VERDICTUM.

IN

Reserved on : 24.04.2024
Pronounced on : 28.05.2024 R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 28TH DAY OF MAY, 2024

BEFORE

THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

WRIT PETITION No.7872 OF 2024 (GM-RES)

BETWEEN:

SRI. T.BHARATHGOWDA
S/O THIMMEGOWDA
AGED ABOUT 40 YEARS
NO.65, VANIVILAS ROAD
BASAVANAGUDI
BENGALURU – 560 004.
... PETITIONER

(BY SRI. SWAROOP S., ADVOCATE)

AND:

1. STATE OF KARNATAKA
REP. BY PRINCIPAL SECRETARY
REVENUE DEPARTMENT
ROOM NO.627, 6TH FLOOR
GATE - 1, M.S.BUILDING
DR. B.R.AMBEDKAR VEEDHI
BENGALURU – 560 001.

2. SUB REGISTRAR
J.P.NAGAR SUB REGISTRAR OFFICE
 VERDICTUM.IN

J.P.NAGAR, BENGALURU – 560 078.

3. M/S. CANARA BANK

BY SPECIALIZED ASSET RECOVERY
MANAGEMENT BRANCH -1 AT
2ND FLOOR, CO BLDG, NO.86
SPENCER TOWERS, M.G.ROAD
BENGALURU – 560 001
REPRESENTED BY AUTHORIZED OFFICER.
... RESPONDENTS

(BY SMT. NAVYA SHEKHAR, AGA FOR R1 AND R2;

SRI. VIGNESH SHETTY, ADVOCATE FOR R3)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND

227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECTING THE
R2 TO REGISTER THE SALE CERTIFICATE DTD 30.09.2022
(ANNEXURE-A).

THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED

FOR ORDERS ON 24.04.2024, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-

ORDER

The petitioner is before this Court seeking a direction by

issuance of a writ in the nature of mandamus directing the 2nd

respondent/Sub-Registrar to register the sale certificate dated 30th

September, 2022 issued by the 3rd respondent in favour of the

petitioner.
 VERDICTUM.IN

2. Heard Sri S. Swaroop, learned counsel appearing for the

petitioner, Smt. Navya Shekhar, learned Additional Government

Advocate appearing for respondents 1 and 2 and Sri Vignesh

Shetty, learned counsel for respondent No.3.

3. The facts adumbrated are as follows:-

One Sri Thimme Gowda, Sri T. Raghavendra Gowda and

Sri T. Prasanna Raghavendra Gowda were the absolute owners of

the property bearing No.19, situated at 11th Cross, Wilson Garden,

Hombegowdanagara, Bengaluru measuring 6000 sq.ft. The

aforesaid owners of the property had mortgaged the subject

property and availed a loan from Canara Bank, the 3rd respondent.

The loan gets into default, the default gets into initiation of

proceedings under the Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002

(‘hereinafter referred to as ‘the SARFAESI Act’ for short) to recover

the amount. Sale of the property was conducted on 19-03-2022.

The petitioner participates in the auction, emerges as the successful

bidder and pays the entire consideration as necessary in law. After

receipt of the entire consideration, the Bank issues a sale certificate

 VERDICTUM.IN

in favour of the petitioner on 30-09-2022. It is an admitted fact

that as on today, the borrowers/owners of the property have not

challenged the sale or initiated any proceedings against the sale of

the property, as the challenge is not pending before any judicial or

quasi judicial fora.

4. The petitioner desirous of getting the sale certificate

registered approaches the jurisdictional Sub-Registrar i.e., the Sub-

Registrar of JP Nagar/2nd respondent. The petitioner pays entire

stamp duty as necessary under the Stamp Act and all other

necessary fee through challan and sits with the Sub-Registrar to get

the sale certificate registered. No written endorsement is issued,

but the averment in the petition is, that certain claims of the

Income Tax Department are pending against the borrowers of the

property and, therefore, the sale certificate cannot be registered.

The petitioner comes back and communicates a letter to clarify the

queries for getting the sale certificate registered. No response

comes about. The petitioner then communicates to the Bank, the

Bank also communicates the Sub-Registrar to register the sale

certificate. No response comes about. A representation comes to

 VERDICTUM.IN

be submitted to the Sub-Registrar by the petitioner on 12-02-2024.

Finding no response, the petitioner is knocking at the doors of this

Court in the subject petition.

