Kerala High Court

Uco Bank vs The State Of Kerala on 21 January, 2022

                     IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                        PRESENT

                   THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN

               FRIDAY, THE 21ST DAY OF JANUARY 2022 / 1ST MAGHA, 1943

                                 WP(C) NO. 29255 OF 2021

PETITIONER:

               UCO BANK
               MALLAPUZHASSERY BRANCH, MALLAPUZHASSERY, NELLIKALA P.O.,
               PATHANAMTHITTA DISTRICT, PIN - 689 643 REPRESENTED BY ITS BRANCH
               MANAGER.

               BY ADVS.
               G.G.MANOJ
               S.SARATH PRASAD



RESPONDENTS:

     1         THE STATE OF KERALA
               REPRESENTED BY SECRETARY TO THE REGISTRATION DEPARTMENT,
               GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

     2         THE SUB REGISTRAR (PRINCIPAL)
               SUB REGISTRAR'S OFFICE, K.K.ROAD, COLLECTORATE P.O., KOTTAYAM -
               686 002.

     3         RIJO PRASAD
               AGED 38 YEARS
               S/O.P.P.RAJENDRAPRASAD, VANCHIPURACKAL KARTHIKA, AYMANAM P.O.,
               KOTTAYAM DISTRICT - 686 015.

     4         P.P.RAJENDRAPRASAD
               AGED 65 YEARS
               S/O.P.K.PADMANABHAN, VANCHIPURACKAL KARTHIKA, KOTTAYAM DISTRICT,
               PIN - 686 015.

     5         P.M.JOHN
               ATHIRAYIL HOUSE, PEROOR P.O., KOTTAYAM, PIN - 686 637, ATHIRAYIL
               CURIES PVT.LTD., KUDAKASSERIYIL BUILDINGS, LOGOS JN., KOTTAYAM.

               BY ADVS.
               V.K.PEERMOHAMED KHAN
               ABRAHAM MATHEW (VETTOOR)
               C.J.CHACKO
               GIRISH KUMAR V.C
               ANIL ABEY JOSE
 WP(C) NO. 29255 OF 2021

                                       2




OTHER PRESENT:

            SMT.M.ANIMA.G.P.




     THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.01.2022,

THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C) NO. 29255 OF 2021

                                       3




                                JUDGMENT

The UCO Bank, which is a public sector Bank, constituted under

the provisions of the Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1970, is the petitioner in this case.

2. The petitioner says that, they had obtained an equitable

mortgage over the property involved in this case from respondents 3

and 4, who are its owners, while availing of a financial facility from

them; but that since the said respondents did not service the said

facility satisfactorily, they were constrained to bring it to sale under

the provisions of the Securitisation and Reconstruction of Financial

Assets and Enforcement of Securities Interest Act (hereinafter referred

to as the 'SARFAESI Act' for short). They say that the sale has been

confirmed in favour of the auction purchaser, but that when they

attempted to register the Sale Certificate, by presenting it before the

2nd respondent - Sub Registrar, said Authority has refused to accede to

it saying that there are certain attachments reflected on the property in

question.

3. The petitioner asserts that all the attachments reflected on

the property, as are evident from Ext.P5 Encumbrance Certificate,

were all much after the date of mortgage - which was 10.09.2014, and WP(C) NO. 29255 OF 2021

therefore, that, going by the various judgments of this Court, including

in Secretary, Keechery Service Co-operative Bank Ltd v. Sajitha

Nizar Alias Sajitha P.M [2020 (6) KLT 68], they cannot be impeded

from proceeding against it or in bringing it to sale, which they have

done validly as per the provisions of the SARFAESI Act. They

therefore, pray that the Sub Registrar be directed to efface the

attachments and to register the Sale Certificate without any further

delay.

4. In response, the learned Government Pleader -

Smt.M.Anima, submitted that Sub Registrar has been incapacitated

from effacing the attachments or from registering the Sale Certificate

because he has noticed the orders over the property brought on it by

the contesting respondents from a competent Court. She submitted

that, however, if this Court is so inclined, the Sub Registrar can

from the Encumbrance Certificate, provided all other statutory

conditions and requirements are satisfied and met by the parties.

5. In response to the afore submissions made by

Sri.G.G.Manoj, on behalf of the petitioner, Sri.Abraham Mathew,

learned counsel for respondent No.5 argued that the sale conducted by

the Bank is in flagrant violation of the provisions of the SARFAESI Act WP(C) NO. 29255 OF 2021

and that this writ petition suffers from suppression of material facts,

including the value of the same.

6. Sri.Abraham Mathew Vettoor, in fact, argued that the

owners of the property, namely respondents 3 and 4, had earlier

approached the petitioner Bank for One Time Settlement, but that

disregarding the same, the property has been brought to sale for a

lower amount than what was offered; and therefore, that the entire

exercise is vitiated and thus liable to be set aside by this Court. He

then supplemented it by saying that, to his information, the owners of

the property, namely respondents 3 and 4, have already approached

the competent Forum for having the sale set aside and thus prayed that

this writ petition be not allowed at this time, when such proceedings

are pending.

