THE STATE OF PUNJAB & ANR.versusM/S FERROUS ALLOY FORGINGS P LTD. & ORS.

          [2024] 11 S.C.R. 1335 : 2024 INSC 890

              The State of Punjab & Anr.
                           v.
       M/s Ferrous Alloy Forgings P Ltd. & Ors.
                (Civil Appeal No. 12527 of 2024)
                         19 November 2024
        [J.B. Pardiwala and R. Mahadevan, JJ.]


                      Issue for Consideration
Whether it is mandatory for the successful auction purchaser to
deposit the stamp duty for the sale certificate to be issued to it in
view of the provisions of the Stamp Act and the Registration Act.

                              Headnotes†
Registration Act, 1908 – s.89(4) and s.17(2)(xii) – Stamp Act –
Arts. 18 and 23 of first Schedule – Code of Civil Procedure,
1908 – Order XXI Rule 94 – Successful auction purchaser –
Sale certificate issued – Whether it is mandatory to deposit
stamp duty in view of the provisions of the Stamp Act and
the Registration Act:
Held: The position of law is settled that a sale certificate issued to
the purchaser in pursuance of the confirmation of an auction sale
is merely evidence of such title and does not require registration
under Section 17(1) of the Registration Act – It is not the issuance
of the sale certificate which transfers the title in favour of the auction
purchaser – The title is transferred upon successful completion of
the sale and its confirmation by the competent authority after all
the objections against the sale have been disposed of – Further,
various decisions of the Supreme Court makes it clear that sale
certificate issued by the authorised officer is not compulsorily
registrable – Mere filing under Section 89(4) of the Registration Act
itself is sufficient when a copy of the sale certificate is forwarded
by the authorised officer to the registering authority – However, a
perusal of Articles 18 and 23 respectively of the first schedule to
the Stamp Act respectively makes it clear that when the auction
purchaser presents the original sale certificate for registration, it
would attract stamp duty in accordance with the said Articles – As
long as the sale certificate remains as it is, it is not compulsorily
registrable – It is only when the auction purchaser uses the
certificate for some other purpose that the requirement of payment
of stamp duty, etc. would arise. [Paras 17, 20]
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    Constitution of India – Art.226 – Exercise of jurisdiction
    u/Art.226, when alternate remedy is available:
    Held: It is settled that an alternate remedy by itself does not divest
    the High Court of its powers under Article 226 of the Constitution
    in an appropriate case though ordinarily, a writ petition should not
    be entertained when an efficacious alternate remedy is provided by
    law – It was held that when a right is created by a statute, which
    itself prescribes the remedy or procedure for enforcing the right
    or liability, resort must be had to that particular statutory remedy
    before invoking the discretionary remedy under Article 226 of
    the Constitution – However, this Court clarified that this rule of
    exhaustion of statutory remedies is a rule of policy, convenience and
    discretion and if the High Court is objectively of the view that the
    nature of the controversy requires the exercise of its writ jurisdiction,
    such a view would not readily be interfered with. [Para 21]

                               Case Law Cited
    Municipal Corporation of Delhi v. Pramod Kumar Gupta [1990]
    Supp. 3 SCR 547 : AIR 1991 SC 401; Smt. Shanti Devi L. Singh
    v. Tax Recovery Officer and Others [1990] 2 SCR 627 : AIR 1991
    SC 1880; B. Arvind Kumar v. Govt. of India and Others (2007) 5
    SCC 745; M/s Esjaypee Impex Private Limited v. The Asst. General
    Manager and Authorized Officer Canara Bank (2021) 11 SCC 537;
    Inspector General of Registration and Another v. G. Madhurambal
    and Another 2022 SCC Online SC 2079; Radha Krishan Industries
    v. State of H.P. [2021] 3 SCR 406 : (2021) 6 SCC 771 – referred to.

                                 List of Acts
    Registration Act, 1908; Companies Act, 1956; Code of Civil
    Procedure, 1908; Stamp Act, 1899; Constitution of India.

                              List of Keywords
    Auction purchaser; Sale certificate; Registration; Stamp duty;
    Sale certificate for registration; Alternate remedy; Article 226 of
    Constitution.

