Madras High Court
Punjab National Bank vs The Sub-Registrar on 25 March, 2022
W.P.No.2125 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 25.03.2022
CORAM
THE HONOURABLE MR.JUSTICE M.DHANDAPANI
W.P.No.2125 of 2022
W.M.P.No.2292 of 2022
Punjab National Bank,
Represented by its Chief Manager ... Petitioner
Vs.
1.The Sub-Registrar,
Kinathukkadavu,
Coimbatore - 642 109.
2.M/s.Nivaa Castings India Private Limited,
No.12, Nadesagounder Layout II,
Rathinapuri,
Coimbatore - 641 027,
Represented by its Managing Director Mr.T.Bharath
3.The Assistant Commissioner,
Commercial Tax Officer,
Trichy Road, Coimbatore - 641 018.
4.The Assistant Commissioner,
Central GST and Central Excise,
Pollachi (Division),
Jothi Nagar, D Colony,
Pollachi - 642 001. ... Respondents
1
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W.P.No.2125 of 2022
Prayer: Writ Petition filed under Article 226 of the Constitution of India to
issue a Writ of Certiorarified Mandamus calling for the records of the first
respondent namely refusal check slip No.RFL/Kinathukkadavu/41/2021
dated 30.12.2021 and quash the same as null and void and consequently to
direct the first respondent to register the Sale Certificate dated 02.11.2021
issued by the petitioner bank in favour of auction purchaser, Mr.Alavikutty.
For petitioner : Mr.M.L.Ganesh
For Respondents : Mr.Yogesh Kannadasan
Special Government Pleader
ORDER
The Writ Petition has been filed seeking to quash the proceedings
passed by the first respondent namely refusal check No. RF2 /
Kinathukadavu / 41 / 21 slip dated 30.12.2021 and to direct the first
respondent to register the sale certificate dated 02.11.2021 issued by the
petitioner bank in favour of auction purchaser Mr. Alavikutty.
2. The facts of the case are as follows:
The company M/s Sanees Alloys Private Ltd., had availed credit
facilities from State Bank of Hyderabad (SBH) against the collateral
security of immovable property situated at Kodangipalayam Village,
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W.P.No.2125 of 2022
Pollachi Taluk comprised in S.No.155/1 measuring an extent of 4 acre and
80 cents and the said company is defaulted to repay the loan, for which, the
SBH had assigned debt along with underlying securities in favour of
M/s.Asree (India) Ltd., vide assignment agreement dated 31.03.2015.
3. It is the further case of the petitioner that M/s.Alloys Private
Limited had entered into OTS on 11.06.2015 with an assignee, M/s.Asrec
(India) Ltd., in furtherance of the same, the aforesaid property was
conveyed by M/s. Sanees Alloys Private Ltd., in favour borrower M/s.Nivaa
Casting India Private Ltd., vide sale deed registered as Documents No.6798
of 2015 before the SRO, Kinathukkadavu. It is further states that the 4th
respondent had attached the said property subsequent to the mortgage
created in favour of the SBH. The petitioner had granted loan to the tune of
Rs.5.50 Crores to the borrower, who is the second respondent herein against
the primary security of hypothecation of book debts, receivables, plant and
machinery, stocks, stocks-in trade and collateral security of mortgaged the
above said properties. The second respondent had created forged documents
and executed MOD on 20.10.2015 registered as Document No.6800/2015
SRO Kinathukadavu in terms of Section 58(1) of Transfer of Property Act
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W.P.No.2125 of 2022
to cover the aforesaid loan liability. The second respondent had committed
default in repaying the loan amount and hence, the said account was slipped
into NPA (A Non performing asset) on 30.09.2016 as per RBI guidelines,
for which, the petitioner Bank had issued demand notice on 03.10.2016 and
took possession of property on 21.02.2017 under Section 13(4) of the
SARFAESI Act, 2002. On 12.08.2021, the said properties were sold to the
auction purchaser viz., N.Alavikutty by the petitioner's Bank for a sale
consideration of Rs.3.68 Crores and accordingly, sale certificate was issued
on 02.11.2021 to him. The said sale certificate was presented before the first
respondent and the same was rejected on 30.12.2021 on the ground that
there is an attachment effected by the respondents 3 & 4 which is not
binding on the petitioner being the secured creditor. Challenging the said
rejection, the present writ petition has been filed before this Court seeking
the above said prayer.
