Registration of Sale Certificate issued under SARFAESI Act

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”), is a crucial legislation in India that empowers banks and financial institutions to recover non-performing assets (NPAs) without the intervention of courts. One of the key mechanisms under this Act is the issuance of sale certificates following the auction of secured assets. The registration of these sale certificates is a critical step in ensuring the legal validity and enforceability of property transfers. This article delves into the legal framework governing the registration of sale certificates, the relevant provisions of the Registration Act, 1908, and the implications of judicial interpretations on this process.

The SARFAESI Act

The SARFAESI Act allows secured creditors to take possession of secured assets and sell these assets to recover their dues. The sale process typically involves public auctions, and upon completion, a sale certificate is issued to the successful bidder.

The Registration Act, 1908

The Registration Act, 1908, is the primary legislation governing the registration of documents in India. It mandates the registration of certain documents to ensure their legal validity and to provide a public record of transactions.

Section 17(2)(xii) - This Section exempts sale certificates issued pursuant to auction sales from compulsory registration. This exemption is crucial for streamlining the process of property transfers under SARFAESI Act as it eliminates the need for additional registration formalities beyond the filing requirements.

Section 89(4) - Section 89(4) requires that a copy of the sale certificate issued by an authorized officer must be forwarded to the Sub-Registrar for filing in Book No. 1.

Gujarat Amendment – A legislative Deviation - The Registration (Gujarat Amendment) Act, 2018 introduced two major changes:

• Insertion of Clause (k) in Section 17(1): Mandates compulsory registration of sale certificates issued by any authority under Central or State laws, including those under SARFAESI.

• Deletion of Section 17(2)(xii): Removes the exemption previously afforded to sale certificates, effectively overriding the national position within the jurisdiction of Gujarat.

State-Specific Rules

Different States may have their own rules regarding the filing and registration of sale certificates. For instance, in Uttar Pradesh(UP), Rule 360 of the UP Registration Manual prescribes that a Revenue Officer must send a copy of the sale certificate to the Registering Authority, who then files it in Book No. 1 which shall be sufficient registration for all legal purpose.  

Rule 360 (3) states, “……….the court or Revenue officer is to send the registering officer a copy of the certificate of sale; the registering officer will then file such copy in his book (file book No. 1) and this is sufficient registration for all legal purpose.”

Esjaypee Impex Pvt. Ltd. v. Canara Bank (2021)

The Hon’ble Court held that mandate of law under Section 17(2)(xii) read with Section 89(4) of the Registration Act only requires the authorised officer of the Bank under the SARFAESI Act to hand over the duly validated sale certificate to the auction-purchaser with a copy forwarded to the registering authorities to be filed in Book 1 as per Section 89 of the Registration Act. This process obviates any further registration requirements, ensuring efficiency in legal proceedings. The relevant portion of the verdict is reproduced herein as under:

“16. We are of the view that the mandate of law in terms of Section 17(2)(xii) read with Section 89(4) of the Registration Act only required the authorised officer of the Bank under the SARFAESI Act to hand over the duly validated sale certificate to the auction-purchaser with a copy forwarded to the registering authorities to be filed in Book 1 as per section 89 of the Registration Act.”  

Inspector General of Registration v. G. Madhurambal (2022)

The Hon’ble Court upheld the consistent view followed for the last 150 years that a sale certificate cannot be regarded as a conveyance subject to stamp duty and compulsory registration and further emphasizing that its filing under Section 89(4) has the same legal effect as registration. This distinction is crucial for understanding the nature of such certificates in property transactions.

State of Punjab v. Ferrous Alloy Forgings Pvt. Ltd. (2024)

This judgment clarified that while a sale certificate is not compulsorily registrable, it attracts stamp duty if presented for registration by the auction purchaser. This highlights the importance of understanding the context in which these certificates are used. The relevant portion of the verdict is reproduced herein as under:

“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."

Kalidass v. Inspector General of Registration (2025)

The Madras High Court affirmed that upon receipt of a sale certificate from an authorized officer, the Registering Authority must make an entry in Book No.1 or scan it, ensuring compliance with Section 89(4). This ensures that all transactions are properly documented and accessible.

M/s Eva Agro Feeds Pvt. Ltd v. State of U.P (2023)

The Allahabad High Court held that non-registration does not vitiate title transfer since filing in Book No.1 suffices for legal purposes. This ruling underscores the sufficiency of the filing process for establishing property rights.

M/s Sri Balaji Fibre v. Inspector General of Registration (2024)

The Madras High Court held that sale certificates are transfers by operation of law, not inter vivos transactions, which distinguishes them from voluntary conveyances. Stamp duty is not payable merely for filing under Section 89(4), as this process is primarily for record-keeping rather than effecting a transfer.

Legal Effect of Filing in Book No. 1

Filing of a copy of sale certificate in Book No. 1 under Section 89(4) has the same effect as registration and obviates the requirement of any further action.

Stamp Duty Considerations

While filing does not attract stamp duty, presenting a sale certificate for additional purposes (e.g., subsequent transactions) may require payment under Articles 18 and 23 of the Stamp Act. This distinction highlights the importance of understanding the context in which these certificates are used as explained in the case of Ferrous Alloy (Supra.).

Role of Authorized Officers

Authorized officers issuing sale certificates under SARFAESI Act are deemed equivalent to Revenue Officers for purposes under Section 17(2)(xii) and Section 89(4). This equivalence ensures streamlined processes without mandatory registration, facilitating efficient property transfers. The Hon’ble Madras High Court in the matter of Sri Balaji Fibre (supra.) held that:

“40. In view of the above position, now, after the advent of the SARFAESI Act, this Court is of the view that the term 'Revenue Officer' has to be liberally construed to include the authorized officer under SARFAESI Act effecting compulsory sale for recovery of a demand.”

Therefore, it is clear that the authorised officer exercising statutory duty for recovery of public money under SARFAESI Act by way of compulsory sale will certainly fall within the ambit of expression “Revenue Officer." 

Sale certificates issued under the SARFAESI Act constitute transfers effected by operation of law, not voluntary conveyances, and are expressly exempt from compulsory registration under Section 17(2)(xii) of the Registration Act. Legal recognition is adequately ensured through their filing in Book No.1, as prescribed under Section 89(4), eliminating the need for additional formalities and enabling efficient, lawful transfer of property rights.

Judicial precedents have consistently reinforced this interpretation, promoting uniformity and legal certainty in transactions conducted under SARFAESI Act provisions. This streamlined process aligns with the broader legislative intent of ensuring transparency, speed, and security in property dealings. 

Yet, in practice, the sub-registrars often resist filing sale certificates appropriately in Book No.1. Even when they do, they frequently misclassify these documents as instruments inadequately stamped, creating unnecessary confusion and legal hurdles for auction purchasers. To address this persistent inconsistency, it is imperative that the government issues clear guidelines or a binding government order or circular. Such a directive would eliminate ambiguity, reinforce statutory compliance, and uphold the integrity of the judicial pronouncements.

About the author: Amit Dhaka is a Partner at asa Legal.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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