself does not operate as as a conveyance of the property, the court clarified.

Relying on the judgment in N.Naresh Kumar v. The Inspector General of Registration, Chennai and Anr, 2018 Justice G.K. Ilanthiraiyan noted:

"The Hon'ble Division Bench of this Court concluded that as long as the sale certificate remains as it is, it is not compulsorily registrable. If the documents are used for any other purpose, it requires stamp duty. The Section 89(4) contemplates only filing of the sale certificates and therefore, the question of stamp duty does not arise."

The petitioner, Tripower Enterprises Private Limited, upon State Bank of India's (Second Respondent) sale notice under SARFAESI Act, became the highest bidder for the property concerned. Accordingly, a sale certificate was issued in its favour and was sent to the Sub Registrar, Neelangarai for filing under Section 89(4).

Rejecting the request, Sub Registrar passed an order directing to pay the stamp duty of Rs.25,56,050/- and a sum of Rs.14,60,600/- as registration fees.

It is this order that was challenged by the petitioner. Such payment of fees on the auction purchase value of the property that's subject matter of the sale certificate is not envisaged under Section 89(4), he argued.

Relying on B. Arvind Kumar v. Government of India & Ors, 2007, the petitioner contended that 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 the Act. Unless it's presented for registration under Section 23 or Section 25 of Registration Act, payment of stamp duty under Article 18 of the Stamp Act does not arise as per the petitioner.

The court accepted this argument of the petitioner in its decision.

In B. Arvind Kumar v. Government of India & Ors, the Apex Court had noted that once the sale of the public auction property is confirmed, "it becomes absolute and the title vests with the auction purchaser. The subsequent sale certificate issued to the purchaser is the evidence of such title which does not require registration under Registration Act."

In its order, the court also relied on Rule 200(1) of the Civil Rules of Practice and Circular Orders and the Supreme Court order in Esjaypee Impex Pvt. Ltd v. Asst. General Manager and Authorized Officer, Canara Bank to underline that the only requirement under the Act is for the court/ officer authorised by court to hand over the sale certificate to auction purchaser and forward a copy thereof to the registering authorities to be filed in Book No.1.

"As such when the purchaser goes for the registration of the original sale certificate issued by the Court Officer, Article 18 of the Indian Stamp Act would be attracted and stamp duty is to be paid as per Article 23 of the Registration Act treating it as conveyance namely auction purchase value of the property. But when a copy of the sale certificate presented before the first respondent not for the purpose of registration but only for purpose of filing it by the first respondent in his office as contemplated under Section 89(4) of the Registration Act", the court said in its order.

The court, therefore, allowed the writ petition to quash the Sub Registrar's order as illegal and to file the sale certificate in Book No. 1 according to Section 89(4) of the Registration Act.

Case Title: Tripower Enterprises (Private) Limited, Represented by its Chief Executive v. The Sub Registrar, Neelangarai & Anr.

Case No: W.P.No.34249 of 2018