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Bell Tower Enterprises LLP, Rep. by its Managing Partner, P. Anand v/s The State of Tamil Nadu, Rep by its Secretary to Government, Commercial Taxes and Registration Department, Secretariat, Chennai & Others

    W.P. No. 23237 of 2018
    Decided On, 12 September 2022
    At, High Court of Judicature at Madras
    By, THE HONOURABLE MR. JUSTICE R. SUBRAMANIAN
    For the Petitioner: Sharath Chandran for Govind Chandrasekhar, Advocate. For the Respondents: V. Yamunadevi, Special Government Pleader.


Judgment Text
(Prayer: Writ Petition filed under Article 226 of the Constitution of India seeking issuance of Writ of Mandamus, to direct the respondents 1 and 2 to refund the excess stamp duty and registration charges amounting to Rs.19,72,620/- paid by the petitioner for registration of sale certificates before respondents 3 to 7, the details of which are set out in the representation of the petitioner dated 30.07.2018.)

The petitioner seeks a Writ of Mandamus directing the respondents 1 and 2 to refund the excess stamp duty and registration charges amounting to RS.19,72,620/- which, according to the petitioner, has been collected in excess by the respondents while registering the sale certificates issued by the Assistant General Manager of State Bank of India in its capacity as the Authorised Officer under the SARFAESI Act under Rule 9(6) of the Security Interest (Enforcement) Rules 2002.

2. It is the claim of the petitioner that the petitioner emerged as a successful bidder in the e-auctions conducted by the authorised officer of the State Bank of India and was favoured with six Sale Certificates for various properties purchased by the petitioner in the said auction. While registering the documents, the respective Registering Officers have collected Stamp Duty at 7% and registration charges at 4% for each of the sale certificates. According to the petitioner, the collection of stamp duty under Article 23 of the Stamp Act, treating the sale certificate issued as a conveyance itself is erroneous and the respondents ought to have collected stamp duty at 5% under Article 18 of the Stamp Act. According to the petitioner, the sale certificate issued by the Authorised Officer under the SARFAESI Act would not amount to a conveyance as defined under Article 23 of the Stamp Act. It could at best be treated as a certificate of sale granted by a Revenue Officer which would fall within Article 18 of the Indian Stamp Act.

3. Upon discovery of the fact that excess amount has been collected, the petitioner made a representation on 30.07.2018 seeking refund of the excess stamp duty and registration charges paid to the tune of Rs.19,72,760/-. Separate memos of calculation explaining, as to how, excess stamp duty and registration charges has been collected were also sent along with a said representation. Since there was no response, the petitioner has come up with the above Writ Petition.

4. Though no counter has been filed by the respondents this being a strictly legal issue, the Writ Petition was heard on merits.

5. Mr.Sharath chandran, learned counsel appearing for the petitioner would submit that a Sale Certificate issued by an Officer authorised by a Bank under the provisions of the SARFAESI Act, would be akin to a sale by a Revenue Officer which would fall within Section 89(4) of the Registration Act. Therefore, according to the learned counsel, registration of such document is not mandatory in view of the provisions of Section 17(2)(xii) of the Registration Act. The learned counsel would, however, submit that if such certificate is presented for registration, the Stamp Duty payable would be only at the rate of 5% and not at the rate of 7%. It is also the further contention of the learned counsel that the Registration Charges collected at 4% of the value is also incorrect and the registration charges payable could only be 1% as per Article 1 of the table of fees prescribed by the State Government under Section 78 of the Registration Act. The learned counsel would further point out that the proviso which has been included by G.O.Ms.No.49 dated 08.06.2017 would not apply to a sale certificate issued by the authorised officer and therefore, collection of 4% as Registration charges is wholly unjust.

6. Contending that a Writ of Mandamus seeking refund of tax collected by mistake would lie, the learned counsel appearing for the petitioner would invite my attention to the judgment of the Hon’ble Supreme Court in M/s.D.Cawasji & Co and others v. State of Mysore and Another, reported in (1975) 1 SCC 636, wherein the Hon’ble Supreme Court had held that a Writ Petition for refund of tax collected in excess under mistake would lie, if it is filed within a period of three years from the date of discovery of the mistake.