5. The learned counsel for the petitioner would vehemently

contend that a proceeding under the SARFAESI Act has precedence

over any other law. The right of the secured creditor overrides

every right of the borrower over the property. The Sub-Registrar

had no jurisdiction to deny registration of document after

compliance with every necessary nuances of registration. Citing an

unjustifiable reason as dues of the Income Tax Department by the

borrowers can never be a ground to deny registration is his

emphatic submission.

6. The learned Additional Government Advocate, on

instructions, would submit that her submissions be treated as her

objections to the main petition and contends that the Sub-Registrar

is not in a position to register the sale certificate as the Income Tax

dues of the borrowers of the property are still pending. It is her

submission that they are statutory dues and unless the statutory

dues are cleared by the borrowers, the property would not become
 VERDICTUM.IN

free from encumbrance and if the property would not become free

from encumbrance, the Sub-Registrar would not register the

document.

7. The learned counsel appearing for the 3rd respondent/

Canara Bank supports the case of the petitioner.

8. I have given my anxious consideration to the submissions

made by the respective learned counsel and have perused the

material on record.

9. The afore-narrated facts are not in dispute. In a public

auction conducted by the 3rd respondent, the petitioner emerges as

the successful bidder of the property owned by the borrowers. This

leads the Bank issuing a sale certificate in favour of the petitioner

on 30-09-2022. The petitioner desirous of getting the sale

certificate registered, approaches the jurisdictional Sub-Registrar

and pays amounts/fees that are required for registration of a

document. After all this, when the petitioner sat before the Sub-

Registrar, he was given to understand that the document would not

be registered. The reason was that a claim of the Income-Tax

 VERDICTUM.IN

Department still hangs on the head of the borrowers of the property

and, therefore, the document cannot be registered. Whether such

discretion is available to the Sub-Registrar is what is required to be

noticed. The document of registration i.e., the sale certificate had

emanated from the proceedings under the SARFAESI Act. Section

26-E of the SARFAESI Act, reads as follows:

“26E. Priority to secured creditors.—

Notwithstanding anything contained in any other law
for the time being in force, after the registration of
security interest, the debts due to any secured creditor
shall be paid in priority over all other debts and all
revenues, taxes, cesses and other rates payable to the
Central Government or State Government or local
authority.

Explanation.—For the purposes of this section, it is

hereby clarified that on or after the commencement of the
Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases
where insolvency or bankruptcy proceedings are pending in
respect of secured assets of the borrower, priority to secured
creditors in payment of debt shall be subject to the provisions
of that Code.”
(Emphasis supplied)

Section 26E mandates priority to secured creditors over any other

law for the time being in force after the registration of security

interest. Section 35 of the Act reads as follows:

 VERDICTUM.IN

“35. The provisions of this Act to override other

laws.—The provisions of this Act shall have effect,
notwithstanding anything inconsistent therewith
contained in any other law for the time being in force or
any instrument having effect by virtue of any such law.”

(Emphasis supplied)

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.

10. Registration of a document is under the Registration Act,

1908. Refusal to register a document is dealt with under Section

71 of the Registration Act. The Sub-Registrar can refuse

registration of a document on grounds that are set out therein.

Section 71 of the Registration Act reads as follows:

“71. Reasons for refusal to register to be

recorded.—(1) Every Sub-Registrar refusing to register a
document, except on the ground that the property to
 VERDICTUM.IN

which it relates is not situate within his sub-district,

shall make an order of refusal and record his reasons
for such order in his Book No. 2, and endorse the words
“registration refused” on the document; and, on
application made by any person executing or claiming
under the document, shall, without payment and
unnecessary delay, give him a copy of the reasons so
recorded.

(2) No registering officer shall accept for registration a

document so endorsed unless and until, under the provisions
hereinafter contained, the document is directed to be
registered.”

(Emphasis supplied)

Invoking its power to frame Rules under the Registration Act, the

Karnataka Government has promulgated ‘the Karnataka

Registration Rules, 1965’ (‘hereinafter referred to as ‘the Rules’ for

short). Chapter-XXIV of the Rules deals with refusal to register.

Rule 171 therein deals with reasons for refusal to register. The

reasons are enumerated therein. Rule 171 reads as follows:

“171. Reasons for refusal to register.- When

registration is refused, the reasons for refusal shall be
at once recorded in Book 2. They will usually come
under one or more of the heads mentioned below.

