CWP No.9121 of 2007 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.9121 of 2007 Date of decision: 8th April, 2011 Paramjit Singh ..... Petitioner Versus State of Punjab through Financial Commissioner Revenue and others ..... Respondents CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA Present: Mr.Sanjeev Sharma, Senior Advocate with Mr.Vikram Sharda, Advocate for the petitioner. Ms.Sonu Chahal, Adll.AG, Punab for respondents no.1 to 3. Mr.S.K.Gupta, Advocate for respondent no.4. ***** RAJIVE BHALLA, J. The petitioner prays for issuance of a writ in the nature of mandamus directing respondent no.2, the Tehsildar (East), Ludhiana, to record a mutation of ownership in his favour on the basis of the certificate of sale dated 18.01.2007, issued by the Debt Recovery Tribunal, Chandigarh and to quash an entry in the jamabandi recording respondent no.6 as owner. The petitioner also prays for quashing of the demand of arrears of electricity charges made vide Annexures P-8 and P-10, payable by the original owner/judgment debtor amounting to Rs.17932/- and 20,948/- respectively and to direct the Municipal Corporation, Ludhiana to record the petitioner's name as owner. At the very outset, counsel for the petitioner gives up his CWP No.9121 of 2007 -2- claim against the Municipal Corporation, Ludhiana. Counsel for the petitioner submits that residential property no.B-XVIII-1212, Harnam Nagar, Ludhiana situated in Khata no.41/47-48, Khasra no.943/1/156/162-164/1/163/1 was the ownership of one Smt.Kiran Bala, respondent no.6. Sh.Jagdish Kapoor, her husband mortgaged this property with the Punjab National Bank on 22.02.1989, to raise a loan. As he could not pay the loan, the Bank filed a petition before the Debt Recovery Tribunal, Chandigarh. The petition was allowed and after following the process prescribed by law, the recovery officer, Debt Recovery Tribunal, Chandigarh auctioned this property. The petitioner purchased the property as the highest bidder. The sale was confirmed in favour of the petitioner and a certificate of sale dated 21.06.2005 was issued by the Recovery Officer, Chandigarh. The petitioner approached the Tehsildar (East), Ludhiana, respondent no.2, for sanction of a mutation but respondent no.2 refused, vide order dated 11.07.2005, to entertain the petition on the pretext that the property is recorded as the ownership of Jagdish Kapoor, husband of Kiran Bala respondent no.6, is mortgaged with the State Bank of India and that stamp duty has not been paid on the sale certificate. Counsel for the petitioner submits that the sale certificate, issued under The Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the Act), is binding upon a revenue officer. The mere fact that the judgment debtor has CWP No.9121 of 2007 -3- transferred the property to her husband does not entitle the Tehsildar, to ignore the sale certificate. It is further argued that as the mutation recorded in favour of Jagdish Kapoor is based upon a fraudulent sale deed, executed by Kiran Bala in favour of her husband, the mortgage created by her husband in favour of the State Bank of India, does not affect the petitioner's rights as an auction purchaser. It is further submitted that the petitioner approached the Recovery Officer who has clarified this matter in his order Annexure P-7, by recording that this property was transferred to Jagdish Kapoor, with a view to commit fraud. Counsel for the petitioner further submits that as Section 17 (2)(xii) of the Registration Act, exempts a sale certificate, issued by a civil or a revenue officer from registration, the petitioner is not required to pay stamp duty. The Tehsildar, therefore, had no jurisdiction to reject the petitioner's request for recording a mutation. As regards the demand for electricity dues, payable by the original owner, counsel for the petitioner relies upon a judgment in Isha Marbles Versus Bihar State Electricity Board and another, 1995 (2), SCC 648, to contend that in the absence of any rule or regulation foisting the liability of the previous owner upon a subsequent purchaser, the petitioner cannot be asked to discharge the liability of Kiran Bala. The electricity authorities are duty bound to change the electricity connection in the name of the petitioner. Counsel for the State of Punjab submits that a sale certificate CWP No.9121 of 2007 -4- may be exempted from registration but this alone does not exempt the petitioner from payment of stamp duty. It is further submitted that as revenue entries record the ownership of Jagdish Kapoor, the sale conducted in the name of Kiran Bala is a nullity and therefore, mutation cannot be entered in the name of the petitioner. Counsel for the Electricity Board submits that electricity dues are a charge on the property. The mere fact that the petitioner is an auction purchaser does not absolve him of his liability to pay electricity dues. I have heard counsel for the parties, perused the pleadings and am of the considered opinion that the following points arise for consideration: - 1. Whether electricity charges, admittedly payable by the original owner can be recovered from the petitioner and/or used as an excuse to deny an electricity connection ? 2. Whether the Tehsildar (East), Ludhiana could refuse to enter a mutation on the ground that stamp duty has not been paid on the sale certificate ? 