Madras High Court
M/S.Cholamandalam Investment ... vs The District Registrar on 25 August, 2023
W.P.(MD) No.273 of 2023
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 25.08.2023
CORAM:
THE HONOURABLE MR.JUSTICE S.S.SUNDAR
and
THE HONOURABLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
W.P.(MD) No.273 of 2023
and
W.M.P(MD)No.237 of 2023
M/s.Cholamandalam Investment and Finance Company Limited,
2/3, GV Tower,
Melakkal Main Road,
Madurai.
Represented by its authorised Officer,
P.Velmurugan : Petitioner
-vs-
1.The District Registrar,
Registration Department,
Madurai North Registration District,
Madurai.
2.The Sub Registrar,
Tallakulam,
Madurai District.
3.Thangapandi
4.M/s.Shriram Transpot Finance Limited,
1st Floor,Sri Alagar Plaza,
GST Road, Thirunagar,
Madurai-625 006.
5.Selvaprabhu : Respondents
PRAYER: Petition filed under Article 226 of the Constitution of India, to
issue a Writ of Certiorarified Mandamus, to call for the records relating to
____________
https://www.mhc.tn.gov.in/judis
Page 1 of 7
W.P.(MD) No.273 of 2023
the impugned check slip in Refusal No.RFL/Tallakulam/8/2022, dated
13.12.2022 and quash the same and consequently, direct the second
respondent to register the sale certificate dated 13.12.2022 relating to the
land in S.No.2721/1 (Part) in which Plot No.78, Tiruvalluvar Nagar, Survey
Ward No.10, Madurai North Village, Madurai South Taluk, Madurai District
and efface/delete the attachment entry of the fourth respondent relating to
the above said property in the Encumbrance Certificate within reasonable
time fixed by this Court.
For Petitioner : Mr.V.Sukumar
For R1 & R2 : Mr.J.Ashok
Additional Government Pleader
For R3 : Tapal Returned
For R4 : Mr.Anand C.Rajesh
For R5 : No Appearance
ORDER
[Order of the Court was made by D.BHARATHA CHAKRAVARTHY, J.]
This Writ Petition is filed with a prayer to issue a Writ of
Certiorarified Mandamus to quash the impugned check slip in Refusal
No.RFL/Tallakulam/8/2022, dated 13.12.2022 and consequently to direct
the second respondent to register the sale certificate dated 13.12.2022
relating to the land in S.No.2721/1 (Part) in which Plot No.78, Tiruvalluvar
Nagar, Survey Ward No.10, Madurai North Village, Madurai South Taluk,
____________
https://www.mhc.tn.gov.in/judis
W.P.(MD) No.273 of 2023
Madurai District and efface/delete the attachment entry of the fourth
respondent relating to the above said property in the Encumbrance
Certificate.
2. The case of the petitioner is that the third respondent in the writ
petition availed loan from the petitioner's financial institution and executed
a memorandum of deposit of title deeds in favour of the petitioner thus
creating an equitable mortgage by a registered document No.3191/2017
and 1982/2018. The third respondent failed to repay the loan amount and
as such it was classified as a 'Non Performing Asset'. The petitioner
initiated proceedings under Section 13 of the SARFAESI Act, 2002 and
ultimately as against a balance outstanding amount for a sum of
Rs.55,95,882/-, the property was sold in favour of the fifth respondent for a
total sale consideration of Rs.28,10,000/- and a sale certificate dated
13.12.2022 was issued in favour of the fifth respondent. When the same
was presented for registration before the second respondent, namely, the
Sub Registrar, Thallakulam, Madurai District, the second respondent
refused to register the same vide cheque slip dated 13.12.2022. It is under
the said circumstances, this writ petition is filed challenging the same.
3. Heard Mr.V.Sukumar, the learned counsel appearing for the
petitioner and Mr.J.Ashok, the learned Additional Government Pleader
____________
https://www.mhc.tn.gov.in/judis
W.P.(MD) No.273 of 2023
appearing on behalf of the respondents 1 and 2 and Mr.Anand C Rajesh,
the learned counsel appearing on behalf of the fourth respondent.
4. It can be seen that the sale certificate was refused to be registered
only on the ground that there is an entry in the form of an order of
attachment pending arbitration proceedings.
5. The learned counsel appearing on behalf of the fourth respondent
would submit that even though there is priority as per Section 26E of the
SARFAESI Act, 2002, the Arbitration and Conciliation Act, 1996 is equally
a special legislation and when Section 17 of the said Act permits the
arbitrator to grant such orders by way of interim measure, it cannot be said
that Section 26E would override the attachment made by the arbitrator and
therefore, he would submit that eventhough he does not have any objection
for registering the sale certificate, the attachment shall be subsisting and
the fourth respondent will be entitled for such relief as may be further
decided in the arbitration.
6. We are not in agreement with the said submission of the learned
counsel appearing for the fourth respondent. Firstly, the fourth respondent
is not a secured creditor. The property is mortgaged in favour of the
petitioner and as such the petitioner as a secured creditor is in a higher
____________
https://www.mhc.tn.gov.in/judis
W.P.(MD) No.273 of 2023
pedestal. The sale of the property has been conducted under the SARFAESI
Act and Section 26E clearly grants priority to the secured creditor over the
other debtors. It contains a non-obstante clause. Therefore, the sale
conducted under the SARFAESI Act, by virtue of Section 26E will have
priority and notwithstanding the attachment made before judgment, the
sale is valid. As far as the entry is concerned, once property has been sold
in favour of the fifth respondent and the title has been conveyed, the
attachment order will not serve any purpose for the fourth respondent
concerned as there is no money left after satisfying the debt of the secured
creditor. On the other hand it would remain as a confusing cloud on the
title of the auction purchaser. This question is no longer res integra as this
Court had recently considered the very same issue in detail in Siva
Automative Trading Private Limited Vs. The Sub Registrar,
Othakadai and others1 and held that the sale certificate is entitled to be
registered and also the entries of attachment will have to be deleted.
7. In that view of the matter, this Writ Petition is allowed on the
following terms:
(i) The petitioner/fifth respondent shall represent the sale certificate
for registration within a period of two weeks from the date of receipt of a
1 W.P.(MD)No.28500 of 2022, dated 02.08.2023 (MANU/TN/4471/2023)
____________
https://www.mhc.tn.gov.in/judis
W.P.(MD) No.273 of 2023
copy of this order. Upon which, the second respondent shall duly register
the same in accordance with law;
(ii) The first and second respondents shall also show the entry of
encumbrance relating to the order in I.A.No.1 of 2020 in Arbitration Case
No.KP16 of 2020 as deleted in respect of the subject matter property;
(iii) No costs.
(iv) Consequently, connected miscellaneous petition is closed.
[S.S.S.R., J.] [D.B.C., J.]
25.08.2023
NCC : Yes / No
Index : Yes / No
Internet : Yes / No
sji
To
1.The District Registrar,
Registration Department,
Madurai North Registration District,
Madurai.
2.The Sub Registrar,
Tallakulam,
Madurai District.
____________
https://www.mhc.tn.gov.in/judis
W.P.(MD) No.273 of 2023
S.S.SUNDAR, J.
and
D.BHARATHA CHAKRAVARTHY, J.
sji
W.P.(MD) No.273 of 2023
25.08.2023
____________
https://www.mhc.tn.gov.in/judis
