Alwaye Urban Co-Operative Bank Ltd. v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE VIJU ABRAHAM** **THURSDAY, THE 25[TH] DAY OF APRIL 2024 / 5TH VAISAKHA, 1946 WP(C) NO. 25 OF 2024** ## **PETITIONER:** **ALWAYE URBAN CO-OPERATIVE BANK LTD. NO.1623 AGED 42 YEARS** **HEAD OFFICE, MARKET ROAD, ALUVA, REPRESENTED BY ITS GENERAL MANAGER & AUTHORIZED OFFICER, K.R. REBINA, AGED 42 YEARS, W/O SUDHEESH M.N., PIN - 683101** **BY ADV R.LEELA** ## **RESPONDENTS:** |**1**|**STATE OF KERALA**| |---|---| ||**REP. BY SECRETARY TO GOVERNMENT, REGISTRATION**| ||**DEPARTMENT, SECRETARIAT, TRIVANDRUM, PIN - 695001**| |**2**|**THE DISTRICT REGISTRAR**| ||**CIVIL STATION, KAKKANAD, ERNAKULAM., PIN - 682030**| |**3**|**THE SUB REGISTRAR**| ||**SUB REGISTRAR'S OFFICE, CHENGAMANAD, ALUVA, PIN -**| ||**683578**| |**4**|**SONY DEVASSY**| ||**AGED 43 YEARS**| ||**W/O KUNJUMON @ DEVASSY K. VARGHESE, KARUMATHI**| ||**HOUSE, CHOWARA P.O., ALUVA., PIN - 683571**| |**5**|**KUNJUMON @ DEVASSY K. VARGHESE**| ||**AGED 52 YEARS**| ||**S/O VARGHESE, KARUMATHI HOUSE, CHOWARA P.O.,**| ||**ALUVA., PIN - 683571**| |**6**|**PRINCE K. DEVASSY**| ||**AGED 21 YEARS**| ||**S/O KUNJUMON @ DEVASSY K. VARGHESE, KARUMATHI**| ||**HOUSE, CHOWARA P.O., ALUVA., PIN - 683571**| |**7**|**THE BRANCH MANAGER**| ||**KASAL INDIA PVT. LTD., CHOONDI BRANCH, ALUVA, PIN**| ||**- 683105**| W.P.(C). No.25 of 2024 : 2 : ## **8 THE BRANCH MANAGER** **(* CORRECTED DECCAN KURIES LOANS PVT. LTD, II/726, NEAR MALA POLICE STATION, II, MALA, THRISSUR, PIN - 680302)** ***DECCANBHAGYA NIDHI LTD. ROOM NO.15/721-6,** **DECCAN CENTRE, MALA P.O., MALA, THRISSUR -680732. [ADDRESS OF 8TH RESPONDENT IS CORRECTED AS PER ORDER DATED 19.01.2024 IN I.A.1/2024 IN WP(C)]. BY ADVS. P CHANDRASEKHAR P.JINISH PAUL ANOOP KRISHNA(k/001468/2018) C.RAMAN(K/1133/1995) ANAND SANKAR(K/000657/2018) REGIMOL M.K.(K/213/2018) JENNY THANKAM(J-541) SNEHA V.** **GP – DEEPA.V.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 25.04.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** : 3 : W.P.(C). No.25 of 2024 ## **VIJU ABRAHAM, J.** - - - - - - - - - - - - - - - - - - - - - - - - - - ## **W.P.(C) No.25 of 2024** - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 25[th] day of April, 2024 ## **JUDGMENT** The above writ petition is filed seeking the following reliefs: i . Issue a writ of mandamus or any other writ, order or direction to the 3[rd] respondent to register the sale certificate as well as the document in favour of the auction purchaser; ii. Issue a writ of mandamus or any other writ, order or direction to the 3[rd] respondent to delete the three prohibitory orders-one order of attachment passed by the Munsiff Court dated 04.01.2020, Aluva in O.S.No.3/2020 in favour of the 7[th] respondent, second entry of attachment passed by the Munsiff Court, Chalakudy in O.S.No.147/2020 dated 21.05.2020, and the third entry of attachment passed by the Munsiff Court, Chalakuddy in O.S.No.181/2020 dated 17.06.2020 from the Revenue/encumbrance certificate over the property in Sy.No.387/10 (Re.Sy.No.125/11) having extent of 6.45 Ares in Block No.8 of Chengamanad Village. iii. Issue a writ of mandamus or any other writ, order or directing the 3[rd] respondent to expedite the issuance of new encumbrance certificate after deleting the aforesaid entries in favour of the auction purchaser and iv. Issue any other writ, Order or direction, as this Hon'ble Court deems fit and proper while considering this writ petition. W.P.