2. Whether the Tehsildar (East), Ludhiana, could refuse to enter a mutation on the ground that the land is not recorded as the ownership of the judgment debtors? The controversy relating to recovery of electricity dues is squarely covered in favour of the petitioner by a judgment of the Hon'ble Supreme Court in Isha Marble's case (supra). In the absence of any statutory provision, rule or regulation, providing that electricity CWP No.9121 of 2007 -5- dues shall be a charge upon the proprerty, the electricity dues admittedly payable by the original owner cannot be foisted upon the petitioner, auction purchaser. In order to place the aforementioned conclusion in its correct perspective, it would be appropriate to reproduce a relevant extract from the judgment in Isha Marble's case (supra): - “56. From the above it is clear that the High Court has chosen to construe Section 24 of the Electricity Act correctly. There is no charge over the property. Where that premises comes to be owned or occupied by the auction-purchaser, when such purchaser seeks supply of electric energy he cannot be called upon to clear the past arrears as a condition precedent to supply. What matters is the contract entered into by the erstwhile consumer with the Board. The Board cannot seek the enforcement of contractual liability against the third party. Of course the bona fides of the sale may not be relevant. 57. the form of requisition relating to the contract is in Annexure VIII prescribed under clause VI of the Schedule to the Electricity Act. They cannot make the auction-purchaser liable. In the case of Isha Mables we have already extracted the relevant clause wherein the consumer was asked to state his willingness to clear off the arrears to which the answer was in the negative. Therefore, the High Court has rightly held that the auction-purchaser, namely, “the writ petitioner before us is ready and willing to enter into a new contract (sic and) that the auction-purchaser does not intend to obtain the continuance of supply of electrical energy on the basis of the old agreement.” It is true that it was the same premises to which reconnection is to be given. Otherwise, with the change of every ownership new connections have to be issued does not appear to be the correct line of approach as such a situation is brought about by the inaction of the Electricity Board in not recovering the arrears as and when they fall due or not providing itself by adequate deposits. 62. No doubt, from the tabulated statement above set out, the auction purchasers came to purchase the property after disconnection but they cannot be “consumer or occupier” within the meaning of the CWP No.9121 of 2007 -6- above provisiones till a contract is entered into.” In view of the legal position as set out in Isha Marble's case (supra), the Electricity Board cannot recover electricity dues, payable by the original owner/judgment debtor from the petitioner or deny an electricity connection on the premise that the petitioner has not paid electricity dues payable by the judgment debtor. The second point, would require consideration of the provisions of the Act, the rules framed thereunder, the provisions of the Registration Act, 1908 and provisions of the Stamp Act, 1899. Debts due and payable to banks and financial institutions are recovered as per procedure prescribed by the Act. A bank or a financial institution may approach a Debt Recovery Tribunal for an order of recovery of debt. The Tribunal, after considering the defence, if any, set-forth by a debtor, may pass an order directing the debtor to pay such amount as may be determined and for the said purpose may issue a certificate of recovery in terms of sections 19 and 22 of the Act. The certificate is thereafter transmitted to the Debt Recovery Officer for effecting recovery in accordance with the procedure prescribed by Chapter V of the Act. Section 25 of the Act, provides for modes of recovery and includes recovery by attachment and sale. Section 29 of the Act provides that provisions of the Second and Third schedules of the Income Tax Act, 1961, and Income Tax (Certificate Proceedings) Rules, 1962 shall apply to these proceedings. CWP No.9121 of 2007 -7- The second schedule of the Income Tax Act provides a comprehensive procedure for sale of property i.e. sale by auction. After confirmation of sale, a Recovery Officer issues a certificate of sale to the highest bidder in accordance with the provisions of the Income Tax Act (Certificate Proceedings) Rules, 1962. Admittedly, the petitioner is an auction purchaser and has been issued a certificate of sale by the Recovery Officer. Section 17(2) of the Registration Act, 1908, provides that a certificate of sale granted to a purchaser of any property sold by public auction by a civil or revenue officer shall not be compulsorily registrable. A relevant extract of Section 17(2) of the Registration Act, 1908, reads as follows :- 17. Documents of which registration is compulsory: - xxx (a) xxx (b) xxx (c) xxx (d) xxx (e) xxx (1A) xxx (2) Nothing in clauses (b) and (c) of sub-section (1) applies to- (i) xxx (ii) xxx (iii) xxx (iv) xxx (v) xxx (vi) xxx (vii) xxx (viii) xxx (ix) xxx (x) xxx (xa) xxx (xi) xxx “(xii) : Any certificate of sale granted to the purchaser of any property sold by CWP No.9121 of 2007 -8- public auction by a Civil or Revenue.” Officer.” Section 89 (4) of the Registration Act, 1908, provides that every revenue officer granting a certificate of sale of immovable property shall forward the certificate to the registering officer, concerned who shall file a copy of the certificate in book 1. Section 89 of the Registration Act, 1908 reads as follows: - “Section 89. Copies of certain orders, certificates and instruments to be sent to registering officers and filed- 1. Every officer granting a loan under the Land Improvement Loans Act, 1883 (19 of 1883), shall send a copy of his order to the registering officer within the local limits of whose jurisdiction the whole or any part of the land to be improved or of the land to be granted as collateral security, is situate, and such registering officer shall file the copy in bis Book No.1. 