Kerala High Court
State Bank Of India vs Sub Registrar on 6 February, 2024
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE VIJU ABRAHAM
TUESDAY, THE 6TH DAY OF FEBRUARY 2024 / 17TH MAGHA, 1945
WP(C) NO. 40778 OF 2023
PETITIONER:
STATE BANK OF INDIA
STRESSED ASSET RECOVERY BRANCH-II 40/947, IST FLOOR,
R.S.BUILDING, METRO PILLAR NO.697, OPP.MAHARAJAS
COLLEGE GROUND, M.G.ROAD, ERNAKULAM,KERALA REPRESENTED
BY ITS CHIEF MANAGER, PIN - 682011
BY ADV S.EASWARAN
RESPONDENTS:
1 SUB REGISTRAR
REGISTRAR'S OFFICE KALPETTA PO KALPETTA WAYANAD
DISTRICT, PIN - 673122
2 M/S FRONTILE PHARMA REPRESENTED BY ITS MANAGING PARTNER
KUNHIMOIDEEN
KILIYANARY HOUSE,GREEN LAND NAGAR, TURKY
ROAD,KALPETTA.P.O, WAYANAD DISTRICT, PIN - 673122
3 MR KUNHIMOIDEEN S/OKUNHAMU
KILIYANARI HOUSE,GREEN LAND NAGAR, TURKY
ROAD,KALPETTA.P.O, WAYANAD DISTRICT, PIN - 673122
4 SHANAVAS
THAYYIL HOUSE, NEAR LEO HOSPITAL,MUTTIL, KALPETTA.P.O,
WAYANAD DISTRICT, PIN - 673121
5 DICKSON D J
VOZHGA HOUSE, MUTTILSANTO.P.ANTO,S/O ANTO, "PELLISSERRY
HOUSE, MULLAKKARA ROAD, PARALAM, AMMADAM, THRISSUR, PIN
- 680563
BY ADVS.
B.KRISHNAN
ANIL KUMAR K.P.
CIBI THOMAS(K/108/1999)
R.PARTHASARATHY(K/151/1996)
OTHER PRESENT:
GP - AJITH VISWANATHAN
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
06.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C). No.40778 of 2023 :2:
VIJU ABRAHAM, J.
-- -- -- -- -- -- -- -- -- -- -- -- --
W.P.(C) No.40778 of 2023
-- -- -- -- -- -- -- -- -- -- -- -- --
Dated this the 6th day of February, 2024
JUDGMENT
The petitioner Bank (hereinafter referred to as 'Bank' for short) has filed this writ petition for a direction to the 1 st respondent Sub Registrar, to delete the entry of attachment in the encumbrance register in respect of its secured asset, and register Ext.P5 sale certificate and thereafter to effect mutation.
2. The 2nd respondent (hereinafter referred to as 'borrower' for short) availed financial facilities from the Bank by creating an equitable mortgage by deposit of title deeds on 14.11.2009, in respect of the property having an extent of 2.835Ares in Re.Sy. No. 183/5 of Kalpetta village, Vythiri Taluk, Wayanad District along with a residential building. When the borrower defaulted the repayment of loan amounts, the Bank initiated proceedings against them under the provisions of the SARFAESI Act, and the property was sold in auction in favour of the 4 th respondent. Ext.P5 is the sale certificate dated 04.11.2023.
3. The 5th respondent has obtained an attachment dated 31.10.2019 in O.S. No.186 of 2019 on the files of Munsiff Court W.P.(C). No.40778 of 2023 :3: Kalpetta in respect of the aforesaid mortgaged property as evident from Ext.P6 encumbrance certificate. Ext.P7 shows that the said attachment is obtained by 5th respondent subsequent to the creation of the equitable mortgage by the borrowers in favour of the petitioner. The petitioner contends that the attachment at the instance of the 5th respondent which is subsequent to the mortgage cannot affect the right of the petitioner to sell the property under the provisions of the SARFAESI Act.
