Madras High Court
M/S.K.D.P.Properties Pvt.Ltd vs The Sub Registrar on 13 March, 2013
Author: R.Subbiah
Bench: R.Subbiah
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 13/03/2013
CORAM
THE HONOURABLE Mr.JUSTICE R.SUBBIAH
Writ Petition (MD) No.2635 of 2012
M/s.K.D.P.Properties Pvt.Ltd.,
rep.by its Chairman and
Managing Director P.R.Kumar,
No.10/21, Corporation Colony Main Road,
Rengarajapuram,
Kodambakkam,
Chennai-600 084. ... Petitioner
vs.
1. The Sub Registrar,
Arasaradi Sub-Registrar Office,
Natarajan Nagar,
Kochiadai,
Madurai.
2. Tamil Nadu Mercantile Bank,
Chinthamani Branch,
Madurai.
(R2 impleaded as per Order of Court
dated 07.08.2012 in M.P.No.1 of 2012
in W.P.No.2635 of 2012) ... Respondents
Writ Petition is filed under Article 226 of Constitution of India, praying
to issue a Writ of Mandamus, directing the respondent to register the document
which is pending before the respondent as P-123 of 2011 dated 28.6.2011 and to
return the document to the petitioner after registration.
!For Petitioner ... Mr.R.N.Amarnath
^For Respondents... Mr.R.Karthikeyan, A.G.P., for R1
Mr.Pala.Ramasamy for R2
:ORDER
This writ petition is filed for a direction to the 1st respondent to register a sale deed which is pending before the respondent as P-123 of 2011 dated 28.6.2011 and to return the same to the petitioner, after registration.
2. Case of the petitioner, in brief, is as follows:
(a) Petitioner is a Private Limited Company incorporated under the provisions of Indian Companies Act. Petitioner Company purchased 82.27 acres of land and building comprising R.S.No.326/3, New R.S.No.31/6A in Arapalayam Village, Madurai South Registration District from M/s.Sri Mappillai Vinayagar Soda Factory and M/s.Sri Mappillai Vinayagar Cine Complex, which are the partnership firms. The document was executed on 28.06.2011 and when it was presented for registration before the 1st respondent, the 1st respondent initially refused to receive the document for registration stating that the property is under attachment pursuant to an order passed by the Debts Recovery Tribunal at Madurai in I.A.No.831 of 2008 in O.A.No.100 of 2008. The representatives of the purchaser informed the 1st respondent that they are purchasing the property knowing the order of attachment and that their rights over the property would be subject to the attachment.
(b) Thereafter, the 1st respondent insisted the petitioners' representatives to give a letter of undertaking stating that the purchaser will not claim the document till the attachment is raised and that the document could be registered as pending registration. The petitioner was forced to give such an undertaking as it had parted with a sum of Rs.7.00 crores towards sale consideration of the property and that the vendors' representatives may not be readily available for registration of the document in another day.
(c) The 1st respondent has no right to get such an undertaking and keep the document as pending. By letter dated 07.02.2012, the petitioner requested the 1st respondent to return the document after registering the same. However, they are keeping the document without registering the same. The order of attachment issued by the Debts Recovery Tribunal, Madurai will not prevent the 1st respondent from registering the document. The petitioner will get right over the property subject to the charge created pursuant to the attachment made by the Debts Recovery Tribunal in I.A.No.831 of 2008 in O.A.No.100 of 2008. If the 1st respondent is not directed to register the document, the petitioner would be put to irreparable loss. Hence, the writ petition.
3. Resisting the said averments, the 1st respondent filed a counter affidavit inter alia stating that when the parties to the document came to know the attachment of the property ordered by the Debts Recovery Tribunal at Madurai on 12.09.1998 in I.A.No.831 of 2008, the petitioners themselves gave a petition for keeping the document 'pending registration' till the attachment is raised. Accordingly, the impugned document was kept 'pending registration' after making necessary endorsement. When the petitioner gave a petition on 07.02.2012 for release of the document, they were informed by a letter dated 29.02.2012 that the document continues to be pending because of non-receipt of any order raising the attachment against the property.
