Tamilnadu Mercantile Bank Ltd. , rep. by its Authorised Officer, Elampillai Branch v. Sub-Registrar, Mallasamudram
2021-06-25
N.KIRUBAKARAN, T.V.THAMILSELVI
body2021
DigiLaw.ai
ORDER : N. KIRUBAKARAN, J. The matter is heard through videoconferencing. 2. The petitioner Bank has challenged the order passed by the 1st respondent refusing to register the sale certificate issued by it in favour of the 2nd respondent who was the successful bidder in the auction conducted by the petitioner. 3. Heard Mr. V. Chandrasekaran, learned counsel for the petitioner and Mr.P.Muthukumar, State Government Counsel, who takes notice on behalf of the 1st respondent. Notice to the 2nd respondent is not necessary as there is no conflict of interest between the petitioner and the 2nd respondent. 4. The petitioner Bank granted loan in favour of one P. Murugesan, S/o. Mr. Pazhaniappa Mudaliar, D.No.3-39A, Gandhi Street, Mallasamudram, Tiruchengode Taluk, Namakkal District – 637 503, Salem District and the property in question was mortgaged to and in favour of the petitioner Bank by deposit of title deeds by the said Murugesan on 13.02.2015. However, the said Murugesan failed to repay the amount and therefore, the account had become NPA. Resultantly, the petitioner Bank brought the property for auction on 28.04.2021 and the 2nd respondent was declared as the successful bidder. The 2nd respondent had also paid the sale consideration. However, when the petitioner and the 2nd respondent went for registration of sale certificate, the same was declined to be registered on the ground that an attachment order dated 19.12.2016 had been passed by the Principal Sub Court, Karur in I.A. No. 1155 of 2016 in O.S. No. 679 of 2016. Hence, the present writ petition. 5. The said ground stated in the impugned order is not sustainable in view of the numerous judgments passed by this Court, especially, in the writ petitions filed by the petitioner by order dated 13.11.2019 in W.P. (MD) No. 23896 of 2019 batch, order dated 25.01.2021 in W.P. No. 1410 of 2021, order dated 29.01.2021 in W.P. No. 6976 of 2020 batch, order dated 13.05.2021 in W.P. NO. 11723 of and order dated 19.05.2021 in W.P. No. 11965 of 2021. 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 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 said 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. Section 31-B of the Act is usefully extracted hereunder: “31-B 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 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.” When that is the settled position of law, it is not understandable as to how repeatedly, the Registering Authorities are refusing to register the sale certificate on the ground that Civil Court has passed attachment orders. Moreover, Section 34, which deals with over-riding effect of the said Act has also been brought to the notice of this Court and the said provision reads thus: “34. Act to have over-riding effect.—(1) Save as provided under subsection (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.
Act to have over-riding effect.—(1) Save as provided under subsection (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. (2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948 (15 of 1948), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984) 2 [, the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act, 1989 (39 of 1989)].” 6. It is evident that right from 2019 onwards, the petitioner Bank is being discriminated by not registering the sale certificate on the ground of attachment orders having been passed by Civil Courts, the earliest writ petition filed by the petitioner Bank being W.P.(MD) No. 23896 of 2019 batch and the latest one being W.P. No. 11965 of 2021. For the past 5 years, the petitioner Bank has been driven to this Court consistently to get relief because of the illegal acts of Registering Authorities. This Court is of the opinion that the petitioner is being singled out every time and illegal orders have been passed refusing to register the sale certificate in respect of the petitioner contrary to various judgments of this Court. Therefore, the impugned order is quashed. 7. Though this Court intended to impose heavy cost against the 1st respondent, Sub-Registrar for acting illegally by declining to register the sale certificate issued, considering the plea made by Mr.P.Muthukumar, State Government Counsel, this Court refrains from imposing costs due to judicial restraint.
Therefore, the impugned order is quashed. 7. Though this Court intended to impose heavy cost against the 1st respondent, Sub-Registrar for acting illegally by declining to register the sale certificate issued, considering the plea made by Mr.P.Muthukumar, State Government Counsel, this Court refrains from imposing costs due to judicial restraint. However, the Inspector General of Registration, 100, Santhome High Road, Mullima Nagar, Mandavelipakkam, Raja Annamalaipuram, Chennai -28, who is suo motu impleaded by this Court as 3rd respondent, for whom Mr.S. Muthukumar, learned State Government Counsel takes notice, 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. The circular shall be issued within two weeks from the date of receipt of a copy of this order. 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. 8. The writ petition is allowed with the above direction. No costs. Connected W.M.P. is closed. 9. Post on 12.07.2021 for reporting compliance regarding production of circular to be issued by the newly impleaded 3rd respondent, Inspector General of Registration failing which the authority shall appear before this Court through videoconferencing.