City Union Bank Kozhikode Branch v. Sub Registrar Kozhikode and Others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **WEDNESDAY, THE 31[ST] DAY OF JULY 2024 / 9TH SRAVANA, 1946** **WP(C) NO. 15927 OF 2024** ## **PETITIONER:** **CITY UNION BANK KOZHIKODE BRANCH THARIF ARCADE BUILDING NO.17/1004 B6, GROUND FLOOR, PUTHIYARA, KOZHIKODE DISTRICT REPRESENTED BY ITS BRANCH MANAGER, PIN – 673004** **BY ADVS. SMT.S. LAKSHMY SMT.S. AMINA SMT.MERIN MONACHAN** ## **RESPONDENTS:** - **1 THE SUB REGISTRAR KOZHIKODE, OFFICE OF THE SUB REGISTRAR, KOZHIKODE, KOZHIKODE DISTRICT, PIN - 673001** - **2 THE VILLAGE OFFICER, KATCHERI VILLAGE, KATCHERI, KOZHIKODE DISTRICT, PIN - 673005** - **3 M/S.MSN TRADERS, 1/537 G, EXHIBITION ROAD, WEST HILL, KOZHIKODE REPRESENTED BY ITS PROPRIETOR, PIN - 673005** - **4 M/S. GRAND CHEF INDIAN FOODS PVT LTD 4/1, 3RD FLOOR, DEVAIAH COURT, 22ND CROSS, 3RD BLOCK, JAYANAGAR, BANGALORE (REPRESENTED BY MANAGING DIRECTOR), PIN - 560011** - **5 M/S.LAKSHMI MILLS, NO. 1/537 F,EXHIBITION ROAD, WEST HILL, CALICUT REPRESENT BY PROPRITER, PIN - 673005** W.P.(C) No.15927/2024 : 2 : - **6 MRS.A VIJAYALAKSHMI W/O. G ASHOK, LEO PARADISE, FLAT NO. 1 C, PT USHA ROAD, CALICUTMETRO ZONE, FLAT NO.L90, OFF JAWAHARLAL NEHRU ROAD, NO.44, PILLAYAR KOIL STREET, ANNA NAGAR, CHENNAI, PIN - 673032** **7 MR.G ASHOK S/O. MR.GOPALAKRISHNAN, LEO PARADISE, FLAT NO 1C, PT USHA ROAD, CALICUT-METRO ZONE, FLAT NO. L90, OFF JAWAHARLAL NEHRU ROAD, NO.44, PILLAYAR KOIL STREET, ANNA NAGAR, CHENNAI, PIN - 673032 8 MR.A SIDHARTH S/O. MR.G ASHO LEO PARADISE, FLAT NO 1C, PT USHA ROAD, CALICUT - 673032. 9 MR.FYSAL V.P., S/O.MOIDEEN V.P., RESIDING AT VPM HOUSE, ARAKINAL P.O., PIN-673028.** - **** 9 MR. JAMAL MUHAMMED V.K. S/O. AHMMADKUTTY HAJI, PROPRIETOR JAMMAL TRADING COMPANY GENERAL MERCHANTS, 9/374, 1ST FLOOR, K.K.ROAD, CALICUT, PIN-676001** ****(SERIAL NUMBER OF THE RESPONDENT IS CORRECTED AS RESPONDENT NO.10, AS PER ORDER DATED 21.05.2024 IN I.A.2/2024 IN WP(C)15927/2024).** **BY ADVS. SRI.R.SUDHISH-R6 AND R7 SMT.M.MANJU(K/003562/1999) SRI.K.P.SUDHEER-R10 SRI.P.ANIRUDHAN SRI.BINOY DAVIS, GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 04.07.2024 AND THE COURT ON 31.07.2024 DELIVERED THE FOLLOWING:** W.P.(C) No.15927/2024 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.15927 of 2024 ````````````````````````````````````````````````````````````` _Dated this the 31[st] day of July, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The City Union Bank is the petitioner. The Bank seeks to declare that it has priority in the matter of recovery of its dues from 3[rd] to 8[th] respondents over attachment/encumbrance reflected in Ext.P15 Encumbrance Certificate, being a secured creditor having its security interest registered with the “Central Registry” as provided in Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The petitioner also seeks to command the 1[st] respondent-Sub Registrar to register Ext.P12 Sale Certificate ignoring/effacing the encumbrance/attachments in favour of W.P.(C) No.15927/2024 : 4 : the 10[th] respondent as reflected in Ext.P15 Encumbrance Certificate. 2. The petitioner states that the petitioner-Bank granted various credit facilities to respondents 3 to 5 during 2014-2017. As a security, respondents 3 to 8 executed security agreements in favour of the petitioner. Respondents 3 to 5 had mortgaged an extent of 1.583/100 undivided share in an extent of 51.21 Cents in Survey No.36/1, Re-survey No.176/35, Re-survey Block No.5, Kasba Village, Kozhikode Taluk, Kozhikode District along with Flat No.1C in the building complex “Leo Paradise”. The period of equitable mortgage was extended from time to time. 3. The petitioner states that the equitable mortgage was created as early as on 12.02.2014. The mortgage was registered with the Central Registry. When the borrower failed to remit the amounts due, the loan accounts were declared as NPA on 28.03.2020. Section 13(2) notice was issued under the SARFAESI Act. Later, the petitioner took possession of the secured asset invoking Section 14. A sale W.P.