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.
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W.P.(C) No.8613 of 2024
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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
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
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.
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
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.
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
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
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.
