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Karnataka HC: Sub-Registrar Cannot Refuse Document Registration Without Violation Notice

The Karnataka High Court has observed that a sub-registrar does not have the jurisdiction to refuse registration of a document unless he notices any violation under Rule 171 of the Karnataka Registration Rules, 1965.

The Bench of Justice M Nagaprasanna observed, “Scores and scores of cases are filed before this Court where the Sub-Registrars refuse to register the documents – the documents could be sale certificates or documents creating charge over the property. The Sub-Registrars, on grounds that are not available to them, refuse to register the documents, sometimes on the score that the software in the Registration Department or the Sub-Registrar’s office is not made to be in tune with the necessities of registration of documents of the Banks and therefore, it is not registered and in certain cases, it is the statutory dues by the borrower or the holder of the document, which are not cleared and therefore, would not be registered. All these are reasons beyond the statute. Unless the Sub-Registrar notices any violation as obtaining under Rule 171 of the Rules, the Sub-Registrar does not have jurisdiction to refuse registration of a document.”

Advocate Swaroop S appeared for the Petitioner whereas AGA Navya Shekhar and Advocate Vignesh Shetty appeared for the Respondents.

The absolute owners of the subject property had mortgaged and availed of a loan facility from the Canara Bank. The loan defaulted which initiated the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’) to recover the amount. The Petitioner participated in the auction, and after being a successful bidder, paid the entire consideration. The Respondent-Bank had also issued a sale certificate, which was not endorsed by the Sub-registrar.

The Counsel for the government submitted that the Sub-Registrar was not in a position to register the sale certificate as the Income Tax dues of the borrowers of the property were still pending. Aggrieved, the Petitioner filed the writ petition seeking directions to the sub-registrar to register the sale certificate issued by Canara Bank in favour of him.

The Court held, “Section 35 of the Act mandates that the SARFAESI Act will have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. These are the rights of secured creditor under the Act. To put in one word – the right of the secured creditor is “unstoppable” except if it is interdicted by any order of a Court of law, which is admittedly absent in the case at hand. There is no proceeding initiated by the borrowers before any judicial or quasi-judicial fora.”

The Court relied on the judgment of the Supreme Court in Punjab National Bank v. Union of India (2022 SC), which held that the provisions of the SARFAESI Act, 2002 will have an overriding effect on the provisions of the Central Excise Act. The High Court said, “If the Central Excise Act found in the judgment of the Apex Court is paraphrased with that of the Income-Tax Department/dues under the Income-Tax Act, the reasons so rendered by the Apex Court would become applicable to the facts of the case at hand as well. The Sub-Registrar, though not in writing, orally refused to register the document on the score that dues of the Income-Tax Department are pending against the borrowers, is a reason which is unavailable to the Sub-Registrar, even if it were to be in writing.”

The Sub-Registrar can act only within the four corners of the Registration Act, 1908 and the Rules framed by the State and if none of the circumstances under Rule 171 of the Rules are found, the Sub-Registrar has no jurisdiction to refuse registration of a document; the document in the case at hand is the sale certificate, the Court emphasized.

The Court also directed the State Government to issue a necessary circular in terms of Rule 171 of the Rules and the law laid down by the Apex Court in the judgment supra, so that every person who goes for registration of documents should not be denied registration except in accordance with the observations.

The Court also directed that if the Sub-Registrar would not register a document in accordance with the law, they will be saddled with exemplary costs when such cases are brought before the Court seeking a direction for registration of a document.

Accordingly, the Court allowed the writ petition and directions to the sub-registrar to register the document without any further ado.

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