4. The learned counsel for the petitioner submitted that the action of
the first respondent in refusing to register the sale deed is as against the
established principle of law. The learned counsel contented that the first
respondent has failed to take note of such requirements and has
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W.P.No.2125 of 2022
mechanically rejected the registration of sale deed. The learned counsel also
submitted that the third respondent cannot claim priority over the debts of
the petitioner's bank in the light of amended provision of section 26E of
SARFAESI Act. Similarly, the 4th respondent cannot claim priority over the
debts of the petitioner bank in the light of Section 142A of Central Excise
and Custom Act. Hence, the learned counsel prays that the first respondent
should be directed to register the sale deed submitted by the petitioner.
5. The learned Special Government Pleader supported the refusal
made by the first respondent and further submitted that there is no merit in
the contentions put forth by the petitioner and therefore, the writ petition
has to be dismissed.
6. Heard the learned counsel for the petitioner as well as the learned
Special Government Pleader appearing for the respondents and perused the
materials available on records.
7. It is not a simple case where the first respondent has refused to
register the sale deed issued by the petitioner in favour of the auction
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W.P.No.2125 of 2022
purchaser. As mentioned in the affidavit filed in support of the writ petition,
the subject property has been offered as security in more than one loan.
Numerous other parties are also claiming charge over the subject property.
Therefore, this Court is unable to accept the contention put forward by the
learned counsel for the petitioner. The right of the petitioner cannot be
decided in a writ petition based merely on the affidavit evidence. The
petitioner has to work out his remedy before the appropriate forum by
adducing evidence both in the form of oral and document. Therefore, this
Court finds no merit in the writ petition and the same is liable to be
dismissed.
8. Accordingly, the writ petition is dismissed. No costs.
Consequently, connected miscellaneous petition is also closed.
11.02.2022
Index : Yes/No
rli
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W.P.No.2125 of 2022
To
1. The Sub- Registrar,
Kinathukkadavu,
Coimbatore - 642 109.
2. The Assistant Commissioner,
Commercial Tax Officer,
Trichy Road, Coimbatore - 641 018.
3. The Assistant Commissioner,
Central GST and Central Excise,
Pollachi (Division),
Jothi Nagar, D Colony,
Pollachi - 642 001.
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W.P.No.2125 of 2022
W.P.No.2125 of 2022
W.M.P.No.2292 of 2022
M.DHANDAPANI,J.
This matter is listed under the caption for being mentioned at the
instance of the learned counsel for the petitioner.
2. The petitioner has filed this petition to issue a Writ of
Certiorarified Mandamus calling for the records of the first respondent
namely refusal check slip No.RFL/Kinathukkadavu/41/2021 dated
30.12.2021 and quash the same as null and void and consequently to direct
the first respondent to register the Sale Certificate dated 02.11.2021 issued
by the petitioner bank in favour of auction purchaser, Mr.Alavikutty.
3. Learned counsel appearing for the petitioner submitted that though
the issue raised in the writ petition was squarely covered by the
W.P.No.17901 of 2020 dated 11.12.2020, however, inadvertently, the said
decision was not brought to the notice of this Court, which resulted in the
dismissal of the petition. It is submitted that similar petitions have been
allowed by this Court and, therefore, the matter is once again brought to the
knowledge of this Court, as there should not be a contra decision with
regard to similar issue.
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W.P.No.2125 of 2022
4. Learned Special Government Pleader appearing for the respondent
does not dispute the aforesaid fact, but submitted that this Court had
appreciated the materials on record while arriving at its decision and,
therefore, submitted that no interference is warranted.
5. Since it is pleaded that there is an order, which is passed in
identical circumstances, which is squarely applicable to the case on hand,
this Court, as a matter of judicial discipline and propriety, has to necessarily
appreciate the said decision before arriving at a conscious finding and,
therefore, the order dated 11.02.2022, passed in the present writ petition is
recalled and the matter is heard afresh.
