Case Note & Summary
The petitioner, a successful auction purchaser, filed a writ petition under Article 226 of the Constitution challenging the refusal of the Sub-Registrar to register the sale deed and certificate issued by Bank of Baroda under the SARFAESI Act. The property was mortgaged by M/s. Raj Picture House to secure financial facilities, and upon default, the Bank auctioned it under the SARFAESI Act. The petitioner emerged as the highest bidder, paid the full consideration, and obtained a sale certificate under Rule 9(6) of the Security Interest (Enforcement) Rules, 2002. However, the Sub-Registrar refused registration on the ground that the State VAT Department had passed a provisional attachment order under Sections 45(1) and 45(2) of the Gujarat Value Added Tax Act, 2003, creating a charge over the property. The petitioner contended that the SARFAESI Act has overriding effect and that crown debts do not have precedence over the Bank's charge. The respondent left the matter to the Court's discretion. The High Court, after considering the submissions and precedents, held that the SARFAESI Act overrides other laws and the Sub-Registrar's refusal was unjustified. The Court directed registration of the sale deed and quashed the impugned order, emphasizing that the Sub-Registrar's duty is to register documents without inquiring into title or prior charges.
Headnote
A) Registration Act - Registration of Sale Deed - Duty of Sub-Registrar - Registration Act, 1908, Sections 71 and 72 - The Sub-Registrar refused to register the sale deed executed by Bank of Baroda under SARFAESI Act citing a provisional attachment order of the State VAT Department - Held that the Sub-Registrar's duty is to register the document if it is otherwise in order and the existence of a prior charge or attachment is not a valid ground for refusal; the Sub-Registrar exceeded his jurisdiction (Paras 7, 10). B) SARFAESI Act - Overriding Effect - Section 35 of SARFAESI Act - Secured creditor's rights under SARFAESI Act prevail over claims of governmental authorities - Provisional attachment under Section 45 of the Gujarat Value Added Tax Act 2003 cannot hinder the registration of a sale deed pursuant to auction under SARFAESI Act - Held that the SARFAESI Act overrides other laws and past dues or charges of crown debt cannot have precedence over the charge of financial institutions; the sale deed must be registered (Paras 7, 10).
Issue of Consideration
Whether the Sub-Registrar under the Registration Act 1908 can refuse registration of a sale deed executed pursuant to an auction under the SARFAESI Act on the ground of prior provisional attachment by state tax authorities given the overriding effect of the SARFAESI Act
Final Decision
Petition allowed; impugned order dated 01.02.2024 quashed; respondent No.2 directed to register the sale certificate/sale deed; rule made absolute; no order as to costs.
Law Points
- SARFAESI Act overrides other laws including state VAT attachment orders
- Registration Act 1908 Sub-Registrar must register documents without inquiry into prior charges
- crown debts do not have precedence over charge of financial institutions under SARFAESI Act
