Rule Empowering Registrar To Refuse Registration Of Property Under Mortgage, Attachment Beyond Scope Of Parent Act: Madras High Court

Rule 55A which was notified on 9th September 2022 by the Inspector General of Registration by exercising power under the Registration Act lists out circumstances where the Registrar may refuse to register a sale deed. The first proviso says that in case an encumbrance as to mortgage, orders on attachment of property, sale agreement or lease agreement exists over the property, the registering officer shall not register such document if the time limit for filing of suit is not lapsed, or No Objection Certificate is not granted by the appropriate authority or raising of the attachment is not done, as the case may be.

Justice N Sathish Kumar observed that the authorities under the Registration Act did not have such powers to make rules which directly went against the objectives of the parent acts such as the Transfer of Property Act and the Registration Act.

The authorities under the Registration Act have no jurisdiction to make rules which have the direct and immediate effect of restraining transactions which are permitted under the Transfer of Property Act. Such a restriction would be clearly illegal and violative of a citizen’s right to deal with his property and would clearly infringe Article 300-A of the Constitution.

The court noted that even before the insertion of Rule 55A, a similar challenge to the power of the registrar to refuse registration was made in which a division bench of the court had held that the registering authority cannot bar the transfer of property citing registration of a sale or lease agreement. This view was upheld by the Supreme Court also. Thus, according to the court, the insertion of the new rule was an “arbitrary exercise” aimed at setting at naught the declaration of law by the division bench.

Thus, when the legal position has already been declared by the Division Bench of this Court and has been affirmed by the Supreme Court it is not open to the Inspector General of Registration to take a contra view and notify a subordinate legislation the effect of which is to completely render nugatory to the interpretation made by this Court. Ex-facie, the first proviso to Rule 55-A (i) is clearly illegal and is vitiated by a clear abuse of power.

The court further held that the new Rule would lead to absurd results as the persons may not be in a position to present the original document of the property always. Similarly, when an order of attachment, subsequent registering of sale deed would be void only against the claim enforceable. However, the new Rule had the effect the nullifying the entire sale.

Similarly, the court added that the second proviso which requires executant to produce revenue records to show right over the property was also improper as revenue records were not documents of title. The third proviso which required executant to obtain a non-traceable certificate and effect paper publication also defied logic as per the court.

Facts of the Present Case

In the present case, the petitioner Federal Bank had initiated action under the SARFAESI Act and sold the subject property through public auction after the respondent failed to repay the loan amount. When the sale certificate was presented for registration, the Registering authority rejected the request on the ground that the property was provisionally attached under Section 83 of the GST Act in 2021.

The court noted that in the present case, the petitioner was a prior mortagagee in 2017 whereas the provisional attachment by the GST authorities was made only in 2021. Even the order of provisional attachment which was valid only for a period of one year had now lapsed.

Thus, the court noted that the impugned order was liable to be quashed. The authorities could not refuse to register the sale certificate. The court thus quashed the impugned order and directed the authorities to register the sale certificate within a period of 15 days.

Case Title: The Federal Bank Ltd. V The Sub Registrar and others

Citation: 2023 LiveLaw (Mad) 52