Allowed

The Authorized Officer v. the Sub Registrar

Kerala HC14 Jul 2021WP(C)/7062/2021

Case brief

AI extract

What is this about?

The High Court allowed the petitioner bank's petition to register a sale deed for a mortgaged property sold via SARFAESI proceedings. The court directed the Sub-Registrar to register the deed and efface attachments made by another creditor in 2016, which were subsequent to the bank's 2012 mortgage.

What did the court decide?

Directed to register the original sale deed dated 2.3.2021 and efface attachments effected on 1.4.2016 subsequent to the creation of the mortgage.

The Authorized Officer Vs the Sub Registrar — Banking and Recovery | Kerala HC (2021)

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WP(C) NO. 7062 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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WEDNESDAY, THE 14^TH DAY OF JULY 2021 / 23RD ASHADHA, 1943 WP(C) NO. 7062 OF 2021

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PETITIONER:

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THE AUTHORIZED OFFICER CSB BANK LTD (FORMERLY CATHOLIC SYRIAN BANK LTD), THALASSERY BRANCH, P.B. NO.57, MM ROAD JUNCTION, THALASSERY, KANNUR-670 101 REP.BY NAWIN THOMAS, S/O.LATE M.J. THOMAS, AGED 46 YEARS, WORKING AS CHIEF MANAGER, CSB BANK LTD (FORMERLY CATHOLIC SYRIAN BANK LTD), ZONAL OFFICE, CONVENT JUNCTION, MARKET ROAD, ERNAKULAM 682 035

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BY ADV P.PAULOCHAN ANTONY

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RESPONDENTS:

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1 THE SUB REGISTRAR SUB REGISTRAR OFFICE, KOTTAPPADI, THAMPURANPADIKOTTAPADI ROAD, THRISSUR-680 505

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2 THE VILLAGE OFFICER THAIKKAD VILLAGE OFFICE, THAIKKAD, CHAVAKKAD, THRISSUR-680 104

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3 CHOWALLURPADI KURIES AND LOANS PRIVATE LIMITED THAIKAKD JUNCTION, GURUVAYOOR, THRISSUR-680 104 REP.BY ITS CHAIRMAN.

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4 SUNIL S/O.APPUNNY, AGED 41 YEARS, VANERY, PERUMPADAPPU, PONNANI, MALAPPURAM DISTRICT-679 580

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5 SANEESHA

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W/O.SUNIL, AGED 36 YEARS, VANERY, PERUMPADAPPU, PONNANI, MALAPPURAM DISTRICT-679 580

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6 K.R.LAKSHMANAN S/O.KOTTAN, AGED 46 YEARS, APARTMENT NO.7D, LAND MARK APARTMENTS, THONDEYAD BYE PASS, IRINGALLUR PANCHAYATH, KOZHIKODE 673 014

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WP(C) NO. 7062 OF 2021

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R6 WAS DELETED FROM PARTY ARRAY AS PER ORDER DATED 23-04-2021 IN IA 1/21.

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BY ADVS.

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SRI.RAJIT SRI.M.R.NANDAKUMAR

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SMT VIDHYA AC, GOVERNMENT PLEADER

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C) NO. 7062 OF 2021

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JUDGMENT

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The petitioner, the authorised officer of the CSB Bank Ltd., has approached this Court seeking directions to the 1st respondent to register the sale deed executed in favour of the auction purchaser pursuant to the initiation of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for short) and for a further direction to the respondents 1 and 2 to efface the attachment noted in Exts.P6 and P7 after the creation of Ext.P1 mortgage on 14.7.2012.

