Petitioner challenged refusal to register Sale Certificate under SARFAESI Act due to subsequent attachment by another bank. Court held subsequent attachments do not affect title and ordered effacement of entries.
Writ petition allowed; 1st respondent directed to efface attachments and register Sale Certificate.
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
FRIDAY, THE 21ST DAY OF JUNE 2024 / 31ST JYAISHTA, 1946
WP(C) NO. 18967 OF 2024
PETITIONER
RASAK
AGED 42 YEARS
S/O. BASHEER, PUTHENPURAYIL HOUSE,
VANNAPPURAM KARA, VANNAPPURAM P.O.,
THODUPUZHA, IDUKKI, PIN – 685607
BY ADVS.
LIJI.J.VADAKEDOM
ATHUL V. VADAKKEDOM
RESPONDENTS:
1 THE SUB REGISTRAR-KARIKODE OFFICE OF THE SUB REGISTRAR-KARIKODE, POOMALA ROAD, THODUPUZHA, IDUKKI, PIN - 6855852 THE AUTHORIZED OFFICER UNDER SARFAESI ACT THE KERALA STATE CO-OPERATIVE BANK LTD, CREDIT PROCESSING CENTER, IDUKKI COLONY P.O., IDUKKI, PIN - 6856023 THE KERALA STATE CO-OPERATIVE BANK LTD REPRESENTED BY ITS GENERAL MANAGER, OFFICE OF THE KERALA STATE CO-OPERATIVE BANK LTD., IDUKKI COLONY P.O., IDUKKI, PIN - 6856024 THE SOUTH INDIAN BANK LTD., REPRESENTED BY ITS BRANCH MANAGER, KALIYAR BRANCH, MUNDACKAL TOWERS, IDUKKI ROAD, KALIYAR P.O., IDUKKI, PIN - 6856075 MAKKAR K.P, KUNNUMPURATHU HOUSE, ODIYAMPARA, VANNAPPURAM P.O., THODUPUZHA, IDUKKI, PIN – 685607WP(C) No.18967 Of 2024
2
By ADVS.
SRI.S.GOPINATHAN-SR.GOVERNMENT PLEADER
K.S.ARUN KUMAR-R2 & R3
SUNIL SHANKAR A-R4
M.V.RAJENDRAN NAIR-R5
VIDYA GANGADHARAN(K/000424/2020)
GAYATHRI.M.M(K/003350/2022)
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 21.06.2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
WP(C) No.18967 Of 2024
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JUDGMENT
Dated this the 21st day of June, 2024
The petitioner had purchased an extent of 12.14 Ares
and 81 Square Meters of property in Survey Nos.1506/2/3, 1506/5/1/2 of Vannappuram Village in the public auction held by 2nd respondent-Authorised Officer under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The said sale was conducted to enforce the security interest created in the property by way of mortgage by deposit of Title Deeds on 31.03.2015 by the then owner of the property, when he availed a loan from the 3rd respondent- Bank. The sale is free from all encumbrances.
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remitted. But, registration was refused citing the reason that there exists an attachment order obtained by the 4th respondent-Bank Manager of South Indian Bank, Kaliyar Branch, over the property. The attachment is shown as Entry Nos.1 and 2 in Ext.P4 Encumbrance Certificate.
were ordered in the year 2021 in I.A. No. 157/2021 in O.A. 498/2017 before the Debts Recovery Tribunal-II, Ernakulam. The mortgage in favour of the 2nd respondent-Bank was created on 31.03.2015. Therefore, the attachments are
admittedly subsequent to the creation of mortgage.
and Another [2022 (4) KHC 508] that "Once the sale is confirmed as per the provisions of Section 13(8) of the Act, the purchaser would get title to the property free of all encumbrances and any attachment upon the property will not have any consequence thereafter. The principle that
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emanates from the aforesaid decision is that an attachment of the secured asset after creation of mortgage in favour of the secured creditor, could be effaced once the sale is confirmed."
behalf of the 1st respondent and submitted that in Ext.P4, there are recording of two attachments by Court Order.
and 3 submitted that the property was mortgaged by the 5th respondent to the Bank on 31.03.2015. As the mortgage is
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a prior mortgage comparing to the attachments recorded in Ext.P4, the mortgage will prevail and the attachments are liable to be effaced in view of the judgment of this Court in Madhan S. v. Sub Registrar, Kollan and others [2014 (1) KHC 249].
respondent-South Indian Bank submitted that there are attachment in favour of the South Indian Bank, as can be seen from Ext.P4 and even if the mortgage of the property to the 3rd respondent-Bank is prior to the attachment, if there is any surplus amount arising out of the auction sale, the 4th respondent-Bank is entitled to the said amount. To this contention, the Standing Counsel representing respondents 2 and 3 submitted that there is no surplus amount arising out of the auction sale.
