A sale certificate issued pursuant to a public auction under the IBC is not compulsorily registrable under Section 17(1) of the Registration Act - Bombay HC
Introduction
The Bombay High Court, in Rajaram
Food Products India Limited v. Joint District Registrar (Class-1) and Collector
of Stamps, Nashik & Ors., has reaffirmed an important proposition
concerning the stamp-duty and registration consequences of sale certificates
issued pursuant to auction sales conducted during liquidation proceedings under
the Insolvency and Bankruptcy Code, 2016 (“IBC”).
The Court held that a sale
certificate issued by a liquidator following a public auction under the IBC is not
compulsorily registrable, and that where the certificate is merely
forwarded to the registering authority for being filed in Book No. 1
under Section 89(4) of the Registration Act, 1908, no stamp duty or
registration fee is payable merely on account of such filing.
The judgment is particularly
significant because the State authorities sought to rely upon the Maharashtra
amendment introducing Section 17(1)(g) of the Registration Act,
contending that a sale certificate issued under the IBC attracted registration
and stamp duty. The High Court rejected that contention, holding, inter alia,
that the IBC is not a “recovery Act”, and that the specific exemption
contained in Section 17(2)(xii) applies to a certificate of sale issued
pursuant to a public auction.
The decision also reinforces
the Supreme Court’s exposition in State of Punjab v. Ferrous Alloy Forgings
Pvt. Ltd., which had settled the distinction between the transfer of title
pursuant to confirmation of an auction sale and the subsequent issuance of a
sale certificate evidencing that title.
I. Facts of the Case
M/s. Gonglu
Agro Pvt. Ltd., the corporate debtor, underwent
Corporate Insolvency Resolution Process (“CIRP”) under the IBC. Since the CIRP
did not result in an approved resolution plan, the National Company Law
Tribunal, Chennai, by order dated 5 January 2024, directed liquidation
of the corporate debtor and appointed Respondent No. 5 as liquidator.
The liquidator
conducted an e-auction on 30 December 2024 in respect of an immovable
property belonging to the corporate debtor. Rajaram Food Products India Limited
emerged as the successful bidder. After depositing the entire sale
consideration, the liquidator issued a sale certificate dated 30 January
2026 in favour of the petitioner.
The liquidator
thereafter forwarded the sale certificate to the Joint District Registrar and
Sub-Registrar for the action contemplated under Section 89(4) of the
Registration Act. The petitioner also represented to the registration
authorities that the sale certificate was not compulsorily registrable and that
only a copy was required to be entered in Book No. 1.
The registration
authorities, however, passed an order dated 16 February 2026, holding
that the sale certificate issued pursuant to proceedings under the IBC
attracted stamp duty under Article 16 of Schedule I of the Maharashtra Stamp
Act, 1958.
An appeal
preferred against that order was dismissed as not maintainable on the ground
that the authority’s order had not quantified or computed any specific stamp
duty liability. The petitioner consequently approached the Bombay High Court
under Article 226 of the Constitution.
II. Issues Before the
High Court
The
principal questions arising for consideration were:
- Whether a sale certificate issued by a liquidator pursuant to a
public auction conducted under the IBC is compulsorily registrable under
Section 17 of the Registration Act, 1908.
- Whether such a sale certificate attracts stamp duty merely
because it is required to be forwarded to the registering authority and
filed in Book No. 1 under Section 89(4).
- Whether the Maharashtra amendment introducing Section 17(1)(g),
relating to sale certificates issued under a “recovery Act”, applies to a
sale conducted under the IBC.
- Whether the liquidator conducting a public auction pursuant to
an order of the NCLT falls within the expression “Civil or Revenue
Officer” occurring in Section 17(2)(xii) of the Registration Act.
- Whether the State authorities could sustain the impugned order
by relying, in their affidavit, upon reasons which were not contained in
the original order.
III. Statutory Framework
The judgment
turns principally upon the interplay between the Registration Act, 1908,
the Maharashtra Stamp Act, 1958, and the IBC.
