High Court Of Calcutta
Murat Viniyog Ltd. vs. Registrar Of Assurances & Ors.
Section 230A, Art. 226
Bhagabati Prosad Banerjee, J.
C.R. No.of 1987
1st February, 1988
Counsel Appeared
Anindya Kumar Mitra & Anand Agarwala, for the Petitioner
BHAGABATI PROSAD BANERJEE, J.:
In this writ petition, a pure question of law has been raised. The question that calls for consideration by the Court is whether in respect of sale of property by execution of a registered document, the confirming party, namely, respondent No. 3, who originally entered into an agreement with respondents Nos. 4 and 5 whereby respondents Nos. 4 and 5 agreed to sell the property either to respondent No.3 or to his nominee, was required to produce an income-tax clearance certificate under s. 230A of the IT Act before the Registrar of Assurances as a condition before the registration of the sale deed by which the owners of the property, namely, respondents Nos. 4 and 5, transferred the property to the petitioner.
The facts of this case in short are that respondents Nos. 4 and 5 were the owners of premises No. 15, Raja Santosh Road, Calcutta, and on 14th Nov., 1986, respondents Nos. 4 and 5 agreed to sell for valuable consideration, the rear portion of the said premises measuring about 10 cottahs of land to respondent No.3 or his nominee, as the case may be, and received a sum of the Rs. 10 lakhs as earnest money. The said agreement for sale was filed before the IT authority as well as before the competent authority under the Urban Land (Ceiling and Regulation) Act, 1976. The IT authority issued a “No objection certificate” in favour of respondents Nos. 4 and 5 for the sale of the said property. Necessary permission was also obtained from the competent authority under the Urban Land (Ceiling and Regulation) Act, 1976, by the owners of the property, namely, respondents Nos. 4 and 5. Respondent No.3 nominated the writ petitioner as the purchaser and the said nomination was duly accepted by the vendors, namely, respondents Nos. 4 and 5. Respondents Nos. 4 and 5 agreed to convey the said property to the writ petitioner and a formal deed of conveyance was executed by respondents Nos. 4 and 5 in favour of the writ petitioner wherein respondent No. 3 was added as a mere confirming party inasmuch as the said sale was made pursuant to an agreement for sale entered into by and between respondent No. 3 and respondents Nos. 4 and 5, whereby respondents Nos. 4 and 5 agreed to sell the said property either to respondent No. 3 or to his nominee. Respondent No.3 was shown as a mere confirming party in the said deed of sale in order to avoid any future controversy. The consideration money of Rs. 40 lakhs was paid by the petitioner to respondents Nos. 4 and 5 out of which a sum of Rs. 10,000 has been paid to respondent No. 3 by way of reimbursement of the earnest money paid by him to respondents Nos. 4 and 5 at the time of execution of the agreement for sale. The requisite stamp duty of Rs. 7,93,650 was affixed to the deed of conveyance and the said deed of conveyance was presented before respondent No.1, the Registrar of Assurances, Calcutta, on 5th Aug., 1987.
The Registrar of Assurances, Calcutta, went to the residence of respondents Nos. 4 and 5 on commission, and upon payment of requisite commission fee for the purpose of execution of the said document and in the presence of respondent No.1, the vendors, namely, respondents Nos. 4 and 5, and the confirming party, namely, respondent No. 3, duly signed the said deed of conveyance at the residence of respondents Nos. 4 and 5 and the original deed of conveyance was handed over to the Registrar of Assurances, Calcutta, and the Registrar of Assurances, Calcutta, took the said deed of conveyance for registration under the law. Upon payment of the consideration money as mentioned in the said deed of conveyance, the vendors, namely, respondents Nos. 4 and 5, handed over vacant possession of the aforesaid property to the writ petitioner. The vendors, namely, respondents Nos. 4 and 5, obtained a “No objection certificate” from the IT authority as provided under s. 230A of the IT Act, 1961, and filed the same before the Registrar of Assurances, Calcutta, along with the written permission granted by the Urban Land Ceiling Authorities at the time of execution of the said deed of conveyance on commission.
