The Supreme Court has ruled that a sale certificate issued after confirming an auction sale does not need to be registered.
The Supreme Court explained that a sale certificate given to a buyer after an auction is only proof of ownership and does not need to be registered under Section 17(1) of the Registration Act. The sale certificate will incur stamp duty only if the buyer chooses to register it. This case was brought to the Supreme Court following a decision by the Punjab and Haryana High Court, which ruled in favor of the Respondent Company, ordering the Registrar to provide the original sale certificate to them and send a copy to the Sub-Registrar as per Section 89(4) of the Indian Registration Act, 1908. The judges, Justice J.B. Pardiwala and Justice R. Mahadevan, stated that the sale certificate itself does not transfer ownership; ownership is transferred once the sale is successfully completed and confirmed by the appropriate authority after resolving any objections.
AOR Karan Sharma represented the Petitioners, while AOR Siddharth Batra represented the Respondent. The case involved M/s Punjab United Forge Limited, which was ordered to be dissolved by the High Court under the Companies Act, 1956. The Industrial Finance Corporation of India (IFCI) was allowed to sell the mortgaged properties, along with those hypothecated to Andhra Bank. IFCI then invited bids, and M/s Ferrous Alloy Forging Pvt. Limited, a related company, submitted the highest bid, leading to the confirmation of the auction sale. The Respondent Company later requested a conveyance deed in its favor, which was initially denied but was eventually granted by the Division Bench.
The Respondent Company was ordered to pay stamp duty on the properties auctioned, based on a valuation of Rs. 2.25 crore stated in the Tender. However, the High Court allowed the Company’s Writ Petition, stating that there was no need to fix stamp duty when the sale certificate was issued. The State then appealed to the Supreme Court. The main question was whether the auction winner must pay stamp duty for the sale certificate to be issued, according to the Stamp Act and the Registration Act.
After reviewing several judgments, the Bench concluded that a sale certificate from an auction is simply proof of ownership and does not need to be registered under Section 17(1) of the Registration Act. The Bench also clarified that the sale certificate from the authorized officer does not require mandatory registration. It noted that filing under Section 89(4) of the Registration Act is enough when the authorized officer sends a copy of the sale certificate to the registration authority. The Bench pointed out that when the auction buyer presents the original sale certificate for registration, it will incur stamp duty as per Articles 18 and 23 of the Stamp Act. Until the sale certificate is used for another purpose, it does not need to be registered.
The Bench dismissed the argument that the High Court should not have used its writ powers under Article 226 because the Respondent Company had another effective option to appeal the Company Judge’s order. They referred to the case of Radha Krishan Industries v. State of H.P., reported in (2021) 6 SCC 771, which stated that having an alternate remedy does not take away the High Court’s authority under Article 226. Based on this, the Bench rejected the appeal.
Cause Title: The State of Punjab & Anr. v. M/s Ferrous Alloy Forgings P Ltd. [Neutral Citation: 2024 INSC 890]
Appearance:
Petitioners: AOR Karan Sharma, Advocate Abhishek Budhiraja
Respondent: AOR Siddharth Batra, Advocates Rhythm Katyal, Samar Ahluwalia, Archana Yadav, Chinmay Dubey, Shivani Chawla, Ayushmaan Bhutani
