Federal Bank Ltd. v. Sub Registrar, Kottayam-Kumali Road, Collectorate Kottayam, Village Officer Thirunakkara, Sebastian Xavier Bhagavath Paramppuzha Karappuzha and Philip George Padamattumel

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **TUESDAY, THE 19[TH] DAY OF MARCH 2024 / 29TH PHALGUNA, 1945** **WP(C) NO. 8467 OF 2024** ## **PETITIONER:** **THE FEDERAL BANK LTD. FEDERAL TOWERS, MARKET RD, PERIYAR NAGAR, ALUVA, KERALA 683101 AND HAVING ONE OF ITS BRANCH AT PB NO 269, THEKUMKAL BUILDING NEAR ANASWARA THEATRE, T D ROAD, KOTTAYAM, KERALA - 686001, REP. BY ITS VICE PRESIDENT AND AUTHNORISED OFFICER, PRADEEP.G, LCRD, FEDERAL TOWERS, MARINE DRIVE, ERNAKULAM DISTRICT, KERALA STATE, PIN – 682031** **BY ADVS. P.PAULOCHAN ANTONY SREEJITH K.** ## **RESPONDENTS:** - **1 THE SUB REGISTRAR KOTTAYAM-KUMALI ROAD,, COLLECTORATE KOTTAYAM, PIN - 686002** - **2 THE VILLAGE OFFICER THIRUNAKARA, KOTTAYAM, KERALA, PIN - 686001** - **3 SEBASTIAN XAVIAR BHAGAVATHI PARAMPIL KARAPPUZHA KOTTAYAM, PIN - 686003** - **4 PHILIP GEORGE PADAMATTUMEL, MUTTAMBALAM P.O, KOTTAYAM, PIN – 686004** **SRI. S. GOPINATHAN, SR. GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.8467/2024 : 2 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.8467 of 2024 ````````````````````````````````````````````````````````````` _Dated this the 19[th] day of March, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner-Bank has filed this writ petition seeking to declare that the sale agreement made after Ext.P1 mortgage is having no existence after the issuance of Ext.P5 Sale Notification as per Section 13(8) of the SARFAESI Act (after amendment) and to direct the 1[st] respondent-Sub Registrar to register Ext.P6 Sale Certificate after removing / effacing the entry of sale agreement shown in Ext.P3 Encumbrance Certificate. 2. M/s. BB Agencies, a Partnership Firm, availed two Cash Credit facilities from the Bank. 2 Ares 60 square metres of property in Re-survey No.43 (old Survey No.136/B) in Block No.141 of Kottayam Taluk, Kottayam Village was W.P.(C) No.8467/2024 : 3 : pledged as security for the Cash Credit facilities by Mr. Shajan Mathew. 3. When the borrowers defaulted in payment, the Bank initiated proceedings for recovery, invoking SARFAESI Act. Physical possession of the mortgaged property / secured asset was taken over by the Bank on 22.06.2022, pursuant to Section 14 proceedings before the CJM, Kottayam. 4. The Bank put the secured asset for sale, as per Sale Notice dated 25.08.2023. The property was sold in auction in the third attempt. The 4[th] respondent purchased the property for ₹25,60,000/-. When the petitioner approached the 1[st] respondent- Sub Registrar for registration of Sale Certificate in favour of the 4[th] respondent, the Sub Registrar declined to register stating that there is an existing court attachment over the property. 5. The petitioner, from Ext.P3 Encumbrance Certificate, noted that there is a liability marked over the property. The petitioner learnt that the liability was noted W.P.(C) No.8467/2024 : 4 : subsequent to the Sale Notification. 6. The petitioner states that the Hon’ble Apex Court in _**Celir LLP v. Bafna Motors (Mumbai) Private Limited** [2023 KHC 6860]_ has explained that the SARFAESI Act being a special law, has an overriding effect over all other general laws including Transfer of Property Act, 1882. As per Section 13(8) of the SARFAESI Act, the right of redemption of a secured asset stands extinguished on and from the very date of publication of public auction notice for sale of the secured asset. Therefore, the 1[st] respondent is compellable to register the Sale Certificate disregarding any other liability. 