Axis Bank Limited v. Sub Registrar Nellayi & Others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **MONDAY, THE 29[TH] DAY OF JULY 2024 / 7TH SRAVANA, 1946** **WP(C) NO. 14311 OF 2024** ## **PETITIONER:** **AXIS BANK LIMITED A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT "TRISHUL", 3RD FLOOR, OPPOSITE SAMARTHESHWAR TEMPLE, ELLIS BRIDGE, AHMEDABAD - 380 006 AND HAVING ITS BRANCH OFFICE AT AGRI BUSINESS CENTRE, AXIS BANK LTD, 1ST FLOOR, PUKALAKKAT CITY CENTRE, PALARIVATTOM, COCHIN-682025 IS REPRESENTED BY RAHUL MATHEW, AUTHORISED OFFICER & MANAGER, 5TH FLOOR, RAC, CHICAGO PLAZA, RAJAJI ROAD, KOCHI, KERALA, PIN – 682035** **BY ADVS. P.PAULOCHAN ANTONY SREEJITH K.** ## **RESPONDENTS:** - **1 THE SUB REGISTRAR NELLAYI SUB REGISTRAR OFFICE NELLAYI, THRISSUR, KERALA, PIN - 680305** - **2 THE VILLAGE OFFICER AMBALLUR VILLAGE OFFICE, AMBALLUR PALAPPILLY ROAD, ALAGAPPANAGAR, KANJOOR AMBALLUR, KERALA, PIN - 680302** - **3 TAHSILDAR MUKUNDAPURAM TALUK OFFICE, CHEMMANDA RD, IRINJALAKUDA NORTH, PIN - 680125** - **4 SIYAD CHERIKANDATHIL HOUSE KEECHERIPADI, VELOORKUNNAM, MUVATTUPUZHA, PIN - 686673** W.P.(C) No.14311/2024 : 2 : - **5 GOPI P. K, PANIKAVEETTIL HOUSE, CHITTISSERY. P.O., NENMAKERA THRISSUR, PIN – 680301** - **6 SUJITHA. K.C PANIKAVEETTIL HOUSE CHITTISSERY. P.O. NENMAKERA, THRISSUR, PIN – 680301** **BY ADV SRI.AJEESH M UMMER SRI.BINOY DAVIS, GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29.07.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.14311/2024 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.14311 of 2024 ````````````````````````````````````````````````````````````` _Dated this the 29[th] day of July, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner seeks to declare that attachment made after mortgage has no existence in the eye of law and seeks to direct the 1[st] respondent to efface the attachment effected after mortgage and to register Ext.P5 Sale Certificate. 2. The petitioner is Axis Bank Limited. One Jeneesh G.J. and Jency availed a loan from the petitioner-Bank for an amount of ₹32 lakhs in the year 2017. They mortgaged a property having an extent of 3.10 Ares along with a building situated in Alagappanagar Panchayat of Thrissur District. W.P.(C) No.14311/2024 : 4 : The loan repayment was defaulted. The petitioner initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Physical possession of the mortgaged property was taken over invoking Section 14 of the Act, 2002, on 06.03.2020. 3. When the Bank obtained Encumbrance Certificate for the purpose of putting the property for sale, the petitioner noted that there is an attachment made at the instance of the 4[th] respondent. The mortgaged property was put to sale. Finally, respondents 5 and 6 purchased the property in auction, for an amount of ₹21,50,000/-. The 5[th] respondent remitted the entire sale consideration. However, when the petitioner approached the 1[st] respondent to register the Sale Certificate, the 1[st] respondent refused to do so on the ground that there is an attachment effected over the property. 4. The petitioner states that the Hon’ble Apex Court has held in various judgments that right of redemption of a secured asset stands extinguished on and from the very date W.P.(C) No.14311/2024 : 5 : of publication of public auction notice for sale of the secured asset. A Division Bench of this Court has held that the sale carried out either under the SARFAESI Act or under the RDB Act takes precedence over the statutory charges. This Court has also held that attachments effected subsequent to the mortgage created in favour of the Bank do not affect the title and ownership of the auction purchaser. Therefore, the 1[st] respondent is compellable to register Ext.P5 Sale Certificate. 5. I have heard the learned counsel for the petitioner and the learned Government Pleader representing respondents 1 to 3. I have also heard the learned counsel for the 4[th] respondent. 6. The property of Jeneesh G.J. and Jency was mortgaged to the 1[st] respondent-Bank on 16.08.2017 as can be seen from Ext.P1. The property, which was given as security to the petitioner-Bank, was taken possession of by the petitioner invoking the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, on 06.03.2020. Ext.P3 W.P.