7. Contending contra, Mrs.V.Yamunadevi, learned Special Government Pleader would submit that a Division Bench of this Court in The Inspector General of Registration v. Kanagalakshmi Ganaguru, reported in 2017 (5) LW 228, has held that a certificate of sale issued by an authorised officer under the SARFAESI Act, cannot be treated as a certificate of sale issued by a Collector or a Revenue Officer in order to attract Section 89 (4) of the Registration Act. On the same analogy, she would contend that Section 17(2)(xii) of the Registration Act, would also not apply and thus a certificate of sale issued by an authorised officer of a Bank would only be a conveyance which is chargeable for duty under Article 23 of the Stamp Act and the Registration charges should be paid treating it as a conveyance.

8. The learned Special Government Pleader would also draw my attention to the decision of the Full Bench of this Court in Dr.R..Thiagarajan v. Inspector General of Registration, reported in AIR 2019 Mad 274, she would also point out that the judgment of the Division Bench in The Inspector General of Registration v. Kanagalakshmi Ganaguru’s case, referred to supra, has been approved by the Full Bench in Dr.R..Thiagarajan v. Inspector General of Registration‘s case. She would further point out that in The Inspector General of Registration v. Prakash Chand Jain, reported in 2021 SCC online Mad 12581, a Division Bench of this court has followed the judgment of the Full Bench and held that the sale certificate issued by the Authorised Officer of the Bank is liable to stamp duty under Section 23 of the Stamp Act, and in the event of under valuation of the property, the Registering Officer is entitled to proceed under Section 47(A) of the Stamp Act.

9. Countering the said submissions of the learned Special Government Pleader based on the judgment of the two Division Benches and the Full Bench of this Court, Mr.Sharath Chandran, learned counsel would submit that the judgments of the Division Bench and the Full Bench in The Inspector General of Registration v. Kanagalakshmi Ganaguru’s case and Dr.R..Thiagarajan v. Inspector General of Registration’s case, stood over ruled by the judgment of the Larger Bench of the Hon’ble Supreme Court in Esjaypee Impex Pvt Ltd v. Assistant General Manager and Authorised Officer, Canara Bank, reported in 2021 (11) SCC 537, the learned counsel would place considerable reliance on the following passage in Esjaypee Impex Pvt Ltd, in support of his contention:

“16. We are of the view that the mandate of law in terms of Section 17(2) (xii) read with Section 89(4) of the Registration Act, 1908 only required the authorised officer of the Bank under the SARFAESI Act to hand over the duly validated sale certificate to the auction-purchaser with a copy forwarded to the registering authorities to be filed in Book I as per Section 89 of the Registration Act.”

10. The question that was posed before the Hon’ble Supreme Court was, as to whether, anything remains to be done after the issue of the sale certificate in a sale held under the provisions of the SARFAESI Act. While reacting to the submissions of the learned counsel for the Bank that the certificate has to be handed over to the Registering Authority for registration and payment of stamp duty, the Hon’ble Supreme Court has observed as above, stating that in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act, the Authorised Officer is only required to hand over the duly validated certificate of sale to the auction purchaser and forward a copy to the registering authority to be filed in Book-I in terms of Section 89 of the Registration of Act.

11. According to Mr.Sharath Chandran, the above decision of the Hon’ble Supreme Court makes it clear that a sale by an Authorised Officer of the Bank under the provisions of the SARFAESI Act, should be considered or treated as a sale by a Revenue Officer under Section 17(2)(xii) and Section 89 (4) of the Registration Act. Elaborating further the learned counsel would submit that this view of the Hon’ble Supreme Court is diametrically opposed to the conclusions of the Division Bench in The Inspector General of Registration v. Kanagalakshmi Ganaguru’s case and the Full Bench in Dr.R..Thiagarajan v. Inspector General of Registration’s case.

12. Let me now consider the provisions of the Registration Act and the Stamp Duty which would stand attracted in the case on hand. Section 17(2)(xii) of the Registration Act, reads as follows:

“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.”

Section 89 (4) of the Registration Act, reads as follows:

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

(4) Every Revenue Officer granting a certificate of the 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 property comprised in the certificate is situate, and such officer shall file the copy in his Book No. 1.”

13. A reading of Section 17(2)(xii) would show that a certificate of sale issued by a Civil or a Revenue Officer in evidence of a sale conducted by way of public auction is not compulsorily registrable. Section 89(4) imposes an obligation on the Revenue Officer, who conducts an auction sale to forward the certificate to the Registering Authority to enable him to file the same in Book-I maintained by him. Article 18 of the Stamp Act, deals with payment of duty on a certificate of sale and Article 23 of the Stamp Act, deals with payment of duty on a conveyance. If a direct question is to be posed, as to whether, a certificate of sale issued by a Court or a Revenue Officer, if evidence of a sale conducted by public auction requires registration or not, the answer has to be a firm 'no'. This would be the natural inference from a reading of the provisions extracted above.