4. Heard the learned counsel for the petitioner and the learned Government Pleader.
5. The learned counsel for the petitioner relied on the decision of this Court in Madhan S. v. Sub Registrar, Kollam and Others [2014 (1) KHC 249] and the decision of a Division Bench of this Court in Secretary, Keechery Service Co- operative Bank Ltd. v. Sajitha Nizar alias Sajitha P.M. and Others, [2020 (5) KHC 231] and contends that the attachment effected subsequent to the creation of equitable mortgage will not affect the right of the Bank to sell the mortgaged property and the attachment has to be effaced from the encumbrance register.
6. In Madhan's case (supra), this Court held in paragraph 9 as follows:-
W.P.(C). No.40778 of 2023 :4:
"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 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."
7. A Division Bench of this Court in Ali Asharaf M.M. and Another v. Sub Registrar, Thrissur (Judgment dated 24.7.2015 in W.A. No.612/2015) has affirmed the law laid down in Madhan's case. In Keechery Service Co-operative Bank case (supra), another Division Bench of this Court also affirmed the law laid down in Madhan's case (supra) and held in paragraph 7 as under:-
"7.In the light of the aforesaid declaration of law by this W.P.(C). No.40778 of 2023 :5: Court the order of dismissal of the petition filed for lifting the attachment ordered under Ext R7 (a) viz., Ext R7 (b) by the Federal Bnk would pale into insignificance. We do not find any reason to disagree with the declaration of law in Madhan's case (supra) which was virtually affirmed by the Division Bench in Ali Asharaf's case (supra). In the said circumstances and taking note of the fact that the orders of attachment of the property in question were after the creation of equitable mortgage of the same with Federal Bank we do not find any reason to interfere with the impugned judgment passed by the learned Single Judge following the dictum in Madhan's case (supra), carrying the directions to effect mutation of the property as also to efface all encumbrance over the property effected after 27/06/2014, the date on which the property in question was mortgaged with Federal Bank".
Thus it is trite law that attachment effected subsequent to the creation of equitable mortgage does not have any effect on the sale conducted by the Bank under the SARFAESI Act and has to be effaced from the encumbrance register. It is evident from the documents produced in the writ petition that the attachment obtained by the 5th respondent is subsequent to the creation of equitable mortgage by the borrowers in favour of the petitioner.
8. This Court in Phoenic ARC Pvt. Ltd. v. Sub Registrar, Feroke [2023 KHC Online 9452] while considering an identical issue referring to Section 89(5) of the Registration Act, 1908 has W.P.(C). No.40778 of 2023 :6: held that since the attachment subsequent to creation of equitable mortgage has lost its efficacy and has to be obliterated from the records, the same can be done by the Sub Registrar by filing the certified copy of the order/judgment of this Court in Book No.1 maintained by the Sub Registrar.
9. Accordingly, there will be a direction to the 1 st respondent to efface the attachment obtained by the 5 th respondent noted in Ext.P6 encumbrance certificate from Book No.1 by filing the certified copy of this judgment in the said book and register Ext.P5 sale certificate if the same is otherwise in order. The 1 st respondent shall thereafter effect mutation of the said property de hors the aforesaid attachments, if there are no other impediments.
The writ petition is disposed of.
Sd/-
VIJU ABRAHAM JUDGE sm/ W.P.(C). No.40778 of 2023 :7: APPENDIX OF WP(C) 40778/2023 PETITIONER EXHIBITS Exhibit P1 COPY OF JENMAM DEED NO.2814/1/2006 DATED 05/10/2006 Exhibit P2 COPY OF LETTER DATED 15.11.2009 CONFIRMING THE CREATION OF EQUITABLE MORTGAGE ExhibitP3 COPY OF DEMAND NOTICE DATED 29.02.2016 ISSUED UNDER SECTION 13(2) OF THE SECURITISATION ACT Exhibit P4 COPY OF THE SALE NOTICE DATED 04.09.2023 Exhibit P5 COPY OF THE CERTIFICATE OF SALE DATED 04.11.2023 Exhibit P6 COPY OF ENCUMBRANCE CERTIFICATE DATED 07.09.2023 ExhibitP 7 COPY OF THE ORDER OF ATTACHMENT DATED 31- 10-2019 IN OS NO 186 OF 2019 ON THE FILES OF MUNSIFF COURT KALPETTA