Madras High Court
Canara Bank vs The Sub Registrar on 24 November, 2023
Author: P.Velmurugan
Bench: P.Velmurugan
W.P.No.33219 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 24.11.2023
CORAM
THE HON'BLE MR. JUSTICE P.VELMURUGAN
W.P.No.33219 of 2023
Canara Bank
Rep.by its Branch Manager
A.Shenbakavalli ... Petitioner
Vs.
The Sub Registrar
Periyanaickenpalayam
Coimbatore North Taluk
Coimbatore District. ... Respondent
PRAYER: Writ Petition filed under Article 226 of the Constitution of India,
to issue a Writ of Certiorarified Mandamus to call for the records in respect
of the Refusal check slip dated 17.08.2023 issued by the respondent and
quash the same and direct the respondent to register the sale certificate dated
07.12.2022 issued by the petitioner Bank in favour of Mrs.SusheelaJayarani
in respect of the property comprised in Survey No.527/1, bearing No.168, Sri
Balaji Gardens, Press Colony Post, No.4, Veerapandi Village, Town
Panchayat, Periyanaickenpalayam, Coimbatore District.
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W.P.No.33219 of 2023
For the Petitioner : Mr.K.S.Viswanathan
Senior Counsel
for Ms.T.Hemalatha
For the Respondents : Mr.Yogesh Kannadasan
Spl. Government Pleader
ORDER
Challenging the refusal check slip dated 17.08.2023, the petitioner has
filed the present Writ Petition.
2. By consent of both the parties, this Writ Petition is taken up for
final disposal at the admission stage itself.
3. It is the case of the petitioner/Bank that M/s Aaron Industries,
represented by its Proprietor – Mr.A.Kevin Anto, availed credit facilities
from the petitioner/Bank, to the tune of Rs.31 Lakhs, by executing a Loan
Agreement dated 29.11.2018. In order to secure the said loan, one Ambrose
Andrew, father of Kevin Anto, executed a Memorandum of Deposit of Title
Deeds on 03.10.2018, bearing Document No.14899/2018 at the office of the
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Sub Registrar, Periyanaickenpalayam, in order to create mortgage over the
house property comprised in S.F.No.527/1, No.168, Sri Balaji Gardens, Press
Colony Post, No.4, Veerapandi Village, Periyanaikenpalayam, Coimbatore
District.
4. While so, the said M/s Aaron Industries defaulted in repayment of
loan liabilities and the same was therefore classified as Non Performing
Asset, since 01.01.2021. Therefore, the petitioner/Bank issued Demand
notice under Section 13(2) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act (hereinafter
referred to as 'SARFAESI Act') on 08.04.2021 to the borrowers, followed by
Possession notice dated 21.10.2021. Symbolic possession was taken and
thereafter, the petitioner/Bank has issued Sale notice dated 13.09.2022 for E-
auction. When the sale was fixed on 23.11.2022, the subject property was
auctioned through online and one Susheela Jayarani was the highest bidder
for a sum of Rs.35,40,000/-. Upon due payment of the bid amount by the
auction purchaser, sale certificate dated 07.12.2022 was issued and physical
possession of the property was also handed over to the auction purchaser.
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5. Be that as it may It came to the knowledge of the petitioner/Bank that
one Surabhi Transport Finance had filed an Arbitration case against the
Kewin Anto along with two others in A.C.P.No.17 of 2022, in respect of a
Loan agreement and dispute between the parties. In the Arbitration
proceedings, by way of an interim order, the property belonging to Ambrose
Andrew, which was originally mortgaged with the petitioner/Bank, in
connection with the credit facilities availed by one Kewin Anto, was
attached. Thereafter, when the auction purchaser presented the sale
certificate for registration before the SRO, Periyanaickenpalayam, the same
was refused, vide the order impugned in this Writ Petition.
6. The learned Senior Counsel appearing for the petitioner/Bank
submitted that in respect of the property, security interest has already been
created in favour of the petitioner/Bank. The Arbitral Tribunal, without
ascertaining the encumbrance over the property, had proceeded to issue an
interim order of attachment over the very same property. He would further
submit that this Court and the Hon’ble Supreme Court, time and again, had
held that the Arbitral Tribunal has no jurisdiction to affect the rights and
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remedies of third parties / secured creditors in the course of determining
dispute pending before it. In support of his submission, the learned Senior
Counsel relied upon the Judgment of the Hon’ble Supreme Court in the case
of State Bank of India Vs. Ericsson India Private Limited and others,
reported in (2018) 16 Supreme Court Cases 617.
7. The learned Special Government Pleader appearing for the respondent
submitted that as per the subsequent amendment of Section 22 (b) (iii) of the
SARFAESI Act, if any attachment or any other encumbrance is made,
subsequent document cannot be registered and therefore, the impugned order
passed by the respondent stands good and does not require any interference
by this Court.
8. Heard the learned counsel on either side and perused the material
records available in this case.
9. Admittedly, the petitioner/Bank brought the secured property for sale
and public auction was conducted and after following due process of law,
sale was also confirmed. Upon due payment by the auction purchaser, sale
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certificate was issued on 07.12.2022. However, when the auction purchaser
attempted to register the said sale certificate, the respondent issued the order
impugned in this Writ Petition. Further, the principles of Order XXXVIII
Rule 5 of Civil Procedure Code are not at all satisfied in this case.It is settled
proposition of law that the scope and object of the SARFAESI Act is peculiar
in nature and it has been clearly established in the case of State Bank of
India Vs. Ericsson India Private Limited and others cited supra, wherein it
has been held as follows:-
“5.There can be no dispute that the Arbitral
Tribunal has no jurisdiction to affect the rights
and remedies of the third party-secured creditors
in the course of determining disputes pending
before it. Moreover, the impugned order does not
comply with the mandate of Rules 5 and 10 of
Order 38 CPC. Thus, the impugned orders cannot
be sustained and are accordingly set aside. It is,
however, made clear that the secured creditors
will proceed against the asset(s) of the debtor(s)
in accordance with law. This order will not affect
any of the remedies of either of the parties. We
have not gone into any other issue except the
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validity of the impugned order.”
10. Applying the ratio laid down in the above case to the present case on
hand, this Court is of the view that the attachment by the Arbitral Tribunal is
subsequent to the proceedings of the secured creditors, i.e., the Arbitral
proceedings are of the year 2022, however, the petitioner/Bank initiated sale
of the subject property in the year 2021 itself. Therefore, the impugned
refusal slip dated 17.08.2023 issued by the respondent is set aside and the
respondent is directed to register the sale certificate dated 07.12.2022 sent by
the petitioner/Bank, if it is otherwise in order, within a period of two weeks
from the date of receipt of a copy of this order.
11.With the above direction, this Writ Petition stands allowed. No costs.
24.11.2023
Jer
Index:Yes/No
Speaking Order: Yes/No
Neutral Citation: Yes/No
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To
The Sub Registrar
Periyanaickenpalayam
Coimbatore North Taluk
Coimbatore District.
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P.VELMURUGAN, J.,
Jer
24.11.2023
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