Allowed

Bank of Baroda v. the Village Officer

Kerala HC9 Aug 2021WP(C)/12488/2021

Case brief

AI extract

What is this about?

The Writ Court allowed a petition challenging a refusal to issue revenue records to a SARFAESI Act purchaser. The court held that Secured Creditors' subsequent attachments do not defeat title obtained via SARFAESI sale. It directed removal of encumbrance entries, issuance of requested records, and permitted payment of land tax.

What did the court decide?

Declaratory relief that attachment does not affect title; direction to remove encumbrance entries, issue records (P11-P13), effect mutation, and remit land tax.

Bank of Baroda Vs the Village Officer — Property and Title | Kerala HC (2021)

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WP(C) NO. 12488 OF 2021

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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 RAJA VIJAYARAGHAVAN V

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MONDAY, THE 9^TH DAY OF AUGUST 2021 / 18TH SRAVANA, 1943

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WP(C) NO. 12488 OF 2021

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PETITIONER/S:

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1 BANK OF BARODA M.G ROAD, ERNAKULAM BRANCH, PALLIMUKKU, M.G ROAD, ERNAKULAM, REPRESENTED BY ITS CHIEF MANAGER, AND AUTHORISED OFFICER RETHEESH VIJAYENDRAN, S/O. VIJAYENDRAN, AGED 47 YEARS

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2 P.P ANTONY, S/O. PAPPU, PURAKKATTU PUTHEN VEEDU, SREEVALSAM ROAD, KUMBALAM SOUTH, KUMBALAM, ERNAKULAM 682 506

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BY ADV LEO GEORGE

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RESPONDENT/S:

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1 THE VILLAGE OFFICER POONITHURA VILLAGE, VYTTILA, ERNAKULAM DISTRICT, PIN 682036

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2 THE TAHSILDAR KANAYANNUR TALUK OFFICE, OPPOSITE SUBASH CHANDRA BOSE PARK, DISTRICT COURT COMPLEX ERNAKULAM 688 532

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3 SHYJU ANTONY S/O. KUTTY MOOSA, KOROTH HOUSE, GAS AGENCY ROAD, GANDHIPURAM, THRIPUNITHURA, ERNAKULAM 682 301

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4 FREADY PAUL

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MANAPARAMBIL HOUSE, NIRMAL GARDENS, KUNJAN BAVA ROAD, PONNURUNNI, ERNAKULAM 682 019

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5 THE ASSISTANT COMMISSIONER, SPECIAL CIRCLE-1, ERNAKULAM KOCHI 682 030

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SRI SYED M THANGAL, GP

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.08.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) NO. 12488 OF 2021

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JUDGMENT

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Being aggrieved by the refusal on the part of the respondents in issuing revenue records to the petitioners in respect of an item of property, the right, title and possession of which has been taken over by the first petitioner invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for brevity) and subsequently assigned to the second petitioner, the petitioners are before this court seeking the following reliefs:

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[i] declare that the First Petitioner Bank has priority in the matter of Recovery of its dues from Respondents 2&3 over Attachments reflected in Exhibit P10 Communication being a Secured Creditor having its security interest registered with the ‘Central Registry’ as provided in section 26E of the SARFAESI Act.

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[ii] Issue a writ of mandamus or any other appropriate writ, direction or order commanding the First Respondent to issue necessary details as sought for in Exhibits P11, P12 and P13 including ‘ROR’ to the respective petitioners after ignoring the Encumbrance/attachments reflected in Exhibit P10 communication and receive Basic tax in respect of the property covered by Exhibits P1&P2 Documents from the Petitioners.

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2. Brief facts of the case are as under:

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The first petitioner is a Public sector bank. A Private Limited Company named

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M/s. Online It Shoppe India Private Limited availed credit facilities from the first petitioner on 10.12.2011 by creating an equitable mortgage in respect of Exts.P1

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and P2 properties. The third and fourth respondents, who are respectively the Managing Director and Director of M/s. Online It Shoppe India Private Limited, were the owners in possession of Exts.P1 and P2 properties admeasuring 4.05 Ares and 4.25 Ares respectively in Sy. No. 1386/1 of Poonithura Village. The mortgage was confirmed by Ext.P3 Memorandum, dated 12.12.2011 issued by the third and fourth respondents in favour of the petitioner. Later, the afore credit account came to be classified as Non-Performing Asset and proceedings under the SARFAESI Act were initiated. The 1st petitioner took physical possession of the secured asset on 26.05.2014 and thereafter, the property was sold to the 2nd petitioner under Security Interest (Enforcement) Rules, 2002, and after complying with all the formalities prescribed in the Act and Rules. The sale certificates issued in respect of properties covered under Exts.P1 and P2 are Exts.P5 and P6.

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After issuing Exts.P5 and P6, Ext.P11 representation was submitted by the 2nd petitioner before the respondents seeking information as regards the ReSurvey number, Block number, Sub Division number etc. The 1st petitioner has submitted Ext.P13 representation seeking issuance of RoR certificate. However, the request was turned down on the ground of pending Revenue Recovery Proceedings against respondents 3 and 4 as per RR Demand Notice dated 24.06.2019, as is evident from Ext.P10 communication. According to the petitioner, attachment subsequent to the mortgage cannot claim precedence over the right of the purchaser, who has obtained ownership of the property pursuant to a sale effected by the petitioner under the SARFAESI Act. It is in the afore circumstances that the petitioners have approached this Court.