                             Case Arising From
    CIVIL APPELLATE JURISDICTION: Civil Appeal No. 12527
    of 2024
[2024] 11 S.C.R.                                                      1337

The State of Punjab & Anr. v. M/s Ferrous Alloy Forgings P Ltd. & Ors.


     From the Judgment and Order dated 28.11.2013 of the High Court
     of Punjab & Haryana at Chandigarh in CWP No. 11055 of 2001

                        Appearances for Parties
     Karan Sharma, Abhishek Budhiraja, Advs. for the Appellants.
     Siddharth Batra, Rhythm Katyal, Samar Ahluwalia, Ms. Archna
     Yadav, Chinmay Dubey, Ms. Shivani Chawla, Ayushmaan Bhutani,
     Advs. for the Respondents.

                Judgment / Order of the Supreme Court

                                  Order

1.   Leave granted.
2.   This appeal arises from the judgment and order dated 28-11- 2013
     passed by the High Court of Punjab and Haryana in C.W.P.
     No.11055/2001 wherein the Writ Petition filed by the Respondent No.1
     herein was allowed and the Respondent No.2 herein was directed
     to handover the original sale certificate to the Respondent No.1 and
     send a copy of the same to the Sub-Registrar under Section 89(4)
     of the Indian Registration Act, 1908 (in short, “the Act, 1908”). The
     High Court also held that the Respondent No.1 was entitled to a
     refund of the stamp duty deposited by it in pursuance of the order
     passed by the Company Judge of the High Court.
3.   The facts giving rise to the appeal may be summarized as under.
4.   The Company by the name M/s Punjab United Forge Limited was
     ordered to be wound up by the Company Judge of the High Court
     under the provisions of the Companies Act, 1956 (for short, “the
     Act, 1956”) and permission was granted to the Industrial Finance
     Corporation of India (IFCI) to sell the properties mortgaged with it and
     also the properties hypothecated with Andhra Bank. Consequently,
     the IFCI invited tenders for the immovable and movable assets to
     be put to auction wherein M/s Ferrous Alloy Forging Pvt. Limited, a
     sister concern of the Respondent No.1 herein, offered the highest bid
     and as a result the auction sale was confirmed, first by the official
     liquidator and later by the High Court in favour of M/s Ferrous Alloy
     Forging Pvt. Limited. It appears from the materials on record that
     thereafter the Respondent No.1 moved an application requesting for
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     execution of the conveyance deed in its favour on the ground that
     the entire sale consideration was paid by it and also the Board of
     Directors and Chairman were the same for both the Respondent No.1
     and its sister concern. The request was declined by the Company
     Judge of the High Court. However, the Respondent No.1 filed an
     appeal against the same before a Division Bench of the High Court
     which came to be allowed vide order dated 22.10.1997.
5.   The materials on record further reveal that the Respondent No.1
     herein filed an application under Order XXI Rule 94 of the Code
     of Civil Procedure, 1908 (for short, the “CPC”) for the issuance of
     sale certificate in its capacity as the successful auction purchaser
     for both the movable and immovable properties. The application
     came to be disposed of by the Company Judge of the High Court
     vide order dated 13-4-1999 taking the view that the Respondent
     No.1 was liable to pay the stamp duty on the immovable properties
     which had been put to auction which would include land, building
     and permanently affixed machinery thereto. It further directed that
     although the immovable properties which were put to auction were
     to be included in the certificate of transfer, their value would be
     excluded for the purpose of computation of stamp duty. The High
     Court directed the Respondent No.1 to file an affidavit to this effect
     and pay the requisite stamp duty.
6.   In pursuance of the order referred to above passed by the High
     Court, the Respondent No.1 submitted an additional affidavit of the
     movable assets purchased by the auction purchaser at Rs.54.67
     lakhs. However, when the matter was taken up by the Registrar,
     he took the view that stamp duty had to be paid on Rs.2.25 crore
     which was the valuation of the immovable properties as offered in
     the tender. The Respondent No.1 was, accordingly, directed to pay
     stamp duty on Rs.2.25 crore for the sale certificate to be issued in
     its favour.
7.   The directions issued by the Registrar were challenged by the
     Respondent No.1 by way of a Writ Petition for being in derogation of
     Section 17 (2)(xii) of the Registration Act read with Rule XXI Order
     94 of CPC. The Division Bench of the High Court formulated the
     following question of law for its consideration.
          “Whether a sale certificate issued in pursuance to a Court’s
          auction is required to be stamped”
[2024] 11 S.C.R.                                                      1339

The State of Punjab & Anr. v. M/s Ferrous Alloy Forgings P Ltd. & Ors.


