Kerala High Court
Cholamandalam Investment And Finance ... vs The Sub Registrar on 12 April, 2024
Author: N.Nagaresh
Bench: N.Nagaresh
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
FRIDAY, THE 12TH DAY OF APRIL 2024 / 23RD CHAITHRA, 1946
WP(C) NO. 8613 OF 2024
PETITIONER:
CHOLAMANDALAM INVESTMENT AND FINANCE
COMPANY LIMITED
DATE HOUSE NO.2,
NSC BOASE ROAD,
PARRYS, CHENNAI - 600 001
AUTHORIZED OFFICER,
MOHAMMED SALIH M
THEKKAKARA COMMERCIAL ARCADE,
PADIVATTOM, EDAPALLY PO,
ERNAKULAM, KERALA
PIN - 682024.
BY ADVS.
P.PAULOCHAN ANTONY
SREEJITH K.
RESPONDENTS:
1 THE SUB REGISTRAR
REVENUE TOWER RD,
THIRUVALLA,
KERALA, PIN - 689101.
2 THE VILLAGE OFFICER
ERAVIPEROOR VILLAGE
VALLAMKULAM MARKET RD,
VALLAMKULAM, THIRUVALLA,
ERAVIPEROOR, KERALA,
PIN - 689541.
W.P.(C) No.8613/2024
:2:
3 M C PAPPY
MULAYAKUNNATHU,
VALLAMKULAM P.O.
PATHANAMTHITTA,
KERALA, PIN - 689541.
4 RENJITH PARTHA SARADI
S/O SYAMALA SARATHY
AZHIYADATHUCHIRA P.O THIRUVALLA
KAVUMBHAGOM (PART) PATHANAMTHITTA,
KERALA, PIN - 686113.
BY SMT.REKHA C.NAIR, SENIOR GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 12.04.2024, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P.(C) No.8613/2024
:3:
N. NAGARESH, J.
`````````````````````````````````````````````````````````````
W.P.(C) No.8613 of 2024
`````````````````````````````````````````````````````````````
Dated this the 12th day of April, 2024
JUDGMENT
~~~~~~~~~ The petitioner, a Non Banking Finance Company, is before this Court invoking writ jurisdiction, seeking to declare that the attachments made after Ext.P2 mortgage are having no existence after 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 and to direct the 1st respondent to register Ext.P6 Sale Certificate after removing / effacing the attachment made by the 3rd respondent shown in Ext.P5 Encumbrance Certificate.
2. The petitioner states that one Mini Thomas and Binoy C. availed housing loan for purchase of land having an W.P.(C) No.8613/2024 :4: extent of 4.51 Ares in Eraviperur Village of Thiruvalla Taluk in Pathanamthitta District. When the borrowers defaulted in repayment of loan, the loan account was classified as NPA and proceedings were initiated under the SARFAESI Act. Section 13(2) notice was issued on 21.02.2022 and symbolic possession was taken. Later, the petitioner obtained an order from the CJM, Pathanamthitta under Section 14 of the SARFAESI Act. Physical possession of the mortgaged property was taken on 14.11.2022, as per Ext.P3 order.
3. The mortgaged property was put to public auction on 23.03.2023. However, the sale did not materialise. In the meanwhile, the petitioner obtained an Encumbrance Certificate. In Ext.P5 Encumbrance Certificate, it was noted that there is an attachment made at the instance of the 3rd respondent. The petitioner sold the property on the basis of private treaty and the 4th respondent purchased the property for an amount of ₹15,65,000/-. Ext.P6 Sale Certificate was issued on 07.02.2024. According to the petitioner, the attachments shown in the Encumbrance W.P.(C) No.8613/2024 :5: Certificate creates difficulties for the petitioner to register the private sale.
4. The petitioner would argue that the right of redemption comes to an end after publication of sale notice under Section 13(8) of the SARFAESI Act, as has been held by this Court in the judgment in Sree Gokulam Chit and Finance Company Private Limited v. Emil and Eric Hospitality Services and others [2021 (6) KHC 411]. A Division Bench of this Court has held in the judgment in Travancore Devaswom Board v. Deputy Examiner, Local Fund Audit and others [2020 (3) KHC 129] that a sale carried out either under the SARFAESI Act or under the RDB Act takes precedence over the statutory charges due to the government created under the KVAT Act or under other State enactments. A secured creditor in whose interest a secured interest is created, has priority in sale and payment over all other statutory charges., contended the counsel for the petitioner.
