Kerala High Court
Hdfc Bank Ltd vs State Of Kerala on 11 March, 2024
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE VIJU ABRAHAM
MONDAY, THE 11TH DAY OF MARCH 2024 / 21ST PHALGUNA, 1945
WP(C) NO. 4480 OF 2024
PETITIONER:
HDFC BANK LTD.
HDFC HOUSE, VAZHUTHACAUD P.O., THYCAUD VILLAGE,
THIRUVANANTHAPURAM DISTRICT REPRESENTED BY ITS ASST. VICE
PRESIDENT AND AUTHORIZED OFFICER, S. SIVAKUMAR., PIN -
695014
BY ADV LATHEESH SEBASTIAN
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY CHIEF SECRETARY, SECRETARIAT,
THIRUVANANTHAPURAM - 695 001., PIN - 695001
2 THE SUB REGISTRAR,
SUB REGISTRAR'S OFFICE, BALARAMAPURAM,
THIRUVANANTHAPURAM, PIN - 695001
3 VILLAGE OFFICER,
PALLICHAL VILLAGE OFFICE, THIRUVANANTHAPURAM,
PIN - 695001
4 PRASANTH KUMAR.S
AGED 49 YEARS
S/O S.S.KUMAR, NANDANAM, VARUVILAKOM, BHAGAVATHY NADA
P.O., PALLICHAL, NEYYATTINKARA, THIRUVANANTHAPURAM,
PIN - 695501
5 BEENA J.G
AGED 43 YEARS
W/O PRASANTH KUMAR, NANDANAM, VARUVILAKOM, BHAGAVATHY
NADA P.O., PALLICHAL, NEYYATTINKARA, THIRUVANANTHAPURAM,
PIN - 695501
6 B.KUMAR,
THENGUVILAKATH VEEDU, BALARAMAPURAM P.O.,
THIRUVANANTHAPURAM, PIN - 695501
7 RAJAJI LAL
DARSANAM, ANAPPADU, BALARAMAPURAM, THIRUVANANTHAPURAM,
PIN - 695501
BY ADV BLAZE K. JOSE
OTHER PRESENT:
SR.GP - JUSTIN JACOB
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
11.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.P.(C). No.4480 of 2024 :2:
VIJU ABRAHAM, J.
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W.P.(C) No.4480 of 2024
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Dated this the 11th day of March, 2024
JUDGMENT
The petitioner Bank has filed this writ petition for a direction to the 2nd respondent Sub Registrar, to efface the encumbrances/attachments of respondents 6 and 7 as reflected in Ext.P6 encumbrance certificate and register Ext.P4 sale certificate and thereafter to effect mutation.
2. The 4th and 5th respondents (hereinafter referred to as 'borrowers' for short) availed financial facilities from the Bank by creating an equitable mortgage by deposit of title deeds on 06.07.2018, in respect of the property having an extent of 1.62 Ares of property comprised in Resurvey No.514/5-1-3-1(old Sy. No.3/1 5C and 5B) of Pallichal Village of Neyyattinkara Taluk. When the borrowers 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. Ext.P4 is the sale certificate dated 12.01.2024.
3. Based on Ext.P4 sale certificate, the petitioner and the auction purchaser submitted a draft sale deed before the 2 nd W.P.(C). No.4480 of 2024 :3: respondent and after verifying the records, the 2 nd respondent informed that there are attachments of respondents 6 and 7 from the Sub Court, Neyyattinkara in O.S. No.41/2021 and Munsiff Court Neyyattinkara in O. S. No.903/2021 in respect of the aforesaid mortgaged property as evident from Ext.P6 encumbrance certificate. The petitioner submits that the said attachment is obtained by respondents 6 and 7 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 6th and 7th respondents 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. Even though respondents 6 and 7 sought time to file counter affidavit, no counter affidavit is seen filed.
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 W.P.(C). No.4480 of 2024 :4: 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:-
"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 W.P.(C). No.4480 of 2024 :5: 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 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 attachments W.P.(C). No.4480 of 2024 :6: obtained by respondents 6 and 7 are 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 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 2 nd respondent to efface the attachment obtained by respondents 6 and 7 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.P4 sale certificate if the same is otherwise in order. The 2 nd 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.4480 of 2024 :7: APPENDIX OF WP(C) 4480/2024 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE LOAN AGREEMENT OF THE PETITIONER AND THE RESPONDENTS 4 AND 5 DATED 06.07.2018 Exhibit P2 TRUE COPY OF THE POSSESSION NOTICE ISSUED UNDER THE SARFAESI ACT TO THE RESPONDENTS 4 AND 6 ON 19.01.2023 Exhibit P3 TRUE COPY OF THE NOTICE OF THE PETITIONER DATED 22.11.2023 Exhibit P4 TRUE COPY OF THE SALE CERTIFICATE ISSUED BY THE PETITIONER TO THE PURCHASER OF THE PROPERTY DATED 12.01.2024 Exhibit P5 TRUE COPY OF THE BY HAND DELIVERY ISSUED BY THE PETITIONER TO THE PURCHASER DATED 27.12.2023 Exhibit P 6 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER ON 23.01.2024