Orissa High Court
(An Application Under Articles ... vs State Of Odisha And Others on 23 February, 2023
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No. 11801 OF 2022
(An application under Articles 226 and 227 of the
Constitution of India)
*****
Iswar Chandra Nayak .... Petitioner
Mr. Prafulla Chandra Acharya, Advocate
-versus-
State of Odisha and others .... Opp. Parties
Mr. Swayambhu Mishra,
Additional Standing Counsel
(For Opp. Party Nos.1 to 3)
Mr. Sohan Mishra, Advocate
(For Opp. Party No.4)
*****
CORAM:
JUSTICE K.R. MOHAPATRA
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Heard and disposed of on 23.02.2023
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JUDGMENT
K.R.Mohapatra, J.
1. This matter is taken up through hybrid mode.
2. This writ petition has been filed assailing the order dated
31st December, 2019 (Annexure-6) passed by Additional District
Magistrate-cum-District Registrar, Mayurbhanj in Registration
Appeal Case No.01 of 2019, whereby confirming the order dated
26th March, 2019 (Annexure-5) passed by the Sub-Registrar,
Kaptipada-Opposite Party No.3, registration of the sale certificate
dated 26th March, 2019 (Annexure-4) has been refused.
3. Mr. Acharya, learned counsel submits that the Petitioner is
the purchaser of the land in question from the from the
Authorized Officer-cum-Chief Manager, Syndicate Bank-
W.P.(C) No. 11801 OF 2022
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Opposite Party No.4 in a public auction held in exercise of power
under Section 13(2) and (4) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (for short 'the SARFAESI Act'). Accordingly,
sale certificate (Annexure-4) in respect of the said land was issued
in favour of the Petitioner. He, thereafter, presented the sale
certificate for registration before the Sub-Register, Kaptipada-
Opposite Party No.3, which was refused on the ground that the
recorded tenant Iswar Chandra Nayak belongs to Scheduled Tribe
community. In view of the provisions under Section 3 of the
Odisha Scheduled Areas Transfer of Immovable Property (by
Scheduled Tribes) Regulations, 1956 (for short 'the Regulations'),
no registration of the sale certificate can be made. Being
aggrieved, the Petitioner along with Opposite Party No.4-Bank
preferred Registration Appeal No.1 of 2019, which was also
rejected on the self-same ground vide order under Annexure-6.
Hence, this writ petition has been filed.
4. Mr. Acharya, learned counsel for the Petitioner submits
that the restriction under the Regulations is not applicable to a
transaction under the SARFAESI Act, because of its overriding
effect. Further, the auction of the property in question was held
by the Bank-Opposite Party No.4 following due procedure as
provided under the SARFAESI Act and Security Interest
(Enforcement) Rules, 2002 (for short 'the Rules'). Petitioner
being the highest bidder has purchased the property. Hence, the
registering authority is under legal obligation to register the sale
certificate. In support of his case, he relied upon a decision in the
case of UCO Bank -v- Dipak Debbarma, reported in (2017) 2
W.P.(C) No. 11801 OF 2022
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SCC 585, wherein at Paragraph-18, the Hon'ble Supreme Court
has held as under:
"18. The 2002 Act is relatable to the entry of banking
which is included in List I of the Seventh Schedule. Sale
of mortgaged property by a bank is an inseparable and
integral part of the business of banking. The object of the
State Act, as already noted, is an attempt to consolidate
the land revenue law in the State and also to provide
measures of agrarian reforms. The field of encroachment
made by the State Legislature is in the area of banking.