(i) Section 19.- that the document is written in a language

which the Registering Officer does not understand and
which is not commonly used in the district, and that if is
unaccompanied by a true translation or a true copy;
 VERDICTUM.IN

10

(ii) Section 20.- that it contains unattested interlineations,

blanks, erasures, or alterations which in the opinion of
the Registering Officer require to be attested;

(iii) Section 21(1) to (3) and Section 22.- that the

description of the property is insufficient to identify it or
does not contain the information required by Rule 15;

(iv) Section 21(4).- that the document is unaccompanied

by a copy or copies of any map or plan which it
contains;

(v) Rule 50.- that the date of execution is not stated in the
document or that the correct date is not ascertainable or
altered so as to make it unascertainable;

(vi) Section 23, 24, 25, 26, 72 ,75 and 77.- that it is
presented after the prescribed time;

(vii) Section 32, 33, 40 and 43.- that it is presented by a

person who has no right to present it;

(viii) Section 34.- that the executing parties or their

representatives, assigns, or agents have failed to
appear within the prescribed time;

(ix) Section 34 and 43.- that the Registering Officer is not

satisfied as to the identity of a person appearing before
him who alleges that he has executed the document or
when an executant is not, identified to the satisfaction
of the Registering Officer.

(x) Section 34 and 40.- that the Registering Officer is not

satisfied as to the right of a person appearing as
representative, assignee or agent, so to appear;

(xi) Section 35.- that execution is denied by any person

purporting to be an executing party or by his agent;

Note,- When a Registering Officer is satisfied that an

executant is purposely keeping out of the way with a view to
evade registration of document or has gone to a distant place
and is not likely to return to admit execution within the
 VERDICTUM.IN

11

prescribed time, registration may be refused, the non

appearance being treated as tantamount to denial of
execution.

(xii) Section 35.- that the person purporting to have

executed the document is a minor, an idiot or a lunatic;

Note.- When the executant of a document who is

examined under a Commission under Section 38 of the Act is
reported by the Commissioner to be a minor, an idiot or a
lunatic, registration may be refused and it is not necessary
that the Registering Officer should personally examine the
executant to satisfy himself as to the existence of the
disqualification.

(xiii) Section 35.- that execution is denied by the

representative or assign of a deceased person by whom
the document purports to have been executed.

Note.- When some of the representatives of a deceased

executant admit and the others deny execution, the
registration of the document shall be refused in toto, the
persons interested being left to apply to the Registrar for an
enquiry into the fact of execution.

(xiv) Sections 35 and 41.- that the alleged death of a

person by whom the document purports to have been
executed has not been proved;

(xv) Section 41.- that the Registering Officer is not satisfied

as to the fact of execution in the case of a Will or of an
authority to adopt presented after the death of the
testator of donor;

(xvi) Section 25, 34 and 80.- that the prescribed fee or fine
or fee under nay other Act to be levied before admitting
a document to registration has not been paid.”

The reasons indicated in Rule 171 are self-explanatory. While it is

an admitted fact that none of those reasons found in the statute

 VERDICTUM.IN

12

i.e., Rule 171 are even present in the case at hand. The refusal to

register a document as observed is dealt with under Section 71 of

the Registration Act and Rule 171 of the Rules, a perusal of which

will nowhere creates any impediment for the 2nd respondent/Sub-

Registrar to register the said document. All the nuances necessary

for registration have been complied with by the petitioner. The

reason for denial of registration by respondent No.2 – Sub-Registrar

is that the dues of the Income-Tax Department pending against the

borrowers. In the considered view of this Court, in the light of

Section 35 quoted supra of the SARFAESI Act, 2002 the said reason

though not in writing could not have been projected by the Sub-

Registrar to deny registration. The issue whether other statutory

dues pending against the borrowers would entail non-registration of

a document, need not detain this Court for long, or delve deep into

the matter.

11. The Apex Court in the case of PUNJAB NATIONAL BANK v.

UNION OF INDIA1 has held as follows:-

“42. Secondly, coming to the issue of priority of

secured creditor's debt over that of the Excise
Department, the High Court in the impugned judgment

1
(2022) 7 SCC 260
 VERDICTUM.IN

13

has held [Punjab National Bank v. Union of India, 2008 SCC

OnLine All 1576] that “In this view of the matter, the
question of first charge or second charge over the properties
would not arise”. In this context, we are of the opinion that
the High Court has misinterpreted the issue to state that the
question of first charge or second charge over the properties,
would not arise.