A. Section 17 of
the Registration Act
Section 17
identifies documents which are compulsorily registrable.
The Maharashtra
amendment introduced Section 17(1)(g), covering:
“sale certificate
issued by any competent officer or authority under any recovery Act.”
At the same time,
Section 17(2)(xii) excludes from compulsory registration a certificate of sale
granted to a purchaser of property sold by public auction by a Civil or
Revenue Officer.
The distinction
between these provisions became central to the decision.
B. Section 89(4)
Section 89 deals with copies of specified
orders, certificates and instruments which are required to be sent to the
registering officer and filed in Book No. 1.
In particular, Section 89(4) requires a
Revenue Officer granting a certificate of sale of immovable property sold by
public auction to forward a copy of the certificate to the registering officer,
who is required to file it in Book No. 1.
The statutory filing contemplated by
Section 89(4) is therefore fundamentally different from compulsory registration
of the original instrument.
C. Maharashtra Stamp Act
The State authorities relied upon
Section 2(g)(iv), Section 2(l), Section 3 and Article 16 of Schedule I
of the Maharashtra Stamp Act.
The State’s case was essentially
that a sale certificate constitutes a conveyance/instrument involving transfer
of property and consequently attracts stamp duty.
IV. Submissions of the
Parties
Petitioner’s Submissions
The petitioner relied principally
upon the Supreme Court’s judgment in State of Punjab v. Ferrous Alloy
Forgings Pvt. Ltd., contending that the law was already settled that a sale
certificate issued following an auction sale does not require compulsory
registration and does not attract stamp duty merely because a copy is required
to be filed under Section 89(4).
Reliance was also placed upon:
·
Vishal Laxman Arkal v.
Inspector General of Registration, 2025 SCC OnLine
Bom 4727; and
·
Khush Housing Finance Pvt.
Ltd. v. State of Maharashtra, order dated 27
January 2026 in W.P. No. 3692 of 2023.
The petitioner further argued that
the IBC is not a recovery statute and therefore Section 17(1)(g) could not be
invoked.
Reliance was placed on the Supreme
Court’s decisions in:
·
Glas Trust Company LLC v.
Byju Raveendran;
·
Tottempudi Salalith v. State
Bank of India; and
·
Hindustan Construction
Company Ltd. v. Union of India,
for the proposition that the IBC is
not a debt-recovery mechanism but a legislation directed towards resolution and
revival of distressed corporate entities.
State’s Submissions
The State authorities contended that the
sale certificate constituted an instrument/conveyance under the Maharashtra
Stamp Act and therefore attracted stamp duty under Article 16 of Schedule I.
They additionally relied upon
Maharashtra’s insertion of Section 17(1)(g), arguing that the sale certificate
had been issued by an authority under proceedings having the character of
recovery proceedings.
V. Case Law
Considered by the Court
1. State of
Punjab v. Ferrous Alloy Forgings Pvt. Ltd., 2024 SCC OnLine SC 3372
This
was the principal authority.
The
Supreme Court held that the transfer of title takes place upon the successful
completion and confirmation of the auction sale. The subsequent sale
certificate is essentially evidence of the title already acquired and
does not itself create or extinguish title.
Consequently,
the sale certificate does not require compulsory registration under Section
17(1).
The
Supreme Court further held that the copy of the sale certificate is to be
forwarded to the registering authority for filing in Book No. 1 under
Section 89(4).
Importantly,
stamp duty becomes relevant where the purchaser subsequently uses the sale
certificate for another purpose requiring such payment; merely retaining the
certificate in its original form does not attract stamp duty.
This
principle became the foundation of the Bombay High Court’s decision.
2. Municipal
Corporation of Delhi v. Pramod Kumar Gupta, (1991) 1 SCC 633
The
Supreme Court had earlier explained the legal sequence in a court auction.
Once
the auction is confirmed under Order XXI Rule 92 CPC, the sale becomes final.