(C) No.15927/2024 : 5 : notice was published. The property was sold for a sum of ₹45,01,000/- in favour of the 9[th] respondent, on 02.01.2024. 4. A Sale Certificate in favour of the 9[th] respondent has been engrossed in stamp with requisite value. The 1[st] respondent declined to register the Sale Certificate on the ground that the property has been attached on 16.12.2017. The attachment has been obtained by the 10[th] respondent on 16.12.2017 in IA No.3067/2017 in OS No.149/2017 of the Additional Subordinate Judges Court, Kozhikode. 5. The petitioner says that the security interest in respect of the property covered by Ext.P1 deed has been created in favour of the petitioner by the 6[th] and 7[th] respondents as early on 26.03.2013. The purported encumbrance as reflected in Ext.P15 Encumbrance Certificate is on 18.12.2017. The continuance of the attachment is therefore opposed to law. The attachment is therefore liable to be effaced from records and respondents 1 and 2 are compellable to register the Sale Certificate issued by the petitioner, contends the petitioner. W.P.(C) No.15927/2024 : 6 : 6. The petitioner has a superior right under Section 31B of the Recovery of Debts and Bankruptcy Act. The right of the petitioner is clear from the judgments rendered by this Court in _**Madhan S. v. Sub Registrar, Kollam and others** [2014 (1) KHC 249]_ and _**Secretary, Keecheri Service Cooperative Bank Limited v. Sajitha Nizar and others** [2020 (5) KHC 231]._ 7. The 10[th] respondent resisted the writ petition filing counter affidavit. The 10[th] respondent stated that he has filed OS No.149/2017 before the Sub Court, Kozhikode against the 6[th] respondent praying for recovery of money. The Sub Court has ordered an attachment before judgment. The petitioner filed IA No.2378/2018 on 03.12.2018 to get themselves impleaded in the Original Suit alleging that the property was already mortgaged with the petitioner and that the petitioner is having first charge over the property. 8. The Sub Judge dismissed the said application as per order dated 04.01.2019. The 6[th] respondent, who was defendant in the OS, remained ex-parte and an ex-parte W.P.(C) No.15927/2024 : 7 : Decree was passed on 07.01.2019. The defendant then filed IA No.253/2019 to set aside the ex-parte Decree. The Sub Judge set aside the ex-parte Decree and the Original Suit was included in the list for trial. 9. The petitioner again approached the Sub Court filing IA No.1586/2019 in IA No.3607/2017 seeking to declare that the petitioner is having first charge over the attachment schedule / claim petition schedule property; and may lift the attachment already effected over the attachment schedule property. By order dated 01.10.2019, the Sub Court partly allowed the application. Even though the learned Sub Judge declared that the petitioner is having first charge over the property in question, the Court disallowed the request to lift the attachment. Subsequently, the Sub Court decreed the Original Suit as per Ext.R10(d) judgment. 10. The 10[th] respondent also obtained a decree against 8[th] respondent in Commercial Suit No.81/2021. Ext.R10(e) is the judgment dated 29.07.2022 in Commercial Suit No.81/2021. The 10[th] respondent filed EP No.32/2021 W.P.(C) No.15927/2024 : 8 : to execute the judgment. The petitioner filed EA No.427/2021 in EP No.132/2021 in OS No.149/2017. The petitioner has initiated SARFAESI proceedings after the decree passed by the civil court. The writ petition is therefore liable to be dismissed. 