(C) No.14311/2024 : 6 : Encumbrance Certificate would indicate that there is an attachment of property. The said attachment was subsequent to the mortgage of the property. 7. In _**Madhan S. v. Sub Registrar** [2014 (1) KLT 406],_ question that came up for consideration before this Court was whether the attachments effected subsequent to the creation of equitable mortgage will be effaced after the property is purchased by another in a sale conducted by the Recovery Officer of the Debt Recovery Tribunal. This Court held that preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property in favour of the petitioner under Sale Certificate 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 by the Recovery Officer and the attachment ceases to have any effect or fall to the ground the moment the sale is confirmed in favour of the petitioner. Therefore, this Court directed the W.P.(C) No.14311/2024 : 7 : Sub-Registrar and the Village Officer to efface the attachments effected subsequent to the mortgage from the relevant records. 8. In _**Keechery Service Co-operative Bank Ltd. v. Sajitha Nizar** [2020 (5) KHC 231],_ a Division Bench of this Court agreed with the declaration of law in _**Madhan S.**_ (supra). Paragraphs 6 and 7 of that judgment read thus: “6. The issue was again considered by a Division Bench of this Court in an unreported decision in Ali Asharaf M.M. & another v. Sub Registrar, Thrissur [W.A.No.612 of 2015]. That was a case where the appellants/writ petitioners purchased property in question in an auction proceedings conducted under the SARFAESI Act. The appellants- petitioners were constrained to approach this Court by filing W.P.(C)No.23435 of 2014, from which the said appeal arose, on account of refusal on the part of the Village Officer to effect mutation of the property purchased by them in the auction under the SARFAESI Act. The reason for not effecting mutation was an order of attachment effected by Munsiff Court, Thrissur in respect of the same property. The learned Single Judge as per judgment dated 13.10.2014 in W.P. (C) No.23435/2014 directed the writ petitioners to approach Munsiff Court, Thrissur for vacating the order of attachment in respect of the property purchased by them in the auction sale conducted under the SARFAESI Act. The Division Bench took note of the indisputable and undisputed fact that the attachment of the property involved therein was subsequent to the date of mortgage of the said property with the Bank whose Authorised Officer conducted the auction proceedings under the W.P.(C) No.14311/2024 : 8 : SARFAESI Act. In the said circumstances, the Division Bench, in full agreement with the dictum laid down in _**Madhan**_ 's case (supra), declared that the attachments effected by the Munsiff Court, Thrissur after the date of mortgage are invalid and consequently, directed the Sub Registrar and the Village Officer, concerned to efface the attachments effected after 8.7.2008 that is, the date on which the mortgage of the property was created with the Bank. 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 _**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 27.6.2014, the date on which the property in question was mortgaged with Federal Bank.” (underline supplied) 9. In view of the facts of the case and in view of the law laid down by the Hon’ble Apex Court and this Court, it is declared that the attachment made after Ext.P1 mortgage has no existence after the issuance of Ext.P4 sale notification. The 1[st] respondent is directed to efface the W.P.(C) No.14311/2024 : 9 : attachment made/effected after the mortgage and register Ext.P5 Sale Certificate. This shall be done within a period of one month. Writ petition is disposed of as above. Sd/- **N. NAGARESH, JUDGE** aks/26.07.2024 W.P.(C) No.14311/2024 : 10 : ## **APPENDIX OF WP(C) 14311/2024** **PETITIONER'S EXHIBITS** **Exhibit P1 TRUE COPY OF DECLARATION CUM CONFIRMATION DATED 16-08-2017 Exhibit P2 TRUE COPY OF THE ORDER DATED 01.06.2019 IN CRL.M.P.NO :3156/2019 Exhibit P3 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE DATED 04-12-2021 Exhibit P4 TRUE COPY OF PAPER PUBLICATION OF SALE NOTICE DATED 09-06-2023 PUBLISHED IN "THE INDIAN EXPRESS" Exhibit P5 TRUE COPY OF THE SALE CERTIFICATE DATED 04-03-2024**