The sale certificate issued under Order XXI Rule 94 is merely a formal
declaration/evidence of the completed transaction.
The
issuance of the certificate does not itself create or extinguish title and
therefore does not attract stamp duty applicable to an instrument of sale.
3. Shanti
Devi L. Singh v. Tax Recovery Officer, (1990) 3 SCC 605
The
Supreme Court held that because a certificate of sale is not compulsorily
registrable under Section 17(2)(xii), the auction purchaser’s title is not
affected by non-registration of the sale certificate.
4. B. Arvind
Kumar v. Government of India, (2007) 5 SCC 745
The
Supreme Court reiterated that where property is sold by public auction pursuant
to an order of a court, acceptance of the bid and confirmation of the sale vest
title in the purchaser.
The
sale certificate is merely evidence of that title. No further deed of transfer
from the court is contemplated.
The
Court also recognised the statutory exemption under Section 17(2)(xii).
5. Esjaypee
Impex (P) Ltd. v. Assistant General Manager and Authorised Officer, Canara
Bank, (2021) 11 SCC 537
A
three-Judge Bench of the Supreme Court clarified the combined operation of
Sections 17(2)(xii) and 89(4).
The
auction purchaser is entitled to receive the original sale certificate, while a
copy is forwarded to the Sub-Registrar for filing in Book No. 1.
Thus,
filing under Section 89(4) does not convert the sale certificate into a
compulsorily registrable instrument.
6. Inspector
General of Registration v. G. Madhurambal, 2022 SCC OnLine SC 2079
The
Supreme Court held that a certificate of sale cannot be regarded as a
conveyance attracting stamp duty merely because it evidences an auction sale.
Once
the validated certificate is issued and a copy forwarded to the registration
authorities for filing in Book No. 1, the statutory mechanism is complete
and no further registration action is required.
7. Vishal
Laxman Arkal v. Inspector General of Registration, 2025 SCC OnLine Bom 4727
The
Bombay High Court applied the Supreme Court’s principles even in the context of
an auction conducted under the SARFAESI Act, 2002.
The
decision was relied upon to reinforce the proposition that the sale certificate
itself does not become compulsorily registrable merely because it evidences a
statutory auction sale.
8. Glas Trust
Company LLC v. Byju Raveendran, (2025) 3 SCC 625
The
case was relied upon for the broader proposition concerning the nature and
object of the IBC.
The
Bombay High Court treated the Supreme Court’s observations as reinforcing the
proposition that the IBC is not intended to function as a conventional
debt-recovery enactment.
9. Tottempudi
Salalith v. State Bank of India, (2024) 1 SCC 24
The
judgment was relied upon in support of the proposition that the IBC should not
be characterised as a debt-recovery statute.
10. Hindustan
Construction Company Ltd. v. Union of India, (2020) 17 SCC 324
The
Supreme Court’s understanding of the IBC as a framework concerned with
resolution and revival, rather than merely recovery of debts, was again relied
upon by the Bombay High Court.
The
Court also referred to Swiss Ribbons (P) Ltd. v. Union of India,
(2019) 4 SCC 17, as part of the jurisprudential foundation for understanding
the IBC’s object.
VI. Court’s Analysis
A. Filing under
Section 89(4) is not Registration
The Court reaffirmed the conceptual distinction between registration
and filing.
Section 17(2)(xii) removes the relevant sale certificate from the
category of compulsorily registrable documents. Section 89(4), on the other
hand, creates a separate statutory obligation to forward a copy of the
certificate to the registering authority for filing in Book No. 1.
Therefore, compliance with Section 89(4) cannot be equated with
compulsory registration of the sale certificate.
The Court expressly held that the sale certificate was not
compulsorily registrable and that merely filing its copy in Book No. 1 was
sufficient.
B. Section
17(2)(xii) Prevails in the Context of a Public Auction
The Court attached significance to the language employed by
Parliament in the two provisions.