4. It is further stated that the petition filed by the vendors of the property in I.A.No.693 of 2009 to raise the interim order of attachment passed in I.A.No.831 of 2008 by the Debts Recovery Tribunal was dismissed as devoid of merits and not sustainable and thus, the order of attachment was made absolute by the Debts Recovery Tribunal at Madurai, by order, dated 30.09.2011 not satisfying with the substituted security offered by them in I.A.Nos.831 of 2008 and I.A.No.693/2009. The property has been placed under attachment by the Commercial Tax Officer, West Veli Street, Madurai also in his Order dated 29.10.2007 for non-payment of a demand of Rs.61,16,921/- and the attachment is still in existence as per the records of the 1st respondent's office. The 1st respondent is, thus, restrained from registering any document affecting the impugned property. The document was therefore kept pending informing the petitioner orally about the reasons for non-registration and therefore, the petitioner cannot plead that they would be put to irreparable loss and injury if the document is not directed to be registered. Hence, the 1st respondent prayed for the dismissal of the writ petition.
5. 2nd respondent bank filed an affidavit of objection inter alia stating that they filed O.A.No.100 of 2008 under section 19 of RDDBFI Act for recovery of Rs.5,80,92,332.92 as on 31.07.2008 with interest against Sri Mappillai Vinayagar Spinning Mills Ltd., and others before the Debts Recovery Tribunal. The bank also filed an application for attachment before judgment in I.A.No.831 of 2008 to attach the properties of M/s. Sri Mappillai Vinayagar Spinning Mills Limited on the ground that the mortgaged property will not be sufficient to fetch the amount to be awarded by the DRT and by order dated 16.09.2008 the debtors were restrained them from alienating the said properties and the copy was served on the 1st respondent. It is the foremost duty of the registration authority to obey the order of the Tribunal and under section 89 of the Registration Act, they have to file the copy of such order in their Book No.I enabling the general public to have public notice about the prevention of any encumbrance including alienation of property.
6. During the subsistence of the order of attachment as against the property, the guarantors have sold the property to the petitioner for a sum of Rs.7 Crores and the document was presented for registration on 28.06.2011. Thus, the vendors of the petitioner and the 1st respondent are guilty of violation and they have played fraud on the bank. Under such circumstances, the bank insisted for making the attachment absolute. When that being so, the vendors filed I.A.No.693 of 2009 to raise the interim order of attachment passed in I.A.No.831 of 2008 dated 16.09.2008 and to dismiss I.A.No.831 of 2008; but the same was dismissed on 30.09.2011.
7. As there is a prohibitory order passed by the Tribunal, the 1st respondent ought not to have entertained the said sale deed dated 28.06.2011 for registration. Hence, the present writ petition to release the document is not at all maintainable and is against law. During the pendency of the attachment over the said properties the petitioner alleged to have presented the sale deed dated 28.06.2011 executed in their favour before the 1st respondent for registering the same. As per Section 64 of C.P.C., private alienation of property after attachment is held to be void. As there is subsisting attachment by the Debts Recovery Tribunal over the said property, no right or title would be conveyed by virtue of the said sale deed dated 28.06.2011 to the petitioner. Thus, the bank has prayed for the dismissal of the writ petition.
8. By way of Reply Affidavit, the petitioner reiterated the averments made in the writ petition, further stating that the 1st respondent has no right to get an undertaking from the petitioner and keep the document as pending relying on such undertaking. It is not correct to state that an order of attachment by the Sales Tax Department is subsisting. The order of attachment has already been raised by the Commercial Tax Department and the same is reflected in the encumbrance certificate dated 08.09.2010 issued by the 1st respondent. As per the encumbrance certificate, the order of attachment made by the Commercial Tax Department came to be raised on 07.02.2008. When there is no order of injunction preventing the 1st respondent from registering the document, they cannot keep the document as pending. Under such circumstances, the 1st respondent have no jurisdiction to keep the document as pending, when there is no under-valuation of the property, thereby evading the payment of stamp duty by the petitioner.