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It is the case of the petitioner that one K.Lakshmanan availed financial assistance on credit basis and a loan was sanctioned after creation of Ext.P1. Ext.P1 letter of confirmation of deposit of title deed dated 14.7.2012 was duly registered with the Central Registry. The borrower defaulted in effecting payment and the bank initiated proceedings under the SARFAESI Act. The property was taken possession pursuant to orders issued by the Chief Judicial Magistrate, Thrissur and later, through private treaty sale, the respondents 4 and 5 purchased the property on the strength of Ext.P4 memorandum of understanding. Ext.P5 is the sale certificate issued by the petitioner in favour of respondents 4 and 5. The petitioner contends that when encumbrance certificate was obtained from the 1st respondent it was found that the property which is the subject matter of Ext.P1 and P5 had been attached by the Munsiff Court, Chavakkad in O.S.No.1215/2016 and O.S.No.1216/2016 instituted by the Chowallurpadi Kuries and Loans Pvt. Ltd., the 3rd respondent herein. According to the petitioner, Exts.P6 and P7 encumbrance

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WP(C) NO. 7062 OF 2021

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certificate would reveal that the attachments were effected on 1.4.2016 much after the creation of the mortgage in favour of the CSB Ltd. When the draft sale deed executed by the petitioner was presented before the 1st respondent, the petitioner was informed that registration can be made only if the attachments made mention of in Ext.P6 and P7 encumbrance certificate are lifted. It is in the afore circumstances that the petitioner is before this Court seeking the following reliefs:

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(i) To direct Respondent No.1 to approve the Exhibit P8 Draft Sale Deed and to register the fair deed in favour auction purchaser.

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(ii) To direct Respondents No1 and 2 to efface the attachments noted after the creation of Exhibit P1 mortgage.

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I have heard Sri.Paulochan Antony.P, the learned counsel appearing for the petitioner and Smt.Vidhya A.C, 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. In the instant case, the property was mortgaged by way of equitable mortgage on 14.07.2012, whereas the attachment was effected only on 01.04.2016. The rights and liberties conferred on the creditor/bank by virtue of mortgage created in the year 2012 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 in the year 2016 (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)

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WP(C) NO. 7062 OF 2021

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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

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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 attachment so effected shall have no impact on the sale conducted under the provisions of the SARFAESI Act.

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Resultantly, this writ petition will stand allowed. There will be a direction to the 1st respondent to register the original of sale deed dated 2.3.2021 executed by the petitioner in favour of respondents 4 and 5. There will be further direction to the respondents 1 and 2 to efface the order of attachments effected over the subject property which are subsequent to the creation of the mortgage on 1.4.2016. Consequently, if any application for mutation of the property is pending before the 2nd respondent, the same shall be taken up and the land holder 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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WP(C) NO. 7062 OF 2021

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APPENDIX OF WP(C) 7062/2021

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PETITIONER'S EXHIBITS

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EXHIBIT P1	TRUE COPY OF THE LETTER OF CONFIRMATION OF DEPOSIT OF TITLE DEED WITH THE PETITIONER BANK DATED 14.7.2012
EXHIBIT P2	TRUE COPY OF THE ORDER IN CMP NO.5855/2015 DATED 5/7/2018 OF THE COURT OF THE CHIEF JUDICIAL MAGISTRATE, THRISSUR
EXHIBIT P3	TRUE COPY OF THE SALE NOTICE DATED 8.10.2020 ISSUED BY THE PETITIONER TO RESPONDENT NO.6
EXHIBIT P4	TRUE COPY OF THE MEMORANDUM OF UNDERSTANDING EXECUTED BETWEEN PETITIONER AND RESPONDENT NO.4 AND 5 DATED 25.11.2020
EXHIBIT P5	TRUE COPY OF THE SALE CERTIFICATE DATED 31.12.2020
EXHIBIT P6	TRUE COPY OF THE ENCUMBRANCE CERTIFICATES DATED 11.8.2016 ISSUED BY THE 1ST RESPONDENT IN RESPECT OF THE SECURED ASSET AND ITS ENGLISH TRANSLATION.
EXHIBIT P7	TRUE COPY OF THE ENCUMBRANCE CERTIFICATES DATED 26.2.2021 ISSUED BY THE 1ST RESPONDENT IN RESPECT OF THE SECURED ASSET AND ITS ENGLISH TRANSLATION
EXHIBIT P8	TRUE COPY OF DRAFT SALE DEED DATED 2/3/2021 SUBMITTED BEFORE THE 1ST RESPONDENT.

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RESPONDENTS' EXHIBITS

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NIL

The Authorized Officer v. the Sub Registrar

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The Authorized Officer v. the Sub Registrar

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