ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VS S.P. VELAYUTHAM & ORS.

ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VS S.P. VELAYUTHAM & ORS. - Supreme Court Case Decision / Judgment 2022

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.27522753 OF 2022

(Arising out of Special Leave Petition(C) NOS.1966219663 OF 2021)

ASSET RECONSTRUCTION COMPANY

(INDIA) LIMITED …APPELLANT(S)

VERSUS

S.P. VELAYUTHAM & ORS. ...RESPONDENT(S)

J U D G M E N T

V. Ramasubramanian, J.

1. Asset Reconstruction Company (India) Limited, to whom the

Indian Bank assigned the loans and the underlying security of a

particular borrower, has come up with the above appeals challenging

the judgment of the Division Bench of the High Court of Judicature at

Madras, reversing the judgment of a learned Single Judge of the

Court, by which the learned Single Judge held the registration of a

saledeed by the Registering Authority to be null and void.

2. We have heard Mr. Guru Krishna Kumar and Mr. Nakul Devan,

learned senior counsel for the appellant, and Mr. Shyam Divan,

Mr. Atul Nanda and Mr. Mukul Rohatgi, learned senior counsel

appearing for the contesting respondents.

3. The brief facts necessary for the disposal of the appeals can be

summarised as follows:

(i) In the year 1992, the Indian Bank sanctioned financial

facilities to M.V.R. Group of Industries. According to the Indian Bank,

the borrower offered the immovable property covered by the document

now in dispute, as collateral security and a mortgage by deposit of title

deeds is said to have been created way back in the year 199596;

(ii) Alleging that the borrower defaulted in repayment of the

loan, Indian Bank filed an application before the Debts Recovery

Tribunal in the year 1996 under Section 19 of the Recovery of Debts

Due to Banks and Financial Institutions Act, 1993;

(iii) However, after the advent of the Securitisation Act, 2002,

the Bank issued a demand notice dated 15.12.2004 under Section

13(2) of the Securitisation Act. It was followed by a possession notice

dated 30.03.2005 under Section 13(4);

(iv) Thereafter, the respondent nos. 4 and 5 herein executed a

deed of Power of Attorney (‘PoA’ for short) on 23.08.2006 in favour of

Mr. S.P. Velayutham, the 1st respondent in one of these appeals and

the 6th respondent in the other appeal. This deed of Power of Attorney

contained an express prohibition for the agent to encumber the

properties. This deed of PoA was registered in the Office of the SubRegistrar, Alandur;

(v) By another deed of PoA dated 07.06.2007, the power of sale

is said to have been conferred upon the agent, but this deed of power

was unregistered;

(vi) On the basis of the original registered deed of PoA dated

23.08.2006 which did not confer a power of sale, Mr. S.P. Velayutham

sold the property to his son Amar (the 6th respondent in one of these

appeals and the 1st respondent in the other appeal) under a deed of

sale dated 05.07.2007;

(vii) In the meantime, Indian Bank which already initiated

proceedings under the Securitisation Act, assigned the debt and the

collateral security in favour of the appellant herein, which is an asset

reconstruction company. On the basis of such assignment, the

appellant issued a sale notice dated 05.08.2008;

(viii) However, Mr. Amar, executed a deed of settlement dated

13.10.2008 in favour of his father Mr. S.P. Velayutham, from whom he

had purchased the property;

(ix) While so, during the period 20092015, some

encroachments took place which led to the initiation of proceedings

under Section 145 Cr.P.C. The original borrowers also filed civil suits

and the appellant got themselves impleaded in those suits;

(x) Eventually, the appellant filed a writ petition in W.P.No.

33462 of 2014 seeking a declaration that the act of the SubRegistrar

in registering the sale deed executed by S.P. Velayutham in favour of

his son Amar, was null and void. The said writ petition was allowed by

a learned Judge on the ground that there was utter failure on the part

of the Registering Authority to follow the mandate of law as prescribed

in Sections 32 to 35 of the Registration Act, 1908 and that the

Registrar failed to verify the deed of PoA dated 23.08.2006, before

allowing registration of the sale deed executed on the basis of the said

power;

(xi) However, two intracourt appeals filed by the fatherson

duo, were allowed by the Division Bench primarily on the ground,

(1) that the appellant ought to have taken recourse to a civil suit; and

(2) that the appellant is guilty of violating the order passed by this

Court in the proceedings arising out of the order of the SubDivisional

Magistrate under Section 145 of the Cr.P.C., directing the parties to

approach the civil court. Aggrieved by this order of the Division Bench,

the appellant has come up with the above appeals.

4. Assailing the impugned order of the Division Bench of the High

Court, it is contended by the learned senior counsel for the appellants,

(i) that the High Court failed completely to appreciate that the

Registration Act, 1908, enjoins upon the Registering Authority to

verify “the person executing” the document sought to be registered;

(ii) that in cases where the statutory authorities fail to perform the

duties enjoined upon them, under specific provisions of the statute,

the jurisdiction of the High Court under Article 226 of the Constitution

does not stand ousted; (iii) that what was challenged before the High

Court in a petition under Article 226 was not the acts of individuals,

but the acts of omission and commission on the part of the Registering

Authority and hence the writ petition cannot be said to be not

maintainable; and (iv) that by an oversimplified process of reasoning,

the Division Bench of the High Court threw the appellant out of the

Court and also added insult to injury by commenting upon the

conduct of the appellant and imposing costs.