9. Keeping in view the submissions made by both sides, I have carefully gone through the materials available on record and I find that the petitioner company had purchased the land and building measuring to an extent of 82.27 acres in R.S.No.326/3, New R.S.No.31/6A in Arapalayam Village, Madurai South Registration District from M/s.Sri Mappillai Vinayagar Soda factory and M/s.Sri Mappillai Vinayagar Cine Complex, which are the partnership firms. The above said properties sold by the vendor were under the order of attachment passed by the DRT, Madurai in I.A.No.831 of 2008 in O.A.No.100 of 2008 filed by the 2nd respondent bank in respect of the loan availed by said Sri Mappillai Vinayagar Soda Factory and Sri Mappillai Vinayagar Cine Complex. The total sale consideration paid by the petitioner company was Rs.7 crores. When the sale deed was executed by the owners of the properties in favour of the petitioner, the order of attachment is in force. Though the vendors of the property have filed I.A.No.693 of 2009 before the DRT to vacate the interim order of attachment dated 16.09.2008 passed in I.A.No.831 of 2008 in O.A.No.100 of 2008 the said application was dismissed on 30.09.2011 and the order of interim attachment dated 16.09.2008 was confirmed. But, now it is the stand of the petitioner herein that they had purchased the property knowing fully well that the property is under attachment. Since the order of attachment was communicated to the office of the 1st respondent Sub Registrar, the sale deed is kept as a pending document as P-123 after obtaining a letter dated 07.02.2012 from the petitioner herein that they would not claim the document till the raising of attachment. Hence, according to the 1st respondent, only on the said undertaking, the document was registered and kept as pending document. But, after registration, the petitioners herein submitted a representation to the 1st respondent on 07.02.2012 to release the document; but they were informed by the 1st respondent that by letter dated 07.02.2012, the document would be kept pending because of non-receipt of any order raising the attachment of the property. That apart, it is the submission of the 2nd respondent that the subject property was also under attachment by the Commercial Tax Officer, Madurai in his order dated 29.10.2007 for non-payment of a demand of Rs.61,16,921/- and the attachment is still in existence as per the records of the 1st respondent's office and, as such, the document cannot be released. After filing the writ petition, the 2nd respondent bank was impleaded as a party; according to the 2nd respondent bank, the 1st respondent ought not to have entertained the sale deed when the order of attachment passed by DRT is in existence; the order of attachment is also confirmed by the DRT by dismissing I.A.No.693 of 2009 filed by the petitioner for raising the attachment; as there is subsisting attachment by the Debts Recovery Tribunal over the said property, no right or title could be conveyed by virtue of sale deed dated 28.06.2011 and in fact, the 1st respondent was guilty of violation and disobedience of the order of attachment passed by the said Tribunal.
10. By a perusal of the records, I find, as contended by the learned counsel for the 1st respondent, that the order of attachment made by the Commercial Tax Department was subsequently raised. Therefore, on the date of execution of sale deed by the vendors of the petitioner, only the order of attachment made in I.A.No.831 of 2008 by the DRT, Madurai alone is in existence.
11. The main submission of the learned counsel for the petitioner is that once the document is registered, the 1st respondent has no authority to retain it; That apart, he had compelled the petitioner to give a letter of undertaking that they would not claim the title document till the order of attachment is raised. But, such an undertaking is not legally valid. Further, the learned counsel, by inviting the attention of this Court to Section 60 of the Registration Act and submitted that once the procedure for admission of the document is completed as per provisions of sections 34, 35, 58 and 59, then it is mandatory on the part of registering officer to endorse thereon a certificate containing the word "registered", together with the number and page of the book in which the document has been copied. Such certificate shall be signed, sealed and dated by the registering officer, and shall then be admissible for the purpose of proving that the document has been duly registered in manner provided by this Act. In the instant case, all the procedures have been completed and the document has also been registered and once if it is registered, it cannot be kept as a pending document. Further, by relying upon the judgments reported in the case of BALKRISHAN GUPTA AND OTHERS .vs. SWADESHI POLYTEX LIMITED AND ANOTHER ((1985) 2 SCC 167) and M.MARATHACHALAM PILLAI .vs. PADMAVATHI AMMAL AND OTHERS (1971 (3) SCC 878), the learned counsel further submitted that by section 64 of C.P.C., the attachment is only void as against all claims enforceable under the attachment and it is not void generally. Therefore, it is incorrect to state that the sale of the property by the vendor of the petitioner is illegal.
