Kerala High Court
Canara Bank, Kanjikode Branch vs Sub Registrar on 19 April, 2024
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE VIJU ABRAHAM
FRIDAY, THE 19TH DAY OF APRIL 2024 / 30TH CHAITHRA, 1946
WP(C) NO. 10099 OF 2024
PETITIONER:
CANARA BANK, KANJIKODE BRANCH
PALAKKAD DISTRICT REPRESENTED BY ITS SENIOR
MANAGER PRASAD K U AGED 39 YEARS S/O UNNIKRISHNAN
K K PALAKKAD DISTRICT., PIN - 678014
BY ADVS.
SANTHOSH PETER (MAMALAYIL)
P.N.ANOOP
SINDHUMOL C.R.
ARYA RAJAN
RESPONDENTS:
1 SUB REGISTRAR
SUB REGISTRAR OFFICE, PALAKKAD DISTRICT,
PIN - 678601
2 VILLAGE OFFICER
VILLAGE OFFICE. MARUTHI ROAD VILLAGE, PALAKKAD,
PIN - 678007
OTHER PRESENT:
SR.GP - DEEPA NARAYANAN
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 19.04.2024, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
W.P.(C). No.10099 of 2024 :2:
VIJU ABRAHAM, J.
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W.P.(C) No.10099 of 2024
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Dated this the 19th day of April, 2024
JUDGMENT
It is averred that the petitioner bank granted credit facility to
M/s.Air-Sun Solar and Wind Energy, after executing an equitable
mortgage in favour of the petitioner bank on 30.03.2013. There
was default in repayment of the loan amount and SARFAESI
proceeding was initiated and ultimately the property was sold in
auction sale on 22.02.2024. Ext.P3 sale certificate was issued in
favour of the auction purchaser. The sale certificate was declined
to be registered stating that there is an attachment affected in the
subject property as per the orders of the Family Court, Palakkad in
I.A. No.1/2024 in OP No.275/2024, a copy of which is produced as
Ext.P4. The request before the 2 nd respondent Village Officer for
demarcating the property sold by the petitioner was also declined
stating the very same reason and it is in the said circumstances
that the petitioner has approached this Court. The petitioner
submits that since mortgage was on 30.03.2013 and Ext.P4
attachment is on 23.02.2024 only, the attachment subsequent to
the mortgage will not affect the proceedings initiated under the
SARFAESI Act.
2. Heard the learned counsel for the petitioner and the
learned Government Pleader.
3. The learned counsel for the petitioner relied on the
decision of this Court in Madhan S. v. Sub Registrar, Kollam
and Others [2014 (1) KHC 249] and the decision of a Division
Bench of this Court in Secretary, Keechery Service Cooperative
Bank Ltd. v. Sajitha Nizar alias Sajitha P.M. and Others,
[2020 (5) KHC 231] and contends that the attachment effected
subsequent to the creation of equitable mortgage will not affect the
right of the Bank to sell the mortgaged property and the
attachment has to be effaced from the encumbrance register.
4. In Madhan's case (supra), this Court held in paragraph 9
as follows:-
"9. The preponderance of judicial opinion leads to the
irresistible conclusion that the sale of the mortgaged property
in favour of the petitioner under Ext. P1 sale certificate under
the Act is free of all encumbrances. The attachments effected
subsequent to the mortgage created in favour of the bank do
not affect the title and ownership of the petitioner over the
subject property. Such attachments have no impact on the
sale conducted under the Act and the same ceases to have
any effect or fall to the ground the moment the sale is
confirmed in favour of the petitioner. The declaration so
sought by the petitioner is therefore granted and I further
direct the Sub Registrar and the Village Officer to efface the
attachments effected subsequent to the mortgage from the
relevant records. Otherwise those attachments would remain
as a permanent taboo prejudicially affecting the marketability
and title to the property even though they ceased to have any
legal efficacy. The needful in relation to the property bought
by the petitioner shall be done within a period of two months
from the date of receipt of a copy of this judgment."