8.   In other words, according to the High Court, the controversy revolved
     around the interplay of the Registration and Stamp Acts, i.e., although
     a sale certificate is undoubtedly not compulsorily registrable yet is
     it mandatory for the auction purchaser to deposit the stamp duty
     for the sale certificate to be issued to it in view of the provisions of
     the Stamp Act.
9.   The Writ Petition came to be allowed by way of the impugned order
     wherein the High Court took the view that there was no occasion for
     fixation of stamp duty at the time of issuance of the sale certificate
     and the Registry of the High Court was only required to issue the
     sale certificate and send a copy of the same to the Sub-Registrar
     in accordance with the mandate contained in Section 89(4) of the
     Registration Act. The High Court further observed that whether the
     certificate is to be stamped or not would be the responsibility of the
     successful auction purchaser.
10. The appellant herein also raised an objection before the High Court
    that as the Respondent No.1 had not challenged the order of the
    Company Judge dated 13-4-1999, the same had attained finality
    and the directions of the Registrar being in consonance with the
    said order, the same could not have been challenged by way of a
    writ petition. The High Court rejected the said objection and held
    that in view of the limited ambit of the controversy, it thought fit to
    consider them in the writ proceedings.
11. In view of the above, the High Court directed that the original sale
    certificate be handed over to the Respondent No.1 and a copy of
    the same be sent to the Sub-Registrar under Section 89(4) of the
    Registration Act. It further directed that the stamp duty deposited
    by the Respondent No.1 be refunded within a period of one month.
12. Aggrieved by the aforesaid, the State of Punjab is in appeal before us.
13. The short question that falls for our consideration in this appeal
    is whether it is mandatory for the successful auction purchaser to
    deposit the stamp duty for the sale certificate to be issued to it in
    view of the provisions of the Stamp Act and the Registration Act.
14. This Court in Municipal Corporation of Delhi v. Pramod Kumar Gupta
    reported in AIR 1991 SC 401, after examining the relevant provisions
    of Order XXI of the Code of Civil Procedure, observed that the title
    to the property put on auction sale passes under the law when the
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     sale is held. The owners and certain other interested persons are
     afforded opportunity under the CPC to assail the sale and make a
     prayer for setting aside the sale on certain enumerated grounds.
     However, once such objections are disposed of without disturbing
     the sale, the sale stands confirmed under Order XXI Rule 92 of the
     CPC. Thereafter, the sale certificate is issued under Order XXI Rule
     94. The Court observed that this chronology of events made it clear
     that the transfer becomes final when an order under Rule 92 of Order
     XXI is made and the issuance of a sale certificate under Rule 94
     is only a formal declaration of the effect of such confirmation. Such
     issuance of certificate does not create or extinguish any title and
     thus would not attract any stamp duty which is applicable qua an
     instrument of sale of immovable property.
15. In Smt. Shanti Devi L. Singh v. Tax Recovery Officer and Others
    reported in AIR 1991 SC 1880, this Court observed that since the
    certificate of sale is not a compulsorily registrable document in lieu
    of Section 17(2)(xii) of the Registration Act, the transfer of title in
    favour of the auction purchaser would not be vitiated on account of
    non-registration of the sale certificate.
16. In B. Arvind Kumar v. Govt. Of India and Others reported in (2007) 5
    SCC 745, this Court observed that when a property is sold by public
    auction in pursuance of an 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. A sale
    certificate is issued to the purchaser only when the sale becomes
    absolute. The sale certificate is merely the evidence of such title.
    It is well settled that when an 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. Although in the said case, the sale
    certificate was registered yet this Court proceeded to observe that a
    sale certificate issued by a court or an officer authorized by the court,
    does not require registration. Section 17(2)(xii) of the Registration
    Act, 1908 specifically provides that a certificate of sale granted to
    any purchaser of any property sold by a public auction by a civil or
    revenue officer does not fall under the category of non-testamentary
    documents which require registration under sub-section (b) and (c)
    of Section 17(1) of the said Act.
[2024] 11 S.C.R.                                                         1341

The State of Punjab & Anr. v. M/s Ferrous Alloy Forgings P Ltd. & Ors.