2. Every Court granting a certificate of sale of immovable property under the Code of Civil Procedure, 1908 (5 of 1908), shall send a copy of such certificate to the registering officer within the local limits of whose jurisdiction the whole or any part of the immovable property comprised in such certificate is situate, and such officer shall file the copy in his Book No.1. 3. Every officer granting a loan under the Agriculturists' Loans Act, 1884 (12 of 1884), shall send a copy of any instrument whereby immovable property is mortgaged for the purpose of securing the repayment of the loan, and, if any such property is mortgaged for the same purpose in the order granting the loan, a copy also of that order, to the registering officer within the local limits of whose jurisdiction the whole or any part of the property so mortgaged is situate, and such registering officer shall file the copy or copies as the case may be, in his Book No.1. 4. Every Revenue Officer granting a certificate of sale to the purchaser of immovable property sold by public auction shall send a copy of the certificate to the registering officer within the local limits of whose jurisdiction the whole or any part of the immovable property comprised in the certificate is situate, and such officer shall file the copy in his Book No.1.” CWP No.9121 of 2007 -9- A recovery officer auctions property of a judgment debtor pursuant to a certificate issued by the Debt Recovery Tribunal and as has been referred to hereinbefore issues a sale certificate in accordance with provisions of the Income Tax (Certificate Proceedings) Rules, 1962. A recovery officer, issuing a sale certificate in the exercise of statutory powers conferred by Act and the rules framed thereunder, is a civil or revenue officer within the meaning of the expression “civil or revenue officer” used in Section 17(2) (xii) of the Registration Act. While considering a similar plea, under the Income Tax Act, in Shanti Devi Versus The Tax Recovery Officer 1990(3), SCC 605, the Hon'ble Supreme Court held that a tax recovery officer is a revenue officer and therefore, a certificate of sale issued is not compulsorily registrable. A relevant extract from the judgment in Shanti Devi's case (supra) reads as follows: - “5. On the above facts, three different and separate questions arise for consideration: - (1) What is the action to be taken by the Sub- Registrar when the copy of a certificate of sale is forwarded to him by the T.R.O. ? (2) Is the vendee in a sale by the T.R.O. entitled to ask the T.R.O. to make entries regarding the transfer in his records on the basis of the copy of the certificate of sale sent to him by the T.R.O. ? (3) What is the procedure to be followed by the Sub-Registrar when the original certificate of sale is produced before him by the vendee ? 6. The first of the above questions is directed answered by S.89 of the Indian Registration Act, 1908. This section provides for the procedure to be followed in certain situations; in particular, in cases where sales are effected either by Courts under the Code of Civil Procedure or by revenue officers in pursuance of a revenue recovery certificate. Under S.89(2), every Court granting a certificate of sale of immovable property CWP No.9121 of 2007 -10- under the Code of Cvil Procedure, 1908, shall send a copy of such certificate to the registering officer within the local limits of whose jurisdiction the whole or any part of the immovable property comprised in such certificate is situate. Sub-Sec.(4) of S.89 makes a similar provision in respect of immovable properties sold by public auction by a revenue officer who issues a certificate of sale in pursuance of the auction. The sub- sections further provide that when the copy of the certificate of sale is so received, such “registering officer shall file the copy or copies, as the case ay be, in his Book No.1.” So far as sales for recovery of income-tax are concerned, Rule 21 of the ITCP rules, quoted earlier, makes a like provision requiring the concerned T.R.O. to send a copy of the certificate of sale to the registering officer concerned. A doubt may arise whether the expression 'revenue officer' in Section 89(4) of the Registration Act includes a T.R.O.; and, if not, whether, without an appropriate amendment of Section 89(2) or (4) of the Registration Act, the mere framing of a rule by the Central Board of Direct Taxes under the Income-tax Act, 1961 will be sufficient to oblige the registration officer to file a copy of the certificate of sale sent to him by the T.R.O. in his Book No.1. In our opinion there is no need to read the term 'revenue officer' in any restricted sense and that it is wide and comprehensive enough to include