Kerala High Court
Gopinathan Nair vs Purushothaman Nair on 12 April, 2024
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE G.GIRISH
FRIDAY, THE 12TH DAY OF APRIL 2024 / 23RD CHAITHRA, 1946
EX.FA NO. 21 OF 2021
AGAINST THE ORDER/JUDGMENT DATED 15.03.2021 IN AS NO.87 OF
2018 OF ADDITIONAL DISTRICT COURT-I,MAVELIKKARA ARISING OUT
OF THE ORDER DATED 17.01.2018 IN EA 154/2014 IN OS NO.150 OF
2006 OF ASSISTANT SESSIONS COURT/SUB COURT / COMMERCIAL
COURT, MAVELIKKARA
APPELLANT/CLAIM PETITIONER:
GOPINATHAN NAIR
AGED 75 YEARS
S/O.GOPALA PILLAI, KOZHIKALA PRASANTHA NILAYAM,
CHERUKOLE MURI, CHENNITHALA.
BY ADVS.
GEORGE VARGHESE(PERUMPALLIKUTTIYIL)
A.R.DILEEP
P.J.JOE PAUL
MANU SRINATH
RESPONDENTS/DECREE HOLDER AND JUDGEMENT DEBTOR:
1 PURUSHOTHAMAN NAIR
VENATTU AISWARYA, CHERUKOLE MURI,
CHENNITHALA - 690 105.
2 BIJU THOMAS
S/O.GEORGE, KARUKETHEKKETHIL VEEDU, CHERUKOLE MURI,
CHENNITHALA - 690 105.
BY ADVS.
E.M.MURUGAN FOR R1
P.R.HARIKUMAR
ANANTHU S. HARI FOR R2
THIS EXECUTION FIRST APPEAL HAVING COME UP FOR ADMISSION
ON 12.04.2024, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
2
Ex.F.A.No.21 of 2021
G.GIRISH, J.
---------------
Ex.F.A.No.21 of 2021
------------------------------
Dated this the 12th day of April, 2024
--------------------------------------------
JUDGMENT
This appeal is directed against the order dated 17.01.2018 of
the Sub Court, Mavelikakra in E.A.No.154 of 2014 in Execution
Petition No.70 of 2012 in O.S.No.150 of 2006, dismissing the
application filed by the appellant for lifting the attachment over 2.23
Ares of land and a residential building situated therein, over which
the appellant claimed absolute title and possession.
2. The appellant is a third party to the abovesaid execution
proceedings pending before the Sub Court, Mavelikkara. He claims
to have obtained the above property in a sale conducted by the
authorized officer of the Punjab National Bank, Circle Office,
Ernakulam under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (for short
'SARFAESI Act'). Pursuant to the above sale, a sale certificate dated
07.09.2012 was issued under Rule 9(6) of the Security Interest
(Enforcement) Rules, 2002. The appellant claims to have mutated
the above property in his name and is said to be in possession and
enjoyment of the said property. According to the appellant, no
encumbrance on the property was brought to the notice of the
Secured Creditor at the time of sale, though the borrowers were
witnesses in the Purchase Certificate. While so, the property was
attached as per order dated 26.11.2013 in E.A.No.22 of 2013 in
E.P.No.70 of 2012 of the Sub Court, Mavelikkara by the 1st
respondent, who was the decree holder in that execution
proceedings. The above execution proceedings were initiated
towards enforcement of the award dated 08.10.2010 in O.S.No.150
of 2006 of the Lok Adalat, towards realization of an amount of
Rs.2,86,166/-. The above award of the Lok Adalat was in respect of
the settlement of O.S.No.150 of 2006, a suit instituted by the 1 st
respondent against the 2nd respondent for realization of money. In
the above award dated 08.10.2010 of the Lok Adalat, it was made
clear that in the event of the 2nd respondent failing to make payment
of the amount mentioned thereunder, the 1st respondent will be
entitled to get the said amount realized from the plaint schedule
property in the said suit, i.e., O.S.No.150 of 2006 of the Sub Court,
Mavelikkara. It is towards execution of the above award dated
08.10.2010 of the Lok Adalat, that the 1st respondent filed E.P.No.70
of 2012 against the 2nd respondent before the Sub Court,
Mavelikkara. Upon getting knowledge about the above attachment,
the appellant filed E.A.No.154 of 2014 before the Sub Court,
Mavelikkara, for lifting the above attachment on the basis of a
contention that he is having absolute title and possession over the
property in question, as per the above Sale Certificate dated
07.09.2012 issued by the authorized officer under the SARFAESI Act.