So long there did not exist any parallel Central Act
dealing with sale of secured assets and referable to Entry
45 of List I, the State Act, including Section 187,
operated validly. However, the moment Parliament
stepped in by enacting such a law traceable to Entry 45
and dealing exclusively with activities relating to sale of
secured assets, the State law, to the extent that it is
inconsistent with the 2002 Act, must give way. The
dominant legislation being the Parliamentary legislation,
the provisions of the Tripura Act, 1960, pro tanto,
(Section 187) would be invalid. It is the provisions of the
2002 Act, which do not contain any embargo on the
category of persons to whom mortgaged property can be
sold by the bank for realisation of its dues that will
prevail over the provisions contained in Section 187 of
the Tripura Act, 1960." (emphasis supplied)
5. In the said case law, the Hon'ble Supreme Court was dealing
with the provisions of Tripura Land Revenue and Land Reforms
Act, 1960 (for short 'the Act'). Section 187 of the said Act restricts
transfer of land of aboriginal tribe. Discussing the overriding effect
of Central Act over the State legislation, Hon'ble Supreme Court
held that the dominant legislation being the Parliamentary
legislation, the provision of Tripura Act of 1960, pro tanto, (Section
187) would be invalid. Thus, the provision of the SARFAESI Act
has overriding effect on the provisions of the Regulations.
6. He also relied upon the decision in the case of Chandra
Sekhar Patra -v- Jitan Manki and others, reported in 2016 SCC
Online Orissa 947, in which this Court at Paragraph-11 held as under:-
W.P.(C) No. 11801 OF 2022
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"11. Considering the rival contentions of the parties,
leaving apart the unnecessary details, this Court finds,
there is no dispute that the disputed property was
mortgaged by way of collateral security. Once a property
is mortgaged, as a collateral security, failure of
satisfaction with the financer, it becomes automatic on
the part of the financer to deal with the property and for
the restrictions contained in Regulation-II of 1956 being
there in a State Act and the application of provision of
Section 29 of S.F.C. Act, 1951 being a Central Act,
taking cue from the decisions in Government of
A.P. (supra), State of West Bengal (supra) and the
decision of the Hon'ble apex Court involving Civil
Appeal No. 11247/2016, UCO Bank (supra), this Court
finds, the Hon'ble apex Court in Civil Appeal No.
11247/2016 has dealt with a case involving in similar
situation involving provisions in the local Act vis-à-vis
the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 deciding
the decision of the High Court holding the Tripura Act,
1960 being included in the 9th Schedule to the
Constitution, and therefore, enjoying the protection of
Article 31(B) of the Constitution would prevail over the
Act, 2002 so as to invalidate the sale notification being
contrary to the provision of the local Act, Hon'ble apex
Court taking into consideration the enabling provision of
Act, 2002, discussed in paragraphs-16, 17 & 18 of the
judgment, came to hold that the provision of Act, 2002
enabled the bank to take possession of any property,
where a security interest has been created in its favour
and more particularly, Section 13 of 2002 Act enables
the bank to take possession and sell such property to any
person to realize its dues. The purchaser of such
property acquires a clear title to the property sold
subject to compliance with the requirement prescribed. It
is needless to observe here that once the loanee failed to
discharge the loan, the bank becomes the owner of the
mortgaged property and since the disputed land was sold
by the O.S.F.C. to the petitioner, the sale deed or
transfer involving therein cannot come under the
scrutiny of the Regulation-II of 1956."
As such, there is no embargo to register the sale certificate issued
by Opposite Party No.4-Bank.
7. Mr. Mishra, learned counsel for the Opposite Party No.4-
Bank supports the case of the Petitioner and prays for a direction
W.P.(C) No. 11801 OF 2022
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to register the sale certificate issued by the Bank-Opposite Party
No.4 in favour of the Petitioner.
8. Mr. Mishra, learned Additional Standing Counsel referring
to the counter affidavit submits that in view of the provisions of
the Regulations, no sale certificate could have been issued in
favour of the Petitioner. It is his submission that the provision
under Section 3 of the Regulations was not followed. The land
was neither mortgaged for agricultural purpose nor the residue of
land required to be left as per the said provision after transaction,
was available with the mortgager after the mortgage. Further,
there is apparently no permission of the competent authority to
alienate the property. Although the Registering Officer is not a
quasi judicial authority, but it has its administrative functions
under the provisions of the Registration Act, 1908 to make an
enquiry as to whether, the document presented can be registered
under the provisions of the said Act. Thus, it has to apply its mind
before taking a decision to register a document/instrument.