(C). No.25 of 2024 : 4 : It is averred that the petitioner is an Urban Co-operative bank and respondents 4 and 5 along with the 6[th] respondent have availed loan by mortgaging the property of respondents 4 and 5 on 26.03.2019. There was default in repayment of the loan and thereupon SARFAESI proceedings were initiated. Ultimately, the property was put to sale and the same was confirmed in the name of the auction purchaser on 28.11.2023 and Ext.P3 sale certificate was issued. Thereafter the petitioner approached the 3[rd] respondent for registering the documents on the basis of the sale certificate, the 3[rd] respondent refused to register, stating that there were attachments from the Munsiff Court, Aluva as well as from the Munsiff Court, Chalakkudy and Ext.P4 communication was issued in this regard. The petitioner submits that a perusal of Ext.P5 encumbrance certificate would reveal that there are attachments from the Munsiff Courts Aluva and Chalakkudy at the instance of respondents 7 and 8. The petitioner would further submit on the basis of Ext.P5 encumbrance certificate that the attachment at the instance of the 7[th] respondent was on 04.01.2020 by the Munsiff Court Aluva in I.A.No.1/2020 in O.S.No.3/2020 and the attachment at the instance of the 8[th] respondent was on 21.05.2020 by the Munsiff Court, Chalakkudy, in O.S. No.147/2020 W.P.(C). No.25 of 2024 : 5 : and on 17.06.2020 in O.S. No.181/2020. On the basis of the same the petitioner would contend that since the mortgage was on 26.03.2019 any attachment subsequent to the same as seen reflected in Ext.P5 encumbrance certificate will not affect the proceedings initiated under the SARFAESI Act. 2. A counter affidavit has been filed by respondents 4 to 6 stating that fraud has been played by the petitioner bank by forging their signature and by creating fraudulent documents and on that a crime has been registered as per F.I.R. No.373 of 2023 of Chengamanad Police Station. 3. Though notice was issued to the 7[th] respondent, there is no appearance on behalf of the said respondent. The 8[th] respondent has filed a counter affidavit mainly stating that they have granted loan after due verification regarding any prior encumbrance created over the said property and further that the fraud has been alleged against the officials of the petitioner and an FIR has already been registered and until such investigation is completed in a proper manner, the registration of the sale certificate as prayed for may not be granted. It is also stated that the mortgage has not been uploaded in the Gahan portal by the petitioner. 4. This Court is only considering as to whether the W.P.(C). No.25 of 2024 : 6 : attachments subsequent to the mortgage created in favour of the bank would affect the sale conducted as per the SARFAESI Act. The contention raised by respondents 4 to 6 cannot be accepted at this stage since there in no averment in the counter affidavit as to whether the SARFAESI proceedings and the sale conducted has been challenged by them in any proceedings. 5. Heard the learned counsel for the petitioner and the learned counsel for the respondents and the learned Government Pleader. 6. The learned counsel for the petitioner relied on the decision of this Court in _**Madhan S. v. Sub Registrar, Kollam and Others [2014 (1) KHC 249]**_ and the decision of a Division Bench of this Court in _**Secretary, Keechery Service Cooperative Bank Ltd. v. Sajitha Nizar alias Sajitha P.M. and Others, [2020 (5) KHC 231]**_ and contends that the attachment effected subsequent to the creation of equitable mortgage will not affect the right of the Bank to sell the mortgaged property and the attachment has to be effaced from the encumbrance register. 7. In _**Madhan**_ 's case (supra), this Court held in paragraph 9 as follows:- _“9. The preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property_ : 7 : W.P.(C). No.25 of 2024 _in favour of the petitioner under Ext. P1 sale certificate under the Act is free of all encumbrances. The attachments effected subsequent to the mortgage created in favour of the bank do not affect the title and ownership of the petitioner 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 sale is confirmed in favour of the petitioner. The declaration so sought by the petitioner is therefore granted and I further direct the Sub Registrar and the Village Officer to efface the attachments effected subsequent to the mortgage from the relevant records. 