5. Supporting the impugned order, it is contended by Mr. Shyam

Divan, learned senior counsel appearing for Mr. S.P. Velayutham

(respondent no.6 in one of these appeals and respondent no.1 in the

other appeal), (i) that when admittedly title suits are pending and the

very appellant herein has got themselves impleaded therein, it was not

open to the appellant to resort to a shortcut method of invoking the

jurisdiction of the writ court; (ii) that when there are seriously

disputed questions of fact, with the contesting respondents (father and

son) tracing their title to an unbroken, unimpeachable chain of

registered documents dating back to 1929, the appellant could not

have invoked the writ jurisdiction of the High Court, after having got

an assignment deed from the Indian Bank just a few years ago in

2007; (iii) that the very right of the Indian Bank to claim the creation

of a mortgage in their favour, has come under cloud after the officials

of the Indian Bank and the borrowers got convicted by the Special

Court for the CBI cases in Calendar Case No. 36 of 1998 for various

offences punishable under Section 120B read with Sections 420, 467,

471 etc., and Section 13(2) read with Section 13(1)(c) and 13(1)(d) of

the Prevention of Corruption Act, 1988; (iv) that the attempt of the

appellant to invoke the writ jurisdiction of the High Court was in the

teeth of the judgment of this Court in SLP(Crl.)No.838 of 2015 dated

27.02.2015, which arose out of proceedings under Section 145 of the

Code of Criminal Procedure, 1973; (v) that despite this Court affirming

the judgment of the High Court relegating the appellant to a civil

court, the appellant took a chance by invoking the writ jurisdiction of

the High Court suppressing material facts; and (vi) that the appellant,

whose very locus to stake a claim on the properties is disputed, was

rightly non suited by the High Court.

6. Mr. Atul Nanda, learned senior counsel appearing for one of the

parties, while adopting the contentions of Mr. Shyam Divan, added

that when the Special Court for CBI cases has found the very creation

of the mortgage in favour of Indian Bank to be a product of fraud and

forgery, an institution claiming to be the assignee of the mortgagee

could not have invoked the writ jurisdiction of the High Court,

especially after having got impleaded in the civil suits.

7. Mr. Mukul Rohatgi, learned senior counsel appearing for one of

the contesting respondents invited our attention to the statutory

provisions and the decision of this Court in Rajni Tandon vs. Dulal

Ranjan Ghosh Dastidar & Anr1

, and contended that the

requirement of authentication of PoA by the Registrar under Section

33(1), was mandatory only in cases where the person executing the

document is different from the person presenting it for registration

and that wherever the agent himself has signed the deed which is

presented for registration, he becomes the executant of the document,

leaving no role for the Registrar to probe.

8. We have carefully considered the above submissions.

1 (2009) 14 SCC 782

9. The limited question that arises for our consideration is as to

whether the invocation of the writ jurisdiction of the High Court by the

appellant was right, especially when civil suits at the instance of third

parties are pending and when the appellant had already been directed

by this Court, in proceedings arising under section 145 of the Code of

Criminal Procedure, to move the civil court?

10. To enable (or disable?) us to find an answer to the above

question, the learned counsel on both sides took us through some

provisions of the Registration Act, 1908 and a few decisions of this

Court. We shall now take a look at them.

11. There is and there can be no dispute about the fact that while

the Registering Officer under the Registration Act, 1908, may not be

competent to examine whether the executant of a document has any

right, title or interest over the property which is the subject matter of

the document presented for registration, he is obliged to strictly

comply with the mandate of law contained in the various provisions of

the Act. Therefore let us take a look at the scheme of the Act.

12. The Registration Act, 1908 is divided into XV parts. Part III

comprising of Sections 17 to 22 contains provisions relating to

registerable documents; PartIV of the Act contains prescriptions

regarding the time of presentation of documents for registration; PartV contains provisions prescribing and regulating the place of

registration of documents; PartVI contains provisions relating to

presentation of documents for registration and the procedure on

admission and denial of execution; PartVII contains provisions for

enforcing appearance of executants and witnesses; PartXI contains

provisions relating to the duties and powers of Registering Officers and

PartXII contains provisions relating to refusal to register and the

remedies available against such refusal.

13. Before we look at the relevant provisions of the Registration Act,

1908, it is necessary to note that “Registration of deeds and

documents” falls in Entry 6 of List III (Concurrent List) of the

SEVENTH SCHEDULE of the Constitution. Therefore, the Registration

Act, 1908, which is a Central Act, can be seen as something which

provides only a template upon which the States are entitled to make

amendments. This is why amendments by States galore in the

Registration Act, 1908. Therefore, any interpretation of the provisions

of the Act, should be in consonance with the scheme of the Act as

applicable to the State involved in the litigation. For instance,

registration of certain documents may be optional in some States but

mandatory in some other States. Therefore, the interpretation made by

this Court, of a provision as amended in its application to a particular

State, cannot be applied blindly while interpreting the same provision

as applicable to another State. Keeping this aspect in mind, let us now

peep into the statutory provisions.

14. Section 32 of the Act mandates that every document to be

registered under the Act, irrespective of whether such a registration is

compulsory or optional, shall be presented by any of the persons

mentioned therein. Section 32 reads as follows:

“32. Persons to present documents for registration.—Except

in the cases mentioned in sections 31, 88 and 89, every

document, to be registered under this Act, whether such

registration be compulsory or optional, shall be presented at the

proper registrationoffice,—

(a) by some person executing or claiming under the

same, or, in the case of a copy of a decree or

order, claiming under the decree or order, or

(b) by the representative or assign of such a person,

assign, duly authorised by powerofattorney

executed and authenticated in manner

hereinafter mentioned.”

15. The words “such person” appearing in clauses (b) and (c) of

Section 32, correlate to the words “person executing or claiming under

the same”, appearing in clause (a) of Section 32. In other words,

clause (a) covers both the executant as well as the claimant of the

document. Therefore, clauses (b) and (c) cover several persons who

may represent the executant or the claimant. Since the controversy in

several decisions of this Court has revolved around clause (c) of

Section 32, it would be useful, for the purpose of easy appreciation, to

break clause (c) into its several components as follows:

(i) by the agent of the person executing the document;

(ii) by the agent of the person claiming under the document;

(iii) by the agent of the representative of the person executing

the document;

(iv) by the agent of the representative of the person claiming

under the document;

(v) by the agent of the assign of the person executing the

document;

(vi) by the agent of the assign claiming under the document.

