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2024 DIGILAW 526 (AP)

Canara Branch v. State of Andhra Pradesh

2024-05-07

NINALA JAYASURYA

body2024
ORDER : Heard Smt. P. Madhavi, learned counsel representing the counsel for the petitioner. Also heard learned Assistant Government Pleader for Stamps & Registration representing the respondents 1 to 5. Despite service of notice, none entered appearance on behalf of the 6th respondent. 2. The Writ Petition is filed aggrieved by the action of the respondents 1 to 4 in including Flat No.501, 4th floor, Vijaya Balaji Classic Apartment and another site in municipal revenue ward No.15, block No.34 near to Door No.34-15-38 covered by R.S No.166/2 of Mandapeta Municipal area, Mandapeta within Sub-Registrar of Mandapeta, East Godavari District., in the list of prohibited properties of SRO, Mandapeta under Section 22A of Indian Registration Act., pursuant to the attachment order dated 24.07.2018 in I.A No.1285/2018 on the file of the Court of the Senior Civil Judge, Ramachandrapuram, East Godavari., and refusing to register the Certificate of Sale dated 17.04.2019. 3. The learned counsel for the petitioner made submissions inter alia to the effect that before merger of Syndicate Bank with the petitioner-Bank, one Mr. Valluri Veera Venkata Ramachandra Murthy and his wife Smt. Valluri Durga Devi obtained housing loan of Rs.28,00,000/- from the Syndicate Bank and one Mr. Gurram Srikar stood as guarantor. She submits that on execution of housing loan agreement dated 21.03.2016 by the said borrowers and the guarantor, the loan was released for the purchase of residential flat referred to above, the borrowers deposited the original registered Sale Deed dated 21.03.2016 in respect of the said flat with the Bank creating a mortgage by Deposit of Title Deed and the same was registered on 30.03.2016 vide document No.1038 of 2016. Subsequently, the borrowers committed default and as such their loan was classified as Non-Performing Asset on 30.06.2018. 4. The learned counsel submits that thereafter, the petitioner-Bank through its authorized officer invoked the provisions of the SARFAESI Act., and called upon the borrowers to pay the amount due in respect of the housing loan account and as they failed to pay the same within the stipulated time, the Bank issued Sale Notice under Rule 8(6) of the Rules made under the Act., to the borrowers and the guarantor and conducted E-Auction after issuing notice in the newspapers. She submits that one Mr. Valluri Narayana Chowdary became successful bidder for Rs.36,10,000/- and on payment of the said amount, the Bank issued Certificate of Sale dated 17.04.2019. She submits that one Mr. Valluri Narayana Chowdary became successful bidder for Rs.36,10,000/- and on payment of the said amount, the Bank issued Certificate of Sale dated 17.04.2019. She submits that the said document was submitted for registration, but the registration authorities have refused to register the document on the premise that an order of injunction is subsisting in I.A No.1285 of 2019 in O.S No.233 of 2018 on the file of the Court of the Senior Civil Judge, Ramachandrapuram, East Godavari. The learned counsel submits that on enquiries by the Bank, it came to light that the 6th respondent herein filed the said suit against the borrower of the Bank i.e., Mr. Valluri Veera Venkata Ramachandra Murthy and obtained an order of attachment dated 24.07.2018. The learned counsel submits that item No.2 of the plaint schedule property in O.S No.233 of 2018 is the property mortgaged to the Bank under the registered Memorandum of Deposit of Title Deed dated 30.03.2016 vide document No.1038/2016 referred to above. 5. The learned counsel while placing reliance on the judgment of the erstwhile Common High Court in City Union Bank Limited v. The Sub-Registrar, Peddapalli, 2018 SCC OnLine Hyd 370 = (2018) 5 ALT 279 (DB) and other decisions, submits that the inclusion of the subject matter Flat in the prohibited properties under Section 22-A of the Registration Act., is unsustainable. 6. A counter-affidavit was filed on behalf of the 5th respondent, wherein it is inter alia stated that the Sub- Registrar, Mandapeta has rejected the registration of Sale Certificate stating that “Court order/attachment order on the property” on 27.04.2019 and after that the 5th respondent refused the document on 23.10.2019 by furnishing the refusal orders and informed that the appeal against the refusal order lies to the District Registrar, Rajahmundry within thirty days from the date of refusal order. Later, the petitioner preferred an appeal which has also been rejected by the District Registrar, Rajahmundry. 