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ordered by the Courts shall prevail over any private contract between the petitioner and the Bank. Counsel for the petitioner further alleged that the sale of the property is an instance of collusion between respondents 2, 3 and the petitioner.
1st respondent, the respective Standing Counsel representing respondents 2 to 4 and the learned counsel appearing for the 5th respondent.
“9. The preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property in favour of the petitioner under Ext. P5 sale certificate under the Act is free of all encumbrances. The attachments effected subsequent to the mortgage created in favour of the bank do not affect the title and ownership of the petitioner over the
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subject property. Such attachments have no impact on the sale conducted under the Act and the same ceases to have any effect or fall to the ground the moment the sale is confirmed in favour of the petitioner. The declaration so sought by the petitioner is therefore granted and I further direct the Sub Registrar and the Village Officer to efface the attachments effected subsequent to the mortgage from the relevant records. Otherwise those attachments would remain as a permanent taboo prejudicially affecting the marketability and title to the property even though they ceased to have any legal efficacy. The needful in relation to the property bought by the petitioner shall be done within a period of two months from the date of receipt of a copy of this judgment.
The writ petition is allowed. No costs.”
12. A Division Bench of this Court in Ext.P5 judgment
in W.A.No.612 of 2015 held as follows-
“7. In the light of the aforesaid factual and legal issues, we are of the view that the appellants are entitled for a similar order. Accordingly, we declare that the attachments effected by the Munsiff Court, Thrissur after the date of mortgage are invalid and there will be a direction to the Sub Registrar and the Village Officer to efface the attachments effected after 08/07/2008 in their registers.
Writ appeal is allowed as above.”
13. The law laid down in the judgment in Madhan S.
(supra) was upheld by this Court in the judgment in W.A.No.612/2015 (Ext.P5). Following the law laid down by
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this Court, the petitioner is entitled to succeed.
The writ petition is accordingly allowed. The 1st respondent-Sub Registrar is directed to efface the attachment effected against the property covered by Ext.P1 Sale Certificate, which is shown as per Entry Nos.1 and 2 in Ext.P4 Encumbrance Certificate. The 1st respondent is directed to register Ext.P1 Sale Certificate.
Sd/-
N.NAGARESH
JUDGE
hmh
WP(C) No.18967 Of 2024
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APPENDIX OF WP(C) 18967/2024
PETITIONER EXHIBITS
Exhibit P1A COPY OF THE SALE CERTIFICATE DATED
11.3.2024
Exhibit P2A COPY OF THE ORDER DATED 30.1.2018 IN
CMP NO. 560/2018 BEFORE THE CHIEF
JUDICIAL MAGISTRATE COURT, THODUPUZHA
Exhibit P3A COPY OF THE PAYMENT DETAILS SHOWING
THE REMITTANCE OF REGISTRATION FEE BY
THE PETITIONER
Exhibit P4A COPY OF THE ENCUMBRANCE CERTIFICATE
NO. 991/2024 DATED 2.2.2024 ISSUED BY
THE 1ST RESPONDENT
Exhibit P5THE COPY OF THE JUDGMENT DATED
24.7.2015 IN W.A. NO. 612/2015 BEFORE
THIS HONOURABLE COURT
Exhibit P6A COPY OF THE ENCUMBRANCE CERTIFICATE
NO. 5344/2024 DATED 14/6/2024
2 issues framed by the court
Whether subsequent attachments on a mortgaged property efface the title obtained by a bona fide purchaser under the SARFAESI Act sale confirmation.
Whether the Sub Registrar is directed to efface attachment entries and register the Sale Certificate.
Colour shows how this judgement treated each authority
Axis Bank v. Hilal Ahmed BhatExplained¶33
Axis Bank (M/s.) v. Hilal Ahmed Bhat and Another
Phoenix ARC Pvt. Ltd v. Sub Registrar, FerokRelied on¶37
Phoenix ARC Pvt. Ltd v. Sub Registrar, Ferok
Madhan S. v. Sub Registrar, KollanRelied on¶44
Madhan S. v. Sub Registrar, Kollan and others
Writ Appeal No. 612 of 2015Relied on¶59
Ext.P5 judgment in W.A.No.612 of 2015
Rasak
The Sub Registrar, Karikode Office
The Authorized Officer under SARFAESI Act, Kerala State Co-operative Bank Ltd
Kerala State Co-operative Bank Ltd
South Indian Bank Ltd
Makkar K.P
N. Nagares
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court