Although the validity of the sale certificate is not in question in
the present writ petition, but in view of the fact that the
transaction was made in contravention of the Regulations, neither
Registering Officer nor the District Register (Appellate Authority)
has committed any error in refusing the registration.
9. He further submits that there are instances, where this
Court has set aside sale of immovable property made by statutory
authorities recorded in the name of aboriginal tribe were set aside
for not taking permission from the competent authority. In support
of his submission, he relied upon a decision in the case of
Satyabhama Pandey -v- Bhagirathi Jaipuria and others,
W.P.(C) No. 11801 OF 2022
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reported in 1988 SCC OnLine Ori 221, wherein at Paragraph-19,
it is held as under:
"19. Applying the ratio of the aforesaid case to the facts
of .the present case, I am of the opinion that the sale of
the property in execution of the decree as well as
confirmation thereof is prohibited by law in view of
section. 22(3) of the Orissa Land Reforms Act, as it stood
then. The Court had no jurisdiction to put the property
into sale in the absence of a written permission from the
Revenue Officer, since admittedly, the judgment-debtor
belongs to a scheduled tribe. In this view of the matter,
the decision of the Court in the earlier proceeding
putting the property into sale and confirming the same
amounts to sanctioning something which is illegal and
consequently, the party affected by the said decision will
not be precluded from challenging the validity of the
same under the rule of res judicata, which is a rule of
procedure and would not supersede the law of the land.
In the language of the learned the Judge in Mathura
Prasad's case [(1970) 1 SCC 613 : A.I.R. 1971 S.C.
2355.] , to hold that the decision in previous proceeding
as conclusive would amount to giving the same the status
of a special rule of law applicable to the parties relating
to the jurisdiction of the Court in derogation of the rule
declared by the Legislature. I am, therefore, of the
opinion that the present proceeding is not barred by the
principles of res judicata and Mr. Mobapatra's
contention must accordingly fail."
He also relied upon the case of Somnath Sipka -v- State of Orissa
and others, reported in AIR 1985 Ori 100, wherein at Paragraph-
3, it is held as under:
"3. Mr. Murty, the learned counsel for the petitioner,
contends that the auction purchaser (opposite party No. 5)
not being a person belonging to the Scheduled Castes or
Scheduled Tribes and the petitioner being a person
belonging to the Scheduled Castes, the sale of his property
without the written permission of the Revenue Officer is
void under sub-sec. (3) of S. 22 of the Orissa Land
Reforms Act and, therefore, opposite party No. 5 does not
derive any title on the basis of the said sale and the order
of the Certificate Officer in Annexure-1 must be struck
down on that ground. Mr. Misra, the learned counsel for
opposite party No. 5, however, contends that sub-section
(3) of S. 22 of the Orissa Land Reforms Act has no
W.P.(C) No. 11801 OF 2022
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application since the property in question has not been
sold in execution of a decree but in a certificate
proceedings. It is difficult to accept the contention of Mr.
Misra, the learned counsel for opposite party No. 5, since
a certificate is in the nature of decree and under law has
the effect of a decree and a proceeding before the
Certificate Officer is in the nature of an execution
proceeding. That apart, sub-section (3) of S. 22 of the Act
is there on the statute with the obvious object of protecting
the property of the weaker sections of the society (i.e.
Scheduled Castes and Scheduled Tribes) from exploitation
by the higher class and there is no justification as to why
in construing that provision, a sale of property in a
certificate proceeding will not be included therein. S.