6. The case of the petitioner/bank is that the company M/s.Sanees
Alloys Private Ltd, had availed credit facilities from State Bank of
Hyderabad (SBH) against the collateral security of immovable property
situated at Kodangipalayam Village, Pollachi Taluk amount and hence, the
said account was slipped into NPA (A Non - performing asset) on
30.09.2016 as per RBI guidelines, for which, the petitioner bank had issued
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W.P.No.2125 of 2022
demand notice on 03.10.2016 and took possession of property on
21.02.2017 under Section 13(4) of the SARFAESI Act, 2002. On
12.08.2021, the said properties were sold to the auction purchaser viz.,
N.Alavikutty by the petitioner's Bank for a sale consideration of Rs.3.68
Crores and accordingly, sale certificate was issued on 02.11.2021 to him.
The said sale certificate was presented before the first respondent and the
same was rejected on 30.12.2021 on the ground that there is an attachment
effected by the respondents 3 & 4 which is not binding on the petitioner
being the secured creditor. Challenging the rejection, the present Writ
Petition has been filed by the petitioner for the above relief.
7. Attention of this Court is drawn to the order passed by this Court in
W.P.No.17901 of 2020, order dated 11.12.2020, which it is submitted is
squarely applicable to the present case, and for better appreciation the
relevant portions in the above said order are extracted hereunder:
"6. The issue involved in the present Writ Petition is
squarely covered by the earlier Order passed by this Court in
W.P.No.16523 of 2020 dt. 07.12.2020. The relevant portions in the
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order are extracted hereunder:
10. The issue involved in the present writ
petition is squarely covered by the earlier orders passed by
this Court. One such order, passed in W.P.No.7497 of 2019
dated 26.04.2019 can be relied upon for the purpose of this
case. The relevant portions of the order are extracted
hereunder:
''3. The issue as to whether the 2nd respondent is
entitled to refuse registration of the document presented by the
petitioner on the ground that the subject matter property is
under Court attachment, is no more res integra, in view of the
several orders passed by this Court in similar issue deciding
against the Registration Department. One such recent order
was passed by this Court in W.P.No.1094/2019 dated
26.03.2019, wherein it is observed as follows:
“8. The above issue involved in this case is no
more res integra in view of the fact that the very same issue
was already considered by this Court and decided against the
registering authority in a decision made in
W.P.No.10647/2007 dated 13.10.2018. In fact, this Court,
while passing the said order, followed the order passed in
W.P.(MD).No.2632/2012 dated 13.03.2013, which in turn,
followed the decision of the Apex Court reported in 1985 (2)
SCC 167 (Balkrishan Gupta v. Swadeshi Polytex Limited).
Paragraph Nos. 7 and 8 of the said order reads as follows:
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7. The point for consideration in this writ petition
is whether the respondent is entitled to refuse registration of
the sale deed on the ground that the subject matter properties
of the sale deed are under Court attachment. The very same
issue was considered by this Court in W.P.No.36079 of 2015
reported in 2016 (3) CTC 493 (S.Praveen Bohra vs. Joint-I
Sub-Registrar) and the learned Judge found that the order of
attachment cannot be a bar to register the document. In order
to arrive at such conclusion, the learned Judge relied on
several decisions of this Court as well as Apex Court. At
paragraph Nos.6 to 9 of the said decision, the learned Judge
has observed as follows:
6. It is relevant to refer to the unreported judgment of
the Madurai Bench of Madras High Court in W.P.(MD) No.
2635 of 2012, dated 13.03.2013, in the case of K.D.P.
Properties Private Limited v. The SubRegistrar, relied on by
the learned counsel for the petitioner, wherein, in paragraph
No. 18, a reference was made to the decision of the Hon'ble
Apex Court reported in (1985) 2 SCC 167, Balkrishan Gupta v.
Swadeshi Polytex Limited, and it was held as follows:
“18. In (1985) 2 SCC 167 (supra), the Hon'ble Supreme
Court has held as under:
“30. The consequence of attachment of
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certain shares of a company held by a shareholder for
purposes of sale in a proceeding under section 149 of the Land
Revenue Act is more or less the same. The effect of an order of
attachment is what Section 149 of the Land Revenue Act itself
says. Such attachment is made according to the law in force for
the time being for the attachment and sale of movable property
under the decree of a civil court. Section 60 of the Code of
Civil Procedure, 1908 says that except those items of property
mentioned in its proviso, lands, houses or other buildings,
goods, money, banknotes, cheques, bills of exchange, hundis,
promissory notes, Government securities, bonds or other
securities of money, debts, shares in a corporation and all
other saleable property, movable or immovable, belonging to a
judgment-debtor, or over which, or the profits of which, he has
a disposing power which he may exercise for his own benefit,
whether the same be held in the name of the judgment-debtor,
or by another person in trust for him or on his behalf, is liable
for attachment and sale in execution of a decree against him.