It must be noted that the word “agent” appearing in clause (c) of

section 32 goes not only with the words “such a person”, but also

with the words “representative” and “assign”. This is for the reason

that ‘representative’ and ‘assign’ are independently covered by clause

(b) and hence if these words do not go with the word ‘agent’ then their

appearance in clause (c) would be redundant.

16. By virtue of the 2nd part of clause (c) of Section 32, it is necessary

that if a document for registration is presented by any of the aforementioned six categories of persons, he should have been “duly

authorized by a PoA executed and authenticated in the manner

mentioned in the other provisions of the Act”. In other words, in cases

where a document is presented for registration by the agent, (i) of the

executant; or (ii) of the claimant; or (iii) of the representative or

assign of the executant or claimant, the same cannot be accepted for

registration unless the agent is duly authorized by a PoA executed

and authenticated in the manner provided in the Act.

17. Section 33 contains prescriptions regarding the types of PoA,

which alone shall be recognized, for the purposes of Section 32.

Section 33 reads as follows:

33. Powerofattorney recognizable for purposes of section

32.—(l) For the purposes of section 32, the following powersofattorney shall alone be recognized, namely:—

(a) if the principal at the time of executing the

powerofattorney resides in any part of India

in which this Act is for the time being in

force, a powerofattorney executed before and

authenticated by the Registrar or SubRegistrar within whose district or subdistrict the principal resides;

(b) if the principal at the time aforesaid resides in

any part of India in which this Act is not in

force, a powerofattorney executed before and

authenticated by any Magistrate;

reside in India, a powerofattorney executed

before and authenticated by a Notary Public,

or any Court, Judge, Magistrate, Indian

Consul or ViceConsul, or representative of

the Central Government:

Provided that the following persons shall not be required to

attend at any registrationoffice or Court for the purpose of

executing any such powerofattorney as is mentioned in

clauses (a) and (b) of this section, namely:—

(i) persons who by reason of bodily infirmity are

unable without risk or serious inconvenience so

to attend;

(ii) persons who are in jail under civil or criminal

process; and

(iii) persons exempt by law from personal

appearance in Court.

(2) In the case of every such person the Registrar or SubRegistrar or Magistrate, as the case may be, if satisfied that the

powerofattorney has been voluntarily executed by the person

purporting to be the principal, may attest the same without

requiring his personal attendance at the office or Court

aforesaid.

(3) To obtain evidence as to the voluntary nature of the

execution, the Registrar or SubRegistrar or Magistrate may

either himself go to the house of the person purporting to be the

principal, or to the jail in which he is confined, and examine

him, or issue a commission for his examination.

(4) Any powerofattorney mentioned in this section may be

proved by the production of it without further proof when it

purports on the face of it to have been executed before and

authenticated by the person or Court hereinbefore mentioned in

that behalf.”

18. A careful look at Sections 32 and 33 will show that while

speaking about PoA, these provisions do not use the word

“registration”. While Section 32(c) uses the words “executed and

authenticated”, Section 33(1) uses the words “recognised” and

“authenticated”. Therefore it is clear that the word “authenticated”

is not to be understood to be the same as “registered”. The

reason why we say so is that Section 33(1) speaks only about

authentication and not registration and clauses (a), (b) and (c) of

Section 33(1) provides the list of persons competent to authenticate a

PoA. Persons who are empowered by clauses (a), (b) and (c) of subsection (1) of Section 33 to authenticate a PoA are as follows:

(i) The Registrar or the SubRegistrar within whose district or

subdistrict the principal resides, if such principal resides, at the time

of execution of the PoA, in any part of India to which this Act applies;

(ii) Any Magistrate, if the principal resides in any part of India

where this Act is not in force;

(iii) A Notary Public, any Court, Judge, Magistrate, Indian

Consul, Vice Consul or Representative of the Central Government, if

the principal does not reside in India.

19. It may be seen from the list of persons indicated above, that not

all of them are Registrars and SubRegistrars appointed in terms of

Section 6 of the Registration Act, 1908. Under the Act, the power of

registration is conferred only upon the Registrars and SubRegistrars appointed under the Act. But clauses (b) & (c) of

Section 33(1) speaks about persons other than Registrars and

SubRegistrars. This is why, Section 32(c) as well as Section 33

use only the expression “authenticated” and not the word

“registered”. But unfortunately several Courts have mixedup these

two words, resulting in applying the test in terms of Sections 17 and

18 for determining the validity of a PoA.

20. In fact the distinction between “authentication” and “registration”

is spelt out very clearly in the Tamilnadu Registration Rules. It may be

noted here that section 69(1) of the Registration Act, 1908, empowers

the Inspector General of Registration (i) to exercise general

superintendence over all the registration offices in the territories

under the State Government; and (ii) to make rules consistent with

the Act, in respect of matters provided in clauses (a) to (j) therein.

These rules, by virtue of subsection (2) of section 69, are required to

be submitted to the State Government for approval and to be

published in the official gazette after such approval. The rules so

made in terms of section 69, in the State of Tamil Nadu, provide

clarity on the distinction between authentication and

registration.

21. Rules 48 and 49 of the Tamilnadu Registration Rules read as

follows:

48. A power of attorney may be brought to a registering

officer (1) for authentication, or (2) for registration, or (3)

for both authentication and registration. In the first case, he

shall merely make the entry prescribed for authentication; in the

second case, he shall register the power in the same manner as

any other document; and in the third case, he shall first

authenticate the power and then admit it to registration in the

usual manner.

49. Although a power of attorney may be registered like any

other instrument, it is not valid for registration purposes unless

authenticated. When a power of attorney is brought to a

registering officer by a person who does not understand

the distinction between authentication and registration,

the registering officer should explain the difference to him

and give him such information as may be necessary.

22. After pointing out the distinction between authentication and

registration of a PoA, Rule 52 indicates the duty to be performed by

the Registering Officer, at 2 points of time, namely (i) at the time of

authentication; and (ii) when the power is revoked. Rule 52 reads as

follows:

52. (i) An abstract in the form printed in Appendix III shall be

retained of each power of attorney authenticated by a

registering officer whether such power is general or special,

registered or not registered. The abstract shall be signed by the

registering officer; and shall be filed in a separate file with a

serial number along with other powers retained under rule 46.