4. By the impugned Memo No. 577, dt. 26th Oct., 1987, the Registrar of Assurances, Calcutta, informed the petitioner’s advocate that respondent No. 3 was also required to obtain an income-tax clearance certificate as provided under s. 230A of the IT Act as, according to respondent No. 1, respondent No. 3, by virtue of the agreement for sale, acquired some interest or benefit in the land in question, relying upon the definition of the word “immovable property” as provided in s. 2(6) of the Indian Registration Act. It was also pointed out by the Registrar of Assurances, Calcutta, that the agreement for sale that was entered into by and between respondent No. 3 and respondents Nos. 4 and 5 created an interest in land in favour of respondent No. 3 and as such the same should be regarded as a benefit arising out of the land. In order to decide the question whether the contract for sale created an interest in favour of respondent No. 3 within the meaning of s. 2(6) of the Registration Act in the land in question and whether respondent No. 3 has to obtain an income-tax clearance certificate from the IT authorities under s. 230A of the IT Act and has to produce the same before the registering authority along with the owners of the land who are the vendors, namely, respondents Nos. 4 and 5, respectively, it is necessary to set out the provisions of s. 2(6) of the Registration Act, s. 54 of the Transfer of Property Act and s. 230A of the IT Act. Sub- s. (6) of s. 2 of the Registration Act reads as follows : “`Immovable property’ includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass.” Sec. 54 of the Transfer of Property Act reads as follows : “Sale” is a transfer of ownership in exchange for a price paid or promised or part paid and part promised. Such transfer, in the case of tangible immovable property of a value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property.” Sec. 230A of the IT Act reads as follows : “230A. (1) Notwithstanding anything contained in any other law for the time being in force, where any document required to be registered under the provisions of cl. (a) to cl. (e) of sub-s. (1) of s. 17 of the Indian Registration Act, 1908 (16 of 1908), purports to transfer, assign, limit or extinguish the right, title or interest of any person to or in any property valued at more than fifty thousand rupees, no registering officer appointed under that Act shall register any such document, unless the ITO certifies that— (a) such person has either paid or made satisfactory provisions for payment of all existing liabilities under this Act, the EPT Act, 1940 (15 of 1940), the Business Profits Tax Act, 1947 (21 of 1947), the Indian IT Act, 1922 (11 of 1922), the WT Act, 1957 (27 of 1957), the Expenditure-tax Act, 1957 (29 of 1957), the GT Act, 1958 (18 of 1958), the Super Profits Tax Act, 1963 (14 of 1963) and the Companies (Profits) Surtax Act, 1964 (7 of 1964); or (b) the registration of the document will not prejudicially affect the recovery of any existing liability under any of the aforesaid Acts. (2) The application for the certificate required under sub-s. (1) shall be made by the person referred to in that sub- section and shall be in such form and shall contain such particulars as may be prescribed. (3) The provisions of sub-s. (1) shall not apply in a case where the person referred to in that subsection is any such institution, association or body, or belongs to any such class of institutions, associations or bodies, as the Board may, for reasons to be recorded in writing notify in this behalf in the Official Gazette.”
The Registrar of Assurances, Calcutta, while refusing to register the sale deed in question, pointed out that the confirming party, respondent No.3, had acquired an interest in the said immovable property which was also sought to be transferred and as such income-tax clearance certificate under s. 230A of the IT Act was required to be produced and unless the said income-tax clearance certificate is produced, the document could not be registered and that the registration was withheld and the matter was kept pending until the confirming party, namely, respondent No. 3, produces the income-tax clearance certificate under s. 230A of the IT Act.
The Registrar of Assurances, Calcutta, it appears, relied on a passage from Sanjiva Rao’s Registration Act and relied on the principle laid down in an English case, namely, Marshall vs. Green (1875) 1 CPD 35, which laid down the proposition that in an agreement for sale of immovable property, to create an interest in land, one must acquire a real interest in any benefit arising out of the land.