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. The needful in relation to the property bought by the petitioner shall be done within a period of two months from the date of receipt of a copy of this judgment.”_ 8. A Division Bench of this Court in _**Ali Asharaf M.M. and Another v. Sub Registrar, Thrissur**_ (Judgment dated 24.7.2015 in W.A. No.612 of 2015) has affirmed the law laid down in _**Madhan**_ 's case. In _**Keechery Service Co-operative Bank**_ ’s case (supra), another Division Bench of this Court also affirmed the law laid down in _**Madhan**_ 's case (supra) and held in paragraph 7 as under:- _“7.In the light of the aforesaid declaration of law by this Court the order of dismissal of the petition filed for lifting the attachment ordered under Ext R7 (a) viz., Ext R7 (b) by the Federal Bank would pale into insignificance. We do not find any reason to disagree with the declaration of law in_ : 8 : W.P.(C). No.25 of 2024 _Madhan's case (supra) which was virtually affirmed by the Division Bench in Ali Asharaf's case (supra). In the said circumstances and taking note of the fact that the orders of attachment of the property in question were after the creation of equitable mortgage of the same with Federal Bank we do not find any reason to interfere with the impugned judgment passed by the learned Single Judge following the dictum in Madhan's case (supra), carrying the directions to effect mutation of the property as also to efface all encumbrance over the property effected after 27/06/2014, the date on which the property in question was mortgaged with Federal Bank”._ Thus it is trite law that attachment effected subsequent to the creation of equitable mortgage does not have any effect on the sale conducted by the Bank under the SARFAESI Act and has to be effaced from the encumbrance register. It is evident from the documents produced in the writ petition that Ext.P5 attachment effected is subsequent to the creation of equitable mortgage by the borrowers in favour of the petitioner. 9. This Court in _**Phoenix ARC Pvt. Ltd. v. Sub Registrar, Feroke [2023 KHC Online 9452]**_ while considering an identical issue referring to Section 89(5) of the Registration Act, 1908 has held that since the attachment subsequent to creation of equitable mortgage has lost its efficacy and has to be obliterated from the records, the same can be done by the Sub Registrar by filing the W.P.(C). No.25 of 2024 : 9 : certified copy of the order/judgment of this Court in Book No.1 maintained by the Sub Registrar. 10. Accordingly, there will be a direction to the 3[rd] respondent to efface the attachment obtained by respondents 7 and 8 noted in Ext.P5 encumbrance certificate from Book No.1 by filing the certified copy of this judgment in the said book and register Ext.P3 sale certificate if the same is otherwise in order. The writ petition is disposed of as above. Sd/- **VIJU ABRAHAM JUDGE** sm/ : 10 : W.P.(C). No.25 of 2024 ## **APPENDIX OF WP(C) 25/2024** **PETITIONER EXHIBITS Exhibit P1** **Exhibit P2** **THE TRUE COPY OF THE SALE NOTICE ISSUED BY THE PETITIONER DATED 16.08.2023** **THE TRUE COPY OF THE SECOND SALE NOTICE ISSUED BY THE PETITIONER DATED 07.11.2023** **Exhibit P3 THE TRUE COPY OF THE SALE CERTIFICATE ISSUED BY THE PETITIONER DATED 14.12.2023** **Exhibit P4 THE TRUE COPY OF THE REJECTION ORDER ISSUED BY THE CHENGAMANAD SUB REGISTRAR DATED 18.12.2023** **Exhibit P5 THE TRUE COPY OF THE CERTIFICATE OF ENCUMBRANCE ISSUED BY THE 3RD RESPONDENT DATED 18.09.2023** **Exhibit P6 THE TRUE COPY OF THE LOAN AGREEMENT DATED 26.3.2019 EXECUTED BY THE 4TH & 5TH RESPONDENTS IN FAVOUR OF THE 1ST RESPONDENT BANK.** **RESPONDENT EXHIBITS Exhibit R4(a) TRUE COPY OF THE SMS DATED NIL RECEIVED FROM UNITED INDIA INSURANCE COMPANY BY THE 5[TH] RESPONDENT.** **Exhibit R4(b) TRUE COPY OF THE FIR NO. 0373 OF 2023 DATED 17.08.2023 ON THE FILE OF THE CHENNGAMANAD POLICE STATION** **Exhibit R8(a) TRUE COPY OF ENCUMBRANCE CERTIFICATE DATED 16-05-2022 ISSUED BY THE SUB REGISTRAR CHENGAMANAD SRO**