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Registering Authority Bound To Verify If Power Of Attorney Gives Power To Sell; Sale Deed Registration Not A Mechanical Process : Supreme Court

Manu Sebastian
5 May 2022 4:06 AM GMT
Registering Authority Bound To Verify If Power Of Attorney Gives Power To Sell; Sale Deed Registration Not A Mechanical Process : Supreme Court
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The Supreme Court has held that a Registering Authority under the Registration Act 1908, while registering a sale deed executed by a Power of Attorney holder, is bound to verify if the Power of Attorney empowers the agent to sell the property.The Court noted that the provisions of the Registration Act, particularly Section 34(3)(c), imposes an obligation on the Registering Officer to...

The Supreme Court has held that a Registering Authority under the Registration Act 1908, while registering a sale deed executed by a Power of Attorney holder, is bound to verify if the Power of Attorney empowers the agent to sell the property.

The Court noted that the provisions of the Registration Act, particularly 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.

Finding fault with the Registering Authority for allowing the registration of a sale deed on the basis of the Power of Attorney despite the PoA prohibiting the agent from creating encumbrances on the property, the Court stated that a Registrar cannot be held to be performing a mechanical role.

"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", the bench comprising Justices Hemant Gupta and V Ramasubramanian observed.

The bench was hearing appeals filed by Asset Reconstruction Company(India) Ltd challenging the action of registering authorities in allowing the registration of sale deed executed by one S P Velayutham with respect to a property over which the appellant had security interest. A single bench of the Madras High Court had allowed the appellant's prayer to declare the registration of sale and deed as null and void  on the ground that there was 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 PoA. However, a division bench set aside the single bench verdict on the primary ground that remedies ought to have been sought in a civil suit and not under Article 226 of the Constitution.

Supreme Court's analysis

The judgment authored by Justice Ramasubramanian contains a detailed analysis of the provisions of the Registration Act and the Tamil Nadu Rules on the duties and functions of the Registering Authorities.

"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", Justice Ramasubramanian stated (para 11).

The Court also said that there are State Amendments to Registration Act. "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", the Court said. In the instant case, the Court took into account the Tamil Nadu amendments made to the Registration Act and also the TN Rules made under the Act.

Section 32(c) of the Act mandates that an agent presenting a document for registration must be duly authorised by power­ of­ attorney executed and authenticated in manner mentioned in 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" (Para 16)

Section 33 mentions the Power of Attorney recognizable for the purpose of Section 32. Section 33 says that the Power of Attorney must be authenticated by the persons specified in the section.

Persons who are empowered by clauses (a), (b) and (c) of sub­ section (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.

Authentication does not mean registration

The Court explained that the word "authenticated" in Section 33 does not mean "registered". 

"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""(Para 18)

"Under the Act, the power of registration is conferred only upon the Registrars and Sub­ Registrars 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 mixed­ up these two words, resulting in applying the test in terms of Sections 17 and 18 for determining the validity of a PoA"(Para 20).

Provisions of enquiry by Registering Officer

Section 34 of the Act contains provisions regarding the enquiry to be undertaken by the Registering Officer before registration.  

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;

Importantly, the Court observed that 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(Para 29).

Power of Attorney in the instant case had prohibited creating encumbrances in the property

The Court noted that the Power of Attorney executed in favour of Velayutham had specifically prohibited the creation of encumbrances in the property.

It said that the issue in the instant case was not whether the Registering Authority should have verified the authenticity of the PoA but whether the authority should have verified if the deed granted him the power to sell.

"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".

Writ jurisdiction under Article 226 maintainable 

The Court noted that in the instant case, the appellant was not seeking a declaration that the sale deed was null and void for want of title, but was questioning the failure of the registering authority to follow the statutory mandate.

"...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"(Para 53).

The Top Court set aside the division bench judgment and restored the single bench verdict.

"..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".

Recent Supreme Court judgment distinguished

The respondents had relied on a judgment delivered by another bench of the Supreme Court in January this year in the case Amar Nath versus Gian Chand which observed that the Registration Act does not contemplate enquiry into the validly of the PoA.

Here, the Court observed that it has difficulty in accepting the observation in Amar Nath as having universal application for two reasons : (i)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.

"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", the Court observed in this regard.

The respondents had also relied on the decision in Rajni Tandon versus Dulal Ranjan Ghosh Dastidar & Anr (2009) 14 SCC 782. But the Court held that the issue in that case was 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.

"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", the Court said.

Case Details : Asset Reconstruction Company (India) Ltd versus SP Velayutham and others

Citation : 2022 LiveLaw (SC) 445

Appearances : Senior Advocates Guru Krishnamoorthy and Nakul Dewan for appellants; Senior Advocate Shyam Divan, Atul Nanda and Mukul Rohatgi for respondents

Click here to read/download the judgment

Headnotes

Registration Act, 1908 - 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 - Para 11

Registration Act, 1908-  Section 32(c)- 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- Para 16

Registration Act, 1908 -Section 32 & 33- Authentication of PoA does not mean registration - 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 (Para 18, 20)

Registration Act, 1908- Section 34 - 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(Para 29).

Constitution of India- Article 226- 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(Para 53).

Registration Act, 1908- 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.

Distinguished : Rajni Tandon versus Dulal Ranjan Ghosh Dastidar & Anr (2009) 14 SCC 782; Amar Nath versus Gian Chand 2022 LiveLaw (SC) 98



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