Asset Reconstruction Company (India) Limited vs S.P. Velayutham & Ors.
Background
A borrower had mortgaged property to Indian Bank as collateral, and after default, the Bank initiated recovery/securitisation proceedings before assigning the debt and security to the appellant, an asset reconstruction company. Meanwhile, the property owners had executed a registered power of attorney (PoA) that expressly prohibited the agent from encumbering the property, followed later by a separate, unregistered PoA purporting to grant a power of sale; relying on the earlier (non-sale) registered PoA, the agent, Mr. S.P. Velayutham, nonetheless sold the property to his own son. The appellant filed a writ petition arguing the Sub-Registrar had failed to verify the PoA's authority before registering this sale deed; a Single Judge agreed and declared the registration null and void, but the Division Bench reversed, holding the appellant should have gone to a civil court instead, especially since related civil suits and a prior Supreme Court order (in Section 145 Cr.P.C. proceedings) had already directed the parties to civil court.
Decision Breakdown
The Supreme Court clarified that registration of a document involves three distinct steps (execution of the document, presentation and admission of execution, and the formal act of registration) and that a challenge to the very execution or title underlying a document (the first two steps) must go to a civil court, but a challenge confined to the Registering Authority's own statutory failure to verify things properly during registration (the third step) remains within the High Court's writ jurisdiction under Article 226 and is not automatically ousted merely because civil suits are pending. Since the appellant here challenged only the Registering Authority's omission to check whether the PoA-holder actually had power to sell (not the underlying title or execution itself), the writ petition was maintainable, and the Division Bench erred in relegating the appellant to a civil suit and reversing the Single Judge. The Court restored the Single Judge's order (registration held null and void for procedural non-compliance) and allowed the appeals, with no order as to costs.
Lesson Learnt
When a person's grievance is that a government registration authority failed to follow its own statutory verification duties (as opposed to a dispute over who actually owns or had the right to sell a property), that grievance can be pursued directly through a writ petition in the High Court. It does not have to be routed through a full civil suit, even if related civil litigation over ownership is separately pending.