Research › Search › Judgment

Telangana High Court · body

2025 DIGILAW 1599 (TS)

Hinduja Leyland Finance Ltd v. State of Telangana

2025-11-21

K.SARATH

body2025
ORDER : 1. Heard Sri T. Sasi Kumar, learned counsel for the petitioner, Smt. S. Sravanthi, learned Assistant Government Pleader for Stamps and Registration, appearing for the respondent Nos.1 to 4, and Sri P. Durga Prasad, learned Standing Counsel appearing for the respondent No.5 and perused the material available on record. 2. This writ petition is filed seeking for a direction to the respondent No.4/Sub-Registrar, Marredpally, Secunderabad, to delete the property viz., H.No.12-15-978 & 12-15-978/A, consisting of G+2 floors in Sy. No.169, admeasuring 150 sq yds., situated at Manikeshwari Nagar, Secunderabad, Hyderabad District (hereinafter referred to as ‘subject property”) from the list of prohibited properties and to register the Sale Certificate issued by the petitioner company in favour of the respondent No.6, the Sale Auction Purchaser, under Rule 9 (6) of the Security Interest (Enforcement) Rules, 2002. 3. The learned counsel for the petitioner submits that originally, the subject property was purchased by one M/s.GVS Patanjali Ayurvedic by obtaining loan facility, with co-borrowers viz., Mrs. Gaddamedhi Vijaya Lakshmi and Mr. Sathyanarayana Gaddamedhi and Mr. Pradeep Gaddamedhi. Later, the said borrowers defaulted in repayment of the said loan. The petitioner company, after following the due process of law, initiated proceedings under the provisions of Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’), took over the possession of the property and later the petitioner-company brought the mortgaged property for auction which was conducted on 25-09-2023. In the said auction, the respondent No.6 has stood as the highest bidder. Accordingly, the petitioner-company has issued Sale Certificate in his favour on 25-09-2023. Thereafter, the petitioner company has submitted the Sale Certificate to the respondent No.4 for registration on 19-12-2023. However, the respondent No.4 has rejected the registration of the Sale Certificate vide his letter dated 19-12-2023 stating that unless and until the attachment order passed by the Deputy Registrar of Chits, Vijayawada is raised and the subject property is removed from the prohibition list, the Certificate of Sale cannot be admitted for Registration and he also informed that the subject property is under attachment in pursuance of the orders dated 27-09-2019 in I.A.No.190 of 2019 in ACP No.195 of 2019, passed by the Deputy Registrar of Chits/Arbitrator at Vijayawada, Krishna District, A.P. under Section 68 (2) of the CHIT FUNDS ACT , 1982 (for brevity ‘the Act, 1982’). 4. 4. The learned Counsel for the petitioner would further submit that the petitioner-company is a secured creditor having first charge over the subject property on 05-09-2018 which is much prior to the attachment orders dated 27-09-2019 and therefore as per Section 68 of the Act, 1982, the attachment order is not binding on the petitioner company and therefore it will not affect the rights of the secured creditor over the subject property, and further, such attachments have no impact on the sale that would be conducted under the Act. In spite of receiving the letter from the petitioner-company, the respondent No.4 did not choose to give reply nor registered the sale certificate and on the other hand insisting the petitioner-company to get the order from the Court for registration. The petitioner-company is not a party to the proceedings in I.A.No.190 of 2019 in ACP No.195 of 2019, initiated by the respondent No.5- M/s. Margadarshi Chit Fund Pvt Ltd., Vijayawada, and therefore the said attachment is not binding on the petitioner-company. 5. The learned counsel for the petitioner-company further submits that the respondent No.4 despite receipt of the letter from the petitioner- company, refused to remove the subject property from the list of prohibited properties. 6. Learned counsel for the petitioner-company further submits that the action of respondent No.4 in not removing the subject property from the prohibited list is contrary to the Orders passed by this Court in City Union Bank Limited Vs. Sub Registrar, Peddapalli and Others , 2018 (5) ALT 279 followed by another Division Bench of this Court in W.P.No.38125 of 2018 dated 14.10.2019 and requested to direct the respondent No.4 to register the Sale Certificate issued by the petitioner company in favour of the respondent No.6. 7. On the other hand, learned Assistant Government Pleader for Stamps and Registration submits that as per the order dated 27-09-2019 in I.A.No.190 of 2019 in ACP No.195 of 2019, the 4 th respondent has entered the subject property in prohibitory list and in view of the provisions of the Registration Act, 1908, the respondent No.4 is not empowered to delete the subject property from the prohibitory list and requested to dismiss the Writ Petition. 8. 8. Learned counsel for the respondent No.5 has not disputed the orders passed by this Court in City Union Bank Limited (supra 1), but requested to direct the petitioner-company, to pay the surplus money, if any remains out of the auction sale proceeds, after adjustment of the entire loan amount, to the respondent No.5 and he relied on the unreported judgment passed by a Division Bench of this Court in the Union Bank of India v. State of Telangana and others , W.P. No. 22518 of 2024 dated 12.12.2024 . 