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2011 DIGILAW 564 (KER)

Housing Development Finance v. K. A. Iqbal

2011-06-10

P.R.RAMACHANDRA MENON

body2011
JUDGMENT 1. The issue involved in this case is whether the attachment ordered over the property by a Civil Court, much after the creation of the security interest over the same in connection with a loan obtained by the borrower from the first petitioner/Bank, is having any adverse consequence with regard to the rights and liberties of the Bank and the successful bidder - who has satisfied the sale consideration, in the public auction pursuant to the proceedings under the SARFAESI Act (Act in short). 2. The sequence of events as narrated in the writ petition shows that the property in question was given as security by the owner, while availing the loan from the first petitioner/Bank. In view of the continuing defaults, the Bank proceeded with steps issuing Ext.P1 notice under Section 13(2) of the SARFAESI Act, on 10.10.2008. Since there was no response on the part of the defaulter, the Bank filed a petition under Section 14 of the Act, before the Chief Judicial Magistrate's Court, Ernakulam, and as per the order passed therein, an Advocate Commissioner was deputed and the physical possession of the property was taken over. After publishing Ext.P2 notice, Ext.P3 notice was issued, followed by the sale conducted on 24.11.2010. The second petitioner turned to be the successful bidder, who was issued Ext.P4 sale certificate. But when the sale certificate was taken for registration before the first respondent, it was refused to be registered, stating that there were some attachments ordered by the Civil Courts, as conveyed by Ext.P5 dated 10.1.2011 which forms the subject matter of challenge in this writ petition. 3. The first respondent has filed a counter affidavit pointing out that there was no question of refusal to register the documents, but for giving effect to the attachment ordered by competent Civil Courts and that, Ext.P5 memo was issued pointing out the actual facts and figures with utmost bona fides and in good faith. Respondents 4 and 5 have not chosen to file any counter affidavit presumably for the reason that there may not be any dispute with regard to the factual position. 4. Mr.K.K.Chandran Pillai, the learned senior counsel appearing for the petitioners submits that the mortgage was created over the property way back in the year 2001. The attachment was ordered by the Civil Courts only much later, as shown in Ext.P5 communication issued by the first respondent. 4. Mr.K.K.Chandran Pillai, the learned senior counsel appearing for the petitioners submits that the mortgage was created over the property way back in the year 2001. The attachment was ordered by the Civil Courts only much later, as shown in Ext.P5 communication issued by the first respondent. The first attachment was ordered by the Principal Sub Court, Paravur, in I.A.4238/07 in O.S.501/07, while the other attachment is as per order passed by the District Court, Ernakulam, in I.A.2027/09 in O.P.545/09. It is also stated by the learned senior counsel that the original of the title deed is with the first petitioner/Bank; a copy of which has been produced as Ext.P6. Reliance is also sought to be placed on Ext.P7 judgment passed in similar circumstances, whereby similar sale certificates have been directed to be registered by the concerned authority. 5. The learned Government Pleader appearing for respondents 1 to 3, with reference to the counter affidavit filed, submits that there is absolutely no mala fides, nor is there anything arbitrary on the part of the first respondent in not registering the document, but for the hurdle placed by the Civil Courts by virtue of the attachments ordered and communicated prior to the presentation of Ext.P4, which in fact was accordingly brought to the notice of the party concerned by issuing Ext.P5. The learned Government Pleader also submits that the first respondent is always ready and willing to give effect to the orders to be passed by this Court, declaring further course of action. 6. The learned counsel appearing for the fifth respondent submits that the rights and liberties of the said respondent to pursue the case against the owner of the property is an independent cause of action and that the said respondent is entitled to proceed against the owner. Reliance is also made to sub-Section (6) of Section 13 of the SARFAESI Act which reads as follows:- 13(6). Any transfer of secured asset after taking possession thereof or take over of management under sub-section (4) by the secured creditor or by the manager on behalf of the secured creditors shall vest in the transferee all rights in, or in relation to, the secured asset transferred as if the transfer had been made by the owner of such secured asset. By virtue of the said provision, it is contended that the attachment prior to the transfer of the property by the creditor has to remain and cannot be wiped out under any circumstances. 7. After hearing both the sides, this Court finds that there is no dispute with regard to the chronology and the sequence of events, in so far as the specific contention of the petitioners that the mortgage was created in the year 2001 whereas the attachments were ordered by the Civil Court in the years 2007-09 stands unrebutted. The remedy provided in favour of the secured creditor by virtue of the Act is an independent right, which is not adversely affected in any manner by virtue of any other stipulation contained in any other law as discernible from the statute itself, which contains a non - obstante clause as incorporated under Section 13(1). The only reference made in the said provision is Section 69 or Section 69A of the Transfer of Property Act, 1882, which do not come to the rescue of respondents 4 and 5. This Court finds that the rights and liberties conferred on the creditor/Bank by virtue of mortgage created in the year 2001 and the right to proceed under the relevant provisions of the SARFAESI Act cannot be defeated because of the subsequent attachments ordered by the Civil Courts in 2007-09. As such, the sale conducted on 24.11.2010, leading to issuance of Ext.P4 sale certificate, is complete in all respects and the title stands conveyed to the second petitioner. 8. In the above circumstances, the first respondent is directed to register Ext.P4 sale certificate as and when the same is presented, subject to satisfaction of the necessary requirements, if the same is otherwise in order. On registering the sale certificate as above, it goes without saying that the second petitioner will be at liberty to enjoy the property with absolute ownership, exclusive possession and clear and marketable title as conveyed. The second petitioner, as a consequence, is at liberty to remit the basic tax in respect of the property and he is entitled to have a possession certificate in this regard. The second petitioner, as a consequence, is at liberty to remit the basic tax in respect of the property and he is entitled to have a possession certificate in this regard. As such, if any request is made by the second petitioner for accepting the basic tax and for issuance of possession certificate, after effecting transfer of registry as per the Transfer of Registry Rules, 1966, necessary steps shall be taken and the same shall be finalised, by the concerned revenue authorities, as early as possible at any rate, within two weeks thereafter. The writ petition is allowed. No cost.