The notes of interlineations, blanks, erasures and alterations

made by the registering officer on the original power shall be

copied verbatim in the abstract.

(i) (a) Each registration office shall maintain a register of all

revocations of powers of attorney registered in, or communicated

to it.

(b) When notice of a revocation is given to a registering officer, he

shall send an intimation of the same to such other offices as

may be specified by the person revoking the power.

23. In fact, there is a separate chapter in Chapter X of the

Registration Rules of Tamilnadu, devoted to deeds of PoA. Rules 48,

49 and 52 which we have extracted above, are part of the said chapter.

Rule 46 spells out the procedure to be followed by the Registering

Officer when a document is presented for registration under a general

PoA and the procedure to be followed when the document is presented

under a Special PoA. It reads as follows:

46. (i) If a document is presented for registration under

special power of attorney, the power shall be retained an

filed in the office with the following endorsement

……………………. No…………….. of 19 ………..

Presented in connection with document No……………. of

19……….. of Book………., Vol………..

Date: Signature of Registering Officer.

(ii) If a document is presented for registration under general power

of attorney, the power shall be returned with the following

endorsement:

Presented in connection with document No……………. of

19……….. of Book………., Vol………..

Date: Signature of Registering Officer.

(iii) When a document is presented for registration by a

person entitled to present it and execution is admitted by an

agent under a power of attorney, the following endorsement

shall be made on the power, which shall be retained and filed, or

returned, according as it is a special or a general power

*No……………. of 19…… Presented in connection with

document No……………. of 19……….. of Book……….,

Vol………..

Date: Signature of Registering Officer.

24. Having seen (i) the distinction between authentication and

registration of a PoA; (ii) the obligation imposed by the Act and the

Rules, upon the Registering Officer while authenticating and/or

registering a PoA; (iii) the necessity for the Registering Officer to

maintain a track of revocation of deeds of PoA; and (iv) the different

requirements of Rule 46, relating to a document presented under a

general PoA and a document presented under a special PoA, let us

now turn to the other provisions.

25. Section 34 of the Act contains provisions regarding the enquiry to

be undertaken by the Registering Officer before registration. Section

34, in its application in the State of Tamilnadu, as amended by

Tamilnadu Amendment Act 28 of 2000, reads as follows:

34. Enquiry before registration by registering officer.—(l)

Subject to the provisions contained in this Part and in sections

41, 43, 45, 69, 75, 77, 88 and 89, no document shall be

registered under this Act, unless the persons executing such

document (and in the case of document for sale of property, the

persons claiming under that document)

, or their representatives,

assigns or agents authorized as aforesaid, appear before the

registering officer within the time allowed for presentation

under sections 23, 24, 25 and 26:

Provided that, if owing to urgent necessity or unavoidable

accident all such persons do not so appear, the Registrar, in

cases where the delay in appearing does not exceed four

months, may direct that on payment of a fine not exceeding ten

times the amount of the proper registration fee, in addition to

the fine, if any, payable under section 25, the document may be

registered.

(2) Appearances under subsection (1) may be simultaneous or

at different times.

(3) The registering officer shall thereupon—

(a) enquire whether or not such document was

executed by the persons by whom it purports to have

been executed;

2 Vide Tamil Nadu Act 28 of 2000, sec.3

(b) satisfy himself as to the identity of the persons

appearing before him and alleging that they have

executed the document (or they are claiming under

the document)

; and

representative, assign or agent, satisfy himself of

the right of such person so to appear.

(4) Any application for a direction under the proviso to subsection (1) may be lodged with a SubRegistrar, who shall

forthwith forward it to the Registrar to whom he is subordinate.

(5) Nothing in this section applies to copies of decrees or orders.

26. Subsection (3) of Section 34 imposes three obligations upon the

Registering Officer. These obligations are:

(i) To enquire whether or not such document was executed by

the person by whom it is claimed to have been executed;

(ii) To satisfy himself as to the identity of the person appearing

before him and claiming to have executed the document;

(iii) To satisfy himself about the right of any person appearing as

a representative, assign or agent, to so appear;

27. We may note that Sections 32(c), 34(1) and 34(3)(c) use the

expressions ‘agent’, ‘representative’ and ‘assign’. Though in common

parlance, we understand the power of attorney agent of a person to be

the representative of the principal, the words “agent” and

“representative” are used in Sections 32(c) and 34(3)(c) to mean

3 Vide Tamil Nadu Act 28 of 2000, sec.3

different persons. The word “representative” is defined in Section 2(10)

of the Registration Act “to include the guardian of a minor and the

committee or other legal curator of a lunatic or idiot”. The words “agent”

and “assign” are not defined in the Act. Therefore, we may justifiably

borrow the definition of the expression “agent” from Section 182 of the

Indian Contract Act, 1872, which defines an “agent” “to mean a person

employed to do any act for another or to represent another in dealings

with third person”.

28. Keeping the above definitions in mind, if we go back to Section

32(c) it could be seen that whenever the agent of, (i) the executant;

(ii) the claimant; (iii) a representative; or (iv) an assign, presents a

document for registration,

(1) he should have been authorised by PoA and

(2) such PoA should have been executed and authenticated in

the manner provided in clauses (a), (b) or (c) of subsection (1) of

Section 33. The requirement of registration depends upon the

State amendments.

29. What is covered by Section 32 (c) read with Section 33(1) is

something different from what is covered by Section 34(3). While

Section 32(c) read with Section 33(1) speaks about the entitlement of

the person to present a document for registration, Section 34(3)

speaks about the enquiry to be conducted and the satisfaction to be

arrived at by the Registering Officer. Section 34(3)(c) imposes an

obligation on the Registering Officer to satisfy himself about the right

of a person appearing as a representative, assign or agent. This

prescription has to be read with rule 46 of the Tamilnadu Rules.