the T.R.O. who effects a compulsory sale for the recovery of an income-tax demand. We are therefore clear that, in the present case, the registration officer has to act in terms of S.89(4) of the Registration Act read with Rule 21 of the ITCP rules. This is to file the copy of the certificate of sale received by him from the T.R.O. in his Book No.1.” It is therefore, beyond debate that a Recovery Officer, exercising powers under the Debts Recovery Act and the rules framed thereunder is a “revenue officer” within the meaning of expression “revenue officer” used in sections 17(2)(xii) and 89 of the Registration Act. A certificate of sale issued by a revenue officer is therefore, exempted from registration and the certificate so issued has to be entered in Book 1, in accordance with Section 89(4) of the Registration CWP No.9121 of 2007 -11- Act. However, while answering this question, the Hon'ble Supreme Court left the question of payment of stamp duty open. The question that remains for adjudication is whether exemption of a certificate of sale from registration, leads to an automatic exemption from payment of stamp duty. Section 3 of the Indian Stamp Act, the charging section provides for payment of stamp duty in accordance with Schedule I and Schedule I-A of the Stamp Act. Clause 18 of Schedule 1-A as applicable to the State of Punjab, reads as follows: - “18. Certificate of sale: (in respect of each property put up as a separate lot and sold) granted to the purchaser of any property sold by public auction by a Civil or Revenue Court, or Collector or other Revenue Officer : The same duty as other Conveyance (No.23) for a consideration equal to the amount of the purchase money only).” Schedule I-A of the Stamp Act, does not exempt a sale certificate issued by a civil or a revenue officer from payment of stamp duty. Section 29(f) of the Stamp Act, provides that expenses of providing proper stamps shall be borne by the purchaser of the property. An appraisal of the provisions of the Stamp Act does not disclose the existence of any statutory provision that exempts a certificate of sale from payment of stamp duty. An auction purchaser, in a court auction or an auction conducted by a revenue officer is not exempted from payment of stamp duty, on the certificate of sale. It CWP No.9121 of 2007 -12- would be necessary to emphasise that the Stamp and the Registration Act operate in different spheres and relate to different statutory obligations, the latter relates to registration of documents and the former to payment of stamp duty. The fact that a document may or may not be compulsorily registrable does not necessarily infer exemption from payment of stamp duty. The petitioner shall therefore, be required to pay stamp duty on the certificate of sale. The next question that arises for consideration is whether the Tehsildar was correct in refusing to sanction a mutation. The relevant jamabandi records the ownership of Jagdish Kapoor, husband of the judgment debtor. Suffice it to state that Kiran Bala transferred the land to her husband Jagdish Kapoor during pendency of proceedings before the Debt Recovery Tribunal, Jagdish Kapoor in turn fraudulently mortgaged this land with the State Bank of India. The transfer of the property in dispute during pendency of proceeding before the Tribunal, does not legitimise the sale deed or the mutation of ownership. Even otherwise, vide order Annexure P-7, the recovery officer has clarified this aspect by holding that Kiran Bala and Jagdish Kapoor have effected a fraudulent transfer. The sale deed and mutation recording Jagdish Kapoor as owner of the land in dispute are a nullity and therefore, do not affect the rights of the petitioner as an auction purchaser. The Tehsildar, a revenue officer, exercises powers to record mutations, under Chapter IV of the Punjab Land Revenue Act, 1887. CWP No.9121 of 2007 -13- Chapter IV enables a revenue officer to enter, alter or change revenue entries by recording a mutation. A sale certificate, is issued by a civil or a revenue officer, in this case by a recovery officer exercising powers under the Act and the rules framed thereunder. The sale certificate has been issued pursuant to an auction carried out in discharge of statutory duties and therefore, cannot be ignored by the Tehsildar. In view of what has been stated hereinabove, the writ petition is disposed of in following terms: - 1. The Tehsildar (East) Ludhiana, Punjab, or such other officer, as is exercising the powers of the Registrar under the Registration Act, 1908 is directed to enter the sale certificate in Book no.1 in accordance with Section 89 (4) of the Registration Act. 2. The petitioner would be required to pay stamp duty on the sale certificate and if not paid, the State of Punjab would be entitled to recover the stamp duty, in accordance with law. 3. The Tehsildar (East) Ludhiana, Punjab, is directed to record a mutation of ownership in the name of the petitioner in accordance with the title transferred under the sale certificate. 4. The electricity authorities are restrained from recovering electricity dues, payable by Kiran Bala from the CWP No.9121 of 2007 -14- petitioner and are directed to forthwith grant an electricity connection to the petitioner. The electricity authorities shall however be at liberty to recover the dues from Kiran Bala. No order as to costs. [RAJIVE BHALLA] shamsher JUDGE 8th April, 2011