43. A Full Bench of the Madras High Court in UTI Bank

Ltd. v. CCE [UTI Bank Ltd. v. CCE, 2006 SCC OnLine Mad
1182 (FB)], while dealing with a similar issue, has held that :
(SCC OnLine Mad paras 25-26)

“25. In the case on hand, the petitioner

Bank which took possession of the property
under Section 13 of the SARFAESI Act, being a
special enactment, undoubtedly is a secured
creditor. We have already referred to the
provisions of the Central Excise Act and the
Customs Act. They envisage procedures to be
followed and how the amounts due to the
Departments are to be recovered. There is no
specific provision either in the Central Excise Act
or the Customs Act, claiming “first charge” as
provided in other enactments, which we have
pointed out in earlier paragraphs.

26. In the light of the above discussion, we

conclude,

‘(i) Generally, the dues to Government i.e. tax,

duties, etc. (Crown's debts) get priority over
ordinary debts.

(ii) Only when there is a specific provision in the

statute claiming “first charge” over the
property, the Crown's debt is entitled to have
priority over the claim of others.

(iii) Since there is no specific provision claiming

“first charge” in the Central Excise Act and the
Customs Act, the claim of the Central Excise
Department cannot have precedence over the
 VERDICTUM.IN

14

claim of secured creditor viz. the petitioner

Bank.

(iv) In the absence of such specific provision in

the Central Excise Act as well as in
Customs Act, we hold that the claim of
secured creditor will prevail over Crown's
debts.’

In view of our above conclusion, the petitioner UTI

Bank, being a secured creditor is entitled to have
preference over the claim of the Deputy Commissioner
of Central Excise, first respondent herein.”

(emphasis in original and supplied)

44. This Court, while dismissing Civil Appeal No. 3627

of 2007 filed against the judgment [UTI Bank Ltd. v. CCE,
2006 SCC OnLine Mad 1182 (FB)] of the Full Bench, vide
order dated 12-2-2009 [CCE v. UTI Bank Ltd., 2009 SCC
OnLine SC 1950] held as under: (UTI Bank case [CCE v. UTI
Bank Ltd., 2009 SCC OnLine SC 1950] , SCC OnLine SC para
1)

“1. Having gone through the provisions of the

Securitisation Act, 2002, in the light of the judgment
of the Division Bench of this Court in Union of
India v. SICOM Ltd. [Union of India v. SICOM Ltd.,
(2009) 2 SCC 121] , we find that under the provisions
of the said 2002 Act, the appellants did not have any
statutory first charge over the property secured by the
respondent Bank. In the circumstances, the civil
appeal is dismissed with no order as to costs”

(emphasis supplied)

45. Hence the reasoning given by the High Court

stands strong and has been affirmed by this Court.

46. This Court in Dena Bank v. Bhikhabhai Prabhudas

Parekh & Co. [Dena Bank v. Bhikhabhai Prabhudas Parekh &
Co., (2000) 5 SCC 694] , wherein the question raised was
whether the recovery of sales tax dues (amounting to crown
 VERDICTUM.IN

15

debt) shall have precedence over the right of the bank to

proceed against the property of the borrowers mortgaged in
favour of the bank, observed as under : (SCC p. 703, para
10)

“10. However, the Crown's preferential right to

recovery of debts over other creditors is confined to
ordinary or unsecured creditors. The common law of
England or the principles of equity and good
conscience (as applicable to India) do not accord the
Crown a preferential right of recovery of its debts over
a mortgagee or pledgee of goods or a secured
creditor.”
(emphasis supplied)

47. Further, in Central Bank of India v. Siriguppa

Sugars & Chemicals Ltd. [Central Bank of India v. Siriguppa
Sugars & Chemicals Ltd., (2007) 8 SCC 353 : (2007) 2 SCC
(L&S) 919], while adjudicating a similar matter, this Court
has held as under : (SCC pp. 360-61, para 17)

“17. Thus, going by the principles governing the

matter propounded by this Court there cannot be any
doubt that the rights of the appellant Bank over the
pawned sugar had precedence over the claims of the
Cane Commissioner and that of the workmen. The
High Court was, therefore, in error in passing an
interim order to pay parts of the proceeds to the Cane
Commissioner and to the Labour Commissioner for
disbursal to the cane growers and to the employees.
There is no dispute that the sugar was pledged with
the appellant Bank for securing a loan of the first
respondent and the loan had not been repaid. The
goods were forcibly taken possession of at the
instance of the revenue recovery authority from the
custody of the pawnee, the appellant Bank. In view
of the fact that the goods were validly pawned to
the appellant Bank, the rights of the appellant
Bank as pawnee cannot be affected by the orders
of the Cane Commissioner or the demands made
by him or the demands made on behalf of the
workmen. Both the Cane Commissioner and the
workmen in the absence of a liquidation, stand
 VERDICTUM.IN

