In a significant ruling, the Karnataka High Court has decided that sub-registrars can't refuse to sign up belongings documents because of exquisite tax dues owed by using borrowers to the Income Tax Department. This landmark selection changed into issued whilst addressing a petition filed with the aid of a land customer affected by this type of refusal.
The Case Background
Petitioner Bharath Gowda participated in an auction held through Canara Bank in March 2022. He efficaciously bid for a 6,000-square-foot mortgaged belongings located in Hombegowdanagar, Wilson Garden, Bengaluru. When Gowda approached the JP Nagar sub-registrar workplace to check in the sale certificates issued with the aid of Canara Bank, he became informed that the registration couldn't continue because of his pending profits tax dues. Following a lack of response to his formal illustration submitted on February 12, 2024, Gowda sought redress from the Karnataka High Court.
Legal Arguments
Gowda's criminal crew argued that the auction proceedings have been performed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). They emphasised that this Act takes priority over different laws, and therefore, pending tax dues need to now not restrict the registration system. They asserted that the sub-registrar’s refusal to sign in the sale certificate based on those dues was unjustified.
On the other hand, the authorities maintained that income tax dues are statutory duties that need to be cleared to make sure that the property is unfastened from encumbrances. They argued that sub-registrars are certain to withhold registration if such statutory dues are pending, to defend the integrity of the registration process.
Court's Findings
The Registration Act's and its corresponding Rules' provisions were examined by the High Court. It concluded that the sub-registrar's authority to refuse registration is strictly governed by the conditions outlined in Rule 171 of the Registration Rules. Justice M Nagaprasanna, delivering the judgment, clarified that unless the conditions of Rule 171 are met, the sub-registrar lacks the jurisdiction to refuse registration of documents such as the sale certificate in question.
"The sub-registrar can act only within the four corners of the Registration Act and the Registration Rules framed by the state," Justice Nagaprasanna emphasised. The sub-registrar lacks the authority to deny registration of a document if none of the conditions outlined in Rule 171 of the Rules are met; the document in question at hand is the sale certificate."
Implications and Directives
The court directed the state government to issue the necessary circulars in accordance with Rule 171 and the relevant Supreme Court rulings. It warned that sub-registrars who unjustifiably delay the registration of documents, compliant with the law, could face exemplary costs.
This ruling reinforces the primacy of the SARFAESI Act in property transactions involving financial institutions and underscores the limited jurisdiction of sub-registrars concerning statutory dues. The judgment is expected to streamline property registrations and mitigate undue delays caused by unresolved tax obligations, thereby enhancing the efficiency of property transactions within the state.
Conclusion
The Karnataka High Court's decision marks a pivotal development in property law, ensuring that pending tax dues do not obstruct the legal process of property registration. This ruling provides clarity and protection for buyers acquiring property through bank auctions, reaffirming the legal precedence of the SARFAESI Act over other statutory obligations.