9. After hearing both sides and perusing the material available on record, this Court is of the considered view that there is no dispute with regard to the mortgage of the subject property by the borrower with the petitioner-company and also the proceedings initiated by the petitioner-company as per SARFAESI Act against the borrower referred to above. The said borrower has availed loan by mortgaging the subject property with the petitioner- company. The petitioner-company by following the procedure as contemplated under SARFAESI Act taken over possession of the subject property and issued Sale Certificate in favour of the respondent No.6. Now, the respondent No.4 has refused to remove the subject property from the prohibited list and register the Sale Certificate on the ground that there is attachment order in respect of the subject property by stating that unless and until the said attachment order is vacated, it cannot be possible to register the Sale Certificate. The said contention of the respondent No.4 is contrary to the Orders passed by this Court in City Union Bank Limited (supra 1). 10. The relevant portion of the Judgment in City Union Bank Limited (supra 1) is as follows: “8. It is needless to observe that the civil Court has no jurisdiction to deal with subject matters pertaining to the SARFAESI Act. In the present scenario, the secured creditor was not a party to the civil suits before the Courts below and thus the orders of attachment before judgment are not binding on the secured creditor/Bank. More so, the cause of action before the Courts below is not within the ambit of SARFAESI Act. 9..................... 10. In the present scenario, the secured creditor was not a party to the civil suits before the Courts below and thus the orders of attachment before judgment are not binding on the secured creditor/Bank. More so, the cause of action before the Courts below is not within the ambit of SARFAESI Act. 9..................... 10. Upon fair reading of S.O. 219 in the light of Section 64 of CPC, this Court is of the view that it only pertains to a civil dispute between the private parties and it does not include an institutional sale under a statute. Though Section 64 comes into play only after the alienation of the property under attachment amongst the private persons, the said legal position does not create an embargo upon the Registrar to proceed with the registration of sale certificates under the SARFAESI Act as the bank is not a party to the suit and the sale is not being effected by a party to the attachment order. 11................ 12. In similar circumstances, the Kerala High Court in The South Indian Bank Ltd. v. The Sub Registrar (3) WP (C) No. 3875 of 2017 dated 24.11.2016, considered the question whether a sale certificate is liable to be registered or not in view of the order of attachment before judgment passed by the civil Court and held that the secured creditor is entitled to proceed with the registration and the Registration Authority cannot stall the process of registration under the garb of an order of attachment passed by the civil Court.” 11. The above said finding of the Division Bench of this Court would squarely apply to the instant case and the Registration Authority cannot stall the process of registration of the Sale Certificate on the ground of attachment order. 12. The relevant portion in para Nos.3 and 4 of the order relied on by the learned counsel for the respondent No.5 in the Union Bank of India (supra 2) is extracted as under: “3. Learned counsel for the parties jointly submit that the controversy involved in the instant petition is squarely covered by an order dated 19.12.2018 passed in W.P.No.44014 of 2018. 4. Relevant extract of the order dated 19.12.2018 passed in W.P.No.44014 of 2018 reads as under: “Therefore, the writ petition is disposed of directing the Sub-Registrar to register the sale certificate. Learned counsel for the parties jointly submit that the controversy involved in the instant petition is squarely covered by an order dated 19.12.2018 passed in W.P.No.44014 of 2018. 4. Relevant extract of the order dated 19.12.2018 passed in W.P.No.44014 of 2018 reads as under: “Therefore, the writ petition is disposed of directing the Sub-Registrar to register the sale certificate. However, if after adjustment of the entire loan amount, any surplus money remains out of the auction sale proceeds, the Bank shall not pay it to the 7th respondent borrower but shall pay it to the 5th respondent-company, after notice to the 7th respondent. There will be no order as to costs.” 13. In the instant case also, the petitioner-company followed SARFAESI Act in respect of the subject property and the Sale Certificate was issued in favour of the respondent No.6. In view of the settled law, the respondent authorities have no power to refuse the registration of the Sale Certificate under SARFAESI Act on the ground of attachment orders obtained from the Civil Court or any other authorities for the same property. In view of the same, the Registering Authority has to delete the subject property from the prohibitory list for registration of the Sale Certificate issued by the petitioner-company in favour of the respondent No.6 without taking into account the attachment order dated 27-09-2019 in I.A.No.190 of 2019 in ACP No.195 of 2019. 14. In view of the above findings, the Writ Petition is disposed of directing the Respondent No.4/the Sub Registrar, Registration & Stamps, Office of the Sub-Registrar, Marredpally, Secunderabad, to remove the subject property from the prohibited list, and register the Sale Certificate issued by the petitioner-company in favour of the respondent No.6, without reference to the Attachment Order dated 27-09-2019 in I.A.No.190 of 2019 in ACP No.195 of 2019 passed by the Deputy Registrar of Chits/Arbitrator, Vijayawada. However, if after adjustment of the entire loan amount, any surplus money remains out of the auction sale proceeds, the petitioner-company shall not pay it to the borrower, but shall pay it to the respondent No.5, after giving notice to the principal borrower. 15. Accordingly, the Writ Petition is disposed of. There shall be no order as to costs. 16. Miscellaneous petitions pending, if any, shall also stand closed.