Andhra Pradesh High Court - Amravati
M/S Kennigton Industries Pvt Ltd vs State Of Andhra Pradesh on 12 October, 2022
Author: D.Ramesh
Bench: D.Ramesh
THE HONOURABLE SRI JUSTICE D.RAMESH
WRIT PETITION No.22368 OF 2022
ORDER:
This petition is filed under Article 226 of the Constitution of India seeking to declare the action of the Respondent Nos. 2 and 3 i.e., the District Registrar, Vijayawada and the Sub-Registrar, Jaggaiahpet in refusing to receive, register the Sale Certificate dated 14.06.2021 presented by the petitioner in respect of land in R.S.No.86 situated in Ravikampadu Village, Sharemahammadpeta Panchayat, Jaggaiahpet Mandal, Krishna District admeasuring 13.229 Acres along with the buildings constructed with plinth area of 110169 Sq. ft. as illegal, arbitrary and consequently, to direct the 3rd respondent-Sub-Registrar to receive and register the Sale Certificate dated 14.06.2021 presented by the petitioner in respect of said land.
2. As per the averments made in the writ petition, the petitioner is a private limited company incorporated under the Companies Act, 1956 and is inter alia engaged in the business of manufacturing man made yarns and other allied products. The petitioner- Company has purchased the land admeasuring 13.29 acres and constructed buildings with plinth area of 110169 Sq Ft standing in the name of M/s Spads Textiles Limited Land and Buildings of a Spinning Mill Unit on land bearing R.S.No. 86 of Ravikampadu Village, Krishna District in the auction conducted by the 2 National Company Law Tribunal, Hyderabad in I.A. No. 432 of 2018 in CP(IB).171/9/HDB/2018.
3. The petitioner has participated in the auction conducted by the National Company Law Tribunal, Hyderabad Bench by exercising the powers under Section 35 of Insolvency and Bankruptcy Code, 2016 read with Regulation 32 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulation, 2016 under which the land in R.S.No. 86 situated in Ravikampadu Village, Sharemahammadpeta Panchayat, Jaggaiahpet Mandal, Krishna District admeasuring 13.229 Acres along with the buildings constructed with plinth area of 110169 Sq. ft. Accordingly, the petitioner Company has participated in the said auction conducted on 15.03.2021 and stood as the highest bidder for amount of Rs.6,09,40,200/-. Thereafter, Sale Certificate was issued to the petitioner on 14.06.2021 by liquidator of the 4th respondent and the petitioner has been in peaceful possession of the said property. Subsequently, the petitioner approached the 3rd respondent for registration of the said land in its name and presented the document for registration, but the 3rd respondent refused to register the document in favour of the petitioner unless the petitioner pays the registration charges of the market value of the land and not on the value of the sale certificate.
4. Upon the refusal, the petitioner has made a representation to the 2nd respondent-District Registrar on 07.06.2002, that the petitioner is ready 3 to pay the stamp duty on the value of the Sale Certificate and that the registration charges as per the market value as demanded by the respondent Nos.2 and 3 is not required to be paid by the petitioner. It was also brought to the notice of the 2nd respondent with respect to the order passed by this Court in W.P. No. 15400 of 2018 wherein this Court has held that, the properties purchased under the open auction conducted by a court or officer authorized by court and does not require registration. But the respondents 2 and 3 refused to receive the document for registration.
5. The petitioner has purchased the property in the public auction conducted by the National Company Law Tribunal, Hyderabad in the liquidation proceedings, which ought to have been accepted by the respondent Nos. 2 and 3 for registration and the sale certificate is a non- testamentary instrument as per the provisions of Section 17(1)(b) of the Registration Act, 1908 which creates, assigns, declares the right, title and interest in the said property in favour of the petitioner. Thus, the action of the respondents in refusing to register the sale certificate presented by the petitioner for registration is arbitrary, illegal.
6. On the identical issue, the Honourable Apex Court in B.Arvind Kumar vs Government of India and Others1 held that, 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, 1 (2007) S SCC 745 at Para12 4 a sale certificate is issued to the purchaser only when the sale becomes absolute. The sale Certificate is merely the evidence of such title. And when an auction purchaser derives title on confirmation of sale in his favour and a Sale Certificate is issued evidencing of such sale and title, no further deed of transfer from the court is contemplated or required.
7. The petitioners made representation dated 07.06.2022 requesting the respondents 2 and 3 to register the Sale Certificate without insisting for the separate agreement and valuation, in view of the observations made by this Court in Indian Bank, ARM Branch, Coimbatore vs. the Sub- Registrar, Nagari Mandal in W.P. No. 17600 of 2011 reiterating the same principles laid down in B. Arvind Kumar's case (cited supra) and also as held in W.P.No.15400 of 2018. Despite the same, the respondents have not received the document and register the same, unless and until they pay the registration charges as per the market value. Hence, the present Writ Petition.
