Telangana High Court
Mittapalli Hari Kishan vs The State Of Telangana on 18 March, 2024
THE HON'BLE SRI JUSTICE N.V.SHRAVAN KUMAR
Writ Petition No.5944 of 2024
ORDER:
The present writ petition is filed questioning the action of respondent No.3 to receive the sale certificate dated 01.07.2023 issued by respondent No.4 presented for registration on 20.11.2023, in respect of part and parcel of industrial land measuring Ac.1-10 gts., in Sy.No.388/1AA/1 and Ac.1-10 gts., in Sy.No.388/AA/2 total extent of Ac.2-20 gts., and RCC and GI roofed mango pulp industry sheds with builtup area of 8160 sq.ft., and plinth area of 17109 sq.ft., situated at H.No.3-99, Peruvancha GP, Kallur Mandal, Khammam District under the guise that there was ad-interim injunction under Order 39 Rule 1 and 2 C.P.C., in respect of the said property issued by the Principal Junior Civil Judge, Sathupally in I.A.No.3 of 2023 in O.S.No.157/2023 suit instituted by one Shaik Subai Pasha against the property owner viz., Kondapalli Srinivasa Rao for recovery of Rs.13,85,000/- and to delete the same from the prohibited property list consequently direct to receive and register the sale 2 certificate presented by respondent No.4 on in favour of the petitioner.
2. The brief facts of the case are that respondent No.4/Karnataka Bank Ltd., has granted credit facilities to M/s.Radhakrishna Agro Products represented by its Proprietor Mr.Kondapalli Srinivasa Rao to an extent of Rs.1,50,00,000/- on 04.06.2018. While availing the credit facilities, its proprietor created security interest over industrial land admeasuring Ac.1-10 gts., in Sy.No.388/AA/1 and Ac.1-10 gts., in Sy.No.388/AA/2 totalling to an extent of Ac.2-20 gts., with built-up area of 8160 sq.ft., and plinth area of 17109 sq.ft., situated at H.No.3-99, Peruvancha GP, Kallur Mandal, Khammam District ('the suit property' hereinafter). The said lands are kept as security deposit for the credit facilities availed. As the borrower failed to repay the loan of sanctioned amount, the loan account was declared as NPA on 28.09.2019 and the said Bank initiated measures under Securitization and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 (for short 'SARFAESI Act' hereinafter) by 3 enforcing the security interest over the residential land and building.
3. Thereafter, auction was initiated under SARFAESI Act and a demand notice was issued under Section 13(2) of the SARFAESI Act calling upon the borrowers to repay the amounts. When the borrowers failed to repay the amount even after 60 days from the date of receipt of notice, respondent No.4 issued possession notice following the procedures prescribed under the SARFAESI Act. In continuation of recovery proceedings, respondent No.4 put the said property for public e-auction on 17.05.2023 by following sale notice on 21.04.2023. Thereafter, petitioner herein purchased the said property for a reserve price of Rs.70,98,987/- and as the petitioner was declared as highest bidder, sale was confirmed in his name after payment of entire bid amount. Thereafter, respondent No.4 issued sale certificate on 01.07.2023 in petitioner's favour, but respondent No.3 is refusing to register the same under the guise that there was an ad-interim injunction order in respect of the property issued by Principal Junior Civil Judge, Sathupally in I.A.No.3 of 2023 in O.S.No.157 of 4 2023 which was instituted by one Shaik Subai Pasha against the property owner for recovery of Rs.13,85,000/-.
4. It is further submitted that the petitioner was also put in physical possession of the said industrial land and that he is the absolute owner and possessor. The petitioner also paid stamp duty through challan dated 20.09.2023, but respondent No.3 is refusing to register the same under the guise of ad-interim injunction and accordingly the said property was put in prohibited list.