It was further contended by the appellant that at the time when the
above attachment was made, the 2nd respondent was having no title
over the said property. The appellant further contended that he is a
bona fide purchaser for value without notice of the charge created
on the said property as per the award of the Lok Adalat, and hence
the attachment over the said property is liable to be lifted.
Respondents 1 and 2 who are the decree holder and the judgment
debtor respectively in the aforesaid execution petition did not file
any objection to E.A.No.154 of 2014 filed by the appellant. In the
enquiry before the Executing Court, the appellant tendered evidence
as PW1 and produced the Sale Certificate in his favour, which is
marked as Ext.A1. The certified copy of the award dated 08.10.2010
of the Lok Adalat in O.S.No.150 of 2006 was marked as Ext.C1.
3. After an evaluation of the evidence, the learned Sub
Judge held that Ext.A1 Sale Certificate would clearly suggest that
the transfer was effected in favour of the appellant, subject to the
encumbrances on the property and hence, he is not entitled to claim
that the attachment ordered over the said property is liable to be
lifted. Aggrieved by the aforesaid order of dismissal of E.A.No.154
of 2014, the appellant is before this Court.
4. It is true that Ext.C1 award of the Lok Adalat dated
08.10.2010 was passed prior to the Sale Certificate issued in favour
of the appellant on 07.09.2012, and that the above Sale Certificate
contained indications to the effect that the said certificate has been
issued subject to the encumbrances and liability of the said property.
It is also true that Ext.C1 award of the Lok Adalat dated 08.10.2010
contain specific provision that in the event of failure of the 2 nd
respondent to make payment of the amount mentioned therein, the
1st respondent will be entitled to realise the said amount from the
plaint schedule property in O.S.No.150 of 2006, which is the very
same property in dispute in this execution proceedings. As already
stated above, the learned Sub Judge declined to lift the attachment
over the said property, stating the reason that Ext.A1 Sale Certificate
relied on by the appellant contains clear indication that the said
certificate was issued in favour of the appellant, subject to
encumbrances on the said property. Referring to Section 55 sub-
section (5) clause (d) of the Transfer of Property Act, the learned
Sub Judge observed in the impugned order that where the ownership
of the property has passed to the buyer as between himself and the
seller, the buyer is bound to pay all public charges and rent which
may become payable in respect of the property, the principal moneys
due on any encumbrances, subject to which, the property is sold and
the interest thereon afterwards accruing due. Upon the above
reasoning, the learned Sub Judge held that the appellant herein is
bound to pay all the money due on the encumbrances in the said
property together with the interest accrued thereon. Referring to
the award passed by the Lok Adalat in the year 2010, permitting the
1st respondent to realise the amount due from the 2nd respondent
from the plaint schedule property, the learned Sub Judge held that
the appellant herein had purchased the said property subject to the
aforesaid encumbrance, and hence, he is liable to clear the above
encumbrance.
5. The impugned order of the Executing Court in the above
regard is seen passed without considering the implications of Section
13 of the SARFAESI Act in respect of the secured assets claimed by
the secured creditor. It is argued by the learned counsel for the
appellant that the plaint schedule property in O.S.No.150 of 2006 of
the Sub Court, Mavelikkara was mortgaged in favour of the Punjab
National Bank, long before 2010 and that the right of the said bank
to have the outstanding loan amount realised from the said property
remains unaffected by any subsequent encumbrances created over
the said property, whether it be by way of an award of the Lok
Adalat, or any other transactions entered into by the 2nd respondent.
For the sake of convenience and for easy reference, sub-section (2)
and sub-section (13) of Section 13 of the SARFAESI Act is extracted
hereunder :
"13. Enforcement of security interest
(1) xxx xxx xxx
(2) Where any borrower, who is under a liability to a
secured creditor under a security agreement, makes
any default in repayment of secured debt or any
instalment thereof, and his account in respect of such
debt is classified by the secured creditor as non-
performing asset, then, the secured creditor may
require the borrower by notice in writing to discharge
in full his liabilities to the secured creditor within sixty
days from the date of notice failing which the secured
creditor shall be entitled to exercise all or any of the
rights under sub-section (4):
(3) xxx xxx xxx
xxx xxx xxx
(13) No borrower shall, after receipt of notice referred to
in sub-section (2), transfer by way of sale, lease or
otherwise (other than in the ordinary course of his
business) any of his secured assets referred to in the
notice, without prior written consent of the secured
creditor."