16

only as unsecured creditors and their rights

cannot prevail over the rights of the pawnee of
the goods.”
(emphasis supplied)

48. The Bombay High Court in Krishna Lifestyle

Technologies Ltd. v. Union of India [Krishna Lifestyle
Technologies Ltd. v. Union of India, 2008 SCC OnLine Bom
137] , wherein the issue for consideration was
“whether tax dues recoverable under the provisions of
the Central Excise Act, 1944 have priority of claim over
the claim of secured creditors under the provisions of
the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002” held that : (SCC OnLine Bom paras 19-20)

“19. Considering the language of Section

35 and the decided case law, in our opinion it
would be of no effect, as the provisions of
the SARFAESI Act override the provisions of the
Central Sales Tax Act and as such the priority
given to a secured creditor would override
Crown dues or the State dues.

20. Insofar as the SARFAESI Act is concerned a

Full Bench of the Madras High Court in UTI Bank
Ltd. v. CCE [UTI Bank Ltd. v. CCE, 2006 SCC OnLine
Mad 1182 (FB)] has examined the issue in depth. The
Court was pleased to hold that tax dues under the
Customs Act and Central Excise Act, do not have
priority of claim over the dues of a secured creditor as
there is no specific provision either in the Central
Excise Act or the Customs Act giving those dues first
charge, and that the claims of the secured creditors
will prevail over the claims of the State. Considering
the law declared [Ed. : The reference appears to be
to Dena Bank v. Bhikhabhai Prabhudas Parekh & Co.,
(2000) 5 SCC 694] by the Supreme Court in the
matter of priority of State debts as already discussed
and the provision of Section 35of the SARFAESI Act we
are in respectful agreement with the view taken by the
Madras High Court [UTI Bank Ltd. v. CCE, 2006 SCC
OnLine Mad 1182 (FB)] .”
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17

(emphasis supplied)

49. An SLP (No. 12462/2008) against the above

judgment of the Bombay High Court stands dismissed by this
Court on 17-7-2009 [Union of India v. Krishna Life Style
Technologies Ltd., 2009 SCC OnLine SC 1952] by relying
upon the judgment in Union of India v. SICOM Ltd. [Union of
India v. SICOM Ltd., (2009) 2 SCC 121] , wherein the
question involved was “Whether realisation of the duty
under the Central Excise Act will have priority over the
secured debts in terms of the State Financial
Corporation Act, 1951” and this Court held as under :
(SICOM case [Union of India v. SICOM Ltd., (2009) 2 SCC
121] , SCC p. 126, para 9)

“9. Generally, the rights of the crown to recover

the debt would prevail over the right of a subject.
Crown debt means the ‘debts due to the State or
the King; debts which a prerogative entitles the
Crown to claim priority for before all other
creditors’. [See Advanced Law Lexicon by P.
Ramanatha Aiyar (3rd Edn.) p. 1147]. Such creditors,
however, must be held to mean unsecured creditors.
Principle of Crown debt as such pertains to the
common law principle. A common law which is a law
within the meaning of Article 13 of the Constitution is
saved in terms of Article 372 thereof. Those principles
of common law, thus, which were existing at the time
of coming into force of the Constitution of India are
saved by reason of the aforementioned provision. A
debt which is secured or which by reason of the
provisions of a statute becomes the first charge over
the property having regard to the plain meaning of
Article 372 of the Constitution of India must be held to
prevail over the Crown debt which is an unsecured
one.”
(emphasis supplied)

50. In view of the above, we are of the firm

opinion that the arguments of the learned counsel for
the appellant, on Issue 2, hold merit. Evidently, prior
to insertion of Section 11-E in the Central Excise Act,
1944 w.e.f. 8-4-2011, there was no provision in the
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1944 Act inter alia, providing for first charge on the

property of the assessee or any person under the 1944
Act. Therefore, in the event like in the present case,
where the land, building, plant, machinery, etc. have
been mortgaged/hypothecated to a secured creditor,
having regard to the provisions contained in Sections
2(1)(zc) to (zf) of the SARFAESI Act, 2002, read with
provisions contained in Section 13 of the SARFAESI Act,
2002, the Secured Creditor will have a first charge on
the secured assets. Moreover, Section 35 of
the SARFAESI Act, 2002 inter alia, provides that the
provisions of the SARFAESI Act, shall have overriding
effect on all other laws. It is further pertinent to note
that even the provisions contained in Section 11-E of
the Central Excise Act, 1944 are subject to the
provisions contained in the SARFAESI Act, 2002.