14. The other question that may arise is who is a Civil or a Revenue Officer, the term Civil or a Revenue Officer has not been defined either under the Stamp Act or under the Registration Act. We have to necessarily fall back upon the precedents available in order to ascertain, as to whether an officer authorised by a Bank to conduct a sale under the provisions of the SARFAESI Act, could be termed as a Civil or a Revenue Officer. It is pointed out that the bar that this question is no longer res integra. The earliest decision of the Hon’ble Supreme Court on this issue could be found in Shanti Deevi L Singh v. Tax Recovery Officer, reported in 1990 (3) SCC 605, wherein the Hon’ble Supreme Court pointed out the procedure for filing of a certificate of sale issued by a Tax Recovery Officer and the Court after considering the provisions of Section 89(4) held that a Tax Recovery Officer under the Income Tax Act would be a Revenue Officer and the certificate of sale issued by him is not compulsorily registrable. In doing so, the Hon’ble Supreme Court held as follows:

“6. …..In our opinion, there is no need to read the term 'revenue officer' in any restricted sense and that it is wide and comprehensive enough to include the T.R.O. who effects a compulsory sale for the recovery of an income-tax demand. We are therefore clear that, in the present case, the registration officer has to act in terms of S. 89(4) of the Indian Registration Act read with rule 21 of the ITCP rules. This is to file the copy of the certificate of sale received by him from the T.R.O. in his Book No. 1.”

15. In B.Arvind Kumar v. Govt. of India and others, reported in 2007 (5) SCC 745, the scope of Section 17(2)(xii) of the Registration Act was considered and the Hon’ble Supreme Court held that a sale certificate is merely an evidence of title and it does not convey title. The Hon’ble Supreme Court while dealing with the nature of the document namely a sale certificate observed as follows:

“12. ….When a property is sold by public auction in pursuance of an order of the court and the bid is accepted and the sale is confirmed by the court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such title. It is well settled that when an auction purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the court is contemplated or required. In this case, the sale certificate itself was registered, though such a sale certificate issued by a court or an officer authorized by the court, does not require registration. 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 sub-section (b) and (c) of Section 17(1) of the said Act. We therefore hold that the High Court committed a serious error in holding that the sale certificate did not convey any right, title or interest to plaintiff's father for want of a registered deed of transfer.”

16. A Division Bench of this Court in K.Chidambara Manickam v. Shakeena & Ors, reported in AIR 2008 Madras 108, held that a sale certificate issued under Rule 9(7) of the Security Interest (Enforcement) Rules 2002, is a complete and absolute sale and it does not require anything to be done in furtherance of it. In doing so, the Division Bench observed as follows:

“10.20. In view of our finding on this point, we hold that the sale of the secured asset in public auction as per Section 13(4) of SARFAESI Act, which ended in issuance of a sale certificate as per Rule 9(7) of the Rules is a complete and absolute sale for the purpose of SARFAESI Act and same need not be registered under the provisions of the Registration Act.”

17. The effect of a sale certificate issued by a Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, was considered by this Court in Dr.Meera Thinakaran v. The State of Tamil Nadu & Ors, reported in AI 2013 Madras 73, wherein it was held that a sale certificate issued under Rule 65 of the Income Tax Rules, is only a document evidencing the conveyance that had already taken place and the same does not require registration. It was also held that no surcharge could be levied under Section 116-A of the Tamil Nadu District Municipality Act on such an instrument. A Division Bench of this Court in P.M.Associates, Udhagamandalam v. IFCI Limited, reported in 2013 (5) CTC 337, while concluding that the sale certificate is absolute and the same cannot be cancelled by the authorised officer pointed out that the document has to be registered, since the second respondent namely the Authorised Officer could not be termed as a Revenue Officer.

18. In Pandian v. The Inspector General of Registration, reported in AIR 2016 Mad 81, this Court had held that a sale certificate issued by an Authorised Officer under the Security Interest (Enforcement) Rules 2002, does not amount to transfer of property and it is only a document evidencing factum of a statutory sale on the above conclusion, this Court held that there is no question of collection of surcharge under Section 116-A of the Tamil Nadu District Municipality Act 1920 or the Tamil Nadu Duty on Transfer of Property (In Municipal Areas) Act (32 of 2009). In doing so, this Court had followed the Judgment of the Single Judge in Dr.Meera Thinakaran v. The State of Tamil Nadu & Ors, and that of the Division Bench in K.Chidambara Manickam v. Shakeena & Ors, referred to supra.