Section 17(1)(g), introduced by the Maharashtra amendment, refers to
a sale certificate issued by a competent authority under a “recovery Act”.
In contrast, Section 17(2)(xii) specifically refers to property sold
by “public auction” by a Civil or Revenue Officer.
The Bombay High Court considered this distinction material. The IBC
auction in the present case was indisputably a public auction conducted by the
liquidator pursuant to the liquidation proceedings ordered by the NCLT.
Consequently, Section 17(2)(xii) squarely applied.
VII. IBC is Not a
“Recovery Act”
Perhaps
the most significant aspect of the judgment is the Court’s treatment of the
Maharashtra amendment.
The
State sought to bring the sale certificate within Section 17(1)(g) by
characterising the IBC proceedings as proceedings under a “recovery Act”.
The
Court rejected this approach.
Drawing
upon Glas Trust, Tottempudi Salalith, Hindustan Construction
Company and Swiss Ribbons, the Court reiterated that the IBC is not
a debt-recovery legislation.
Its
primary objective is resolution and revival of a corporate debtor and
maximisation of the value of its assets. Liquidation is part of the statutory
insolvency framework when resolution fails; it does not transform the IBC
itself into a debt-recovery statute.
Accordingly,
the State could not invoke Section 17(1)(g) merely because the asset was sold
during liquidation.
The
Court additionally observed that Section 17(1)(g) does not itself refer to a sale
certificate arising from a public auction, whereas Section 17(2)(xii)
specifically does.
VIII. The
Liquidator as an Officer for the Purpose of Section 17(2)(xii)
The
Court further held that a liquidator conducting a public auction under the IBC
pursuant to orders of the NCLT qualifies as an officer falling within the scope
of Section 17(2)(xii).
Thus,
the statutory exemption was attracted on two interconnected bases:
1.
the sale was conducted by public
auction; and
2.
the sale certificate was issued
by the liquidator acting pursuant to the statutory insolvency process and NCLT
orders.
The
Court therefore concluded that Section 17(2)(xii) applied to the sale
certificate in question.
IX. An
Administrative Authority Cannot Improve Its Order Through an Affidavit
The
judgment contains another important administrative-law principle.
The
original order dated 16 February 2026 relied upon Article 16 of Schedule I
of the Maharashtra Stamp Act. It did not rely upon Section 17(1)(g) of the
Registration Act.
The
State authorities subsequently attempted to justify the order through their
affidavit by introducing Section 17(1)(g) as an additional ground.
The
Court held that an impugned administrative order must be defended on the
reasons contained in the order itself. The authority cannot supplement or
improve its reasoning subsequently through an affidavit filed in court.
Although
the Court nevertheless considered the Section 17(1)(g) argument on merits, it
found that the provision did not assist the State in any event.
X. The
Qualification: When Can Stamp Duty Become Payable?
The
judgment does not establish an absolute proposition that a sale
certificate can never attract stamp duty.
The
Court carefully preserved the qualification articulated by the Supreme Court in
State of Punjab v. Ferrous Alloy Forgings.
The
exemption operates so long as the sale certificate remains as it is and
is merely retained by the auction purchaser while its copy is filed under
Section 89(4).
If
the purchaser subsequently uses the sale certificate for another purpose for
which the law requires stamping or registration, the relevant stamp-duty
consequences may arise.
This
distinction is important in practice: the judgment concerns the stamp-duty
liability at the stage of statutory filing under Section 89(4), and not
necessarily every subsequent transaction or use of the certificate.
XI. Conclusion and Final
Order
The
Bombay High Court allowed the writ petition and set aside the order dated 16
February 2026.
The
Court directed the registration authorities to:
·
accept the sale certificate
dated 30 January 2026;
·
file it in Book No. 1
under Section 89(4) of the Registration Act;
·
do so without insisting upon
payment of stamp duty or registration fees.
The
Court also declared that the sale certificate issued by the liquidator under
the IBC was not compulsorily registrable under Section 17 and was exempt from
stamp duty when filed under Section 89(4).
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