Registration of property sale cannot be refused by sub-registrars over income tax dues of original borrowers: Karnataka High Court

The Karnataka High Court recently ruled that income tax dues of original borrowers cannot impede the registration of property sales by a sub-registrar, following a petition filed by a buyer. The case involved a property in Bengaluru's Wilson Garden locality, auctioned due to loan default under the SARFAESI Act. \r

The bank issued a sale certificate to the buyer, but the sub-registrar refused registration citing income tax dues of the previous owners. Despite arguments from the government counsel, the bench upheld the buyer's rights, emphasizing the priority of secured creditor dues. \r

The court directed immediate registration of the sale and urged the state government to issue a circular to prevent similar disputes, highlighting the sub-registrars' tendency to refuse registrations on invalid grounds.