19. The very same question arose before another Division Bench of this Court in The Inspector General of Registration v. Kanagalakshmi Ganaguru. This court had held that the authorised officer appointed by the Bank under the provisions of the SARFAESI Act, cannot be called a Civil or Revenue Court or Collector or Revenue Officer. However, the earlier decisions of this Court adverted to supra were not brought to the notice of the Hon’ble Division Bench which decided The Inspector General of Registration v. Kanagalakshmi Ganaguru. Noting the apparent conflict between the Inspector General of Registration v. K.K.Thirumurugan, reported in 2014 Mad HC, which had taken the view that Section 47-A could not be invoked in a sale conducted under the SARFAESI Act, since there has no question of intentional under valuation of the property at a public auction and the judgment in The Inspector General of Registration v. Kanagalakshmi Ganaguru, a reference was made to a Larger Bench in Dr.R..Thiagarajan v. Inspector General of Registration.

20. The Hon’ble Full Bench after an analysis of the law and the relevant provisions of the enactments involved upheld the judgment in The Inspector General of Registration v. Kanagalakshmi Ganaguru, while over ruling the judgment in the Inspector General of Registration v. K.K.Thirumurugan. The conclusion of the Full Bench in Dr.R..Thiagarajan v. Inspector General of Registration, as follows:

“26. To summarize, our answer to the question referred to the Full Bench is as follows:-

We are of the considered view that the Sale Certificate issued by the Authorized Officer of the bank is liable for stamp duty under Article 18-C read with Article 23 of Schedule 1 of the Indian Stamp Act. In the event of under-valuation of the property, which is the subject matter of the Sale Certificate, the Registering Officer is entitled to proceed in accordance with Section 47-A of the Indian Stamp Act. Hence, we agree with the proposition laid down by the Division Bench of this Court W.P.(MD) No.3989 of 2017 in the unreported judgment of this Court dated 21.08.2017 made in W.A.(MD) No.3 of 2017 [cited supra] and, with respect, we are not agreeing with the view taken in the judgment reported in 2015(1) CTC 526 [cited supra].”

21. However in Esjaypee Impex Pvt Ltd v. Assistant General Manager and Authorised Officer, Canara Bank, which also went from this Court, the Hon’ble Supreme Court held that an Authorised 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. I have already extracted the relevant portion of the judgment of the Hon’ble Supreme Court in Esjaypee Impex Pvt Ltd v. Assistant General Manager and Authorised Officer, Canara Bank, which in my considered opinion effectively sets at naught the judgement of the Full Bench of this Court.

22. The conclusion of the Full Bench in Dr.R..Thiagarajan v. Inspector General of Registration’s case that an authorised officer cannot be termed as a Civil or Revenue Officer and a certificate of sale issued by him under Rule 9 of the Security Interest (Enforcement) Rules 2002, needs to be compulsorily registered has been uprooted by the observations of the Hon’ble Supreme Court in paragraph 16 of Esjaypee Impex Pvt Ltd v. Assistant General Manager and Authorised Officer, Canara Bank, as a corollary, the judgment of the Division Bench in The Inspector General of Registration v. Kanagalakshmi Ganaguru, would also stand impliedly over ruled, in view of the subsequent decision of the Hon’ble Supreme Court.

23. The learned Special Government Pleader in her effort to sustain the view of the Division Bench in The Inspector General of Registration v. Kanagalakshmi Ganaguru, would submit that even as late as on 16.09.2021, a Division Bench of this Court in The Inspector General of Registration v.Prakash Chand Jain, has followed the judgment in The Inspector General of Registration v. Kanagalakshmi Ganaguru, and the judgment of the Full Bench in Dr.R..Thiagarajan v. Inspector General of Registration’s case. No doubt the Division Bench in The Inspector General of Registration v.Prakash Chand Jain, had followed the decision of the Full Bench in Dr.R..Thiagarajan v. Inspector General of Registration’s case. Unfortunately the decision of the Hon’ble Supreme Court in Esjaypee Impex Pvt Ltd v. Assistant General Manager and Authorised Officer, Canara Bank‘s case which came to be delivered on 05.01.2021 was not brought to the notice of the Hon’ble Division Bench which decided in The Inspector General of Registration v.Prakash Chand Jain’s case.

