Bombay High Court on Validity of Unregistered Sale Certificates and Membership Rights in Co-operative Housing Societies.

The Bombay High Court held that a sale certificate issued by a Recovery Officer pursuant to a public auction under the Debt Recovery Tribunal (DRT) proceedings does not require compulsory registration under Section 17(2)(xii) of the Registration Act, 1908, and validly transfers ownership upon confirmation of sale. The Court quashed the orders of the Assistant Registrar and Divisional Joint Registrar of Co-operative Societies that had rejected the petitioners’ request for membership in a housing society on the ground of non-registration of the sale certificate. The Court observed that once a sale in a public auction attains finality and possession is handed over, ownership vests in the purchaser, and the society is bound to recognize such ownership and grant membership.

1. The petitioners, M/s. H.V. Infrastructure Pvt. Ltd. (a Delhi-based company) and its director, purchased Flat Nos. B-38 and B-39 in Respondent No. 2 Co-operative Housing Society at a public auction held by the Debt Recovery Tribunal (DRT), Mumbai, in 2007.
2. The flats were originally owned by one Siraj Abdul Karim Mehtaji, who had mortgaged them to the Union Bank of India as security for a loan granted to his proprietary concern, M/s. India Auto Diesel Engineering. Upon default, the DRT issued a Recovery Certificate in 2002 and auctioned the mortgaged properties in 2007.
3. The petitioners emerged as highest bidders, deposited the purchase price and poundage fees, and took possession of both flats through the Recovery Officer’s possession receipts dated 1 November 2007.
4. Despite lawful purchase and payment of stamp duty, the housing society refused to transfer membership to the petitioners, claiming that the sale certificate was unregistered and issued ten years after the auction.
5. The Assistant Registrar and Divisional Joint Registrar of Co-operative Societies rejected the petitioners’ applications for membership, leading to the filing of the present writ petition.

The Court noted that the DRT proceedings, auction sale, and possession transfer had attained finality in 2007, and no objections or appeals were ever filed challenging the sale or its confirmation.

Referring to Section 17(2)(xii) of the Registration Act, 1908, the Court emphasized that sale certificates issued by a Court or Recovery Officer are exempt from compulsory registration. Hence, rejection of membership on this ground was erroneous.

The sale certificate is merely evidence of title and does not itself create ownership; title vests in the auction purchaser upon confirmation of sale.

The Court cited Supreme Court precedents including:

1. Municipal Corporation of Delhi v. Pramod Kumar Gupta (AIR 1991 SC 401)
2. Smt. Shanti Devi L. Singh v. Tax Recovery Officer (AIR 1991 SC 1880)
3. B. Arvind Kumar v. Government of India ((2007) 5 SCC 745)
4. M/s. Esjaypee Impex Pvt. Ltd. v. Canara Bank ((2021) 11 SCC 537)
5. State of Punjab v. M/s. Ferrous Alloy Forgings Pvt. Ltd. (2024 SCC OnLine SC 3372)

The Court rejected the society’s contention that only one flat was mortgaged and that the DRT lacked jurisdiction over the second flat, noting that both flats were explicitly included in the recovery proceedings and sale orders.

It further held that procedural irregularities, such as delayed stamping or non-registration, cannot invalidate a confirmed court sale.

The society’s refusal to recognize the petitioners’ ownership was termed illegal and high-handed, especially since it had obstructed lawful possession and ignored directions from the Recovery Officer.

The Court quashed the impugned orders of the Assistant Registrar (dated 16.12.2019) and Divisional Joint Registrar (dated 27.06.2024), holding them contrary to settled legal principles. It directed the Respondent Society to recognize the petitioners as lawful owners and grant them membership in respect of Flat Nos. B-38 and B-39. The judgment reaffirmed that once a DRT-conducted auction sale attains finality and possession is delivered, ownership cannot be denied on the hyper-technical ground of non-registration of the sale certificate.

1. Section 17(2)(xii), Registration Act, 1908 – Exemption of sale certificates issued by a Court or public authority from compulsory registration.
2. Section 89(4), Registration Act, 1908 – Mandate to file a copy of sale certificate in Book I maintained by the Sub-Registrar.
3. Order XXI Rules 92 & 94, Code of Civil Procedure, 1908 – Confirmation of sale and issuance of sale certificate upon completion of judicial sale.
4. Articles 18 & 23, Indian Stamp Act, 1899 – Stamp duty payable when an auction purchaser voluntarily presents the sale certificate for registration

Citation: 2025:BHC-AS:45183-DB

Case: M/s. H.V. Infrastructure Pvt. Ltd. & Anr. v. State of Maharashtra & Anr.

Court: High Court of Judicature at Bombay (Civil Appellate Jurisdiction)

Coram: Justice Milind N. Jadhav

Writ Petition No.: 11251 of 2024