12. Per contra, by inviting the attention of this Court to section 64 of C.P.C., learned counsel for the 2nd respondent bank submitted that when the order of attachment is in force and when the said order was communicated to the 1st respondent, the sale of the said property by its owner to a third party is void.
13. In view of the submissions of both sides, the points following for consideration are (1) Whether the 1st respondent is entitled to retain the document once if it is registered ?
(2) Whether the sale by the vendor of the property in favour of the petitioner is void since an order of attachment passed by the DRT., Madurai is in existence as against the said property ?
14. With regard to the first question, on a reading of section 60 of the Registration Act, I find that once the procedure for admission of the document is completed, the registering authority is bound to endorse thereon a certificate containing the word "registered" together with the number and page of the book on which the document has been copied. As per section 61 once the registration of the document is completed, thereafter the document shall be returned to the person who presented the same for registration. For understanding, sections 60 and 61 of the Registration Act, 1908 are as follows:
"60. certificate of registration:- (1) After such of the provisions of sections 34, 35, 58 and 59 as apply to any document presented for registration have been complied with, the registering officer shall endorse thereon a certificate containing the word "registered", together with the number and page of the book in which the document has been copied.
(2) Such certificate shall be signed, sealed and dated by the registering officer, and shall then be admissible for the purpose of proving that the document has been duly registered in manner provided by this Act, and that the facts mentioned in the endorsements referred to in section 59 have occurred as therein mentioned".
61. Endorsements and certificate to be copied and document returned: (1) The endorsements and certificate referred to and mentioned in sections 59 and 60 shall thereupon be copied into the margin of the Register-book, and the copy of the map or plan (if any) mentioned in section 21 shall be filed in Book No.1. (2) The registration of the document shall thereupon be deemed complete, and the document shall then be returned to the person who presented the same for registration, or to such other person (if any) as he has nominated in writing in that behalf on the receipt mentioned in section 52".
15. In the instant case, the entire procedure for admission of document was completed and under such circumstances, the 1st respondent is bound to register the document and return the same to the petitioner. In such view of the matter, no significance could be attached to the letter of undertaking given by the petitioner that they would not claim the document till the attachment is raised since the statute mandates that once the admission of document is completed, the same has to be registered and returned.
16. With regard to the next question, it is the submission of the learned counsel for the 2nd respondent bank that as per section 64 C.P.C., the sale deed executed by the vendor of the petitioner is void since order of attachment passed by the DRT is in force. Section 64 of C.P.C. reads as follows:
"64. Private alienation of property after attachment to be void:- (1) Where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment- debtor of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment. (2) Nothing in this section shall apply to any private transfer or delivery of the property attached or of any interest therein made in pursuance of any contract for such transfer or delivery entered into and registered before the attachment.
Explanation: For the purposes of this section, claims enforceable under an attachment include claims for the rateable distribution of assets".
