Madras High Court
The Branch Manager vs The Sub Registrar on 12 January, 2023
W.P(MD)No.29018 of 2022
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 12.01.2023
(Reserved on 04.01.2023)
CORAM :
THE HONOURABLE MR.JUSTICE D.KRISHNAKUMAR
and
THE HONOURABLE MR.JUSTICE R.VIJAYAKUMAR
W.P(MD)No.29018 of 2022
The Branch Manager,
Canara Bank,
Palani Branch,
Dindigul District. ... Petitioner
vs.
1. The Sub Registrar,
Palani Joint-I Sub Registrar Office,
Palani, Dindigul District.
2. Thiru.A.N.Natchimuthu ... Respondents
PRAYER : Writ Petition filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorarified
Mandamus, to call for the records in Na.Ka.No.4573/App/2022 dated
15.11.2022 issued by the 1st respondent and quash the same and
consequently directing the 1st respondent to register the sale
certificate dated 22.08.2022 issued by the petitioner bank in favour of
1/13
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W.P(MD)No.29018 of 2022
the 2nd respondent as per the petitioner's representation dated
15.09.2022 for the schedule mentioned properties.
For Petitioner : Mr.P.Madhan Alexandar
For R1 : Mr.R.Baskaran
Additional Advocate General assisted by
Mr.S.Shanmugavel
Additional Government Pleader
ORDER
(Order of the Court was made by D.KRISHNAKUMAR, J.)
The prayer in this writ petition is for issuance of a Writ of
Certiorarified Mandamus, to call for the records in Na.Ka.No.
4573/App/2022 dated 15.11.2022 issued by the 1st respondent and
quash the same and consequently direct the 1st respondent to register
the sale certificate dated 22.08.2022 issued by the petitioner/Bank in
respect of the schedule mentioned properties, in favour of the 2nd
respondent, as per the petitioner's representation dated 15.09.2022.
2. The petitioner/Bank had issued a demand notice under
Section 13(2) of the SARFAESI Act on 11.07.2017 to the borrowers
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W.P(MD)No.29018 of 2022
namely, one Kulandhaivel and his wife Tmt.Selvamani by demanding
them to repay the entire loan amount, but they did not respond to the
same and therefore, the petitioner took possession of the mortgaged
properties by issuing, affixing and publishing the possession notice
dated 16.09.2017. Since the borrowers neither replied to the
possession notice nor challenged the same, the petitioner/Bank issued
a sale notice dated 28.03.2022 by fixing the sale on 30.04.2022 and
the mortgaged properties were auctioned and the 2nd respondent was
declared as a successful bidder. Subsequently, the petitioner/Bank
issued a sale certificate dated 18.08.2022 in favour of the 2 nd
respondent. The petitioner/Bank has approached the 1st respondent
on 22.08.2022 to register the sale certificate in favour of the 2nd
respondent, but the 1st respondent has neither registered the sale
certificate nor returned the same. Though the petitioner/Bank
approached the 1st respondent several times with regard to
registration of the sale certificate, there was no proper reply and
therefore, the petitioner issued a legal notice dated 15.09.2022 to the
1st respondent, for which, the 1st respondent by impugned order dated
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W.P(MD)No.29018 of 2022
15.11.2022, replied that the borrowers have defaulted in payment of
tax to the State Government and only on payment of tax arrears, the
sale certificate could be registered. Therefore, the petitioner has filed
the instant writ petition before this Court challenging the aforesaid
impugned order.
3. Assailing the impugned order, learned counsel for the
petitioner submitted that the impugned order is contrary to the Full
Bench judgment of this Court in The Assistant Commissioner(CT)
vs. The Indian Overseas Bank and another W.P.Nos.2675/2011
etc batch dated 10.11.2016, wherein, it has been held that the
secured creditor will have priority over the other debts even of the
Crown and the Circular issued by the State Government dated
10.07.2021, whereby, all the Sub Registrars in the State of Tamil Nadu
have been directed not to deny registration of any document
presented citing attachment order passed by the Court. According to
the learned counsel, the refusal on the part of the 1st respondent to
register the sale certificate is contrary to Section 31B of the
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W.P(MD)No.29018 of 2022
Enforcement of Security Interest & Recovery of Debts Laws and
Miscellaneous Provisions (Amendment) Act, 2016, which came into
force with effect from 01.09.2016. Thus, the learned counsel
submitted that the 1st respondent miserably failed to register the sale
certificate in the light of the Circular issued by the Registration
Department dated 10.07.2021 and hence, the impugned order is liable
to be set aside.
