Sale Certificate Issued By Liquidator In IBC Auction Exempt From Registration, Stamp Duty: Bombay High Court

The Bombay High Court has held that a liquidator conducting a public auction under the Insolvency and Bankruptcy Code (IBC) qualifies as an officer under the Registration Act. Therefore, a sale certificate issued during such an auction is exempt from compulsory registration and stamp duty.

The exemption continues so long as only a copy of the sale certificate is filed with the registering authority. Stamp duty becomes payable only if the purchaser later seeks to use the sale certificate for any other purpose.

A Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat held that the IBC is not a recovery law and that a liquidator conducting a public auction falls within the class of officers covered by the Registration Act.

“The liquidator conducting sale by way of public auction under the provisions of the IBC and on the orders of the NCLT, certainly qualifies to be an officer covered under the said provision i.e. Section 17(2)(xii) of the Registration Act.”

Explaining the consequence of this finding, the court observed:

“Therefore, the sale certificate issued in favour of petitioner is not compulsorily registrable. Only a copy of the same is required to be entered in Book No.1, as per Section 89(4) of the Registration Act. So long as the sale certificate remains as it is with the petitioner, it is neither required to be registered, nor does it attract stamp duty. It is only when the petitioner seeks to use the sale certificate for some other purpose, that the requirement of payment of stamp duty would arise.”

Rajaram Food Products India Limited moved the High Court after the Joint District Registrar directed it to pay stamp duty on a sale certificate issued following its purchase of a property in the liquidation of Gonglu Agro Pvt. Ltd.

When a copy of the certificate was forwarded to the registration authorities for filing, the company maintained that it did not require compulsory registration or payment of stamp duty. The Joint District Registrar disagreed, prompting the company to approach the High Court after its statutory appeal failed.

Relying on the Supreme Court's decision in State of Punjab v. Ferrous Alloy Forgings Pvt. Ltd., Rajaram Food Products argued that sale certificates issued in public auctions are not compulsorily registrable.

It also submitted that a liquidator acting under orders of the National Company Law Tribunal qualifies as a civil officer for the purpose of the exemption.

The state authorities argued that the sale certificate amounted to a conveyance under the Maharashtra Stamp Act, and therefore the Maharashtra amendment to the Registration Act was applicable.

Rejecting the State's stand, the court held that the IBC is intended to facilitate the revival of distressed companies rather than function as a debt recovery mechanism. It also noted that only a copy of a sale certificate issued in a public auction is required to be filed in Book No. 1, and that the exemption provision specifically applies to such certificates.

The court consequently set aside the Joint District Registrar's order and directed the authorities to file the sale certificate in Book No. 1 without insisting on registration or payment of stamp duty.