Section 64 of the Code of Civil Procedure, 1908, states that
where an attachment of a property is made, any private
transfer or delivery of the property attached or of any interest
therein and any payment to the judgment debtor of any debt,
dividend or other monies contrary to such attachment, shall be
void as against all claims endorceable under the attachment.
What is forbidden under Section 64 of the Code of Civil
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Procedure is a private transfer by the judgment-debtor of the
property attached contrary to the attachment, that is, contrary
to the claims of the decree holder under the decree for
realisation for which the attachment is effected. A private
transfer under Section 64 of the Code of Civil Procedure is not
absolutely void, that is, not void as against all the world but
void only as against the claism enforceable under the
attachment. Until the property is actually sold the judgment
debtor retains title in the property attached. Under Rule 76 of
Order 21 of the Code of Civil Procedure, 1908, the shares in a
corporation which are attached may be sold through a broker.
In the alternative such shares may be sold in public auction
under Rule 77 thereof. On such sale either under Rule 76 or
under Rule 77, the purchaser acquires title. Until such sale is
effected, all other rights of the judgment debtor remain
unaffected even if the shares may have been seized by the
officer of the court under Rule 43 of Order 21 of the Code of
Civil Procedure, 1908 for the purpose of effecting the
attachment, or through a Receiver or though an order in terms
of Rule 46 of Order 21 of the Code of Civil Procedure may
have been served on the judgment debtor or on the company
concerned”.
19. The dictum laid down in the above judgment
(1985) 2 SCC 167 (supra), gives a fitting answer to the issue
raised in this writ petition. So far as the order of attachment
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passed by the DRT is concerned, the transfer is not void
generally but it is void only as against the claims enforceable
under the said attachment. Therefore, I am of the opinion that
the sale of the property attached cannot be construed as illegal
sale. However, if the 2nd respondent bank exercises its right as
against the property, the petitioner cannot raise any objection
because the sale of the vendor in favour of the petitioner is
void in respect of the order of attachment obtained by the 2nd
respondent bank. So, even if the property is sold in favour of
the petitioner, the 2nd respondent bank can always exercise its
right as against the said property.
20. In view of the above finding, I am of the
opinion that the sale of the subject property pending the order
of attachment is void only as against the claims enforceable
under the order of said attachment and not in respect of other
claims. Therefore, the sale of the property, which is under
attachment, cannot be said as illegal.
In the light of what is stated above, the writ
petition is allowed and the 1st respondent-Sub Registrar,
Kochiadai, Madurai, is directed to release the registered
document in favour of the petitioner within a period of one
week from the date of receipt of a copy of this order. No costs.”
7. It is also worthwhile to refer to the unreported
judgment of Madurai Bench of Madras High Court in
W.P.(MD) No. 14388 of 2014, dated 01.09.2014, in the case of
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W.P.No.2125 of 2022
M. Chitra v. The Sub Registrar, relied on by the learned
counsel for the petitioner, wherein, in paragraph No. 5, it was
held as follows:—
“5. In such circumstances, merely because there is
an order of attachment passed by a Civil Court, the same
cannot be a ground to refuse to register the Memorandum of
Deposit of Title Deeds. If any deposit of title deeds is created
in respect of the said property pursuant to the right acquired
by the petitioner, vide settlement deed, dated 04.07.2011 it is
always subject to further orders to be passed by the Civil
Court. The petitioner's case is that she acquired title by way of
settlement deed dated 04.07.2011, much prior to the order of
attachment. Further, the learned counsel appearing for the
petitioner placed reliance on Order 38, Rule 10 C.P.C. stating
that attachment before judgment shall not affect the rights,
existing prior to the attachment, of persons not parties to the
suit, nor bar any person holding a decree against the
defendant from applying for the sale of the property under
attachment in execution of such decree. The lending bank
namely, Canara Bank, Vadamadurai if satisfies with the title of
the petitioner over the property, can request the Registrar to
register the document. In such circumstances, merely because
an order has been passed by the Civil Court effecting
attachment, cannot be a bar for entertaining a document for
registration. Hence, the reasons assigned by the respondent
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refusing to register, vide his memo, dated 25.07.2014, is not in
accordance with law beyond the scope of Section 71 of the
Act.”
