Allowed

The Federal Bank Limited v. Sub Registrar

Kerala HC14 Feb 2019WP(C)/3163/2019

Case brief

AI extract

What is this about?

In a writ petition, the High Court of Kerala directed the Sub Registrar to register a sale certificate issued by Federal Bank to an auction purchaser. The court held that the bank's equitable mortgage (2008) preceded the State Bank of India's attachment (2012), making the Sub Registrar's refusal illegal. The court ordered effacement of the attachment upon registration.

What did the court decide?

Directed the first respondent to register the Ext.P2 sale certificate within one month and effaced the attachment upon registration.

The Federal Bank Limited Vs Sub Registrar — Banking and Recovery | Kerala HC (2019)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN

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THURSDAY ,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940

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WP(C).No. 3163 of 2019

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PETITIONERS:

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1 THE FEDERAL BANK LIMITED HEAD OFFICE AT ALUVA, BRANCH AT M.G.ROAD, ERNAKULAM, REPRESENTED BY THE DEPUTY VICE PRESIDENT OF LCRD ERNAKULAM DIVISION, MARINE DRIVE,ERNAKULAM,SAJAN PHILIP MATHEW.

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2 ANSAR.A.J., S/O.ABDUL JALEEL, CHINNATHOPPIL, POWER HOUSE WARD, ARYAD SOUTH, ALAPPUZHA - 688 007.

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BY ADVS. A.ANTONY SMT.LEELAMMA ANTONY

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RESPONDENTS:

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1 SUB REGISTRAR, SUB REGISTRY OFFICE, ALAPPUZHA - 688001.

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2 STATE BANK OF INDIA, FORMERLY STATE BANK OF TRAVANCORE, VADAKKANAL BRANCH, P.B.NO.1008, RAIBAN SHOPPING COMPLEX, BOAT JETTY ROAD, ALAPPUZHA - 688 007, REPRESENTED BY ITS BRANCH MANAGER.

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BY ADVS. SRI.K.K.CHANDRAN PILLAI (SR.) SMT.AMBILY S., SC, SBI SMT.AMMINIKUTTY-SR.GP

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 3163 of 2019

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JUDGMENT

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The first petitioner is Federal Bank Ltd., a banking company under the provisions of the Banking Regulation Act and the second petitioner is stated to be the auction purchaser of certain property sold by them in an auction conducted under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act ('the SARFAESI Act')

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The petitioners' grievance projected in this case is that even though the sale was completed and confirmed on 11.05.2017 and Ext.P2 sale certificate had been issued by the first petitioner to the second petitioner in terms of law, the first respondent - Sub Registrar, Alappuzha is refusing to register the same merely saying that there is an attachment reflected in the Encumbrance Certificate with respect to this property. The petitioners assert that this stand of the first respondent is completely untenable, since the equitable mortgage in favour of the first petitioner was executed by the borrower on 12.11.2008; whereas concededly the attachment made on the property by the second respondent - State Bank of India was on 10.04.2012. The first petitioner says that the amount realised from the sale was only about Rs.28 lakhs, whereas the total dues to them is more

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WP(C).No. 3163 of 2019

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than Rs.58 lakhs. He says, therefore, that there is no surplus to which the second respondent could have made any claim and therefore that the stand of the first respondent in refusing to register Ext.P2 sale certificate is illegal and unlawful.

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Sri.K.K.Chandran Pillai, the learned senior counsel, assisted by Smt.Ambily, appearing for the second respondent - bank asserts that there is nothing wrong in the stand now adopted by the first respondent because his client is having a legitimate attachment over the property. According to him, even assuming, without it being admitted, that the Federal Bank has a valid mortgage over the property in the year 2008, there is no reason to efface his client's attachment over it because they are certainly entitled to any surplus available after such sale. After saying so, the learned senior counsel adds that his client is not sure that a mortgage was created in the year 2008 and that this issue may be left open to his client to be agitated, if it is so required, as per law.

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The learned senior Government Pleader, on instructions, submits that the Registering Authority did not refuse to register the sale certificate but only that he had raised an objection on account of the attachment found on the property at the instance of the second respondent. She says that if the mortgage of the Federal Bank is earlier than the attachment effected by the State

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WP(C).No. 3163 of 2019

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Bank of India, then naturally going by the precedents in this area, the sale certificate will have to be registered. She says that if this Court so orders, the registration of Ext.P2 sale certificate will be completed without any avoidable delay.

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When I analyse the submissions made as afore by the learned counsel and the learned senior counsel, it becomes obvious that if factually the Federal Bank is claiming rights over the property on the basis of an equitable mortgage created as early as in the year 2008, then the second respondent - State Bank of India cannot object to the registration of Ext.P2 sale certificate, because concededly their attachment was made four years later. This is more so because, Sri.Chandran Pillai, the learned senior counsel has clearly submitted that the only question that can be raised by the State Bank of India is whether the Federal Bank has an earlier mortgage as stated by them. However, this is not an issue that can be considered by me in this writ petition and I leave full liberty to the State Bank of India to agitate it appropriately, if they are so advised, as per law.

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That said, as matters now stand, the Federal Bank claims an equitable mortgage of the year 2008 and they have sold the property through Ext.P3 to the second petitioner. The attachment of the State Bank of India is concededly only on

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WP(C).No. 3163 of 2019

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10.04.2012. Therefore, I see no reason why the first respondent should deny registration of Ext.P2 sale certificate and I am certainly of the view that he will have to do it at the earliest point of time.

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The only other relevant question is if there had been any surplus through such sale to which the State Bank of India certainly could have make a claim. However, Sri.A.Antony, the learned counsel for the petitioners submits that there is no surplus at all and that in fact the petitioner - bank has to receive more money from the original borrowers.

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In the afore circumstances, I order this writ petition and direct the first respondent to register Ext.P2 sale certificate, as per law, as expeditiously as is possible but not later than one month from the date on which the stamp duty is presented by the petitioners.

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On registration of the sale deed, the attachment made by State Bank of India over the property shall stand effaced, since such an endorsement may create hurdle for the second petitioner to deal with the property further.

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Sd/- DEVAN RAMACHANDRAN

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STU

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JUDGE

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WP(C).No. 3163 of 2019

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APPENDIX

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PETITIONER'S EXHIBITS:

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EXHIBIT P1	TRUE COPY OF THE REQUEST OF THE G.RAJESH KANNAN DATED 13-11-2008 FOR ACCEPTING THE TITLE DEED OF THE PROPERTY AS EQUITABLE MORTGAGE AS ENVISAGED UNDER SECTION 58(F)OF THE TRANSFER OF PROPERTY ACT.
EXHIBIT P2	TRUE COPY OF SALE CERTIFICATE DATED 28.06.2017 ISSUED BY THE 1ST PETITIONER IN FAVOUR OF THE 2ND PETITIONER.
EXHIBIT P3	TRUE COPY OF REPRESENTATION DATED 31.10.2018 OF THE 2ND PETITIONER ADDRESSED TO THE 1ST RESPONDENT.
EXHIBIT P4	TRUE COPY OF ENCUMBRANCE CERTIFICATE ISSUED BY ALAPPUZHA SRO DATED 08.10.2018.

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RESPONDENTS' EXHIBITS : NIL

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//TRUE COPY//

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P.A TO JUDGE.

The Federal Bank Limited v. Sub Registrar

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The Federal Bank Limited v. Sub Registrar

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