4. Learned Additional Advocate General submitted that there
is a due of tax payable to the State and therefore, in the interest of
the revenue to the State, the impugned order has rightly been passed
and hence, the same does not require interference by this Court.
5. Heard the learned counsel for the parties and perused the
materials available on record.
6. In the present case, the petitioner/Bank has conducted an
action for sale of the mortgaged properties, in which, the 2 nd
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W.P(MD)No.29018 of 2022
respondent was declared as a successful bidder. Thereafter, though
the petitioner/Bank issued a sale certificate in favour of the 2nd
respondent and the 2nd respondent also paid the entire sale
consideration, the 1st respondent/Sub Registrar refused to register the
sale certificate citing arrears of tax payable to the State by the
borrowers of the mortgaged properties. According to the petitioner,
the secured creditors will have priority over all other debts and in this
regard, they have relied on the aforesaid Full Bench judgment,
wherein, it has been held as follows:-
''The writ petitions have been listed before the Full
Bench in pursuance to the reference order in W.P.No.6267
of 2006 and W.P.No.253 of 2011, in respect of the following
issues:-
''a) As to whether the Financial Institution, which is a
secured creditor, or the department of the government
concerned, would have the 'Priority of Charge' over the
mortgaged property in question, with regard to the tax and
other dues.
b) As to the status and the rights of a third party
purchaser of the mortgaged property in question.''
2.We are of the view that if there was at all any
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W.P(MD)No.29018 of 2022
doubt, the same stands resolved by view of the
Enforcement of Security Interest and Recovery of Debts
Laws and Miscellaneous Provisions (Amendment) Act,
2016, Section 41 of the same seeking to introduce Section
31B in the Principal Act, which reads as under:-
''31B. Notwithstanding anything contained in any
other law for the time being in force, the rights of secured
creditors to realise secured debts due and payable to them
by sale of assets over which security interest is created,
shall have priority and shall be paid in priority over all
other debts and Government dues including revenues,
taxes, cesses and rates due to the Central Government,
State Government or local authority.
Explanation. - For the purposes of this section, it is
hereby clarified that on or after the commencement of the
Insolvency and Bankruptcy Code, 2016, in cases where
insolvency or bankruptcy proceedings are pending in
respect of secured assets of the borrower, priority to
secured creditors in payment of debt shall be subject to the
provisions of that Code.''
3.There is, thus, no doubt that the rights of a secured
creditor to realise secured debts due and payable by sale of
assets over which security interest is created, would have
priority over all debts and Government dues including
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W.P(MD)No.29018 of 2022
revenues, taxes, cesses and rates due to the Central
Government, State Government or Local Authority. This
section introduced in the Central Act is with
''notwithstanding'' clause and has come into force from
01.09.2016.
4.The law having now come into force, naturally it
would govern the rights of the parties in respect of even a
lis pending.
5.The aforesaid would, thus, answer question (a) in
favour of the financial institution, which is a secured
creditor having the benefit of the mortgaged property.
6.In so far as question (b) is concerned, the same is
stated to relate only to auction sales, which may be carried
out in pursuance to the rights exercised by the secured
creditor having a mortgage of the property. This aspect is
also covered by the introduction of Section 31B, as it
includes ''secured debts due and payable to them by sale of
assets over which security interest is created''.
7.We, thus, answer the aforesaid reference
accordingly.
8.The matters be placed before the roster Division
Bench for dealing with the individual cases.''
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W.P(MD)No.29018 of 2022
7. The relevant portion of the Circular dated 10.07.2021
issued by the Registration Department reads as follows:-
''4(i) xU brhj;jpd; kPJ fld; bgw;W mij jpUg;gpr;
brYj;jhj epiyapy;, mr;brhj;J kPJ Vy eltof;iff;F
cl;gLj;jg;gl;L tA;fp kw;Wk; fld; tR{y; jPh;g;ghak; Mfpa
mikg;g[fshy; rl;l g[{h;t eltof;iffspd; fPH; mr;brhj;jpid
Vyk; Kyk; chpik bgw;wtUf;F fpuar; rhd;W vGjpf;
bfhLf;fg;gLfpd;wd.
