The Madras High Court ruled that the proviso to Rule 55A of the Tamil Nadu Registration Regulations is illegal and unconstitutional because it contradicts the intent of its parent acts, the Registration Act and the Transfer of Property Act.
The Court held that the authorities under the Registration Act were not in power to make rules which are not in compliance with the scope of its parent act.
Brief Facts:
The present writ petition challenges an order passes by the first respondent rejecting the request of the petitioner seeking registration of the sale certificate. Following the respondent's failure to repay the loan amount, the petitioner bank took legal action under the SARFAESI Act and sold the subject property at a public auction. The property was provisionally attached under Section 83 of the GST Act in 2021, thus when the sale certificate was brought for registration, the Registration authority denied the request.
Observations of the Court:
The High Court held that the authorities under the Registration Act lack the authority to enact regulations that would directly and immediately halt transfers of property that are authorised by the Transfer of Property Act. A restriction of this kind would be obviously unlawful, violate a citizen's right to trade with his property, and violate Article 300-A of the Constitution.
The Court pointed out that a similar challenge to the registrar's right to refuse registration had already been made prior to the introduction of Rule 55A, and a division bench of the court had previously ruled that the registering authority could not prevent the transfer of property by citing the registration of a sale or lease agreement. The Supreme Court also supported this point of view. The court therefore concluded that the introduction of the new rule was an "arbitrary exercise" intended to nullify the division bench's pronouncement of law.
The court additionally determined that the new Rule would produce ludicrous outcomes since individuals might not always be able to submit the original document for the property. Similar to an attachment order, a subsequent sale deed registration would only be void against an enforceable claim. The new Regulation, however, had the result of invalidating the entire sale.
The second proviso, which calls on the executant to provide income records to demonstrate ownership of the property, was likewise unlawful, the court added, as revenue records are not papers of title. According to the court, the third proviso, which required the executant to secure a non-traceable certificate and execute paper publishing, was equally illogical.
Decision of the Court:
The writ petition was allowed by the High Court and the sub-registrar was directed to register the sale within 15 days from the date of receipt of copy of the order. The petitioner in this case was a prior mortgagee in 2017, but the provisional attachment by the Tax authorities was not filed until 2021, the court stated. Even the provisional attachment order, which had only been in effect for a year, was now no longer legitimate. The Court held that the impugned order dated 17.10.2022 was liable to quashed as there was no material to show any orders passed by the second respondent pursuant to the order dated 18.12.2021.
Case Title:
The Federal Bank Ltd. vs The Sub Registrar and others
Coram: Honourable Justice N. Sathishkumar
Case No.: WP No.2758 of 2023
Advocate for the Petitioner: Mr. A. V. Radhakrishnan
Advocate for the Respondent: Mr. Yogesh Kannadasan (For Respondent 1)
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