Federal Bank Ltd. VS Sub Registrar, Pollachi

1.The challenge in this writ petition is an order dated 17.10.2022 passed by the first petitioner rejecting the request of the petitioner for registration of the Sale Certificate.

2. The petitioner Bank is a secured creditor of the property which was mortgaged in their favour on 19.10.2017. The deed of mortgage was registered as Doc.No.8509 of 2017 before the first respondent. As the mortgagor failed to repay the outstanding amount, the loan account was classified as N.P.A. and action was initiated under the SARFAESI Act. Consequently, the property was sold through a public auction, and a sale certificate was also issued on 09.09.2022.When the sale certificate was presented for registration, the impugned order was passed rejecting the request of the petitioner for registration of Sale Certificate on the sole ground that property was provisionally attached under Sec.83 of the G.S.T.Act on 18.12.2021.

3. Mr. Yogesh Kannadasan, Special Government Pleader takes notice for the first respondent and submits that as per Rule 55-A of the Tamil Nadu Registration Rules, if any property is attached or mortgaged or lease agreement is entered into, the sale deed cannot be registered. Thus, as per Rule 55-A of TamilNadu Registration Rules, a document cannot be presented for registration unless the attachment is raised.

4. Learned counsel appearing for the petitioner would mainly contend that even applying Rule 55-A of the Registration Rules, the socalled provisional attachment has lapsed by operation of law itself. Therefore, according to the counsel for the petitioner, Sec.83 of the G.S.T.Act makes it very clear that any provisional attachment passed under Sec.83 (1) of the Act will continue only for a period of one year and not thereafter. Despite this being brought to the notice of the first respondent, the impugned order came to be passed.

5. Heard the learned counsel appearing for the petitioner, learned Special Government Pleader appearing for the respondents and perused the materials available on record.

6. This Court has encountered with several Writ Petitions challenging the orders of the Registering authority refusing to register the documents or transaction permitted under law. Though the rule 55(A) has not been directly challenged this Court is of the view that when a subordinate Legislation is ex facie found to be in conflict with the provision of the Parent Act and Transfer of Property act as well as constitutional rights, the sub ordinate legislation will have to yield to substantive law governing the field and constitution as pointed out by the Supreme Court in Government of Andra Pradesh vs Lakhsmi Devi 2008 SCC 720 wherein it is held as follows:

“34. In India the grundnorm is the Indian Constitution, and the hierarchy is as follows:

(i) The Constitution of India;

(ii)Statutory law, which may be either law made by Parliament or by the State Legislature;

(iii) Delegated legislation, which may be in the form of rules made under the statute, regulations made under the statute, etc.;

(iv) Purely executive orders not made under any statute

35. If a law (norm) in a higher layer in the above hierarchy clashes with a law in a lower layer, the former will prevail. Hence a constitutional provision will prevail over all other laws, whether in a statute or in delegated legislation or in an executive order. The Constitution is the highest law of the land, and no law which is in conflict with it can survive. Since the law made by the legislature is in the second layer of the hierarchy, obviously it will be invalid if it is in conflict with a provision in the Constitution (except the directive principles which, by Article 37, have been expressly made non-enforceable).”

In view of the above judgement this court is inclined to test the validity of Rule 55A of the registration Act which came into force from 05.09.2022.

7. It is relevant to note that the object of the Registration Act is designed to prevent fraud by obtaining a contemporaneous publication and an unimpeachable record of each document [Rajni Tandon v. Dulal Ranjan Ghosh Dastidar, (2009) 14 SCC 782]. It is for this reason the Supreme Court in State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77, has held that the Act only strikes at the documents and not at the transactions. The whole aim of the Act is to govern documents and not the transactions embodied therein.

8. Prior to the insertion of Rule 55-A the Registrar could refuse to register a document if it fell within any of the categories in Section 22-A& B of the Act or under Section 34 or if the case fell within any of the circumstances set out in Rule 162 of the Registration Rules. However, it has become a practice for Sub-Registrar’s to refuse registration of documents citing internal circulars requiring them to produce title deeds to scrutinize title etc. Several writ petitions have come up before this Court challenging such refusals. In one such case, the issue was whether once a sale agreement is registered by the vendor, the subsequent documents in respect of the same immovable property could be refused to be registered by the Registrar. In other words, once an agreement for sale is registered under the Registration Act, whether the vendor is debarred from effecting any agreement or transfer in respect of the same immovable property. As there were conflicting decisions of single judges the matter was directed to be placed before a Division Bench.

Download PDF:
Federal Bank Ltd.

For Reference Visit:
Madras High Court

Read Another Case Law:
GST Case Law