17. The position of law is thus settled that a sale certificate issued to
    the purchaser in pursuance of the confirmation of an auction sale
    is merely evidence of such title and does not require registration
    under Section 17(1) of the Registration Act. It is not the issuance of
    the sale certificate which transfers the title in favour of the auction
    purchaser. The title is transferred upon successful completion of
    the sale and its confirmation by the competent authority after all the
    objections against the sale have been disposed of.
18. Recently, a three-Judge Bench of this Court in M/s Esjaypee Impex
    Private Limited v. The Asst. General Manager and Authorized Officer
    Canara Bank reported in (2021) 11 SCC 537 observed that the
    mandate of law that flows from a combined reading of Sections 17(2)
    (xii) and 89(4) of the Registration Act respectively is that the auction
    purchaser is entitled to receive the original sale certificate and a copy
    of the same is required to be forwarded to the Sub- Registrar for the
    purpose of filing in Book 1 as per the Registration Act.
19. In Inspector General of Registration and Another v. G. Madhurambal
    and Another reported in 2022 SCC Online SC 2079, a two-Judge
    Bench of this Court observed that the consistent position of law is
    that a certificate of sale cannot be regarded as a conveyance subject
    to stamp duty. The Court further observed that once a direction is
    issued for the duly validated certificate to be issued to the auction
    purchaser with a copy forwarded to the registering authorities to be
    filed in Book I as per Section 89 of the Registration Act, it has the
    same effect as registration and requirement of any further action is
    obviated.
20. The position of law discussed above makes it clear that sale certificate
    issued by the authorised officer is not compulsorily registrable. Mere
    filing under Section 89(4) of the Registration Act itself is sufficient when
    a copy of the sale certificate is forwarded by the authorised officer
    to the registering authority. However, a perusal of Articles 18 and 23
    respectively of the first schedule to the Stamp Act respectively makes
    it clear that when the auction purchaser presents the original sale
    certificate for registration, it would attract stamp duty in accordance
    with the said Articles. As long as the sale certificate remains as it is, it
    is not compulsorily registrable. It is only when the auction purchaser
    uses the certificate for some other purpose that the requirement of
    payment of stamp duty, etc. would arise.
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21. We also do not find any force in the contention of the appellant
    that the High Court should not have exercised its writ jurisdiction
    under Article 226 as Respondent no. 1 had an alternate efficacious
    remedy of filing an appeal against the order of the Company Judge
    in pursuance of which directions came to be passed by the Registrar.
    This Court in Radha Krishan Industries v. State of H.P. reported in
    (2021) 6 SCC 771 observed that an alternate remedy by itself does
    not divest the High Court of its powers under Article 226 of the
    Constitution in an appropriate case though ordinarily, a writ petition
    should not be entertained when an efficacious alternate remedy is
    provided by law. It was held that when a right is created by a statute,
    which itself prescribes the remedy or procedure for enforcing the
    right or liability, resort must be had to that particular statutory remedy
    before invoking the discretionary remedy under Article 226 of the
    Constitution. However, this Court clarified that this rule of exhaustion
    of statutory remedies is a rule of policy, convenience and discretion
    and if the High Court is objectively of the view that the nature of the
    controversy requires the exercise of its writ jurisdiction, such a view
    would not readily be interfered with.
22. In view of the aforesaid, the appeal fails and is hereby dismissed.
23. Pending application(s), if any, shall also stand disposed of.

     Result of the case: Appeal dismissed.



     †
         Headnotes prepared by: Ankit Gyan