7. This Court has considered the submissions made and perused the material on record. 8. Before dealing with the contentions on both sides, it may be appropriate to refer to the following important dates, which have a bearing on the relief sought for in the Writ Petition. 9. 7. This Court has considered the submissions made and perused the material on record. 8. Before dealing with the contentions on both sides, it may be appropriate to refer to the following important dates, which have a bearing on the relief sought for in the Writ Petition. 9. The subject matter Flat was mortgaged to the petitioner- Bank on 30.03.2016 and the order of attachment was passed on 24.07.2018 in I.A.No.1285 of 2018 in O.S.No.233 of 2018 on the file of the Court of the Senior Civil Judge, Ramachandrapuram, East Godavari and the said property was placed in the prohibited category list much subsequently. These factual aspects were not controverted specifically in the counter-affidavit filed on behalf of the 5th respondent. Be that as it may. 10. In City Union Bank Limited’s case, on which much reliance was placed, a Division Bench of the erstwhile Common High Court for the State of Telangana and for the State of Andhra Pradesh dealt with similar fact situation as in the present case. 11. The Hon’ble Division Bench by referring to the provisions of the relevant statutes, Standing Order 219 as also the legal precedents, in its detailed order inter alia held that “S.O.219 only pertains to a civil dispute between private parties and it does not include an institutional sale under a statute. Though Section 64 of Civil Procedure Code comes into play only after alienation of the property under attachment against the private persons, the said legal position does not create an embargo upon the Registrar to proceed with the registration of sale certificate under SARFAESI Act as the Bank is not a party to the suit and sale is not being effected by a party to the attachment order.” It was also held that the attachments effected subsequent to the mortgage created in favour of the bank do not affect the rights of the secured creditor over the subject property. 12. While allowing the Writ Petitions, the Hon’ble Division Bench at para No.14, held as follows: “14. The preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property in favour of the auction purchaser and the sale certificate under the SARFAESI Act in such circumstances is free of all encumbrances. 12. While allowing the Writ Petitions, the Hon’ble Division Bench at para No.14, held as follows: “14. The preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property in favour of the auction purchaser and the sale certificate under the SARFAESI Act in such circumstances is free of all encumbrances. The attachments effected subsequent to the mortgage created in favour of the bank do not affect the rights of the secured creditor over the subject property. Such attachments have no impact on the sale conducted under the Act and the same ceases to have any effect or fall to the ground the moment the same is confirmed in favour of the secured creditor Bank and auction purchaser. Otherwise, those attachments would remain as a permanent taboo prejudicially affecting the marketability and title to the property even though they ceased to have any legal efficacy and thereby it becomes necessary to register the sale certificate.” 13. The subject matter property, as noted by this Court, was mortgaged to the petitioner-Bank and registered in the office of the 4th respondent vide Document No.1038/2016 dated 30.03.2016. When such is the undisputed position, the rejection of registration of the Certificate of Sale on the ground that the property is included in list of prohibited properties list by virtue of the Interlocutory Order in the Suit cannot be appreciated. This Court is of the considered opinion that the reasoning of the Hon’ble Division Bench in City Union Bank Limited’s case (referred to supra) at Para 14 of the Order applies to the present case. 14. The inclusion of the property which was mortgaged by Deposit of Title Deeds through registered document to the Bank in the prohibited category reflects non-application of mind, vitiates the effect of registration and as such, illegal and has no legal efficacy. 15. For the aforegoing conclusion, the Writ Petition is allowed. The 4th respondent shall receive, register and release the Sale Certificate dated 17.04.2019 presented by the petitioner-Bank in respect of the subject matter Flat without reference to the prohibited category list, if the same is otherwise in compliance with the provisions of Stamps Act & Registration Act. There shall be no order as to costs. As a sequel, all pending applications shall stand closed.