6. It is clear from the aforesaid provision that once the
notice as contemplated under sub-section (2) has been received by
the borrower, then the borrower cannot transfer by way sale, lease
or by way of any other transaction the secured asset which is being
proceeded against under the provisions of the SARFAESI Act. A
perusal of Ext.C1 award dated 08.10.2010 of the Lok Adalat would
reveal that the 2nd respondent herein had consented that the plaint
schedule property, i.e., the disputed property in this execution
proceedings, is liable to be proceeded against at the instance of the
1st respondent for the realisation of the amount of Rs.2,00,000/-
mentioned in the said award with further interest as provided
thereunder, in the event of the 2nd respondent failing to make
payment of the said amount. Going by the relevant provisions of
Section 13 of the SARFAESI Act extracted hereinabove, the 2nd
respondent has no manner of right to concede for the appropriation
of the plaint schedule property in the said suit at the instance of the
1st respondent for the realisation of the amount covered by the Lok
Adalat, if he had received the notice as provided under sub-section
(2) of Section 13 of the SARFAESI Act. It is also pertinent to note
here that if the plaint schedule property in O.S.No.150 of 2006 of
the Sub Court, Mavelikkara was mortgaged in favour of the secured
creditor, i.e., the Punjab National Bank, long before the award of the
Lok Adalat, then the entire right and authority of the said Bank over
the abovesaid property, which has been mortgaged in their favour,
gets transferred to the purchaser once the Sale Certificate is issued
under the relevant provisions of the SARFAESI Act. To put it
otherwise, the purchaser of the property who gets right over the said
property by virtue of the Sale Certificate issued under the SARFAESI
Act, stands in the same footing as that of the Bank once the Sale
Certificate is issued transferring the property in favour of the said
person. The transfer effected by way of the Purchase Certificate
issued under the SARFAESI Act is infact the entire right and authority
which the Bank had perfected over the said property by virtue of the
mortgage or other transaction entered into at the time of execution
of the loan agreement by the 2nd respondent in favour of the said
Bank. When viewed in the above perspective, the right of the
appellant herein over the plaint schedule property in O.S.No.150 of
2006 of the Sub Court, Mavelikkara, cannot be affected by the award
passed by the Lok Adalat in the year 2010 since the right and
authority perfected by him over the said property is exactly the very
same right and authority of the Punjab National Bank to which the
said property was mortgaged long before the award of the Lok
Adalat. In the impugned order of the learned Sub Judge, the
abovesaid aspect has not been dealt with and discussed. Therefore,
it appears to be expedient in the interests of justice to have this
matter remitted back to the Executing Court, i.e., the Sub Court,
Mavelikkara, with a direction to consider the implications of Section
13 sub-section (2) and sub-section (13) of SARFAESI Act, and also
the right perfected by the appellant as a transferee from the Bank
which had secured the said property long before 2010 when the Lok
Adalat is said to have passed the award.
In the result, the appeal stands allowed as follows :
(i) The impugned order dated 17.01.2018 in E.A.No.154
of 2014 of the Sub Court, Mavelikkara is hereby set
aside.
(ii) The case is remanded back to the Sub Court,
Mavelikkara for fresh disposal of E.A.No.154 of 2014,
after considering the legal implications of Section 13
sub-section (2) and sub-section (13) of the SARFAESI
Act, and also the right perfected by the appellant as a
transferee of the secured creditor, who had obtained
the property in dispute by way of mortgage, long
before the award of the Lok Adalat in the year 2010.
(iii) Being an Execution Petition of the year 2012, the
learned Sub Judge shall make every endeavour to
dispose of the matter, as expeditiously as possible, at
any rate, within a period of three months from the date
of receipt of a copy of this judgment.
Sd/-
G.GIRISH, JUDGE
vgd
PETITIONER'S ANNEXURES
ANNEXURE I CERTIFIED COPY OF ORDER DATED 15/03/2021
IN A.S.NO.87/2018 ON THE FILE OF THE COURT
OF THE ADDITIONAL DISTRICT JUDGE-I,
MAVELIKARA.
ANNEXURE II THE MEMORANDUM OF APPEAL IN A.S.NO.87/2018
RETURNED BY THE COURT BELOW.
ANNEXURE III A TRUE COPY OF E.A.NO.154/14 IN
E.P.NO.70/12 IN O.S.NO.150/06 ON THE FILE
OF THE SUB COURT, MAVELIKKARA.
ANNEXURE IV A CERTIFIED COPY OF AWARD DATED 08/10/2010
IN O.S.150/06 ON THE FILE OF THE SUB COURT,
MAVELIKKARA (EXT.C1).