5. A Division Bench of this Court in Ali Asharaf M.M. and
Another v. Sub Registrar, Thrissur (Judgment dated 24.7.2015
in W.A. No.612 of 2015) has affirmed the law laid down in
Madhan's case. In Keechery Service Co-operative Bank's case
(supra), another Division Bench of this Court also affirmed the law
laid down in Madhan's case (supra) and held in paragraph 7 as
under:-
"7.In the light of the aforesaid declaration of law by this Court
the order of dismissal of the petition filed for lifting the
attachment ordered under Ext R7 (a) viz., Ext R7 (b) by the
Federal Bank would pale into insignificance. We do not find
any reason to disagree with the declaration of law in
Madhan's case (supra) which was virtually affirmed by the
Division Bench in Ali Asharaf's case (supra). In the said
circumstances and taking note of the fact that the orders of
attachment of the property in question were after the creation
of equitable mortgage of the same with Federal Bank we do
not find any reason to interfere with the impugned judgment
passed by the learned Single Judge following the dictum in
Madhan's case (supra), carrying the directions to effect
mutation of the property as also to efface all encumbrance
over the property effected after 27/06/2014, the date on
which the property in question was mortgaged with Federal
Bank".
Thus it is trite law that attachment effected subsequent to the
creation of equitable mortgage does not have any effect on the sale
conducted by the Bank under the SARFAESI Act and has to be
effaced from the encumbrance register. It is evident from the
documents produced in the writ petition that Ext.P4 attachment
effected is subsequent to the creation of equitable mortgage by the
borrowers in favour of the petitioner.
6. It is seen that the person at whose instance Ext.P4
attachment was granted is not made a party in the writ petition. In
similar circumstances, ie., the party at whose instance the
attachment was granted was not a party in the writ petition, this
Court in Shamla K. U. and Another v. Sub Registrar, Office of
the Kodungallor Sub Registrar[2018 KHC 811] held in
paragraph 11 as follows:
"11. However, the beneficiary of the attachment order
referred to in serial No.9 of Ext.P-3 certificate is not now
made a party and therefore procedural fairness demands that
he should be duly notified before the process of effacement of
attachment order is completed and he could be heard on the
limited factual issue, as to whether the attachment order in
his favour has been issued before or after the date of creation
of mortgage in this case. So also, a proper certificate by the
financial institution showing the exact date of creation of
mortgage in this case pursuant to Ext.P-2 loan agreement is
also not available before this Court. It is brought to the notice
of this Court that the respondent-Sub-Registrar will be having
copies of the orders of the civil court referred to in serial No.9
of Ext.P-3, showing the details like the name and address of
the beneficiary of the attachment order in question.
Accordingly, the following directions and orders are passed:
(i) The request of the petitioner in Ext.P-4 petition dated
25.10.2018 will stand remitted to the respondent-Sub-
Registrar, for consideration afresh.
(ii) The petitioner will get an authenticated certificate from
the financial institution concerned (HDFC), certifying the date
of creation of the mortgage in this case, pursuant to Ext.P-2
loan agreement and the said certificate shall be issued by the
said financial institution, through its authorized officer under
the seal of the bank.
(iii) The petitioner will produce copy of the said certificate
before the respondent Sub-Registrar, along with a certified
copy of this judgment. Thereafter, the respondent-Sub-
Registrar will issue notice to the beneficiary of the attachment
order, referred to as serial No.9 of Ext.P-3 and hear the
petitioner and the said party and decide on the limited factual
issue, whether the attachment order in question has been
rendered after the date of creation of the mortgage, in the
instant case.
(iv) In case, it is found that the attachment order in question
referred to in serial No.9 of Ext.P-3 has been rendered after
the creation of the mortgage in this case, then the respondent
shall make an additional entry in book No.1 as envisaged in
Sec.89(5) of the Registration Act, 1908, noting therein that
the said attachment order will stand effaced consequent to
the directions issued by this Court in this judgment.