30. Before we complete our discussion on the statutory scheme, it is

necessary to take note of few more provisions, applicable in the State

of Tamilnadu, which are of relevance. By Tamilnadu Act No.29 of

2012, Section 17(1) of the Registration Act, 1908 was amended so as

to insert clauses (f), (g), (h) and (i). Clause (h) so inserted, reads as

follows:

“Instruments of power of attorney relating to immovable

property other than those executed outside India”

31. Simultaneously, Section 28 was also amended by the State of

Tamilnadu to incorporate a proviso to the effect that a document

mentioned in Section 17(1)(h) may also be presented for registration in

the office of the SubRegistrar within whose jurisdiction the principal

ordinarily resides.

32. By the very same Tamilnadu Amendment Act 29 of 2012, two

more provisions were also inserted in the Registration Act, 1908. One

was Section 34B and another was Section 64A. Section 34B reads as

follows:

"34B. Procedure for Registration of document of Power of

Attorney relating to immovable property.Subject to the

provisions of this Act, no document of Power of Attorney relating

to immovable property shall be registered unless passport size

photographs and finger prints of the principal, the agent and of

the identifying witnesses are affixed to the document and the

agent has also signed such document.".

Section 64A reads as follows:

“64A. Procedure where instrument of Power of Attorney

presented in office of SubRegistrar relates to immovable

property not situate in subdistrict. Every SubRegistrar on

registering an instrument of Power of Attorney including

instrument of revocation or cancellation of such Power of

Attorney relating to immovable property not situate in his own

subdistrict, shall make a copy and send the same together with

a copy of the map or plan (if any) mentioned in section 21, to

every other SubRegistrar in whose subdistrict the whole or

any part of such property is situate and such SubRegistrar

shall file the same in his Book No.1:

Provided that where such instrument relates to immovable

property in several districts, shall forward the same to the SubRegistrars concerned, under intimation to the Registrar of every

district in which any part of such property is situate."

33. At this stage we should record that the dispute on hand relates

to a document executed and registered much before the Tamilnadu

Amendment Act 29 of 2012. But still we have taken note of it, not for

the purpose of applying it to this case, but for the purpose of flagging

certain concerns. Now that we have noticed various provisions of the

Act, let us see some factual aspects and then deal with the

contentions on both sides.

34. In the case on hand, the sale deed dated 05.07.2007 executed by

the father S.P. Velayutham, in favour of his son Amar, contained a

specific recital to the effect that the owners of the property had

appointed S.P. Velayutham, as their Power of Attorney, by a deed

dated 23.08.2006 to sell the property. But far from authorising the

power agent to sell the property, clause 7 of the registered deed of PoA

dated 23.08.2006, on the basis of which the sale deed was executed,

actually contained an express prohibition from creating any

encumbrance on the property. Clause 7 of the registered PoA dated

23.08.2006 reads as follows :

“(7) To negotiate with any third party/s claimant/s including

broker/s take the Banks and other financial institutions

claimant/s if any in the schedule mentioned properties and to

settle such claims and on, this behalf our attorney is

empowered to do all acts, deeds and things. To enter upon the

schedule mentioned properties for the survey of, the same. The

power agent herein appointed shall have no power to encumber

the schedule mentioned properties for the survey of the same.

The power agent herein appointed shall have no power to

encumber the schedule mentioned properties without the

written consent of us.”

35. Apart from the fact that clause 7 extracted above expressly

prohibited the power to encumber, there was also no stipulation

authorising S.P. Velayutham to appear before any Registering Officer

for the purpose of sale, as an agent. Though clause 5 authorised the

agent to appear before the Registrar and to admit execution, the same

was specifically in relation to the execution of gift deeds in favour of

municipalities, corporations or other authorities, for the purpose of

development of the layout, formation of the roads etc. Similarly,

clause 6 of the deed of PoA also contained a limited power to appear

before the SubRegistrar, but the same was also restricted to certain

things mentioned in clause 6 itself.

36. Interestingly, the contesting respondents relied upon another unregistered deed of PoA dated 07.06.2007, which contained a power to

sell. Despite this document being dated 07.06.2007 and despite the

date of execution of the sale deed being 05.07.2007, there was no

reference to this PoA in the sale deed. This deed of PoA has surfaced

much later and the fraudulent nature of this deed of PoA is patently

visible, in view of certain recitals contained therein. The relevant

recitals contained in the unregistered PoA dated 07.06.2007 reads as

follows:

“…AND WHEREAS, under the said General Power of Attorney

Deed though we have intended to confer power including to

sell the Schedule mentioned properties under clauses of the

said General Power of Attorney Deed, by inadvertence and

over sight the said clause relating to power to sell the

schedule mentioned properties was omitted to be included

therein;

AND WHEREAS, now our Agent Mr. S.P. Velayutham has found

the said mistake and requested for execution of additional and

supplemental General Power of Attorney Deed 'empowering him

to sell the schedule mentioned properties' and to receive the

sale consideration therefor. In continuation of the earlier

General Power of Attorney Deed dated 23.08.2006 referred to

above;:

AND WHEREAS, we as the Principals under the General Power

of Attorney Deed dated 23.08.2006 are satisfied with, the

mistake pointed out by our Agent and 'accordingly we also

agreed' to execute this General Power of Attorney Deed and as

such we are appointing Mr. S.P. Velayutham, son of Sabapathy,

Hindu; aged about 50 years, residing at No. 5, Sabarj, Street,

Madlpakkam, Chennai600091 as out General Power of

Attorney to do the following acts; deeds and things relating to

the properties detailed in the Schedule hereunder…”

The above recitals contain a totally false statement to the effect, (i) that

a power of sale was intended to be conferred under the original PoA,

but it was omitted due to inadvertence and oversight; and (ii) that

after the mistake was pointed out, the Principals decided to execute

the additional document. These recitals are manifestly false and are

contrary to clause 7 of the registered PoA dated 23.08.2006. In any

case, this PoA dated 07.06.2007 was not what was produced or relied

upon at the time of registration of the sale deed dated 05.07.2007.