24. Recently a Division Bench of this Court in Tripower Properties Limited v. The Inspector General of Registration, reported in 2021 SCC Online Mad 15097, G.Madhurambal v. The Inspector General of Registration and V.Krsihnamoorthy v. The Inspector General of Registration, had held that a sale by an officer appointed under the SARFAESI Act, would be exempt from registration and the Authorised Officer of a Bank would be a Revenue Officer. The Division Bench went a step ahead and held that a sale held by a Commissioner pursuant to a direction of this Court would also fall within ambit of Section 89(2) of the Registration Act. Of course it does not appear from the reports that the dictum of the Full Bench and other Division Benches of this Court were brought to the notice of the Hon’ble Division Bench which decided in Tripower Properties Limited v. The Inspector General of Registration.

25. From the above discussion, it could be seen that in view of the pronouncement of the Hon’ble Supreme Court in Esjaypee Impex Pvt Ltd v. Assistant General Manager and Authorised Officer, Canara Bank, the law as it stands today is that an Authorised Officer, who conducts a sale under the provisions of the SARFAESI Act, would be a Revenue Officer and the certificate issued by him in evidence of such sale, would be a document which is not compulsorily registrable under Section 17(2)(xii) of the Registration Act. It would be sufficient, if the document is lodged with the Registrar under Section 89(4) to be filed by him in the Book-I maintained by him. The decisions of this Court in the Inspector General of Registration v. K.K.Thirumurugan, (Division Bench,) The Inspector General of Registration v. Kanagalakshmi Ganaguru, (Division Bench), Dr.R..Thiagarajan v. Inspector General of Registration, (Full Bench) and The Inspector General of Registration v. Prakash Chand Jain, (Division Bench) are no longer good law, in view of the pronouncement of the Hon’ble Supreme Court in Esjaypee Impex Pvt Ltd v. Assistant General Manager and Authorised Officer, Canara Bank.

26. The next question that would arise is to the amount of stamp duty and registration charges payable, if such certificate is presented for registration. Article 18 of the Stamp Act, provides for Stamp Duty payable on a certificate of sale granted by a Civil or Revenue Court or C

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ollector or other Revenue Officer. Clause (c) of Article 18 makes the duty payable for a conveyance would apply to a sale certificate also. Under Article 23 of the Stamp Act, the Stamp Duty payable on a sale is 5% as per G.O.Ms.No.46- CT and All Department dated 27.03.2012. As already pointed out since the document would not be a conveyance there is no question of payment of any surcharge either under Section 116-A of the Tamil Nadu District Municipality Act 1920 or under the Tamil Nadu Duty on Transfer of Property (In Municipal Areas) Act (32 of 2009). 27. Insofar as the registration charges are concerned, the State Government has fixed the registration charges at 1% under Section 78 of the Registration Act and the same has been published in the Tamil Nadu Government Gazette, as required under Section 79 of the Registration Act. By G.O.Ms.No.49 dated 08.06.2017, the following proviso was added to Article 1 of the table of the fees: “Provided further that notwithstanding anything contained in this Table, in case of deeds of conveyance, exchange, gift and settlement among non- family members, the Registration Fee shall be levied at the rate of Rupees four per Rupees hundred or part thereof on the value or amount on which stamp duty under the Indian Stamp Act, 1899 (Central Act II of 1899) is payable”. 28. It is the contention of Mr.Sharath Chandran, learned counsel for the petitioner that the proviso would apply only in cases of deeds of conveyance, exchange, gift and settlement among non-family members. Inasmuch as a sale certificate would not amount to a conveyance, the registration fee payable would be as provided under Article 1 that is at 1% and nothing more. The judgment of this Court in Sakthi Foundations Pvt. Ltd., v The Inspector General of Registration, supports the contention of the learned counsel for the petitioner on this point. This Court after examining the language of the proviso had held that it would not apply to a sale certificate issued under SARFAESI Act. This renders the collection of registration charges at 4% from the petitioner also illegal. 29. In the upshot of the above discussions, the Writ Petition has to be necessarily allowed and the excess fee and the stamp duty collected will have to be refunded by the respondents. The Writ Petition stands allowed, a Writ of Mandamus will issue directing the respondents to refund the excess stamp duty and registration fee to the tune of Rs.19,72,620/- with interest at 9% per annum from the date of filing of this Writ Petition till date of payment. There shall be no order as to costs.
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