In a significant ruling on property registration under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), the Madras High Court has clarified that a registering officer cannot refuse registration of a sale certificate issued under the Act merely because of an existing attachment over the property. The judgment reinforces the binding nature of circulars issued by the Inspector General of Registration and underscores the supremacy of SARFAESI proceedings over prior attachments.
Background & Facts
The Dispute
The petitioner, M/s. Cholamandalam Investment and Finance Company Ltd., approached the Madras High Court challenging a refusal check slip dated 30.01.2026 issued by the Sub Registrar, Neelankarai (2nd respondent). The slip refused registration of a sale certificate dated 08.01.2025 executed by the petitioner in favour of the 3rd respondent, Jeevan Kumar.K, on the ground that the property was subject to a court attachment.
Key Facts
- The petitioner, a financial institution, had issued a sale certificate under the SARFAESI Act on 08.01.2025 for a property in Neelankarai, Chennai
- The Sub Registrar refused registration on 30.01.2026, citing an existing court attachment over the property
- The petitioner relied on Circular No. 22482/C1/2022 dated 12.07.2024, issued by the Inspector General of Registration (1st respondent), which explicitly states that attachments have no significance when a sale certificate is issued under the SARFAESI Act
- The circular itself was issued pursuant to the Madras High Court’s judgment in W.P. No. 11056 of 2024, which held that registering officers cannot refuse registration on attachment grounds
Procedural History
- 08.01.2025: Sale certificate executed by the petitioner under the SARFAESI Act
- 30.01.2026: Refusal check slip (RFL/Neelankarai/3/2026) issued by the 2nd respondent refusing registration
- 2026: Writ Petition (WP No. 13275 of 2026) filed before the Madras High Court challenging the refusal slip
- 08.04.2026: Judgment delivered by Justice Abdul Quddose, allowing the writ petition
Relief Sought
The petitioner sought:
- Quashing of the refusal check slip dated 30.01.2026
- A direction to the 2nd respondent to register the sale certificate dated 08.01.2025 within a stipulated time frame
The Legal Issue
The central question before the Court was whether a registering officer can refuse registration of a sale certificate issued under the SARFAESI Act on the ground of an existing court attachment over the property, in light of the Inspector General of Registration’s circular and settled judicial precedents.
Arguments Presented
For the Petitioner
- The petitioner contended that the refusal check slip was issued without application of mind to the Circular No. 22482/C1/2022 dated 12.07.2024, which explicitly bars refusal of registration on attachment grounds
- Reliance was placed on the Madras High Court’s judgment in W.P. No. 11056 of 2024, which held that attachments do not affect the registration of sale certificates under the SARFAESI Act
- It was argued that the SARFAESI Act prevails over prior attachments, and the registering officer’s refusal was arbitrary and contrary to law
For the Respondents (R1 & R2)
- Mr. P. Harish, learned Government Advocate, appeared for the 1st and 2nd respondents and did not dispute the issuance of the circular
- No substantive arguments were advanced to justify the refusal of registration
The Court's Analysis
The Court observed that the 2nd respondent’s refusal to register the sale certificate was arbitrary and contrary to settled law. The judgment emphasized the following key points:
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Binding Nature of Circulars: The Circular No. 22482/C1/2022 dated 12.07.2024, issued by the Inspector General of Registration, was binding on the registering officer. The circular explicitly stated:
"f) Hon’ble High Court in W.P.No.11056/2024 has observed that attachment made by some department and when the sale certificate is issued under SARFAESI Act, 2002, it is well settled that any attachment existing will have no significance and on that ground the registering officer cannot refuse to register the sale certificate."
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Supremacy of SARFAESI Proceedings: The Court reiterated that sale certificates issued under the SARFAESI Act override prior attachments. The refusal to register the sale certificate on attachment grounds was thus legally unsustainable.
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Non-Application of Mind: The refusal check slip was issued without considering the circular or the judgment in W.P. No. 11056 of 2024, demonstrating a clear non-application of mind by the registering officer.
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Judicial Precedent: The Court relied on its earlier judgment in W.P. No. 11056 of 2024, which had already settled the legal position that attachments cannot defeat registration of sale certificates under the SARFAESI Act.
The Verdict
The Madras High Court allowed the writ petition and issued the following directions:
- The impugned refusal check slip dated 30.01.2026 was quashed
- The 2nd respondent was directed to register the sale certificate dated 08.01.2025 executed by the petitioner in favour of the 3rd respondent
- The registration was to be completed within two (2) weeks from the date of receipt of a copy of the order
- The order was passed without costs
What This Means For Similar Cases
Registration of SARFAESI Sale Certificates Is Non-Negotiable
- Registering officers cannot refuse registration of sale certificates issued under the SARFAESI Act on grounds of existing attachments. The Circular No. 22482/C1/2022 and the judgment in W.P. No. 11056 of 2024 make this position binding and non-discretionary
- Practitioners should rely on circulars issued by the Inspector General of Registration as they carry the force of law and must be followed by subordinate officers
Judicial Precedents Override Administrative Discretion
- The judgment reinforces that administrative authorities must adhere to judicial precedents and cannot act arbitrarily. Any refusal to register a sale certificate under the SARFAESI Act must be grounded in law, not mere procedural formalities
- In cases of refusal, writ petitions can be filed to challenge the arbitrary action, with a strong likelihood of success if the refusal contravenes settled law
SARFAESI Act Prevails Over Prior Attachments
- Financial institutions and purchasers can take comfort in the fact that sale certificates issued under the SARFAESI Act are immune to prior attachments. This ensures certainty in recovery proceedings and protects the rights of secured creditors
- Buyers under SARFAESI proceedings should ensure that registering officers comply with circulars and judicial directions to avoid unnecessary litigation