It may be mentioned herein that whenever any sale of an immovable property is to be made, it should be governed by the provisions of the Transfer of Property Act, particularly, s. 54 of the Transfer of property Act, which defines “sale” and also provides that a contract for the sale of immovable property does not, of itself, create any interest in or charge on such property. This last clause, wherein it provides that such a contract for sale of immovable property does not, of itself, create any interest in or charge on such property, totally abolished the English doctrine that a contract for sale transfers an equitable estate to the purchaser. The law in India does not recognise the equitable estate. In this connection, it may be mentioned that s. 17(2)(v) of the Indian Registration Act provides that any document not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest is not required to be registered. It was submitted by Mr. Anindya Kumar Mitra, learned counsel appearing on behalf of the petitioner, that the registering authority was in error and failed to appreciate the correct and the established legal position in this behalf inasmuch as no interest in any immovable property had been created in favour of respondent No. 3 by virtue of the said contract for sale and it was further submitted that the registering authority failed to appreciate the true scope and ambit of the provisions of s. 230A of the IT Act. It was further submitted that the production of an income-tax clearance certificate is required under the provisions of s. 230A of the IT Act in case of a transfer of property within the meaning of the Transfer of Property Act and that the Indian Registration Act does not create or extinguish the right, title and interest in any property and if respondent No. 3 is not the owner and if respondent No.3 had no occasion to transfer the property in favour of the petitioner, in that event, on a proper construction of the provisions of s. 230A of the IT Act, respondent No.3 was not required to obtain an income-tax clearance certificate. In my view, the submission made by Mr. Mitra requires careful consideration. The object of s. 230A of the IT Act, 1961, is primarily intended to be a safeguard against tax evasion. It provides a total safeguard in the sense that it requires not only the income-tax clearance certificate from the ITO, but also prescribes an interdict to the registering authority not to register any document which purports to transfer, assign, limit or extinguish the right, title or interest of any person to or in any property including agricultural land the value of which exceed Rs. 50,000 unless such certificate is produced. The certificate is to the effect that the transferor had either paid or made satisfactory arrangements for payment of all existing tax liabilities so that the registration of the document will not prejudicially affect the recovery of any existing tax liability. This section has been enacted as part of the machinery for collection or recovery of income-tax and other taxes. In the instant case, when the IT authorities issued a “No objection certificate” in favour of respondent Nos. 4 and 5 for effecting the transfer of property in favour of the petitioner, the question is whether the Registrar of Assurances can insist that respondent No. 3 who is not the owner of the property in question but with whom an agreement was made for sale by respondents Nos. 4 and 5 and ultimately the writ petitioner being the nominee of respondent No.3 is purchasing the property directly respondents Nos. 4 and 5 for production of income-tax clearance certificate (sic). Such certificate as contemplated by s. 230A of the IT Act was required to be taken by respondent No. 3 and had to be produced before the registering authority. From the scheme of s. 230A of the said Act, it appears that the object of such legislation was to prevent transfer of property by a person who had defaulted in making payment of income-tax and s. 230A of the said Act was introduced for the purpose of recovery of the dues, for, otherwise, if a person in arrear of payment of income-tax is allowed to transfer his property without payment of the dues, in that event, the Revenue is bound to suffer as ultimately the Revenue would not get the property to fall back upon to realise the income-tax. Respondents Nos. 4 and 5 who are the owners of the land are admittedly not defaulters in payment of income-tax and that was a reason why the IT authorities issued a “No objection certificate” in respect of the transfer in question. In law, respondent No. 3 had no saleable interest in the property in question and admittedly if respondent No. 3 is in arrears of payment of any income-tax, certainly the IT authorities cannot fall back upon the property in question in which respondent No.3 had no right, title or interest which could be sold. The language used in s. 230A of the IT Act could not be stretched so far as is sought to be done by the Registrar of Assurances. It is a firmly established principle that language is presumed to be used in its primary ordinary sense unless this stultifies the purpose of the statute or otherwise produces some injustice, absurdity or anomaly or contradiction, in which case, some secondary ordinary sense must be preferred. In the instant case, I have to look to the intention of Parliament for enacting the provision of s. 230A of the IT Act and the intention for such provision is clear. The interpretation sought to be given by the Registrar of Assurances would clearly amount to a destructive analysis. The view taken by the Registrar of Assurances is, on the face of it, perverse in view of the provision of the Transfer of Property Act and the provision of the IT Act referred to above. The object of s. 230A of the IT Act is clear and it is not difficult to ascertain the mischief which the statute was intended to remedy and under such circumstances, the construction as sought to be made by the Registrar of Assurances would