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I have heard Sri. Leo George, the learned counsel appearing for the

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petitioners and the learned Government Pleader.

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I have considered the submissions advanced and have perused the records. Section 26E of the SARFAESI Act grants priority to secured creditors after the registration of the security interest and the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. The rights and liberties conferred on the creditor/bank by virtue of mortgage created and the right to proceed under the relevant provisions of the SARFAESI Act cannot be defeated because of the subsequent attachments ordered by the Civil Court (see HDFC v. Sub Registry Officer [2011 KHC 851] and Madhan v. Sub Registrar [2014 (1) KLT 406]). In TDB v Deputy Examiner, Local Fund Audit and Others , [2020 (3) KHC 129] a Division Bench of this Court had occasion to observe that the sale carried out either under the SARFAESI Act or under the RDB Act takes precedence even over the statutory charges due to the Government created under KVAT Act or under other State Enactments after the Amendment Act of 2016. A secured creditor in whose favour a security interest has been created thus has priority in sale and payment over all other statutory charge holders.

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Furthermore, Section 10 of the Record of Rights Act, 1968 mandates that certified copies of the entries in the Record of Rights shall be granted by such officer on payment of the requisite fees. The proceedings under the SARFAESI Act were initiated which has finally culminated in the issuance of Exts.P5 and P6 sale certificates in favour of Sri. P.P.Antony. In that view of the matter, there is no justification on the part of the first respondent in refusing to issue a Record of Rights as requested by the petitioners.

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Furthermore, this Court in Joseph Kurian v. Village Officer [2010 (3) KLT 251], Rimmy v. State of Kerala and others [2012 KHC 2981], Vijayarajan M.D. V Tahsildar and Others [2013 KHC 2764] and in Anwar M. Easa and another v. District Collector, Ernakulam and others [2010 (1) KLT 747] has held that the payment of land tax is to be made by the holder of the land and this is in tune with the relevant provisions of the Kerala Land Tax Act. Section 5 of the Kerala Land Tax Act, 1961 enjoins the 'landholder', in whose name a land is registered, to pay the tax due under the provisions of the Act and a corresponding duty is imposed on the Revenue to receive the Tax when the same is offered. In that view of the matter, the petitioner is entitled to remit the basic tax.

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This writ petition will stand allowed. It is declared that the attachment effected subsequent to the creation of mortgage on 10.12.2011 shall not affect the title and ownership of the 2nd petitioner over the properties covered under Exts. P5 and P6 sale certificates. Consequently, there will be a direction to the competent among respondents Nos.1 and 2 to remove the entries in their registers relating to encumbrances over the subject property subsequent to the creation of the mortgage on 10.12.2011. The records sought for by the petitioners as per Exts.P11 to P13 shall be issued. If any application for mutation of the property is pending before the respondent Nos.1 and 2, the same shall be effected and the 2nd petitioner shall be permitted to remit the land tax in accordance with law.

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Sd/-

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RAJA VIJAYARAGHAVAN V

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JUDGE

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sru

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WP(C) NO. 12488 OF 2021

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APPENDIX OF WP(C) 12488/2021

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PETITIONER EXHIBITS

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Exhibit P1	TRUE COPY OF SALE DEED NO 2955/2006 OF MARADU SRO
Exhibit P2	TRUE COPY OF SALE DEED NO. 2954/2006 OF MARADU SRO
Exhibit P3	TRUE COPY OF MEMORANDUM EVIDENCING DEPOSIT OF TITLE DEEDS EXECUTED BY RESPONDENTS 3 AND 4 IN FAVOUR OF FIRST PETITIONER BANK WITH RESPECT TO THE PROPERTIES WHICH IS THE SUBJECT MATTER OF EXHIBITS P1 AND P2 DATED 12-12-2011
Exhibit P4	TRUE COPY OF THE DEMAND NOTICE CAUSED BY THE AUTHORISED OFFICER OF THE FIRST PETITIONER BANK DATED 25-02-2014
Exhibit P5	A TRUE COPY OF THE SALE CERTIFICATE ISSUED BY THE AUTHORISED OFFICER OF THE FIRST PETITIONER IN FAVOUR OF THE SECOND PETITIONER IN RESPECT OF THE PROPERTY COVERED BY EXHIBIT P1
Exhibit P6	TRUE COPY OF THE SALE CERTIFICATE ISSUED BY THE AUTHORISED OFFICER OF THE FIRST PETITIONER IN FAVOUR OF THE SECOND PETITIONER IN RESPECT OF THE PROPERTY COVERED BY EXHIBIT P2
Exhibit P7	TRUE COPY OF THE ENCUMBRANCE CERTIFICATE WITH RESPECT TO THE PROPERTY COVERED BY EXHIBIT P1 SALE DEED DATED 09-02-2021
Exhibit P8	TRUE COPY OF THE ENCUMBRANCE CERTIFICATE WITH RESPECT TO THE PROPERTY COVERED BY EXHIBIT P2 SALE DEED DATED 10-02-2021
Exhibit P9	TRUE COPY OF THE REQUEST SUBMITTED BY THE FIRST PETITIONER TO THE FIRST RESPONDENT DATED 26-03-2021
Exhibit P10	A TRUE COPY OF THE COMMUNICATION ISSUED BY THE FIRST RESPONDENT TO THE FIRST PETITIONER DATED 31-03-2021