11. I have heard the learned Standing Counsel for the petitioner, the learned Government Pleader representing respondents 1 and 2, the learned counsel representing respondents 6 and 7 and the learned counsel representing the 10[th] respondent. 12. From the pleadings, it is evident that the mortgage was created by 6[th] and 7[th] respondents in favour of the petitioner-Bank on 26.03.2013. The mortgage is evidenced by Exts.P2 and P7. The mortgage was registered with the Central Registry during 2013-2014. The sale of the property was effected by the petitioner-Bank on 02.01.2024. The contention of the petitioner is that since the attachment of property by the Sub Court, Kozhikode is only on 18.12.2017, the said attachment has no effect in view of the law laid down W.P.(C) No.15927/2024 : 9 : by this Court in _**Madhan S.**_ (supra). 13. However, it is to be noted that the 10[th] respondent had instituted OS No.149/2017 before the Sub Court, Kozhikode against the 6[th] respondent for recovery of money in the year 2017. The Sub Court, Kozhikode had ordered attachment of the property as per Ext.P15 on 18.12.2017. The petitioner-Bank filed IA No.2378/2018 on 03.12.2018 to get impleaded in the original suit. The said application was dismissed by the Sub Court. 14. The said Suit was decreed ex-parte. Subsequently, the defendant in the Suit filed IA No.253/2019 to set aside the ex-parte Decree. The ex-parte Decree was set aside. The petitioner has filed IA No.1586/2019 in IA No.3067/2017 in OS No.149/2017 seeking to declare that the petitioner is having first charge over the attachment schedule / claim petition schedule property; and may lift the attachment already effected over the attachment schedule property. The Sub court has decreed the Original Suit as per Ext.R10(d) judgment. W.P.(C) No.15927/2024 : 10 : 15. The 10[th] respondent filed Commercial Suit No.81/2021 in the Court of Commercial / Principal Sub Court, Kozhikode. The 10[th] respondent filed EP No.32/2021 to execute the judgment. The petitioner filed EA No.427/2021 in EP No.132/2021 in OS No.149/2017, making a claim. 16. When there are serious disputes regarding the liability in respect of the mortgaged property and civil litigations are pending and when the petitioner has already approached the civil court with its claim, it would be highly inappropriate for this Court to pass an order in order to enable the petitioner to efface the attachments over the property to facilitate an auction sale made by the petitioner. As the petitioner has approached the civil court, the petitioner has to avail the civil remedy. The writ petition is therefore dismissed. Sd/- **N. NAGARESH, JUDGE** aks/29.07.2024 W.P.(C) No.15927/2024 : 11 : ## **APPENDIX OF WP(C) 15927/2024** ## **PETITIONER’S EXHIBITS** **Exhibit P1 TRUE COPY OF DEED NO.255/2009 DATED 08.04.2009, SRO KOZHIKODE IN THE NAME OF THE SIXTH AND SEVENTH RESPONDENTS** - **Exhibit P2 TRUE COPY OF THE MEMORANDUM OF DEPOSIT OF THE TITTLE DEED FOR CREATION OF MORTGAGE BY DEPOSIT OF TITLE DEEDS EXECUTED BY THE SIXTH AND SEVENTH RESPONDENTS WHO ARE THE GUARANTORS TO THE LOAN TRANSACTION, DATED 26.03.2013** - **Exhibit P3 TRUE COPY OF THE EXTENSION OF MORTGAGE BY DEPOSIT OF TITLE DEEDS EXECUTED BY THE SIXTH AND SEVENTH RESPONDENTS WHO ARE THE GUARANTORS TO THE LOAN TRANSACTION, DATED 12.02.2014** **Exhibit P4 RUE COPY OF THE EXTENSION OF MORTGAGE BY DEPOSIT OF TITLE DEEDS EXECUTED BY THE SIXTH AND SEVENTH RESPONDENTS WHO ARE THE GUARANTORS TO THE LOAN TRANSACTION, DATED 09.05.2014** **Exhibit P5 A TRUE COPY OF THE EXTENSION OF MORTGAGE BY DEPOSIT OF TITLE DEEDS EXECUTED BY THE SIXTH AND SEVENTH RESPONDENTS WHO ARE THE GUARANTORS TO THE LOAN TRANSACTION, DATED 24.02.2015 Exhibit P6 A TRUE COPY OF THE EXTENSION OF MORTGAGE BY DEPOSIT OF TITLE DEEDS EXECUTED BY THE SIXTH AND SEVENTH RESPONDENTS WHO ARE THE GUARANTORS TO THE LOAN TRANSACTION, DATED 21.12.2015 Exhibit P7 A TRUE COPY OF THE EXTENSION OF MORTGAGE BY DEPOSIT OF TITLE DEEDS EXECUTED BY THE SIXTH AND SEVENTH RESPONDENTS WHO ARE THE GUARANTORS TO THE LOAN TRANSACTION, DATED 22.09.2017** W.P.