Allowed

Suhail S. v. the District Collector

Kerala HC2 Jul 2021WP(C)/7052/2021

Case brief

AI extract

What is this about?

The Court held that a sale certificate issued under the SARFAESI Act grants priority to the secured creditor. Consequently, the Director of Registration was directed to register the sale deed by effacing adverse entries regarding revenue recovery proceedings initiated by the electricity board for arrears accruing prior to the attachment. The Tahasildar was also directed to effect the transfer of r

What did the court decide?

Directed the Director of Registration to register the sale certificate after effacing adverse entries in revenue registers and for the Tahasildar to transfer the registry.

Suhail S. Vs the District Collector — Contract and Commercial Disputes | Kerala HC (2021)

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WP(C) NO. 7052 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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FRIDAY, THE 2^ND DAY OF JULY 2021 / 11TH ASHADHA, 1943

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WP(C) NO. 7052 OF 2021

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PETITIONER/S:

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SUHAIL S., AGED 31 YEARS, S/O. SAHUL HAMEED, RESIDING AT 449, NOORA MANZIL, PANAYAM, PERINADU P.O., PANAYAM VILLAGE, KOLLAM-691 601.

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BY ADVS. SRI.S.SREEKUMAR (KOLLAM) SRI.K.VIJAYAN SMT.V.BEENA SRI.ANAND B. MENON

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RESPONDENT/S:

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1 THE DISTRICT COLLECTOR, COLLECTORATE, CIVIL STATION, KOLLAM-691 013.

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2 THE TAHASILDAR (RR), TALUK OFFICE, TALUK KACHERY P.O., NEAR KSRTC BUS STAND, KOLLAM-691 001.

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3 VILLAGE OFFICER, THRIKKARUVA VILLAGE, ASHTAMUDI ROAD, THRIKKARUVA, KOLLAM-691 004.

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4 THE BRANCH MANAGER, SOUTH INDIAN BANK LTD., KOLLAM BRANCH, CHINNAKADA, KOLLAM-691 001.

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5 AUTHORISED OFFICER, PHOENIX ARC PVT. LTD., 5TH FLOOR, DANI CORPORATE PARK-158, CST ROAD, KALINA, SANTACRUZ (EAST) MUMBAI-400 098.

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6 THE SUB REGISTRAR OFFICER, SUB REGISTRAR OFFICE, POST OFFICE JUNCTION, ANCHALUMOODU, KOLLAM-691 601.

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WP(C) NO. 7052 OF 2021

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7 ADDL.R7. ASSISTANT ENGINEER, KERALA STATE ELECTRICITY BOARD, KANJIRAMKUZHI.

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IS IMPLEADED AS PER ORDER DATED 26-03-2021 IN IA NO.1/2021 IN WP(C) 7052/2021.

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BY ADV ARUNKUMAR A., SC, KSEB

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) NO. 7052 OF 2021

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JUDGMENT

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By virtue of Ext.P1 sale certificate issued by the 5th respondent in exercise of his powers under Section 13 of the Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for short) read with Rule 8 and 9 of the Security Interest (Enforcement) Rules, 2002, the petitioner along with one Nizamudheen secured title over property having an extent of 16.71 Ares together with buildings and improvements and comprised in Re-survey No. 274/9 in Block No. 4 of Thrikkaruva Village.

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Armed with the sale certificate, the petitioner approached the 6th respondent seeking registration of the sale deed. However, the said respondent refused registration on the ground that the property was the subject matter of an attachment effected by the 7th respondent towards arrears due to the KSEB. The petitioner was informed that recovery proceedings have been initiated by the Tahsildar (RR), Kollam in respect of the above property and a prohibitory order was passed on 2.2.2018.

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The petitioner contends that the mortgage was created on 18.1.2012 as is evident from Ext.P2 and as the attachment was effected only on 2.2.2018, it would not affect the title and ownership of the property nor would it have any impact on the sale conducted as per the provisions of the SARFAESI Act. Being aggrieved and seeking interference, the petitioner is before this Court seeking the following reliefs:

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WP(C) NO. 7052 OF 2021

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(i) To issue a writ of mandamus, order or direction to the 6th respondent to register the sale deed of the petitioner as per Ext./P1 sale certificate and give a direction to the 3rd respondent to mutate the property of the petitioner purchased in auction and to receive the property tax.

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(ii) To issue a writ of mandamus, order or direction to the 6th respondent to remove the adverse entries in the relevant registers regarding the Revenue REcovery proceedings against the secured asset subsequent to the creation of the mortgage.

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Sri. S. Sreekumar, the learned counsel appearing for the petitioner submitted that it has been laid down by this Court in a catena of decisions that under Section 26E of the SARFAESI Act, priority in payment has been statutorily created in favour of a secured creditor over all other debts including tax is payable to the Central Government or State Government on registration of the security interest. He would further point out that the sale of the property under Ext.P1 sale certificate is free from all encumbrances and the attachments effected subsequent to the mortgage would not affect the title and ownership of the petitioner and Nizamudheen over the properties. Such attachments will have no effect on the sale conducted invoking the provisions of the Act and the same would cease to have any effect the moment the sale is confirmed in favour of the petitioner.

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Sri. Arun Kumar, the learned Standing counsel appearing for the

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7th respondent submitted that electricity connection was granted to the previous owner on the strength of an agreement entered into between him

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WP(C) NO. 7052 OF 2021

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and the Board. The electricity arrears are for the period from February 2014 till April 2015 and it was for realizing the same that the proceedings were initiated and attachment effected on 02.02.2018.

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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, 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. In that view of the matter, the petitioner is entitled to succeed.

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There will be a direction to the 6th respondent to register Ext.P1 sale certificate as and when the same is presented for registration after

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WP(C) NO. 7052 OF 2021

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effacing the adverse entries in the relevant registers. Consequent to such registration, the 2nd or the 3rd respondent, as the case may be, on receipt of valid application, shall effect transfer of registry in respect of the property that is the subject matter of Ext.P1 sale certificate and the petitioner shall be permitted to remit land tax.

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This writ petition is disposed of.

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SD/-

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RAJA VIJAYARAGHAVAN V

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JUDGE

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WP(C) NO. 7052 OF 2021 7

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APPENDIX OF WP(C) 7052/2021

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PETITIONER(S) EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE SALE CERTIFICATE DATED 8.3.2021 ISSUED BY THE 5TH RESPONDENT. EXHIBIT P2 TRUE COPY OF THE LETTER DATED 10.3.2021 ISSUED BY THE 5TH RESPONDENT SHOWING THE DATE OF DEPOSIT OF TITLE. EXHIBIT P3 THE TRUE COPY OF THE RECOVERY PROCEEDINGS OF THE 2ND RESPONDENT TAHASILDAR. EXHIBIT P4 THE TRUE COPY OF THE JUDGMENT IN WPC 6197/2020 DATED 2.3.2020 OF THE HON'BLE HIGH COURT OF KERALA.

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RESPONDENT(S) EXHIBITS: NIL

Suhail S. v. the District Collector

Case brief

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Suhail S. v. the District Collector

Case brief

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