37. Therefore, if the Registering Officer had verified the recitals

contained in the registered deed of PoA dated 23.08.2006, to see if the

power agent had the power to do what he did, he would have refused

the registration of the document. Rule 46 of the Tamilnadu

Registration Rules ordains what the Registering Officer is obliged to

do, (i) when a document is presented for registration under a special

PoA; and (ii) when a document is presented for registration under a

general PoA. It was the failure on the part of the Registering Officer to

do what he is required to do, that convinced the learned Single Judge

to invoke the writ jurisdiction. But the Division Bench overturned the

decision of the learned Judge on the ground that the writ court ought

to have relegated the parties to the civil court.

38. Two main contentions are raised on behalf of the contesting

respondents, namely (i) the restraint that is expected of the High

Court, in a writ petition arising under Article 226, in respect of

matters which require detailed factual investigation; and (ii) the

limited scope of the enquiry that could be conducted by the

Registering Authority under Sections 32 to 34 of the Registration Act,

1908.

39. In support of the 1st contention, the learned senior counsel

appearing for the respondents relied upon the following decisions, (i)

Thansingh Nathmal vs. Superintendent of Taxes4

, (ii) Sarvepalli

Ramaiah vs. District Collector5

; (iii) Latif Estate Line India Ltd.

vs. Hadeeja Ammal6

40. Out of the aforesaid decisions, the decision in Thansingh (supra)

arose out of the orders of assessment passed under the Assam Sales

Tax Act, 1947. The order passed by the original authority was

challenged before the appellate authority and then the revisional

authority and thereafter in a writ petition under Article 226. It was in

such circumstances that this Court held that the High Court had no

power to decide questions of fact which are exclusively within the

competence of the taxing authorities. Similarly, the decision in

Sarvepalli Ramaiah (supra), arose out of proceedings for the grant of

Ryotwari Patta. The dispute travelled to the High Court after an

elaborate enquiry by the District Collector. It was in that context that

4 (1964) 6 SCR 654

5 (2019) 4 SCC 500

6 2011 (2) CTC 1

this Court examined the scope of the power of judicial review under

Article 226.

41. The Full Bench decision of the Madras High Court in Latif

Estate Line India Ltd. (supra), arose out of a controversy as to

whether a deed of cancellation of sale can or cannot be accepted for

registration. The Full Bench explained the circumstances under which

a deed of cancellation, presented by both the vendor and the

purchaser, can be accepted. But the Full Bench categorically held that

a deed of unilateral cancellation cannot even be accepted for

registration. This proposition actually goes in support of the

contention of the appellant that the Registering Officer has a duty to

see whether the document presented for registration has been

presented in accordance with law or not. In fact the decision of the

Full Bench itself arose out of a writ petition challenging the act of the

Registering Authority in allowing the registration of the deeds of

unilateral cancellation of sale deeds.

42. The reliance placed by the respondents on the decision in Satya

Pal Anand vs. State of Madhya Pradesh7

, is misplaced. The decision

7 (2016) 10 SCC 767

in Satya Pal Anand (supra) arose out a case where the allotment of a

plot made by a cooperative society was cancelled unilaterally by a deed

of extinguishment, by the society. The allottee raised a dispute which

ended in a compromise but notwithstanding the compromise the

allottee raised a dispute under the relevant provisions of the Madhya

Pradesh Cooperative Societies Act, 1960. When the dispute was

pending, the allottee moved the Registering Officer for the cancellation

of the deed of transfer executed in favour of the subsequent

purchasers. When the Registering Authority refused to comply with

the demand, a writ petition was moved seeking a declaration that the

deed of extinguishment and the subsequent sales were null and void.

The High Court dismissed the writ petition on the ground that a

dispute was already pending before the competent authority under the

Cooperative Societies Act. When the order of dismissal passed by the

High Court was challenged before this Court, there was a difference of

opinion as to whether the issue was directly covered by the decision of

this Court in Thota Ganga Laxmi and Another vs. Government of

Andhra Pradesh and Others8

. Therefore, the matter was placed

8 (2010) 15 SCC 206

before a three Judge Bench. While upholding the decision of the High

Court, the three member Bench held in Satya Pal Anand (supra) that

there was no rule in the State of Madhya Pradesh similar to Rule 26(k)

(i) of the Rules issued by the State of Andhra Pradesh under Section

69 of the Registration Act, 1908 and that therefore the decision in

Thota Ganga Laxmi (supra) cannot be invoked.

43. The decision in Satya Pal Anand (supra) cannot go to the

rescue of the contesting respondents, for the simple reason that the

writ petitioner in that case, first accepted a compromise and then

raised a dispute under the Cooperative Societies Act (which is akin to

a civil suit) and thereafter approached the High Court under Article

226 for a declaration, which he could have sought only in the already

instituted proceedings. The very fact that Thota Ganga Laxmi was

sought to be distinguished on the basis of the express provision

contained in the Rules of the State of A.P., would indicate that there is

no absolute bar for the High Court to exercise jurisdiction under

Article 226.

44. Both sides relied upon the decision of this Court in Rajni

Tandon (supra). The question that arose in Rajni Tandon (supra)

was as to whether the PoA required authentication by the Registering

Authority, when a sale deed executed by the power agent himself is

presented for registration by the power agent. This question was

couched in a different language by this Court in paragraph 19 of the

Report in Rajni Tandon (supra) as follows:

“19. In view of the aforesaid situation, the issue that falls for

our consideration is whether a person who executes a

document under the terms of the power of attorney, is, insofar

as the registration office is concerned, the actual executant of

the document and is entitled under Section 32(a) to present it

for registration and get it registered.”