8. At the stage of admission, on 26.7.2022 this court passed the following order:-
"Considering the submissions made by the learned counsel for the petitioner and also the orders of this court issued in WP.No.15400 of 2018, dated 24.1.2020, pending disposal of the Writ Petition, the 2nd and 3rd respondents are directed to receive the documents submitted by the petitioner based on the value of sale certificate dated 14.6.2021 and register the same."5
9. On receipt of notice and the above said orders, the 3rd respondent filed counter stating that the Government issued a Memo No.3358/Regtn.I/A2/2012 dt.22.6.2012 which reads as follows:
"Section 13(4) of the Securitization and reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 provides that in case the borrower fails to discharge his liability in full within the period prescribed in sub section (2), the secured creditor may take recourse to one more of the following measures to recover his secured debt namely (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realize the secured asset(b)(c)(d)... sub section (6) provides that any transfer of secured asset after taking possession thereof or take over management under sub section (4) by the secured creditor or by the manager on behalf of the secured creditor shall vest in the transferee of all rights in or in relation to the secured asset transferred as if the transfer had been made by the owner of such secured asset."
"In view of the above, provisions contained in the SARFAESI Act, 2002, the law departments have therefore opined that the sale of secured asset by the secured creditor can be regarded as a sale of property by a owner of the property. Hence, the sale will be governed by Article 47-A of the Schedule I-A of the Indian Stamp Act, 1899 and not Article 16 of the said schedule."
10. It is further submitted in their counter that the provisions of Article 16 of Schedule I-A of the Indian Stamp Act,1899 are applicable when the Sale Certificate is "granted to the purchaser of any property sold by public auction by a Civil or Revenue Court or Collector or other Revenue Officer". The Certificate of Sale granted by a Registrar of Co-Operative Societies is also covered by the above Article as per item No.49 of the Notification containing the reductions and remissions of stamp duty issued from time to time by the government. Accordingly, the Sale 6 Certificates issued by others do not fall under the above Article. In present case, the National Company Law Tribunal in its order dated 22- 08-2019, ordered initiation of liquidation process by appointing the Resolution Professional Liquidator. As such, the Liquidator has to execute a sale deed in favour of writ petitioner on stamp duty as prescribed under Article 47-A of Schedule I-A of Indian Stamp Act, 1899. But, the Liquidator issued the subject Sale Certificate instead of executing a sale deed in favour of the writ petitioner, the same is not covered by the provisions of Article 16 of Schedule-IA to the Indian Stamp Act, 1899.
11. Finally it is stated that in the counter that the Sub-Registrar is bound by the provisions of the Stamp Act and the Registration Act and also the instructions given by the authorities form time to time. If the required stamp duty and registration fee under Article 47-A of schedule I- A of the Indian Stamp Act, 1899 are paid, the sale deed is presented within the time allowed for 120 days for presentation as per the Registration Act, 1908, the respondent will process the same as per the rules made under Registration Act, 1908 and Stamp Act, 1899. Further they have relied on the full Court judgment of Madras High Court reported in 2019 SCC On-line MAD 9085, wherein the Court held that the Sale Certificate issued by the authorized officer of a Bank cannot be considered as the Certificate issued by Revenue Officer or a Court of 7 Revenue as per law and as such it is subjected to stamp duty as per the market value. Thereby prayed to dismiss the writ petition.
12. Based on the above pleadings, learned counsel for the petitioner submitted that the identical issue was considered by the Hon'ble Apex Court in B.Aravaind Kumar Vs. Government of India and Others [cited supra], at paragraph 12. He also placed reliance on the judgment passed by the Honourable Supreme Court in V.N.Devadoss Vs. Chief Revenue Control Officer-cum-Inspector and Others2 wherein the issue involved in the said case is that the sale was conducted under the orders of the statutory authority i.e., Board for Industrial and Financial Reconstruction (BIFR). There are several instances, where the Official Liquidator is involved to take a decision in the matter of acceptance of the bid made. That the vendors of the appellant i.e. M/s Dunlop India Ltd. became a sick industry and was declared so under the provisions of the 1985 Act. Consequent upon such declaration, surplus properties and assets belonging to the said Company were disposed of on the basis of orders passed by BIFR and AAIFR by forming an Assets Sales Committee. The appellant submitted that his tender along with others and his offer of Rs 24.34 crores approximately was the highest, and the same was accepted by the Assets Sales Committee and also by the statutory authorities. The Company was granted permission to execute 2 (2009) 7 SCC 438 8 the sale deed in favour of the appellant. Whereas the State has took the stand that sale value cannot be termed as market value.
