Telangana High Court
Karur Vysya Bank Limited, Kvbl vs The State Of Telengana And 5 Others on 26 April, 2022
Author: Surepalli Nanda
Bench: Surepalli Nanda
THE HONOURABLE SRI JUSTICE UJJAL BHUYAN
AND
THE HONOURABLE MRS JUSTICE SUREPALLI NANDA
WRIT PETITION No.3873 of 2020
ORDER:(Per Hon'ble Sri Justice Ujjal Bhuyan) Heard Mr. G.Krishna Chaitanya, learned counsel representing Ms. C.Rama Kumari, learned for the petitioner and Mr. C.V.Bhaskar Reddy, learned Government Pleader for the State of Telangana on behalf of respondent Nos.1 &
2.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks a direction to respondent No.2 for registering the sale certificate issued by the petitioner following auction sale of the schedule property.
3. Petitioner in this proceeding is the Karur Vysya Bank Limited. Respondent No.3 through respondent No.4 availed cash credit benefit from the petitioner to purchase a 2 UB,J & SN,J W.P.No.3873 of 2020 house bearing GHMC No.2-2-226, admeasuring 115 square yards, situated at Amberpet, Hyderabad.
4. Subsequently, the cash credit limit was enhanced.
5. However, on account of non-payment of dues, the cash credit account maintained by the 3rd respondent with the petitioner was classified as Non-Performing Asset (NPA) with effect from 30.07.2018 whereafter petitioner invoked provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (briefly referred to hereinafter as the 'SARFAESI Act'), pursuant to which demand notice dated 08.08.2018 was issued under Section 13(2) of the SARFAESI Act. As per the demand notice, outstanding dues was quantified at Rs.20,30,756.96 as on 31.07.2018.
6. It is stated that respondent No.3 failed to pay the due amounts, for which petitioner after issuing possession notice under Section 13(4) of the SARFAESI Act issued 3 UB,J & SN,J W.P.No.3873 of 2020 auction sale notice on 14.12.2018. Ultimately, the schedule property was sold to respondent No.5 under a private treaty for a total sale consideration of Rs.14,93,750.00.
7. On payment of the aforesaid amount by respondent No.5, sale certificate was issued by the petitioner to respondent No.5.
8. When the question of registration of the sale certificate by respondent No.2 arose, it was found on inquiry that an attachment order was passed on 07.05.2019 by the City Civil Court, Hyderabad, in I.A.No.18 of 2018 in O.S.No.3 of 2018 filed by respondent No.6.
9. In view of above, the schedule property in respect of which petitioner had issued sale certificate is included in the prohibited list. Therefore, 2nd respondent expressed inability to register the sale certificate.
10. In the above circumstances, present writ petition has been filed seeking the relief as indicated above.
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11. Issue raised in the present writ petition stands squarely covered by a Division Bench decision of this Court in City Union Bank Ltd., Karimnagar Branch vs. The Sub Registrar, Peddapalli, Karimnagar District, W.P.No.1084 of 2017, decided on 12.02.2018. After referring to relevant provisions of the Code of Civil Procedure, 1908; Transfer of Property Act, 1881; Registration Act, 1908, and various judicial pronouncements, this Court held as follows:
"14. The preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property in favour of the auction purchaser and the sale certificate under the SARFAESI Act in such circumstances is free of all encumbrances. The attachments effected subsequent to the mortgage created in favour of the bank do not affect the rights of the secured creditor 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 same is confirmed in favour of the secured creditor Bank and auction purchaser. 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 and thereby it becomes necessary to register the sale certificate.
15. Taking into account all these aspects and reckoning the law in the subject as discussed above, this Court has no 5 UB,J & SN,J W.P.No.3873 of 2020 hesitation to hold that the secured creditor is entitled to succeed in these writ petitions. The writ petitions are accordingly allowed directing the first respondent in both the writ petitions to register the sale certificates in accordance with the Registration Act. Miscellaneous Petitions pending if any shall stand closed. No order as to costs."
12. Thus, the view expressed by this Court is that sale of mortgage property in favour of auction purchaser and consequential sale certificate issued by the secured creditor under the SARFAESI Act is free of all encumbrances. Attachment affected subsequent to mortgage created in favour of secured creditor would not affect the rights of the secured creditor over the schedule property. Such attachment would not have impact on the sale conducted under the SARFAESI Act.
13. Insofar the present case is concerned, the schedule property was mortgaged to the petitioner in the year 2013, 04.06.2013 to be precise. The attachment order of the civil Court is dated 07.05.2019, much after creation of mortgage.
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14. Therefore, following the decision of this Court in City Union Bank Ltd. (supra), we direct 2nd respondent to register the sale certificate issued by the petitioner in respect of the schedule property in favour of respondent No.5 in accordance with the provisions of the Registration Act, 1908. The above exercise shall be carried out within a period of six (06) weeks from the date of presentation of the sale certificate.
15. This disposes of the Writ Petition. However, there shall be no order as to costs.
16. As a sequel, miscellaneous applications pending, if any, in this Writ Petition, shall stand closed.
______________________ UJJAL BHUYAN,J _________________________ SUREPALLI NANDA, J Date: 26.04.2022 KL