45. After analysing Sections 32 and 33 of the Registration Act, 1908

this Court came to the conclusion that whenever an agent is

authorised to execute a document and present the same for

registration and he accordingly executes the document in terms of

PoA, he becomes the actual executant in so far as the Registering

Authority is concerned and that therefore he becomes entitled under

Section 33(a) to present it for registration. This Court further held that

the authentication in terms of Section 33(1)(a) is required only in

cases where Section 32(c) is invoked. Paragraph 33 of the Report in

Rajni Tandon is reproduced for easy appreciation as follows:

“33. Where a deed is executed by an agent for a principal and

the same agent signs, appears and presents the deed or admits

execution before the registering officer, that is not a case of

presentation under Section 32(c) of the Act. As mentioned

earlier the provisions of Section 33 will come into play only in

cases where presentation is in terms of Section 32(c) of the Act.

In other words, only in cases where the person(s) signing the

document cannot present the document before the registering

officer and gives a power of attorney to another to present the

document that the provisions of Section 33 get attracted. It is

only in such a case, that the said power of attorney has to be

necessarily executed and authenticated in the manner provided

under Section 33(1)(a) of the Act.”

46. But we are not concerned in this case with the question whether

the PoA relied upon by the power agent S.P. Velayutham in the sale

deed executed by him, required authentication and whether the

Registering Authority committed a blunder in accepting the sale deed

presented by him for registration, without verifying the authentication

of the PoA or not. We are concerned in this case with the most

fundamental question whether the Registering Authority could have

turned a blind eye to the fact that the deed of PoA on the basis of

which the sale deed was executed as well as presented for registration

by S.P. Velayutham contained an express prohibition for the power

agent to create an encumbrance on the property, especially in the light

of the Rules framed under section 69 of the Act. The decision in

Thota Ganga Laxmi, was in a way approved by a 3member Bench in

Satya Pal Anand, on the basis of the rules in the State of Andhra

Pradesh, showing thereby that statutory rules also play a crucial role.

Rajni Tandon is not an authority for holding that the registering

Authority has no duty even to verify the presence or absence of a

power of sale in the deed of PoA, especially in the light of the rules.

47. In Amarnath vs. Gian Chand 9

, this Court was concerned with

a case arising out of peculiar circumstances. The said case arose out

of a civil suit for a declaration of title and for permanent injunction.

The plaintiff in that case entered into an oral agreement for the sale of

his property and gave a special PoA in favour of the second defendant.

But the agreement fell through and hence the plaintiff took back the

original deed of PoA from the second defendant. However, the second

defendant applied for a copy of the PoA and thereafter sold the

property in collusion with the first defendant. Upon coming to know of

the same, the original owner filed the suit as aforesaid, contending

that the second defendant had no valid power and that the Registering

Authority ought to have verified this aspect from the second defendant

under Sections 32, 33 and 34 of the Registration Act, 1908. After trial,

the trial court dismissed the suit on the ground that the cancellation

9 (2022) SCC Online SC102

of the PoA also required registration and that the mere writing of the

word “cancelled” on the original PoA cannot be taken to mean that the

power was validly cancelled. The First Appellate Court confirmed the

judgment and decree of the trial court. While reversing the judgments

of the trial court and the Appellate Court, the High Court opined that

under Section 18A of the Registration Act as applicable to the State of

Himachal Pradesh, by way of an amendment under Himachal Pradesh

Act 2 of 1969, the PoA ought to have accompanied the sale deed

presented for registration and that if the SubRegistrar had ensured

this, he would have found that in view of the cancellation of the power,

the agent ceased to have any power of sale. This decision of the High

Court was reversed by this Court in Amar Nath (supra), after an

exhaustive analysis of the provisions of the Registration Act, 1908.

While doing so, this Court held in paragraph 26 as follows:

“26. For reasons, which we have indicated, Section 32(c) read

with Section 33 and Section 34(2)(c) are inter related and they

would have no application in regard to the document presented

for registration by a power of attorney holder who is also the

executant of the document. In other words, there is really no

need for the production of the original power of attorney, when

the document is presented for registration by the person standing

in the shoes of the second defendant in this case as he would be

covered by the provisions of Section 32(a) as he has executed the

document though on the strength of the power of attorney. To

make it even further clear, the inquiry contemplated under

the Registration Act, cannot extend to question as to whether the

person who executed the document in his capacity of the power

of attorney holder of the principal, was indeed having a valid

power of attorney or not to execute the document or not..”

48. Though the passage extracted above, lends credence to the

contention of the learned senior counsel for the contesting

respondents, there is some difficulty in accepting the same as a

proposition of law of universal application. There are two reasons why

we say so. They are: (i) as we have stated elsewhere, the interpretation

of the provisions of the Registration Act, would depend upon the State

amendments and the Rules framed in each State under Section 69;

and (ii) in Amar Nath, the challenge to the sale was before the civil

court, not merely on the ground that the Registering Authority failed

to perform his duties, but also on the ground that the defendant

conveyed what he could not have. Unfortunately, the parties in Amar

Nath, appear to have gone on a wild goose chase. Instead of focussing

their attack on the agent (who was the defendant in the suit), for

executing the document without any power, the parties focussed their

attack on the registering officer for permitting the registration of the

document. This resulted in their failure. If a civil court finds that the

sale by a power agent was unauthorised, then the question whether

the Registering Officer performed his duties properly or not, would lose

its significance. An attack on the authority of the executant of a

document, is not to be mixed with the attack on the authority of the

Registering Officer to register the document. The distinction between

the execution of a document and the registration of the document is to

be borne in mind while dealing with these questions.

49. Actually, the registration of a document comprises of three

essential steps among others. They are, (i) execution of the

document, by the executant signing or affixing his left hand

thumb impression; (ii) presenting the document for registration

and admitting to the Registering Authority the execution of such

document; and (iii) the act of registration of the document.