17. A close reading of the said provision would show that the transfer or delivery of the property attached in favour of third person is void only as against all claims enforceable under the said attachment; otherwise, it is not void generally. In this regard, an useful reference could be placed in the judgments relied on by the petitioner. In 1971 (3) SCC 878 (supra), the Hon'ble Supreme Court has held as follows:
"6. But Mr.Chagla appearing on behalf of Pillai raised an alternative contention. He said that at the time of sale there was another outstanding attachment and the sale in favour of Padmavathi being contrary to such attachment was, in any event, void. It appears that on January 17, 1956, Pillai had in execution of a decree obtained in Suit No.55 of 1953, attached the property, but that attachment was removed on March 23, 1957, on satisfaction of the decree. By Section 64, Code of Civi Procedure, the attachment is only void as against all claims enforceable under the attachment, and it is not void generally. Since the attachment effected on January 17, 1956 was removed, any private alienation contrary to such attachment cannot be regarded as void for there are no claims enforceable under the attachment, dated January 17, 1956".
18. In (1985) 2 SCC 167 (supra), the Hon'ble Supreme Court has held as under:
"30. The consequence of attachment of certain shares of a company held by a shareholder for purposes of sale in a proceeding under section 149 of the Land Revenue Act is more or less the same. The effect of an order of attachment is what Section 149 of the Land Revenue Act itself says. Such attachment is made according to the law in force for the time being for the attachment and sale of movable property under the decree of a civil court. Section 60 of the Code of Civil Procedure,1908 says that except those items of property mentioned in its proviso, lands, houses or other buildings, goods, money, bank-notes, cheques, bills of exchange, hundis, promissory notes, Government securities, bonds or other securities of money, debts, shares in a corporation and all other saleable property, moveable or immovable, belonging to a judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor, or by another person in trust for him or on his behalf, is liable for attachment and sale in execution of a decree against him. Section 64 of the Code of Civl Procedure, 1908 states that where an attachment of a property is made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment debtor of any debt, dividend or other monies contrary to such attachment, shall be void as against all claims enforceable under the attachment. What is forbidden under Section 64 of the Code of Civil Procedure is a private transfer by the judgment-debtor of the property attached contrary to the attachment, that is, contrary to the claims of the decree holder under the decree for realisation of which the attachment is effected. A private transfer under section 64 of the Code of Civil Procedure is not absolutely void, that is, not void as against all the world but void only as against the claims enforceable under the attachment. Until the property is actually sold the judgment debtor retains title in the property attached. Under Rule 76 of Order 21 of the Code of Civil Procedure, 1908, the shares in a corporation which are attached may be sold through a broker. In the alternative such shares may be sold in public auction under Rule 77 thereof. On such sale either under Rule 76 or under Rule 77, the purchaser acquires title. Until such sale is effected, all other rights of the judgment debtor remain unaffected even if the shares may have been seized by the officer of the court under Rule 43 of Order 21 of the Code of Civil Procedure, 1908 for the purpose of effecting the attachment, or through a Receiver or though an order in terms of Rule 46 of Order 21 of the Code of Civil Procedure may have been served on the judgment debtor or on the company concerned".
19. The dictum laid down in the above judgment (1985) 2 SCC 167 (supra), gives a fitting answer to the issue raised in this writ petition. So far as the order of attachment passed by the DRT is concerned, the transfer is not void generally but it is void only as against the claims enforceable under the said attachment. Therefore, I am of the opinion that the sale of the property attached cannot be construed as illegal sale. However, if the 2nd respondent bank exercises its right as against the property, the petitioner cannot raise any objection because the sale of the vendor in favour of the petitioner is void in respect of the order of attachment obtained by the 2nd respondent bank. So, even if the property is sold in favour of the petitioner, the 2nd respondent bank can always exercise its right as against the said property.
20. In view of the above finding, I am of the opinion that the sale of the subject property pending the order of attachment is void only as against the claims enforceable under the order of said attachment and not in respect of other claims. Therefore, the sale of the property, which is under attachment, cannot be said as illegal.
In the light of what is stated above, the writ petition is allowed and the 1st respondent - Sub Registrar, Kochiadai, Madurai, is directed to release the registered document in favour of the petitioner within a period of one week from the date of receipt of a copy of this order. No costs.
gl To The Sub Registrar, Arasaradi Sub-Registrar Office, Natarajan Nagar, Kochiadai, Madurai.