51. Thus, as has been authoritatively established by

the aforementioned cases in general, and Union of
India v. SICOM Ltd. [Union of India v. SICOM Ltd., (2009) 2
SCC 121] in particular, the provisions contained in
the SARFAESI Act, 2002, even after insertion of Section 11-E
in the Central Excise Act, 1944 w.e.f. 8-4-2011, will have an
overriding effect on the provisions of the 1944 Act.

52. Moreover, the submission that the validity of

the confiscation order cannot be called into question
merely on account of the appellant being a secured
creditor is misplaced and irrelevant to the issue at
hand. The contention that a confiscation order cannot be
quashed merely because a security interest is created in
respect of the very same property is not worthy of
acceptance. However, what is required to be appreciated is
that, in the present case, the confiscation order is not being
quashed merely because a security interest is created in
respect of the very same property. On the contrary, the
confiscation orders, in the present case, deserve to be
quashed because the confiscation orders themselves lack any
statutory backing, as they were rooted in a provision that
stood omitted on the day of the passing of the orders.
Hence, it is this inherent defect in the confiscation orders
that paves way for its quashing and not merely the fact that
 VERDICTUM.IN

19

a security interest is created in respect of the very same

property that the confiscation orders dealt with.

53. Further, the contention that in the present

case, the confiscation proceedings were initiated
almost 8-9 years prior to the charge being created in
respect of the very same properties in favour of the
bank is also inconsequential. The fact that the charge
has been created after some time period has lapsed
post the initiation of the confiscation proceedings, will
not provide legitimacy to a confiscation order that is
not rooted in any valid and existing statutory
provision.

54. To conclude, the Commissioner of Customs

and Central Excise could not have invoked the powers
under Rule 173-Q(2) of the Central Excise Rules, 1944
on 26-3-2007 and 29-3-2007 for confiscation of land,
buildings, etc. when on such date, the said Rule 173-
Q(2) was not in the statute books, having been
omitted by a Notification dated 12-5-2000. Secondly,
the dues of the secured creditor i.e. the appellant
Bank, will have priority over the dues of the Central
Excise Department, as even after insertion of Section
11-E in the Central Excise Act, 1944 w.e.f. 8-4-2011,
the provisions contained in the SARFAESI Act, 2002 will
have an overriding effect on the provisions of the
Central Excise Act, 1944.”

(Emphasis supplied)

The Apex Court considers identical circumstance. The dues in the

case before the Apex Court were that of the Department of Central

Excise. The Apex Court holds that debt owed to the Crown or the

State cannot take away the right of a secured creditor in the light of

Section 26E and Section 35 of the Act supra.

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20

12. The Apex Court considering the entire spectrum of law

holds that dues of the secured creditor, the Bank or any other

financial institution will have priority over the dues of the Central

Excise Department under the Central Excise Act. The Apex Court

holds the provisions of the SARFAESI Act, 2002 will have overriding

effect on the provisions of the Central Excise Act. 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.

13. The Sub-Registrar can act only within the four corners of

the Registration Act and the Registration Rules framed by the State.

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.

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14. 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. Therefore, it

is necessary for the State Government to issue 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 supra as acts of Sub-Registrars

 VERDICTUM.IN

22

are driving every person who is denied registration to the doors of

this Court unnecessarily and if the Sub-Registrar would not register

a document, if it is found to be in tune with law, the delay in

registration would be attributable only to those Sub-Registrars, who

will be saddled with exemplary costs when such cases are brought

before this Court seeking a direction for registration of a document.

15. For the aforesaid reasons, the following:

ORDER

(i) The writ petition is allowed.

(ii) Mandamus issues to the 2nd respondent/Sub-

Registrar to register the document brought before
him by the petitioner forthwith; the moment copy of
this order is brought to his notice, without brooking
any delay.

(iii) The State Government is directed to issue a Circular

to all the Sub-Registrars in the State in tune with
this order so that persons, who are wanting to get
their documents registered, need not every time
knock at the doors of this Court.
 VERDICTUM.IN

23

(iv) The Circular to be so issued shall bear reference to

the Rules and the judgment of the Apex Court
quoted in this order.

(v) Compliance with issuance of Circular be reported to

this Court within eight weeks from the date of
receipt of a copy of this order.

Sd/-
JUDGE

nvj
CT:SS