50. In cases where a suit for title is filed, with or without the relief of

declaration that the registered document is null and void, what gets

challenged, is a combination of all the aforesaid three steps in the

process of execution and registration. The first of the aforesaid three

steps may be challenged in a suit for declaration that the registered

document is null and void, either on the ground that the executant did

not have a valid title to pass on or on the ground that what was found

in the document was not the signature of the executant or on the

ground that the signature of the executant was obtained by fraud,

coercion etc. The second step of presentation of the document and

admitting the execution of the same, may also be challenged on the

very same grounds hereinabove stated. Such objections to the first

and second of the aforesaid three steps are substantial and they strike

at the very root of creation of the document. A challenge to the very

execution of a document, is a challenge to its very DNA and any

defect or illegality on the execution, is congenital in nature.

Therefore, such a challenge, by its very nature, has to be made only

before the civil court and certainly not before the writ court.

51. The third step namely the act of registration, is something that

the Registering Authority is called upon to do statutorily. While the

executant of the document and the person claiming under the

document (claimant) are the only actors involved in the first two steps,

the Registering Officer is the actor in the third step. Apart from the

third step which is wholly in the domain of the Registering Authority,

he may also have a role to play in the second step when a document is

presented for registration and the execution thereof is admitted. The

role that is assigned to the Registrar in the second step is that of

verification of the identity of the person presenting the document for

registration.

52. Thus, the first two steps in the process of registration are

substantial in nature, with the parties to the document playing the

role of the lead actors and the Registering Authority playing a guest

role in the second step. The third step is procedural in nature where

the Registering Authority is the lead actor.

53. In suits for declaration of title and/or suits for declaration that a

registered document is null and void, all the aforesaid three steps

which comprise the entire process of execution and registration come

under challenge. If a party questions the very execution of a document

or the right and title of a person to execute a document and present it

for registration, his remedy will only be to go to the civil court. But

where a party questions only the failure of the Registering Authority to

perform his statutory duties in the course of the third step, it cannot

be said that the jurisdiction of the High Court under Article 226

stands completely ousted. This is for the reason that the writ

jurisdiction of the High Court is to ensure that statutory authorities

perform their duties within the bounds of law. It must be noted that

when a High Court, in exercise of its jurisdiction under Article 226

finds that there was utter failure on the part of the Registering

Authority to stick to the mandate of law, the Court merely cancels the

act of registration, but does not declare the very execution of the

document to be null and void. A declaration that a document is null

and void, is exclusively within the domain of the civil court, but it does

not mean that the High Court cannot examine the question whether or

not the Registering Authority performed his statutory duties in the

manner prescribed by law. It is well settled that if something is

required by law to be done in a particular manner, it shall be done

only in that manner and not otherwise. Examining whether the

Registering Authority did something in the manner required by law or

otherwise, is certainly within the jurisdiction of the High Court under

Article 226. However, it is needless to say that the High Courts may

refuse to exercise jurisdiction in cases where the violations of

procedure on the part of the Registering Authority are not gross or the

violations do not shock the conscience of the Court. Lack of

jurisdiction is completely different from a refusal to exercise

jurisdiction.

54. In the case on hand, the appellant has not sought a declaration

from the High Court that the execution of the document in question

was null and void or that there was no title for the executant to

transfer the property. The appellant assailed before the High Court,

only the act of omission on the part of the Registering Authority to

check up whether the person who claimed to be the power agent, had

the power of conveyance and the power of presenting the document for

registration, especially in the light to the statutory rules. Therefore,

the learned Single Judge rightly applied the law and allowed the writ

petition filed by the appellant, but the Division Bench got carried away

by the sound and fury created by the contesting respondents on the

basis of (i) pendency of the civil suits; (ii) findings recorded by the

Special Court for CBI cases; and (iii) the order passed by this Court in

the SLP arising out of proceedings under Section 145 Cr.P.C.

55. Arguments were advanced on the question whether the

Registering Authority is carrying out an administrative act or a quasijudicial act in the performance of his statutory duties. But we think it

is not relevant for determining the availability of writ jurisdiction. If

the Registering Authority is found to be exercising a quasijudicial

power, the exercise of such a power will still be amenable to judicial

review under Article 226, subject to the exhaustion of the remedies

statutorily available. On the contrary if the Registering Authority is

found to be performing only an administrative act, even then the High

Court is empowered to see whether he performed the duties statutorily

ordained upon him in the manner prescribed by law.

56. Much ado was sought to be made by contending that the

appellant approached the High Court without disclosing the previous

orders of the High Court and this Court, relegating them to civil court

for the adjudication of their claim. Reliance was also placed in this

regard on the decision of this Court in Raj Kumar Soni vs. State of

U.P.10

57. But we do not agree. The previous orders directing the appellant

to go to the civil court arose out of the proceedings under Section 145

of the Cr.P.C. But it does not mean that the recourse to civil court was

seen as the only panacea for all ills.

10 (2007) 10 SCC 635

58. Therefore, in the light of (i) the Tamilnadu Registration Rules

discussed above; (ii) the statutory scheme of Sections 32 to 35 of the

Act as well as other provisions as amended by the State of Tamilnadu;

and (iii) the distinction between a challenge to the first 2 steps in the

process of execution of a document and the third step concerning

registration, we are of the considered view that the Division bench of

the High Court was not right in setting aside the order of the learned

single Judge. If the Registering Officer under the Act is construed as

performing only a mechanical role without any independent mind of

his own, then even Government properties may be sold and the

documents registered by unscrupulous persons driving the parties to

go to civil court. Such an interpretation may not advance the cause of

justice.

59. Therefore, in fine, the appeals are allowed, the impugned order of

the Division Bench is set aside and the order of the learned single

Judge is restored. There will be no order as to costs.

………………………………….J.

(Hemant Gupta)

………………………………….J.

(V. Ramasubramanian)

New Delhi

May 04, 2022

Search This Blog

Indian Constitution

ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED VS S.P. VELAYUTHAM & ORS.

Comments

Post a Comment

Popular posts from this blog

100 Questions on Indian Constitution for UPSC 2020 Pre Exam

भारतीय संविधान से संबंधित 100 महत्वपूर्ण प्रश्न उतर

संविधान की प्रमुख विशेषताओं का उल्लेख | Characteristics of the Constitution of India