HDB Financial Services Ltd vs Sub Registrar, Mavoor, Kozhikode, Pin 673661

N. Nagaresh, J

The petitioner, which is a Finance Company, has filed this writ petition seeking to declare that the attachment made after Ext.P1 mortgage is having no existence after the issuance of Ext.P4 sale notification as per Section 13(8) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The petitioner states that one Rajeesh Purappodi along with his wife Rachana C. availed two loans from the petitioner-Company for ₹99,87,789/-, in the year 2018. They mortgaged 8.29 Cents of land in Re-Survey No.96/1 together with a house building in Kuttikattoor Village of Kozhikode Taluk. Ext.P1 is the Letter of Deposit of Title Deed dated 01.02.2018.

The borrowers defaulted in repayment of loan. The petitioner initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and issued Section 13(2) notice. Symbolic possession of the property was taken over. Later, a Section 14 application was filed before the Chief Judicial Magistrate, Ernakulam. With the assistance of Court Commissioner, physical possession of the property was taken over on 09.12.2022.

The mortgaged property was put for sale on 16.02.2023. The auction did not materialise on that day. Finally, an auction was conducted on 25.11.2023 and the 4th respondent became the successful bidder for an amount of ₹80,51,850/-. Ext.P5 Sale Certificate dated 27.12.2023 was issued to the 4th respondent.

However, when the petitioner approached the 1st respondent-Sub Registrar for registration of Sale Certificate, the petitioner was informed that there are court attachments in respect of the property and hence the Sale Certificate cannot be registered. The petitioner submits that those other attachments seen in the Encumbrance Certificate were made subsequent to the borrower mortgaging the property to the petitioner on 01.02.2008. Those attachments made subsequent to the mortgage are invalid. The Sub Registrar cannot desist from registering the Sale Certificate on that count. The Registrar is compellable to efface the attachments effected after the mortgage and to register Ext.P5 Sale Certificate.

The 3rd respondent filed a counter affidavit. The 3rd respondent submitted that he has filed OS No.5/2023 in the Sub Court, Kozhikode against the borrower who mortgaged the property to the petitioner. The suit is for realisation of ₹50 lakhs with interest amount of ₹2,00,548/-. The court has attached the mortgaged property at the instance of the petitioner. There is no illegality in the court ordering attachment of the property. If the petitioner wants to challenge the attachment, the petitioner has to approach the concerned trial court filing Claim Petition under Order 21 Rule 58 of the Code of Civil Procedure. The writ petition is misconceived and it is only to the dismissed.

I have heard the learned counsel for the petitioner, the learned Senior Government Pleader representing respondents 1 and 2 and the learned counsel appearing for the 3rd respondent.

Certain facts are not in dispute in this writ petition. The owner of the property in question who borrowed money from the petitioner-Company had mortgaged the property to the petitioner-Company on 01.02.2008. The attachment by the civil court at the instance of the 3rd respondent was effected only on 21.01.2023.

In the judgment in Madhan S. v. Sub Registrar, Kollam and others [2014 (1) KLT 406], this Court has held that the preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property in favour of the petitioner is free of all encumbrances. This Court held that 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 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

In the judgment in Travancore Devaswom Board v. Deputy Examiner, Local Fund Audit and others [2020 (3) KHC 129], a Division Bench of this Court held that a sale carried out either under the SARFAESI Act or under the RDDB Act takes precedents over the statutory charges due to the Government created under the KVAT Act or under the other State enactments. This Court held that a secured creditor in whose favour a security interest has been created thus has priority in sale and payment over all other statutory charge holders.

Considering the law laid down by this Court as above, the petitioner is entitled to succeed in the above writ petition. The 1st respondent is therefore directed to efface the attachment over the property done after the mortgage. The 1st respondent is further directed to register Ext.P5 Sale Certificate.

The writ petition is allowed as above.