(C) No.15927/2024 ## : 12 : - **Exhibit P8 A TRUE COPY OF THE SEARCH REPORT IN RESPECT OF THE SECURES ASSET WITH CENTRAL REGISTRY OF SECURITIZATION ASSET RECONSTRUCTION AND SECURITY INTREST INDIA EM.ID NO 33946 DATED 14/5/2023** - **Exhibit P8(a) A TRUE COPY OF THE SEARCH REPORT IN RESPECT OF THE SECURES ASSET WITH CENTRAL REGISTRY OF SECURITIZATION ASSET RECONSTRUCTION AND SECURITY INTREST INDIA EM.ID NO 42228 DATED 18/12/2014** - **Exhibit P8(b) A TRUE COPY OF THE SEARCH REPORT IN RESPECT OF THE SECURES ASSET WITH CENTRAL REGISTRY OF SECURITIZATION ASSET RECONSTRUCTION AND SECURITY INTREST INDIA EM.ID NO 76120 DATED 18/1/2016** - **Exhibit P9 TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 13(2) OF THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT 2002 TO THE THIRD TO 8TH RESPONDENTS DATED 27/10/2020** - **Exhibit P10 TRUE COPY OF THE NOTICE UNDER SECTION 13(4) OF THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTREST ACT 2002 DATED 29/3/2021** - **Exhibit P11 TRUE COPY OF THE NOTICE ISSUED UNDER SECTION 13(4)OF THE SECURITY INTEREST (ENFORCEMENT) RULES 2002 ISSUED BY THE PETITIONER DATED 16.12.2023** - **Exhibit P12 TRUE COPY OF THE SALE CERTIFICATE ISSUED BY THE AUTHORIZED OFFICER OF THE PETITONER DATED 18/3/2024** - **Exhibit P13 A TRUE COPY OF THE SALE CERTIFICATE DULY ENGROSSED IN E STAMP DATED 16/3/2024** - **Exhibit P14 A TRUE COPY OF THE COMMUNICATION ISSUED BY THE FIRST RESPONDENT TO THE AUTHORIZED OFFICER OF THE PETITIONER DATED 19/3/2024** W.P.(C) No.15927/2024 : 13 : **Exhibit P15 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE NO 652/2018 DATED 06.04.2018** **EXHIBIT P16 THE COPY OF THE A DIARY PROCEEDINGS DATED 28.06.2024** ## **RESPONDENTS’ EXHIBITS** - **EXHIBIT R10(A) TRUE COPY OF APPLICATION DATED 30/08/2019 FILED BY THE PETITIONER AS I.A.NO. 1586/2019 IN I.A.NO. 3067/2017 IN O.S.NO. 149/2017 ON THE FILE OF THE SUBORDINATE JUDGE'S COURT III A, KOZHIKODE.** **EXHIBIT R10(B) TRUE COPY OF COUNTER STATEMENT DATED 06/09/2019 IN I.A.NO.1586/2019 IN I.A.NO. 3067/2017 IN O.S.NO. 149/2017 ON THE FILE OF THE SUBORDINATE JUDGE'S COURT IIIA, KOZHIKODE FILED BY THE 10TH RESPONDENT** **EXHIBIT R10(C) TRUE COPY OF ORDER DATED 01/10/2019 IN I.A. NO.1586/2019 IN I.A.NO. 3067/2017 IN O.S.NO. 149/2017 PASSED BY THE SUBORDINATE JUDGE'S COURT, KOZHIKODE EXHIBIT R10(D) TRUE COPY OF JUDGMENT DATED 16/10/2019 IN O.S. NO.149/2017 ON THE FILE OF THE SUBORDINATE JUDGE'S COURT, KOZHIKODE.** **EXHIBIT R10(E)** - **TRUE COPY OF JUDGMENT DATED 29/07/2022 IN COMMERCIAL SUIT NO.81/2021 ON THE FILE OF THE COMMERCIAL/ PRINCIPAL SUB COURT, KOZHIKODE** **EXHIBIT R10(F) TRUE COPY OF E.P. NO.132/2021 DATED 15.3.2021 IN O.S. NO. 149/2017 ON THE FILE OF THE SUBORDINATE JUDGES COURT, IA, KOZHIKODE.** **EXHIBIT R10(G) TRUE COPY OF CLAIM PETITION DATED 29/07/2021 IN E.A. NO. 427/2021 IN E.P.NO. 132/2021 IN O.S.NO. 149/2017 ON THE FILE OF THE SUBORDINATE JUDGES COURT, IA, KOZHIKODE** W.P.(C) No.15927/2024 : 14 : **EXHIBIT R10(H) TRUE COPY OF COUNTER STATEMENT DATED 22/02/2022 IN E.A. NO.427/2021 IN E.P.NO. 132/2021 IN O.S.NO. 149/2017 ON THE FILE OF THE SUBORDINATE JUDGES COURT, KOZHIKODE EXHIBIT R10(I) TRUE COPY OF E COURT STATUS OF E.P. NO. 132/2021 DOWNLOADED FROM THE WEBSITE OF THE SUBORDINATE JUDGES, COURT, KOZHIKODE**