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2020 DIGILAW 606 (KER)

Hashim v. State of Kerala

2020-07-16

RAJA VIJAYARAGHAVAN V.

body2020
JUDGMENT : In the year 2016, the petitioner herein instituted O.S. No 105 of 2016 in the Court of the Munsiff Varkala seeking return of Rs.500,000/- paid by way of advance to the respondents 6 and 7 consequent to the execution of an agreement for sale which is dated 26.10.2015. Along with the suit, the petitioner had also filed an application seeking attachment, which was allowed by order dated 4.3.2016. This fact is evident from Exhibit P2 encumbrance certificate. The suit was finally decreed ex parte on 31.10.2018. 2. According to the petitioner, the property which was attached by the petitioner was notified for sale by the 5th respondent bank and this fact came to his notice on 15.1.2020 from Exhibit P3 sale notice. Later, the property was sold to the 8th respondent by invoking the provisions of the SARFAESI Act. It is contended that the Bank had in fact sold an encumbered property as the property was attached by the Bank only on 21.12.2019, whereas the property was attached by the petitioner as early as on 4.3.2016. The petitioner contends that the sale held on 24.2.2020 is unjust and illegal and raising a challenge thereto, the petitioner has already approached the Debt Recovery Tribunal. While so, the petitioner came to understand that the 8th respondent, who is the auction bidder, is trying to effect mutation. The petitioner approached the 3rd respondent and submitted a representation detailing all these aspects and requesting that the 8th respondent not be permitted to effect mutation. It is in the above backdrop that the petitioner has approached this Court seeking a direction to the 3rd respondent to consider and pass appropriate orders on Exhibit P4 within a time frame and for a further direction to the 4th respondent not to affect mutation and receive land tax and for incidental reliefs. 3. By order dated 20.3.2020, this Court had granted an order restraining the 3rd respondent from effecting mutation. 4. The 5th respondent has entered appearance and has filed a petition seeking to vacate the interim order. 5. In view of the nature of relief sought for, notice to the other respondents are dispensed with. 6. 3. By order dated 20.3.2020, this Court had granted an order restraining the 3rd respondent from effecting mutation. 4. The 5th respondent has entered appearance and has filed a petition seeking to vacate the interim order. 5. In view of the nature of relief sought for, notice to the other respondents are dispensed with. 6. In the statement filed by the 5th respondent it is stated that the respondents 6 and 7 had in fact purchased the property which is the subject matter in these proceedings by availing a loan on 17.3.2015 after creating a mortgage. According to the respondent No.5, the transaction which the petitioner had with respondents 6 and 7 was much later and subsequent to the creation of the mortgage. It is further contended that when the respondents 6 and 7 defaulted from paying the loan installments, the account was categorised as non performing on 17.3.2016 and thereafter statutory notice was issued on 19.10.2016. The property was taken symbolic possession on 20.3.2018 and later the property was sold on 23.2.2020 under the provisions of the SARFAESI Act. According to the 5th respondent, when a mortgage is created in terms of the provisions of the Transfer of Property Act, 1992, it amounts to an encumbrance, and an order of attachment effected subsequently does not override or deserves to be preferred over the rights of a mortgagee of the effect of the mortgage as an encumbrance. 7. I have considered the submissions. As the only prayer sought for by the petitioner is for an expeditious consideration of Exhibit P4 within a time frame, the notice to the other respondents are dispensed with. 8. In HDFC v. Sub Registry Officer ( 2011 KHC 851 ) it was observed by this Court that the rights and liabilities conferred on the creditor/bank by virtue of mortgage created earlier 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 almost the same lines, in Rajalekshmi Amma v. Basheer ( 2013 (4) KLT 443 ), it was held that when a mortgage is created in terms of the provisions of the Transfer of Property Act, it amounts to an encumbrance. However, an order of attachment before judgment creates no charge. In almost the same lines, in Rajalekshmi Amma v. Basheer ( 2013 (4) KLT 443 ), it was held that when a mortgage is created in terms of the provisions of the Transfer of Property Act, it amounts to an encumbrance. However, an order of attachment before judgment creates no charge. The quality of the mortgage as an encumbrance does not get watered down to be subservient to by an order of attachment by the civil court under Code of Civil Procedure. That order of attachment does not override or deserves to be preferred over the rights of a mortgagee or the effect of the mortgage as an encumbrance. However, the details of the mortgage created in favor of the 5th respondent by respondents 6 and 7 are not before this Court. In that view of the matter, this petition is disposed of directing the 3 rd respondent to consider Exhibit P4 representation submitted by the petitioner and pass appropriate orders in the light of the principles above. However before passing orders, the respondent Nos.5 and 8 shall also be afforded an opportunity of being heard. Necessary orders shall be passed expeditiously, at any rate, within a period of 10 weeks from the date of production of a copy of this judgment. The above order shall be without prejudice to the right of the petitioner to raise his contentions before the Tribunal.