22(1) makes a sale void excepting in cases provided for in
clauses (a) and (b) thereof. Sub-sec. (3) of S. 22 is an
injunction against the authorities not to sell without prior
permission even in execution of a decree unless the person
who is purchasing is also a Scheduled Caste or Scheduled
Tribe man. As it appears from Annexure-1, the Certificate
Officer himself was quite aware of this position and,
therefore, ordered that the certificate of sale would be
issued only after obtaining necessary formal permission
from the Revenue Officer S.D.O. Thus, the subsequent
part of the order of the Certificate Officer directing
delivery of possession to the highest bidder even prior to
the receipt of the requisite permission must be held to be
contrary to law......."
He, therefore, submits that the writ petition is liable to be
dismissed.
10. This Court finds that the factual aspect of the case is
almost undisputed. I will deal with rival contentions raised by
learned counsel for the parties after discussing the law on the issue
of registration of a sale certificate issued in exercise of power
under SARFAESI Act and Rules.
11. Hon'ble Supreme Court in the case of Indian Overseas
Bank -v- RCM Infrastructure Ltd. and another, reported in 2022
SCC OnLine SC 634, at Paragraphs-30 and 32 held as under:-
"30. In the case of B. Arvind Kumar (supra), the property
in question was a suit property and was sold in a public
W.P.(C) No. 11801 OF 2022
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auction. The sale was confirmed by the District Judge, Civil
and Military Station, Bangalore. What has been held by this
Court is that when a property is sold by public auction in
pursuance of the 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. It has been held that a sale certificate is issued to
the purchaser only when the sale becomes absolute. It was
held that when the auction purchaser derives title on
confirmation of sale in his favour and a sale certificate is
issued evidencing such sale and title, no further deed of
transfer from the court is contemplated or required.
Additionally, in the said case, the Court found that the sale
certificate itself was registered.
31. xxx xxx xxx
32. It is further to be noted that the present case arises
out of a statutory sale. The sale would be governed by Rules
8 and 9 of the said Rules. The sale would be complete only
when the auction purchaser makes the entire payment and
the authorised officer, exercising the power of sale, shall
issue a certificate of sale of the property in favour of the
purchaser in the Form given in Appendix V to the said
Rules."
12. Further, in the case of Shakeena and another -v- Bank of
India and others, reported in 2019 STPL 9872 SC, the Hon'ble
Supreme Court relying upon the decision in Indian Overseas
Bank (supra) amongst other has framed the following question for
consideration.
"16. Reverting to the impugned judgment of the
Division Bench of High Court, it essentially considered
three points as noted in paragraph 8 of the impugned
judgment. The same reads thus:
(i) Whether the sale of the secured asset in public
auction as per section 13(4) of SARFAESI Act, which
ended in issuance of a sale certificate as per rule 9(7)
of the Security Interest (Enforcement) Rules, 2003 (in
short "the rules") is a complete and absolute sale for
the purpose of SARFAESI Act or whether the sale
would become final only on the registration of the sale
certificate?
xxx xxx xxx"
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13. And answering to the aforesaid question, the Hon'ble
Supreme Court relying upon the decision in B. Arvind Kumar -v-
Govt. of India and others, reported in (2007) 5 SCC 745 and
applying the principle set out therein, concluded that execution
and registration of sale deed is no more required after issuance of
a sale certificate. It is thus held as under:-
"10.17 The ratio laid down by the Division Bench of this
court in Arumugham, S. v. C.K. Venugopal Chetty and the
Supreme Court in B. Arvind Kumar v. Government of
India, referred supra, squarely applies to the case on
hand and we, therefore, have no incertitude to hold that
the sale which took place on 19.12.2005 has become final
when it is confirmed in favour of the auction purchaser
and the auction purchaser is vested with rights in relation
to the property purchased in auction on issuance of the
sale certificate and he has become the absolute owner of
the property. Further, as held by the Division bench of
this court in Arumugham, S. v. C.K. Venugopal
Chetty and the Supreme Court in B. Arvind
Kumar v. Government of India, referred supra, the sale
certificate issued in favour of the appellant does not
require any registration in view of section 17(2)(xii) of the
Registration Act as the same has been granted pursuant to
the sale held in public auction by the authorized officer
under SARFAESI Act.
