The State Of Punjab vs M/S Ferrous Alloy Forgings P Ltd.

Court: Supreme Court
Case type: Civil Appeal
Decided on: 19-11-2024

<pre> REPORTABLE
2024 INSC 890
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.12527 of 2024
(Arising out of SLP(C) No.23347 of 2014)
THE STATE OF PUNJAB & ANR. Appellant(s)
 VERSUS
M/S FERROUS ALLOY FORGINGS P LTD. & ORS. Respondent(s)
 
O R D E R
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.
Signature Not Verified
Digitally signed by
VISHAL ANAND
Date: 2024.11.22
18:01:13 IST
Reason:
1

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 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.
2

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”
3

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)
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 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
5

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
6

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.
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
7

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.
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
8

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. 
…………………………………………J. 
 (J.B. PARDIWALA)
…………………………………………J. 
 (R. MAHADEVAN)
NEW DELHI;
19TH NOVEMBER, 2024.
9

ITEM NO.7 COURT NO.15 SECTION IV-B
 S U P R E M E C O U R T O F I N D I A
 RECORD OF PROCEEDINGS
Petition for Special Leave to Appeal (C) No.23347/2014
[Arising out of impugned final judgment and order dated 28-11-2013
in CWP No. 11055/2001 passed by the High Court of Punjab & Haryana 
at Chandigarh]
THE STATE OF PUNJAB & ANR. Petitioner(s)
 VERSUS
M/S FERROUS ALLOY FORGINGS P LTD. Respondent(s)
 
Date : 19-11-2024 This petition was called on for hearing today.
CORAM : 
 HON'BLE MR. JUSTICE J.B. PARDIWALA
 HON'BLE MR. JUSTICE R. MAHADEVAN
For Petitioner(s) 
 Mr. Karan Sharma, AOR
 Mr. Abhishek Budhiraja, Adv.
For Respondent(s) 
 Mr. Siddharth Batra, AOR
 Mr. Rhythm Katyal, Adv.
 Mr. Samar Ahluwalia, Adv.
 Ms. Archna Yadav, Adv.
 Mr. Chinmay Dubey, Adv.
 Ms. Shivani Chawla, Adv.
 Mr. Ayushmaan Bhutani, Adv. 
 UPON hearing the counsel the Court made the following
 O R D E R
1. Leave granted.
2. The appeal is dismissed, in terms of the signed Reportable
order.
3. Pending applications, if any, also stand disposed of.
 (VISHAL ANAND) (POOJA SHARMA)
ASTT. REGISTRAR-cum-PS COURT MASTER (NSH)
(Signed Reportable Order is placed on the file)
10</pre>