be contrary to the spirit and/or the object of the provision of s. 230A of the said Act. Further, the scope of s. 230A of the IT Act, in my view, cannot be enlarged beyond what was intended by the legislature. Sec. 230A of the said Act clearly provides that an income-tax clearance certificate is required before the registration when the transferor purports to transfer, assign, limit or extinguish right, title or interest in the property. Sec. 54 of the Transfer of Property Act clearly declares that a contract for sale of immovable property does not, of itself, create any interest in or charge on such property. When in a matter like this, respondent No. 3 had become a confirming party, the right of respondent No. 3 to enforce the contract for sale against respondents Nos. 4 and 5 had been clearly abandoned in so many clear words and in order to avoid any future complication in the matter, respondent No. 3 was made a confirming party. The confirming party in the instant case had not acquired any interest which could be transferred. In that view of the matter, in my view, the Registrar of Assurances was wholly wrong in holding that the contract for sale created an interest in favour of respondent No.3 in view of the definition of “immovable property” as provided in s. 2(6) of the Registration Act. The Registrar of Assurances, Calcutta, in my view, failed to appreciate the true scope of the meaning and definition of the word “immovable property” as provided in s. 2(6) of the Indian Registration Act. The word “or any other benefit to arise out of land and things attached to the earth…” cannot be read in isolation inasmuch as on a plain reading of the said sub-section, it is clear that these words “or any other benefit to arise out of land and things attached to the earth” must be a right or interest akin to rights to ways, light, ferries, fisheries and that these words “any other benefit to arise out of land” is provided after the words “some specific right”, it should be held that any other benefit must be similar to the rights mentioned in that sub-section on the basis of the principles of the interpretation. These words, “any other benefit” are to be interpreted on the basis of the principle of “ejusdem generis “. What is “transfer of property” is provided under the Transfer of Property Act and in this regard the Transfer of Property Act overrides all other Acts. The scope and ambit of the Transfer of Property Act is well- known and well-defined. The scope of the Indian Registration Act is also well-settled, namely, that the purpose of this Act is to provide the provision for registration of document for effecting such transfer within the meaning of the Transfer of property Act. The scope of the Indian Registration Act is confined only to registration and not to a transaction. The scope of the Transfer of Property Act is confined to a transaction, in other words, to create or extinguish right, title or interest in any property and the meaning of transfer of such right, title and interest. When the Transfer of Property Act clearly provides that a contract for sale of immovable property does not create any interest in or charge on property, that should be regarded as the law of the land and the legal effect of a contract for sale of immovable property cannot be enlarged by the provision of the Registration Act as sought to be made by the registering authority. In my view, the Registrar of Assurances proceeded in the matter on an erroneous conception of law regarding the effect of a contract for sale of immovable property. As hereinbefore stated, respondent No.3 had no manner of right, title or interest in the immovable property which belongs to respondents Nos. 4 and 5 and the agreement for sale specifically provided that the property might be sold either to respondent No. 3 or to his nominee when the property belonging to respondents Nos. 4 and 5 was sought to be transferred in favour of the petitioner being the nominee of respondent No.3. By no stretch of imagination, can it be said that respondent No.3 had any right which is sought to be transferred in favour of the petitioner. When the IT authorities had issued the “No objection certificate”, respondents Nos. 4 and 5 as the owners of the property had no outstanding tax liability and the registering authority was bound to act upon the same and register the same on the strength of such certificate. The Registrar of Assurances had no jurisdiction to go behind the “No objection certificate” issued in the clearance given by the IT authorities under the provisions of the IT Act. In my view, in the facts and circumstances of the case, particularly respondent No. 3 was not transferring any of his right, title or interest in property as provided in s. 230A of the IT Act and as such the question of obtaining an income-tax clearance certificate does not and could not arise at all. In my view, the Registrar of Assurances, Calcutta, was in error in keeping the registration pending till the confirming party, namely, respondent No. 3, produced the income-tax clearance certificate inasmuch as respondent No. 3, was only confirming party, and respondent No. 3 was not the owner of the property and respondent No. 3 had not acquired any right, title or interest in the property on the strength of the mere agreement to sell the property of which he was party. Accordingly, the decision contained in memo No. 577 dt. 26th Oct., 1987, given by Mr. R. K. Dutt, Registrar of Assurances, Calcutta, which is annexed to the petition, is set aside and respondent No.1 is directed to forthwith register the deed of conveyance dt. 5th Aug., 1987, relating to the rear portion of the premises No. 15. Raja Santosh Road, Calcutta, which was presented before the said authority on 5th Aug., 1987, which is annexed to the writ petition and to issue certificate of registration in favour of the petitioner forthwith.
8. The writ petition accordingly succeeds. There will be no order as to costs.
[Citation : 176 ITR 89]