5. Heard.
W.P.(C) No.8613/2024:6:
6. The petitioner in whose favour a security interest has been created over a property, by a borrower who availed financial advance, seeks to direct the 1 st respondent-Sub Registrar to register Ext.P6 Sale Certificate in respect of the property in favour of purchaser of the property. The borrower failed to discharge the debt and the petitioner took possession of the property and sold it to the 4 th respondent. The Sub Registrar is not registering Sale Certificate in favour of the 4th respondent due to certain attachments effected by court, over the property.
7. Section 13(8) of the SARFAESI Act reads as follows:-
Where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets,-
(i) the secured assets shall not be transferred by way of lease assignment or sale by the secured creditor; and
(ii) in case, any step has been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount under this subsection, no further step shall be taken by such secured creditor for W.P.(C) No.8613/2024 :7: transfer by way of lease or assignment or sale of such secured assets.
8. In Celir LLP v. Bafna Motors (Mumbai) Private Limited [2023 KHC 6860], the Apex Court held that the SARFAESI Act being a special law has an overriding effect over all other general laws including the Transfer of Property Act, 1882. The Apex Court held that in case of any inconsistency between Section 13(8) of the SARFAESI Act and Section 60 of the Transfer of Property Act, the issue should be dealt with in terms of Section 35 of the SARFAESI Act. The Apex Court held that as per Section 13(8), the right of redemption of a secured asset stands extinguished on and from the very date of publication of the public auction notice for sale of the secured asset.
9. In the judgment in Sree Gokulam Chit and Finance Company Private Limited (supra), this Court held that Section 13(8) of the Act incorporates the principles of the right of redemption of a mortgager. Earlier, until 2016, the right of redemption was available till the date of sale. W.P.(C) No.8613/2024 :8: However, after the amendment, by virtue of the provisions of the Act, the right of redemption of a mortgager comes to an end on the date of publication of notice of public auction. Thereafter, the mortgager loses the right to redeem the secured asset.
10. It is therefore evident that after the mortgage of the property, the residuary rights available to the attaching creditors are only in respect of the right of redemption. Once the right of redemption is taken away under Section 13(8) of the SARFAESI Act, attachments made by the 3rd respondent will become otiose in the eyes of law.
11. In respect of the property involved in this writ petition, the property was mortgaged by the borrower owner as per Ext.P2 Memorandum of Deposit of title deed, on 31.12.2019. The Bank published Ext.P4 sale notification on 16.02.2023. The public auction was scheduled on 23.03.2023.
12. Ext.P5 Encumbrance Certificate would show that the attachment in respect of the property was only in the year W.P.(C) No.8613/2024 :9: 2023. It is evident from the pleadings that the attachment was subsequent to the sale notification. In the circumstances of the case, going by the law laid down by this Court, the 1st respondent cannot resist registration of Sale Certificate by the petitioner in favour of the purchaser.
The writ petition is therefore allowed. The 1st respondent is directed to register Ext.P6 Sale Certificate after removing / effacing the attachment made by the 3rd respondent shown in Ext.P5 Encumbrance Certificate.
Sd/-
N. NAGARESH, JUDGE aks/15.04.2024 W.P.(C) No.8613/2024 : 10 : APPENDIX OF WP(C) 8613/2024 PETITIONER'S EXHIBITS Exhibit P1 A TRUE COPY OF THE BOARD RESOLUTION DATED 01.08.2023.
Exhibit P2 TRUE COPY OF THE MEMORANDUM OF DEPOSIT OF TITLE DEED DATED 31.12.2019.
Exhibit P3 TRUE COPY OF THE ORDER DATED
01.09.2022 IN MC NO.297/2022.
Exhibit P4 TRUE COPY OF THE PAPER PUBLICATION
PUBLISHED IN FINANCIAL EXPRESS DATED
16.02.2023.
Exhibit P5 TRUE COPY OF THE ENCUMBRANCE
CERTIFICATE DATED 08.01.2024.
Exhibit P6 TRUE COPY OF THE SALE CERTIFICATE
DATED 07.02.2024.