Hdfc Bank Ltd vs Sub Registrar
2021 Latest Caselaw 4656 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                               PRESENT

          THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V

     TUESDAY, THE 09TH DAY OF FEBRUARY 2021 / 20TH MAGHA,1942

                      WP(C).No.23874 OF 2020(H)


PETITIONER:

               HDFC BANK LTD.
               DEPARTMENT FOR SPECIAL OPERATIONS, CHOICE TOWERS,
               MANORAMA JUNCTION, ERNAKULAM-16, REP. BY ITS
               AUTHORIZED OFFICER RAJESH ANTONY.

               BY ADVS.
               SRI.P.BINNY JOSEPH
               SHRI.BASIL MATHEW

RESPONDENTS:

      1        SUB REGISTRAR
               KOOTHATTUKULAM SUB REGISTRAR OFFICE,
               KOOTHATTUKULAM-686662.

      2        JOHNSON,
               AGED 44 YEARS
               S/O.JOHN, CHORIYAMMAKKAL, KIZHAKKOMBAKKARA,
               KOOTHATTUKULAM-686662.




               SMT MABLE C KURIAN, GOVERNMENT PLEADER

     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD          ON
09.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C).No.23874 OF 2020                 2




                                   JUDGMENT

The petitioner is a Scheduled Bank. A security interest was created by

M/s. Kairali Tours & Travels and two others, after availing cash credit facility to

the tune of Rs. 12 lakhs. Property having an extent of 6.7 Ares falling in old Sy.

No. 528/3A of Thiruvambadi village owned by the proprietor of M/s. Kairali

Tours & Travels was mortgaged by deposit of title deeds on 5.9.2013 as is

evident from Ext.P2 memorandum. Default was committed by the borrowers

and the asset was classified as a Non-Performing. Proceedings under the

Securitisation and Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 ('SARFAESI Act' for short) were initiated and the

property was finally brought to sale. However, it was noted from Ext.P5

encumbrance certificate that an encumbrance was created over the secured

asset by the 2nd respondent on 1.10.2015. According to the petitioner, the

encumbrance as noted in Ext.P5 as item No. 3 is subsequent to the priority

interest created by a prior mortgage. According to the petitioner, the

attachments effected subsequently cannot claim precedence over the right of

the petitioner as the secured creditor. According to the petitioner, the noting of

the attachment order in the encumbrance certificate will adversely affect the

rights of the petitioner as the secured creditor. It is in the afore circumstances,

that the petitioner has approached this Court seeking a direction to the 1st

respondent to efface the attachments made subsequent to the creation of the

mortgage in the property covered under Ext.P1 title deed and for a further

declaration that the property is free of all encumbrances.

2. I have heard Sri. Binny Joseph, the learned counsel appearing for

the petitioner, and Smt. Mable C. Kurian, the learned Government Pleader.

3. Sri. Binny Joseph, the learned counsel submitted that Section 26E

of the SARFAESI Act grants priority to secured creditors and it states that the

dues to any secured creditor shall be paid in priority over all other debts and all

revenues, taxes, Cesses and Rates due to the Central Government, State

Government or Local Authority. Section 31B of the Recovery of Debts Due to

Banks and Financial Institutions Act, 1993 also declares the position in the

same lines.

4. I have considered the submissions made by the learned

Government pleader as well. Though notice was served to the 2nd respondent,

there is no appearance.

5. Section 26E of the SARFAESI Act grants priority to secured

creditors after the registration of the security interest and the debts due to any

secured creditor shall be paid in priority over all other debts and all revenues,

taxes, cesses and other rates payable to the Central Government or State

Government or local authority. In the instant case, the property was

mortgaged by way of equitable mortgage on 5.9.2013 whereas the attachment

was effected only on 1.10.2015. The rights and liberties conferred on the

creditor/bank by virtue of mortgage created in the year 2013 and the right to

proceed under the relevant provisions of the SARFAESI Act cannot be defeated

because of the subsequent attachments ordered by the revenue authorities or

by the Civil Court (see HDFC v. Sub Registry Officer [2011 KHC 851] and

Madhan v. Sub Registrar [2014 (1) KLT 406]). In that view of the matter,

the attachment so effected shall have no impact on the sale conducted under

the provisions of the SARFAESI Act.

Resultantly, this writ petition will stand allowed. There shall be a

declaration that the encumbrance noted as item No.3 in Ext.P5 certificate will

have no effect over the rights of the petitioner as the secured creditor. There

will be a further direction to the 1st respondent to efface the attachment

effected over the property covered under Ext.P1 deed vide No.1581/2013 of

the Koothattukulam SRO, which are subsequent to creation of the mortgage by

Ext.P2 memorandum dated 5.9.2013.

Sd/-

RAJA VIJAYARAGHAVAN V

JUDGE sru

APPENDIX PETITIONER'S EXHIBITS:

EXHIBIT P1           THE TRUE COPY OF THE TITLE DEED
                     NO.1581/2013 OF KUTHATTUKULAM SRO DATED
                     27.8.2013.

EXHIBIT P2           THE TRUE COPY OF THE MEMORANDUM RECORDING
                     PAST TRANSACTION OF CREATION OF MORTGAGE BY
                     DEPOSIT OF TITLE DEEDS DATED 5.9.2013.

EXHIBIT P3           THE TRUE COPY OF THE 13(2) NOTICE ISSUED TO
                     THE BORROWERS DATED 28.9.2015.

EXHIBIT P4           THE TRUE COPY OF THE POSSESSION NOTICE
                     ISSUED BY THE PETITIONER ON 1.4.2016.

EXHIBIT P5           THE TRUE COPY OF THE ENCUMBRANCES
                     CERTIFICATE DATED 6.10.2020.

EXHIBIT P6           THE TRUE COPY OF THE JUDGMENT OF THIS
                     HON'BLE COURT IN WP(C) 13123/2018 DATED
                     12.4.2018.

RESPONDENTS' EXHIBITS:

                         NIL