(v) After completing the above process, the respondent-SRO
will issue a fresh Encumbrance Certificate, without showing
the impugned attachment order, on submission of requisite
application in that regard and on payment of the prescribed
fee, if any, in case the same has been effaced after following
the process mentioned herein above.
(vi) The petitioner may produce such fresh Encumbrance
Certificate before the Village Officer concerned, who shall
also then efface such encumbrance pursuant to the abovesaid
attachment order, as shown in the revenue records and may
issue necessary rights of records (ROR) certificate in respect
of the property, if an application in that regard is made by the
petitioner. "
7. This Court in Phoenix ARC Pvt. Ltd. v. Sub Registrar,
Feroke [2023 KHC Online 9452] while considering an identical
issue referring to Section 89(5) of the Registration Act, 1908 has
held that since the attachment subsequent to creation of equitable
mortgage has lost its efficacy and has to be obliterated from the
records, the same can be done by the Sub Registrar by filing the
certified copy of the order/judgment of this Court in Book No.1
maintained by the Sub Registrar.
In view of the above, the writ petition is dispose of as follows:
(i) The 1st respondent shall consider the claim of the petitioner to
register Ext.P3 certificate of sale in favour of the auction
purchaser afresh, in the light of the declaration of law as
above.
(ii) The petitioner shall produce a copy of the certificate,
certifying the date of creation of the mortgage before the 1 st
respondent Sub-Registrar, along with a certified copy of this
judgment. Thereafter, the 1st respondent shall issue a notice
to the beneficiary of the attachment order and hear the
petitioner and the said party and decide on the limited factual
issue, whether the attachment order in question has been
rendered after the date of creation of the mortgage, in the
instant case.
(iii) In case, it is found that the Ext.P4 attachment order has
been rendered after the creation of the mortgage in this case,
then the respondent shall make an additional entry in book
No.1 as envisaged in Sec.89(5) of the Registration Act, 1908,
noting therein that the said attachment order will stand
effaced consequent to the directions issued by this Court in
this judgment.
(iv) After completing the above process, the 1 st respondent
shall issue a fresh Encumbrance Certificate, without showing
the impugned attachment order, on submission of requisite
application in that regard and on payment of the prescribed
fee, if any, in case the same has been effaced after following
the process mentioned herein above.
(v) The 1st respondent shall take steps to register Ext.P1
certificate of sale after following the proceedings mentioned
above, if there is no other impediment.
(vi) Ext.P5 reply of the 2 nd respondent is set aside with a
consequential direction to the 2 nd respondent to reconsider
the request of the petitioner to demarcate the property after
the procedures as stated above are completed.
Sd/-
VIJU ABRAHAM
JUDGE
sm/
APPENDIX OF WP(C) 10099/2024
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE LETTER EVIDENCING DEPOSIT
OF TITLE DEEDS DATED 30.03.2013 SUBMITTED
BY THE BORROWER TO THE PETITIONER BRANCH
Exhibit P2 TRUE COPY OF THE ORDER OF THE CHIEF
JUDICIAL MAGISTRATE COURT, PALAKKAD IN
MC.NO.531/2023 DATED 25.09.2023
Exhibit P3 TRUE COPY OF THE SALE CERTIFICATE ISSUED
BY THE PETITIONER BANK IN FAVOUR OF THE
AUCTION PURCHASER DATED 27.02.2024
Exhibit P4 TRUE COPY OF THE ORDER OF FAMILY COURT,
PALAKKAD IN IA.NO.01/2024 IN
OP.NO.275/2024 DATED 23.02.2024
Exhibit P5 THE REPLY OF THE 2ND RESPONDENT DATED
02.3.2024 TO LETTER SUBMITTED BY THE
PETITIONER