10.18 The finding of the learned Single Judge that the
sale is not complete without registration of sale certificate,
therefore, is not sustainable in law and the same is liable
to be set aside.
10.19 If the argument of the borrowers that even after the
issuance of the sale certificate, prior to registration, they
are entitled to redeem the property is accepted, it would
make the provisions of the SARFAESI Act redundant and
the very object of the SARFAESI Act enabling the Banks
and financial Institutions to realize long term assets,
manage problems of liquidity, asset liability mismatch and
to improve recovery of debts by exercising powers to take
possession of securities, sell them and thereby reduce
nonperforming assets by adopting measures for recovery
and reconstruction would fail and would open a pandora's
box for the litigations upsetting the sale confirmed in
favour of the bonafide auction purchasers, who invested
huge money.
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10.20 In view of our finding on this point, we hold that
the sale of the secured asset in public auction as per
section 13(4) of SARFAESI Act, which ended in issuance
of a sale certificate as per rule 9(7) of the Rules is a
complete and absolute sale for the purpose of SARFAESI
Act and same need not be registered under the provisions
of the Registration Act."
14. In view of the above, a sale certificate issued in favour of
the Petitioner does not require registration and as the sale process
was complete and becomes absolute on the issuance of sale
certificate itself. Hence, this Court has no hesitation to hold that
the sale certificate issued by the Opposite Party No.4-Bank does
not require registration under the Registration Act.
15. Now coming to the rival contentions of the learned counsel
for the parties, it transpires that in one hand,
Mr. Acharya, learned counsel for the Petitioner submits that the
sale certificate issued by the Bank under Rule 9(7) of the Rules is
not hit by the provisions of the Regulations; on the other hand Mr.
Mishra, learned ASC submits that the mortgage being made in
contravention of Section 3 of the Regulations, the Registering
Officer has committed no error in refusing the registration of the
sale certificate. No doubt, the mortgage of the property of Iswar
Chandra Tudu was made without obtaining permission of the
competent authority and ultimately sale certificate was issued in
favour of the Petitioner by the mortgagee-Bank/Opposite Party
No.4. But, validity of neither the mortgage nor the sale certificate
is in question in the present writ petition. Further, in view of the
ratio in the case of Dipak Debbarma (supra) and Chandra Sekhar
Patra (supra) there remains no iota of doubt that the provisions of
the SARFAESI Act being a Central legislation has an overriding
W.P.(C) No. 11801 OF 2022
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effect on the restrictions imposed on alienation of immovable
property of a Schedule Tribe in the schedule areas under the
Regulations. The case law relied upon by Mr. Mishra, learned
ASC has no application to this case as those relate to alienations
under the State legislation. Thus, neither the Sub-Registrar,
Kaptipada-Opposite Party No.3, nor the Additional District
Magistrate-cum-District Registrar, Mayurbhanj at Baripada-
Opposite Party No.2, are correct in their discussion with regard to
applicability of the provisions of Regulations to the instant case.
Hence, the impugned orders under Annexures-5 and 6 are not
sustainable and are accordingly set aside.
16. But, in view of the provision under Section 89 of the
Registration Act, there has to be an entry of the sale certificate in
Book No.1. Hence, it is directed that the Registering Officer shall
make an entry of the sale certificate in Book-I on being moved by
the Petitioner. It is further observed that this order shall not in any
manner stand on the way of the Competent Authority to test the
validity of the sale certificate, if permissible under law.
17. With the aforesaid observation and direction, the writ
petition is disposed of.
18. As requested by Mr. Mishra, learned Additional Standing
Counsel, a copy of this order be handed over to him for
communication and compliance.
Urgent certified copy of this judgment be granted on
proper application.
(K.R. Mohapatra)
ms Judge
W.P.(C) No. 11801 OF 2022
