Circular No. 21343/C1/2021, dated 10 July 2021

What the circular governs

Circular No. 21343/C1/2021 dated 10 July 2021 concerns registration of sale certificates issued by banks following property auctions. The Inspector General of Registration, Tamil Nadu Registration Department, issued the direction after the Madras High Court considered a case in which registration was refused because a Civil Court attachment order existed against the auctioned property.

The circular applies when a bank, acting as a secured creditor, issues a sale certificate to the successful purchaser of an auctioned property.

Why the direction was issued

Earlier Registration Department circulars required registering officers to examine ownership records and an encumbrance certificate before accepting a property document. The encumbrance certificate was to be obtained within the 10 days preceding presentation, and officers were required to confirm that the person executing the document was the latest purchaser or rights holder shown in it. These checks were intended to prevent forged documents and impersonation.

In the case referred to in Circular No. 21343/C1/2021, a bank presented an auction sale certificate for registration. Registration was refused because a court attachment order had already been made against the property. The bank challenged that refusal before the Madras High Court.

The Madras High Court held that a Sub Registrar cannot refuse registration of a sale certificate merely because a Civil Court attachment order exists. The judgment stated that the rights of secured creditors under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 override other debts.

Key directions

Circular No. 21343/C1/2021 instructs registering officers that:

• A bank auction sale certificate issued by the bank as a secured creditor must not be rejected solely because a Civil Court attachment order affects the property.
• A registering officer must not issue a check slip or refusal order on that ground.
• Registration must not be stopped when all other legal requirements have been fulfilled.
• Refusing registration on the ground of a Civil Court attachment may be treated as violating the Madras High Court's direction, and an affected party may begin contempt proceedings.

Who may be affected

The direction is relevant to banks, successful auction purchasers, property buyers dealing with auctioned assets, and registering officers throughout Tamil Nadu. It removes a Civil Court attachment order as a standalone reason for refusing a qualifying bank auction sale certificate, but it does not remove the requirement to satisfy other applicable registration requirements.