13. In the said circumstances, the Hon'ble Apex Court held that -
"16. Market value is a changing concept. The Explanation to sub-rule (5) makes the position clear that (sic market) value would be such as would have fetched or would fetch if sold in the open market on the date of execution of the instrument of conveyance. Here, the property was offered for sale in the open market and bids were invited. That being so, there is no question of any intention to defraud the revenue or non-disclosure of the correct price. The factual scenario as indicated above goes to show that the properties were disposed of by the orders of BIFR and AAIFR and that too on the basis of value fixed by Assets Sales Committee. The view was expressed by the Assets Sales Committee which consisted of members such as representatives of IDBI, debenture-holders, Government of West Bengal and Special Director of BIFR. That being so, there is no possibility of any undervaluation and therefore, Section 47-A of the Act has no application. It is not correct as observed by the High Court that BIFR was only a mediator.
17. Sale has been defined under Section 54 of the Transfer of Property Act, 1882 (in short "the TP Act"). Although the Act has not included the definition of sale, Section 2(10) of the Act defines "conveyance" as including a conveyance on sale, every instrument and every decree or final order of any civil court by which property whether immovable or movable or any estate or interest in any property is transferred to, or vested in or declared to be of any other person, inter vivos, and which is not otherwise specifically provided for by Schedule I or Schedule 1-A, as the case may be.
18. On the facts of the case it cannot be said that Section 47-A has any application because there is no scope for entertaining a doubt that there was any undervaluation. That being so, the High Court's order is clearly unsustainable and is set aside. The registration shall be done at the price disclosed in the document of conveyance. There is no scope for exercising power under Section 47-A of the Act as there is no basis for even entertaining a belief that the market value of the property which is the subject-matter of conveyance has not been truly set forth with a view to fraudulently evade payment of proper stamp duty."
14. Learned counsel for the petitioner submitted that even in the instant case, the Sale Certificate has been issued by the National Company Law Tribunal, in the liquidation proceedings, which is also 9 statutory body. As held by the Hon'ble Apex Court, the same should come under Section 47A of the Stamp Act, 1899. Further directed that the registration shall be done at the price disclosed in the document of conveyance; there is no scope for exercising powers under Section 47 A of the Act, as there is no basis for even entertaining a belief that the market value of the property which is the subject matter of the conveyance has not been truly set forthwith with a view to fraudulently evade payment of proper stamp duty. Said observations are clearly applicable to the present case.
15. Learned counsel for the petitioner further submitted that following the above said judgment this court has disposed of identical matter in W.P.No.15400 of 2018.
16. In the said judgment, the point for consideration is that whether the petitioner is required to pay stamp duty equivalent to the market value fixed by the authorities or suffice to pay stamp duty on the value shown in the sale certificate for registration. Finally this court held that the sale certificate was issued after conducting sale in a public auction where the petitioner becomes the highest bidder. The instrument i.e., sale certificate was issued under the authority of Central enactment i.e., SARFAESI Act, as such, the value set forth in the said document can be taken as market value of the property for the purpose of registration. Accordingly, directed the respondents to receive the Sale Certificate 10 presented by the petitioner therein and register the same in favour of the petitioner as per the value shown in the Sale Certificate as market value, for determination of stamp duty.
17. Following the above judgments, there are several judgments passed by this court with the same directions. Hence, requested to allow the writ petition directing the respondents to consider, receive and register the document of Sale Certificate presented by the petitioner, as per the value of the Sale Certificate.
18. Per contra learned Government Pleader appearing on behalf of the respondents submitted that as per the instructions of the Government and also the Article 16 of the Stamps Act, 1899 clearly contemplates that any property sold by public auction by a Civil or Revenue Court or Collector or other Revenue Officer only would applicable other than those, the article 16 Schedule I of Stamp Act, 1899 would not be applicable. Hence, the petitioners are liable to pay the stamp duty as per the market value, once they paid the stamp duty as per the market value, the 3rd respondent will consider and register the same as per rules.
19. Considering the submissions made by learned counsel for the petitioner as well as learned Government Pleader and on perusal of the documents, it is not in dispute that the petitioner become highest bidder in the open auction conducted by the statutory authority i.e., National 11 Company Law Tribunal, Hyderabad for the value of Rs.6,09,40,200/-. Accordingly Sale Certificate was issued in favour of the petitioner by the National Company Law Tribunal. The honourable Apex court as held in V.N.Devadoss's case, that "On the facts of the case it cannot be said that Section 47-A has any application because there is no scope for entertaining a doubt that there was any undervaluation. The registration shall be done at the price disclosed in the document of conveyance. There is no scope for exercising power under Section 47-A of the Act as there is no basis for even entertaining a belief that the market value of the property which is the subject-matter of conveyance has not been truly set forth with a view to fraudulently evade payment of proper stamp duty."
20. In view of the above said observations, this Writ Petition also disposed of, directing the respondents 2 and 3 to receive and register the Sale Certificate dated 14.06.2021 issued by the National Company Law Tribunal, by accepting the registration charges as per the value shown in the Sale Certificate as market value for determination of the stamp duty and release the document expeditiously, from the date of receipt of a copy of the order. There shall be no order as to costs.
As a sequel, miscellaneous applications pending, if any, shall also stand closed.
__________________ JUSTICE D. RAMESH Date: 12.10.2022 Pnr