(ii) xU Beh;tpy;, xU tA;fpahy; Vyk; Kyk; tHA;fg;gl;l
fpuar; rhd;W, gjpt[f;Fj; jhf;fy; bra;ag;gl;ljpy; mt;thW
Vyk; tHA;fg;gl;l brhj;jpid bghUj;J Vw;fdBt ePjpkd;wk;
xd;wpdhy; gw;Wif Miz gpwg;gpf;fg;gl;Ls;sjhy;,
mf;fpuar; rhd;W gjpt[f;F Vw;fg;glhky;
kWj;jspf;fg;gl;Ls;sJ. njid vjph;j;J rk;ge;jg;gl;l
tA;fpahy; brd;id cah; ePjpkd;wj;jpy; ePjpg;Bguhiz kD
jhf;fy; bra;ag;gl;ljpy; ghh;it-3y; fhZk; jPh;g;g[iuapy;,
fPH;fhZkhW Miz gpwg;gpf;fg;gl;Ls;sJ.
5. The said ground stated in the impugned order is not
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W.P(MD)No.29018 of 2022
sustainable in view of the numerous judgments passed by this
Court. In the above said cases, this Court had categorically held,
after considering several decisions and citing the provision under
section 31-B of The Recovery of Debts due to Banks and Financial
Institutions Act, 1993, that Sub Registrar cannot refuse to
register the sale certificate on the ground that there is an
attachment order passed by the Civil Court. In the cases, it has
been held that the rights of secured creditors in terms of Section
31-B of the Act will override all other debts.
7.The Inspector General of Registration shall issue a circular
to all the Registrars in Tamil Nadu to register all sale certificates
irrespective of any attachment orders passed by the Civil Courts
in view of the above judgments as well as the statutory provisions
namely, Sections 31-B and 34 of Recovery of Debts due to Banks
and Financial Institutions Act, 1993. It is made clear that if any
Registering Authority refuses to register the sale certificate on the
ground of attachment order passed by the Civil Court.
It would be deemed to be violation of Court's order
amounting to contempt and the aggrieved parties can always
initiate contempt proceedings before this Court.
vdBt 'Secured Creditor' vd;w jFjpapy; tA;fpahy;
vGjpf;bfhLf;fg;gLk; Vy fpuar; rhd;Wfs; gjpt[f;F jhf;fy;
bra;ag;gl;lhy;, mr;brhj;J kPJ ePjpkd;wk; xd;wpdhy;
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W.P(MD)No.29018 of 2022
gw;Wif Miz gpwg;gpf;fg;gl;Ls;sjd; fhuzj;jpw;fhf kWg;g[
Fwpg;g[ (Check slip) kw;Wk; kWg;g[ Miz (Refusal Order)
tHA;fglf; TlhJ vd;Wk; Mtzg; gjptpid epWj;jptplhky; nju
rl;l Bjitfs; g[{h;j;jp bra;ag;gl;L nUg;gpd;
Mtzg;gjpt[ Bkw;bfhs;s gjpt[ mYtyh;fs;
mwpt[Wj;jg;gLfpd;wdh;.''
8. Considering the facts of the present case in the light of the
aforesaid Full Bench Judgment and also the Circular dated
10.07.2021, this Court is of the view that the impugned order dated
15.11.2022 passed by the 1st respondent is wholly unjustified and
without any authority and therefore, the same is liable to be quashed.
9. Accordingly, the impugned order in Na.Ka.No.
4573/App/2022 dated 15.11.2022 passed by the 1st respondent is
quashed and the 1st respondent is directed to register the sale
certificate dated 22.08.2022 issued by the petitioner/Bank
immediately without any further delay. Despite the Circular dated
10.07.2021, since the 1st respondent has passed the impugned order
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W.P(MD)No.29018 of 2022
refusing to register the sale certificate, this Court is inclined to impose
a cost of Rs.5,000/- (Rupees Five Thousand only) payable by the 1st
respondent to the Chairman & Co-ordinator, Taluk Level Mediation Sub
Centre, Palani, within a period of two weeks from the date of receipt
of a copy of this order.
10. With the above direction, the Writ Petition is allowed. No
costs.
[D.K.K.,J.] & [R.V.,J.]
12.01.2023
NCC : Yes / No
Index : Yes / No
Internet : Yes
bala
To
The Sub Registrar,
Palani Joint-I Sub Registrar Office,
Palani, Dindigul District.
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W.P(MD)No.29018 of 2022
D.KRISHNAKUMAR, J.
and
R.VIJAYAKUMAR, J.
bala
PRE-DELIVERY ORDER MADE IN
W.P(MD)No.29018 of 2022
DATED : 12.01.2023
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