Isabella Mariam

The High Court of Kerala Division Bench of Justice Dr. A.K. Jayasankaran Nambiar and Justice P.M. Manoj held that a sale certificate issued by a bank, financial institution, revenue or court authority to an auction purchaser does not, by itself, attract stamp duty under the Kerala Stamp Act, 1959. The Court clarified that such a certificate qualifies as an instrument for the purposes of stamp duty only when it is presented for registration under the Registration Act, 1908. Accordingly, the Court dismissed the writ appeals filed by the State against the judgments of the Single Judge, upholding that neither the original sale certificate nor its copy submitted under Section 89(4) of the Registration Act required payment of stamp duty unless specific statutory thresholds converting the document into an instrument were met.

The writ appeals arose from a common issue: whether a sale certificate issued following a public auction of immovable property, conducted by banks, financial institutions, civil or revenue authorities, attracted stamp duty under the Kerala Stamp Act, 1959. The appeals were filed by the State against various judgments of the learned Single Judge that had allowed writ petitions preferred by banks, financial institutions, and auction purchasers.

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In these writ petitions, the petitioners had challenged the insistence of registering authorities to pay stamp duty on the original sale certificates issued to them, often in the context of proceedings under the SARFAESI Act, Recovery of Debts Act, or other public auction procedures. The registering authorities had refused to act on the sale certificates unless the applicable stamp duty, equivalent to that of a conveyance deed, was paid.

The petitioners, including individuals and financial institutions, had contended that such a demand was contrary to the provisions of both the Kerala Stamp Act, 1959 and the Registration Act, 1908. The registration officials relied on Article 16 of the Schedule to the Kerala Stamp Act, which refers to a ‘certificate of sale’ granted to the purchaser of any property sold by public auction by a civil or revenue court or by the Government or other revenue officers.

The State, represented by the Special Government Pleader (Taxes), argued that the sale certificate evidenced the transfer of ownership, payment of consideration, extinguishment of encumbrances, and other elements which qualified it as an instrument under Section 2(j) of the Kerala Stamp Act. It was further submitted that Article 16 of the Schedule explicitly treats the certificate of sale as liable for duty at the same rate as a conveyance.

The petitioners, on the other hand, contended that a sale certificate, by itself, did not transfer ownership but merely recorded a transaction already concluded. They relied on judicial precedents, including decisions of the Supreme Court, to argue that such documents were not compulsorily registrable and hence not subject to stamp duty unless presented for registration voluntarily.

Several sale certificates in question had been issued by banks and financial institutions under statutory frameworks such as the SARFAESI Act, and copies of the certificates were submitted to the registering authority under Section 89(4) of the Registration Act. The registering authorities, citing lack of stamp duty, refused to file the certificates in Book No.1, prompting the aggrieved parties to approach the High Court.

In some instances, banks such as South Indian Bank and HDFC, and financial institutions like Bajaj Housing Finance and HDB Financial Services Ltd., were involved in the issuance of these certificates. The purchasers had approached the writ court to compel the registering authorities to file the documents in Book No.1 without insisting on stamp duty.

The learned Single Judge had allowed the writ petitions, holding that sale certificates were not instruments under Section 2(j) of the Kerala Stamp Act unless presented for registration, and that registration authorities could not demand stamp duty for the mere act of filing a copy under Section 89(4) of the Registration Act.

The Division Bench recorded, "The issue that arises for consideration is whether a sale certificate, issued by a bank/revenue authority to a purchaser of immovable property, pursuant to a sale conducted at the instance of a bank/financial institution/court/revenue authority of the property of a revenue defaulter, will attract the levy of stamp duty under the Kerala Stamp Act, 1959?"

The Court noted that "the State has resorted to the provisions of the Registration Act to try and recover dues under the Kerala Stamp Act." It observed that "the enforcement of the provisions of a fiscal legislation has necessarily to be through the machinery provided under that legislation, and not through the machinery provided under a general regulatory legislation."

Referring to Section 2(j) of the Kerala Stamp Act, the Court stated that "a sale certificate, at the time of its issuance to an auction purchaser, does none of the actions such as creation, transfer, limitation, extension, extinguishment, or recording of rights or liabilities in praesenti. It only records the fact of a transaction."

The Bench clarified, "We are therefore clear in our minds that, at the time of its issuance to an auction purchaser, a sale certificate cannot be seen as an ‘instrument’, and consequently will not attract the levy of stamp duty under the Kerala Stamp Act."

Addressing whether such a certificate could become an instrument later, the Court stated, "There may be circumstances when the auction purchaser seeks a registration of the sale certificate... It is only when the sale certificate thus becomes an ‘instrument’ that it will attract the charge of stamp duty."

The Court drew reference to the Supreme Court's observations in Uma Devi & Ors v. Anand Kumar & Ors [(2025) 5 SCC 198] and Suraj Lamp & Industries (P) Ltd. v. State of Haryana [(2012) 1 SCC 656], stating the benefits of registration but reaffirming that the act of registration is not compulsory for sale certificates.

On the function of Section 89(4) of the Registration Act, the Court recorded, "The registering authority is only required to file a copy of the sale certificate as and when it is forwarded... Such filing... is merely intended to inform persons interested in the property of the circumstances under which the property came into the hands of its present title holder."

Further quoting Shanti Devi L. Singh v. Tax Recovery Officer [(1990) 3 SCC 605], the Court explained that "filing under Section 89(4) is distinct from registration. What the Sub-Registrar is required to do is to file the copy and no more. He does not have to copy out the certificate or make any other entries in Book No.1."

On the point of admissibility of unstamped documents, the Court recorded that, "even if an instrument is insufficiently stamped, what is affected is only its admissibility in evidence and not its validity as the document that it purports to be."

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The Division Bench held that the sale certificate issued to a purchaser pursuant to a public auction, unless presented for registration under the Registration Act, does not qualify as an ‘instrument’ under the Kerala Stamp Act. The Court stated, "While the registering authority under the Registration Act cannot exercise his powers under Sections 33 or 34 of the Kerala Stamp Act in relation to the copy of a sale certificate that is sent to him for filing in terms of Section 89(4) of the Registration Act, even the original of the sale certificate concerned will not attract the levy of stamp duty under the Kerala Stamp Act, save in the exceptional circumstances when it qualifies to be an instrument as defined under the Kerala Stamp Act."

The Court declared, "The Writ Appeals preferred by the State, therefore, fail and are accordingly dismissed. No Costs."

Advocates Representing the Parties:

For the Petitioners: Sri. Shiju Varghese, Sri. Mohan Jacob George, Sri. B. Vinod, Sri. Peeyus A. Kottam, Sri. Leo George, Sri. P. Paulochan Antony, Sri. Jaison Joseph, Sri. Jimmy Joseph, Smt. Archana Ramanan, Smt. Veena Vallikanthan, Sri. Zakeer Hussain, Sri. Sabu John

For the Respondents: Sri. Mohammed Rafiq, Special Government Pleader (Taxes)

Case Title: The Revenue Divisional Officer, Adoor & Ors. v. Thomas Daniel & connected matters

Neutral Citation: 2025: KER:53343

Case Number: W.A. No. 2008 of 2024 & connected cases

Bench: Justice Dr. A.K. Jayasankaran Nambiar and Justice P.M. Manoj