7. Sri.Peer Mohammed Khan, learned counsel appearing for

the owners of the property, namely respondents 3 and 4, affirmed the

afore submissions of Sri.Abraham Mathew Vettoor, saying that a

Securitisation Application has already been filed before the Debts

Recovery Tribunal (DRT), Ernakulam, assailing the sale and that same

is still pending. He predicated that his clients are confident of the sale

being set aside because it was done in flagrant violation of the

mandatory provision that a sale could have been conducted only 15 WP(C) NO. 29255 OF 2021

days after the notice had been served on his clients. He also, therefore,

prayed that this writ petition be dismissed.

8. When I evaluate the afore rival submissions, it is without

requirement to restate that the position of law is well settled that a

Bank or a Financial Institution obtains primary right to proceed against

the property in question, if they have a prior equitable mortgage.

9. In the case at hand, it is uncontested that the mortgage was

dated 10.09.2014 and that all the attachments reflected on the

Encumbrance Certificate, at the instance of the contesting parties, are

much later.

10. Of course, the submissions of Sri.Peer Mohammed Khan, as

recorded above, is that his clients have already challenged the sale and

that the matter is pending before the DRT.

11. However, this will not stop registration of the Sale

Certificate, if they are so presented by the Bank before the Sub

Registrar, in the absence of any interdictory orders being issued by the

DRT. Since Sri.Peer Mohammed Khan, has been unable to inform me

that any such order has been issued by the said Tribunal, I fail to

understand how the Sub Registrar can refuse registration of the Sale

Certificate or effacement of entries of attachment, as per the well

settled declarations of this Court in a catena of judgments, including in WP(C) NO. 29255 OF 2021

Sajitha Nizar (supra).

12. Before I tread forward, certainly, as is also argued by the

learned counsel for the respondents, the petitioner has only sought

effacement of attachments over the property, so as to enable them to

have the Sale Certificate registered.

13. Even though there is no specific prayer for a direction to

the Sub Registrar to allow Registration of the Sale Certificate, I am of

the view that this Court will be justified in moulding the reliefs,

because, at the Bar, Sri.G.G.Manoj, learned counsel for the Bank, seeks

that effacement of the entries of attachment be succeeded by

registration of the Sale Certificate, as and when it is presented before

the Sub Registrar by his client.

14. Since the only purpose for effacement of entries of

attachment from the Encumbrance Certificate and the Revenue

Records is registration of the Sale Certificate, I am of the opinion, that

this Court will be justified in issuing orders inspite of a specific relief

not being asked for the said purpose because, otherwise, it would serve

no purpose whatsoever.

In the afore circumstances, I order this writ petition, leaving

liberty to the petitioner or the auction purchaser to present the Sale

Certificate before the Sub Registrar for registration and if this is done, WP(C) NO. 29255 OF 2021

then said Authority will consider the same de hors the attachments

over the properties and complete necessary action thereon without any

avoidable delay.

Once the Sale Certificate is so registered, the Sub Registrar will

efface all the entries of attachment subsequent to the date of

mortgage, namely 10.09.2014, so as to enable the auction purchaser to

deal with the property without impediment in future.

Needless to say, this Court has not dealt with any of the rights of

the contesting parties in any manner whatsoever and they are all left

open to be pursued by them appropriately before the competent

Forum.

Obviously, therefore, if the sale is to be set aside on the

application of respondents 3 and 4, or if any modification is to be

ordered by the DRT or any other appropriate Forum, it will be binding

on the Bank, as also the auction purchaser, subject to their available

remedies in law.

I also leave liberty to the attaching creditors to move the Bank or

the DRT appropriately for claiming the surplus of the sale price, if any,

available with the Bank, on the basis of their attachments; for which

purpose, all their applicable remedies are reserved.

I also clarify that if the sale has not been yet confirmed by the WP(C) NO. 29255 OF 2021

Bank in favour of the auction purchaser, the liberty of the contesting

respondents to approach them seeking redemption of

mortgage/settlement, or such other reliefs, are also left open.

SD/-

DEVAN RAMACHANDRAN JUDGE rp WP(C) NO. 29255 OF 2021

APPENDIX OF WP(C) 29255/2021

PETITIONER EXHIBITS

Exhibit P1 TRUE COPY OF THE LETTER ISSUED BY THE 3RD RESPONDENT CONFIRMING THE DEPOSIT OF TITLE DEED FOR CREATION OF EQUITABLE MORTGAGE IN FAVOUR OF THE PETITIONER BANK.

Exhibit P2 TRUE COPY OF THE ORDER DATED 07/03/2020 ISSUED BY THE HONOURABLE DEBT RECOVERY TRIBUNAL II, ERNAKULAM IN S.A.336 OF 2019.

Exhibit P3 TRUE COPY OF THE AID SALE NOTICE DATED 19/11/2011 ISSUED BY THE PETITIONER BANK.

Exhibit P4 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE DATED 17/11/2021 ISSUED BY SUB REGISTRY OFFICE KOTTAYAM.