5. The grievance of the petitioner is that Civil Court has no jurisdiction to entertain the said I.A., as property is secured with respondent No.4 and registered with respondent No.3 much before claiming the mortgage on 28.07.2021. He would further submit that as per Section 34 of SARFAESI Act, no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debt Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance 5 of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Learned counsel also referred to Section 31B of Recovery of Debts and Bankruptcy Act, 1993 which is as under:
"31B. Priority to secured creditors.-
Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority.
[Explanation.--For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code]"
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6. Learned counsel further relied on judgment of this Court in W.P.No.20196 of 2019 in State Bank of India v. The Union of India and the relevant paragraph is extracted hereunder:
"58. We respectfully agree with the said view and hold that having regard to the clear language contained in Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 giving priority to rights of secured creditors (to realise secured debts due and payable to them by sale of assets over which security interest is created) over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority, the law has undergone a sea change; and in view of Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 and sec.26E of the SARFAESI Act,2002 w.e.f.1.9.2016 the claims of secured creditors such as the petitioner Bank have priority over the claims of the respondents 1-3 for service tax dues."
7. The petitioner has made several representations to respondent No.3, however, respondent No.3 having received the same has not registered the document. The petitioner would submit that challan amount of 7 Rs.3,99,600/- paid shall become stale if the registration was not done within six (6) months i.e., till 19.03.2024 and the State Government will forfeit the said amount.
8. Learned counsel for the petitioner has also filed a memo along with daily status of O.S.No.157 of 2023. On 19.09.2023, in I.A.No.3 of 2023 in O.S.No.157 of 2023, summons were issued to the defendants; on 17.10.2023, D1 to D3 were called absent and as there was no representation, they were set exparte and matter stood adjourned to 26.04.2024. From the list of prohibited properties downloaded from the website, it is evident that land to an extent of Ac.50-00 gts., in each Sy.Nos.388/AA/1 and 388/AA/2 were covered by Court's stay order in I.A.No.3 of 2023 in O.S.No.157 of 2023.
9. The main grievance of the petitioner is that since the petitioner has already purchased the said property by way of e-auction and sale certificate has been issued on 01.07.2023 and accordingly challan amount of Rs.3,99,600/- was paid the same would become stale if registration is not done within a period of six (6) months 8 which would subsist till 19.03.2024. Learned counsel further prays this Court to direct the respondents to receive the document and the same may be registered.
10. It is pertinent to note that in the suit filed for recovery of money in O.S.No.157 of 2020, the petitioner herein is not a party whereas the borrower is defendant No.1 in the said suit and ad-interim injunction was granted on 19.09.2023 and the title deeds was deposited on 04.06.2018 i.e., much before filing of the suit. The sale certificate was issued to the petitioner in his favour on 01.07.2023 and ad-interim injunction was granted on 19.09.2023 in I.A.No.3 of 2023 in O.S.No.157 of 2023 i.e., much after the issuance of sale certificate. The interim order is neither binding on the petitioner nor on the registration authorities. Moreover, the said suit was filed based on an unregistered mortgage deed.
11. In view of the submissions made above, this Court deems it appropriate that if the document of the petitioner is not received, petitioner would be deprived of challan amount of Rs.3,99,600/- for no fault on his part. 9 In that view of the matter and with the consent of learned counsel on either side, this Court disposes of this writ petition with a direction to respondent No.3 to receive the document i.e., sale certificate dated 01.07.2023 presented by the petitioner and may proceed with the registration. However, respondent authorities shall follow Section 71 of Registration Act, 1908 and provisions of Indian Stamps Act, 1899 and pass appropriate orders accordingly. It is needless to state that the petitioner shall not claim any equities on the subject lands and mere registration does not confer any title to the property.
12. Recording the above said submission, writ petition is disposed of, accordingly.
Miscellaneous petitions, pending, if any, shall stand closed. However, there shall be no order as to costs.
______________________________________ N.V.SHRAVAN KUMAR, J 18.03.2024 MRM Note: Issue C.C. by 19.03.2024.