In a significant judgment, the Supreme Court of India, in Civil Appeal No. 12527 of 2024, arising from SLP(C) No. 23347 of 2014, clarified the interplay of the Registration Act, 1908, and the Stamp Act concerning auction sale certificates. Delivered on November 19, 2024, the ruling addressed whether a sale certificate issued following a court-ordered auction requires the payment of stamp duty.
Background of the Case
The dispute originated from a winding-up order of M/s Punjab United Forge Limited by the Company Judge of the High Court under the Companies Act, 1956. The Industrial Finance Corporation of India (IFCI) was permitted to sell the company’s mortgaged and hypothecated properties. In the ensuing auction, M/s Ferrous Alloy Forgings Pvt. Ltd., a sister concern of the respondent, emerged as the highest bidder, acquiring movable and immovable assets. The transaction was later confirmed by the official liquidator and the High Court.
The controversy arose when the registrar required the successful auction purchaser to pay stamp duty on the sale certificate. The respondent, M/s Ferrous Alloy Forgings Pvt. Ltd., challenged this directive before the Punjab and Haryana High Court, which ruled in their favor. The State of Punjab appealed to the Supreme Court.
Legal Issues Addressed
1. Mandatory Stamp Duty on Sale Certificates:
The primary issue was whether a sale certificate issued after a court-ordered auction required the payment of stamp duty.
2. Role of Registration and Confirmation of Title:
The Court examined whether registration of sale certificates under Section 17(2)(xii) of the Registration Act is mandatory.
3. High Court’s Writ Jurisdiction Under Article 226:
The appellant argued that the respondent should have pursued statutory remedies rather than filing a writ petition.
Court’s Decision
The Supreme Court, comprising Justice J.B. Pardiwala and Justice R. Mahadevan, dismissed the appeal, affirming the High Court’s order. The Court extensively referred to precedents, including:
– Municipal Corporation of Delhi v. Pramod Kumar Gupta (AIR 1991 SC 401): The title to auctioned property is transferred upon sale confirmation under Order XXI Rule 92 of the CPC, and the sale certificate under Rule 94 is merely evidence of such title, not a transfer instrument attracting stamp duty.
– B. Arvind Kumar v. Govt. of India (2007) 5 SCC 745: Auction sales result in absolute title transfer upon confirmation, and sale certificates do not require registration under Section 17(1) of the Registration Act.
– Inspector General of Registration v. G. Madhurambal (2022 SCC Online SC 2079): A sale certificate filed with the registrar suffices for statutory requirements, negating further action for title validation.
Key Observations
1. “The issuance of a sale certificate is a mere formality after the confirmation of an auction sale. It does not create or extinguish any title but serves as evidence of such title.”
2. “Stamp duty on auction sale certificates arises only when the certificate is utilized for a purpose beyond mere evidence of title, such as registration or transfer of rights.”
Representation in Court
The State of Punjab was represented by Mr. Karan Sharma and Mr. Abhishek Budhiraja, while M/s Ferrous Alloy Forgings Pvt. Ltd. was represented by Mr. Siddharth Batra, Mr. Rhythm Katyal, and their legal team.