7. Heard. 8. In the case of the petitioner, the mortgage of the property was effected in favour of the petitioner as per Ext.P1 letter for deposit of title deeds dated 03.01.2018. It is evident that the mortgage of the property in favour of the petitioner was created on 30.07.2017. Ext.P3 is the Encumbrance Certificate in respect of the property issued by the W.P.(C) No.8467/2024 : 5 : Registration Department. The petitioner would submit that the liability shown therein was subsequent to the mortgage. 9. This Court considered the effect of subsequent court attachment over mortgaged property, in the judgment in _**Madhan S. v. Sub Registrar, Kollam and others** [2014 (1) KLT 406]_ . This Court held that 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 SARFAESI Act. The attachment ceases to have any effect or falls to the ground, the moment the sale is confirmed. 10. In the case of the petitioner, it is seen that the mortgage was created on 30.12.2017. During the period of mortgage, a sale agreement was executed by the owner of the property on 16.09.2022, in respect of the property. It is the sale agreement which is reflected in Ext.P3 Encumbrance Certificate as a liability. This Court has considered a similar issue in W.P.(C) No.37855/2023. In the W.P.(C) No.8467/2024 : 6 : said case, a sale was effected in respect of property subsequent to the creation of equitable mortgage by the borrowers in favour of the finance company. This Court held that the mortgagor is disabled from further encumbering the property without the junction of the mortgagee. 11. In _**Kerala State Financial Enterprises Limited v. Meenachil Co-operative Agricultural Rural Development Bank Limited** [2004 (3) KLT 369],_ this Court held that a mortgagor cannot further encumber properties in any case without the junction of the mortgagee and that on mortgage, a liability is automatically attached to the property and it is a burden imposed upon the land and the interest in the land, by the owner of the land. Subsequent sale cannot therefore survive in preference to the mortgage created by the borrowers. 12. Taking into account the law laid down by this Court in the afore judgments, the petitioner is entitled to relief in this writ petition. W.P.(C) No.8467/2024 : 7 : 13. It is declared that the sale agreement made on 16.09.2022 without the consent of the petitioner cannot have any effect on the right of the petitioner as a mortgagee. The 1[st] respondent is therefore directed to register Ext.P6 Sale Certificate after removing/effacing the entry of sale agreement shown in Ext.P3 Encumbrance Certificate, within a period of one month. The 2[nd] respondent shall effect necessary changes in the registry if an application is made and if the application satisfies all other legal parameters. The writ petition is disposed of as above. Sd/- **N. NAGARESH, JUDGE** aks/18.04.2024 W.P.(C) No.8467/2024 : 8 : ## **APPENDIX OF WP(C) 8467/2024** ## **PETITIONER'S EXHIBITS** **Exhibit P1** **A TRUE COPY OF THE LETTER OF DEPOSIT OF TITLE DEEDS DATED 03-01-2018 EVIDENCING DEPOSIT OF THE SALE DEED NO 1831/2014 DATED 26-06-2014 WITH PETITIONER BANK** **Exhibit P2 TRUE COPY OF THE ORDER OF THE CHIEF JUDICIAL MAGISTRATE KOTTAYAM APPOINTING ADVOCATE COMMISSIONER DATED 14.02.2021** **Exhibit P3 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE DATED 10-08-2023** **Exhibit P4 TRUE COPY OF PAPER PUBLICATION OF SALE NOTICE DATED 26-08.2023 PUBLISHED IN "THE HINDU"** **Exhibit P5 A TRUE COPY OF THE SALE NOTICE DATED 11-12-2023** **Exhibit P6** **TRUE COPY OF THE SALE CERTIFICATE ISSUED BY THE AUTHORIZED OFFICER 1**