8. Thus, it is crystal clear that it is well settled
principle of law that the order of attachment cannot be a bar to
register the document. Therefore, I am of the view that there is
no need for this petitioner to file an appeal. I am of the opinion
that the sale of the subject property, pending the order of
attachment is void only as against the claims enforceable
under the order of said attachment and not in respect of other
claims. Therefore, I am of the opinion that the sale of the
property attached cannot be construed as illegal sale.
4. Accordingly, I find that the reasons stated by
the 2 nd respondent in refusing to register the document,
cannot be sustained. Thus, the Writ Petition is allowed and the
impugned order is set aside. Consequently, the matter is
remitted back to the 2 nd respondent to consider the document
viz., Decree dated 03.03.2018, submitted by the petitioner, for
registration. Such exercise shall be done by the 2 nd
respondent within a period of two weeks from the date of
receipt of a copy of this order. No costs.''
11. It can be seen from the above order that the
learned Single Judge has placed reliance upon the orders
passed by the Hon'ble Division Bench and also the Judgment
of the Hon'ble Apex Court, which was in turn relied upon by
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the Division Bench. The ratio in the above order is that an
order of attachment cannot be a bar to register a document.
The reason being that the sale of a subject property pending
the order of attachment is void only as against the claims
enforceable under the order of attachment and not in respect of
other claims. Therefore, the sale of the property, which is
under attachment, cannot be said to be illegal where the
parties to the transaction have nothing to do with the pending
proceedings in which the order of attachment was passed.
7. The Attachment Order passed in the Civil Suit will not in
any way bind the 2nd respondent Bank since the mortgage was
created in the year 2009 itself and the Suit in question was filed
only in the year 2017. The 2nd respondent being a secured creditor,
will have a priority in recovering the debt. Even otherwise the sale
of property which is under attachment, cannot be said to be illegal
where the parties to the transaction have nothing to do with the
civil proceedings in which the Attachment Order was passed. The
Order of Attachment cannot be a bar to register the Sale
Certificate presented for registration before the 1st respondent."
8. Though contentions has been raised by the learned Special
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Government Pleader that this Court may not interfere with its order dated
11.02.2022, however, it is fairly submitted by the learned Special
Government Pleader that the order placed before this Court by the learned
counsel for the petitioner is squarely applicable to the case on hand.
9. Sub being the undisputed position, this Court is of the considered
view that rendering of substantial justice is of foremost importance and such
being the case, there being a decision of this Court, in which detailed
discussion has been made and order has been passed, this Court, as a matter
of judicial discipline, is bound by the said decision and, in such view of the
matter is of the considered view that the order passed in W.P.No.17901 of
2020 dated 11.12.2020 is squarely applicable to the case on hand.
10. Accordingly, for the reason aforesaid, the impugned order passed
by the first respondent deserves to be set aside and, the same is set aside and
the first respondent is directed to register the sale certificate dated
02.11.2021 presented by the petitioner, if it is otherwise in order, on
payment of requisite stamp duty and registration charges. The writ petition
is allowed with the aforesaid directions. There shall be no order as to costs.
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W.P.No.2125 of 2022
Consequently, connected miscellaneous petition is closed.
25.03.2022
Index : Yes / No
Internet : Yes / No
Speaking Order/Non-Speaking Order
tri/nhs
To
1.The Sub-Registrar,
Kinathukkadavu,
Coimbatore - 642 109.
2.The Assistant Commissioner,
Commercial Tax Officer,
Trichy Road, Coimbatore - 641 018.
3.The Assistant Commissioner,
Central GST and Central Excise,
Pollachi (Division),
Jothi Nagar, D Colony,
Pollachi - 642 001.
M.DHANDAPANI,J.
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W.P.No.2125 of 2022
tri/nhs
W.P.No.2125 of 2022
W.M.P.No.2292 of 2022
25.03.2022
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