Housing Development Finance Corporation Limited v. State of Kerala & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN** ## **WEDNESDAY, THE 20[TH] DAY OF DECEMBER 2023 / 29TH AGRAHAYANA, 1945** ## **WP(C) NO. 17579 OF 2023** ## **PETITIONERS:** - **1 M/S.HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED DOOR NO.39/6457, RAVIPURAM, M.G ROAD, ERNAKULAM – 682 015 REPRESENTED BY ITS AUTHORISED OFFICER MR.SACHIN A.S** - **2 MRS. BAICYMOL GEORGE AGED 55 YEARS W/O. GEORGE G. PODIMATTAM, PODIMATTATHIL, FLAT NO.F.10, WEST BROOK, WEXCO HOMES, KOTTAYAM DISTRICT, KOTTAYAM POST, PIN-686 001.** - **3 MR. GEORGE G. PODIMATTAM AGED 55 YEARS S/O. GEORGE, PODIMATTATHIL, FLAT NO.F.10, WEST BROOK, WEXCO HOMES, KOTTAYAM DISTRICT, KOTTAYAM POST, PIN – 686 001.** ## **BY ADVS.** **GIGIMON ISSAC TOBIAS TOGI MATHEW ALTHEA MELINDA CORREYA ROSE ANN JOSEPH** ## **RESPONDENTS:** - **1 STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM – 695 001.** - **2 THE SUB REGISTRAR OFFICE OF THE PRINCIPAL SUB REGISTRY OFFICE, KOTTAYAM – 686 001.** - **3 VIDGYA RAJ, AGED 39 YEARS,D/O K.N RAJAN, KURISHINKAL, KURISHUMOOD P.O., CHANGANASSERY, KOTTAYAM – 686 104.** - **4 SHAJI KANNOTH AGED 62 YEARS S/O. SREEDHARAN, F11, WEXCO WEST BROOKS APARTMENT, NOW RESIDING AT HAOMA WELLNESS, HRBR, 3RD BLOCK, KALYAN NAGAR, BANGALORE – 560 084.** **W.P(C) No.17579 of 2023** **2** **5 AJITHA AGED 56 YEARS, W/O. SHAJI KANNOTH, F11, WEXCO WEST BROOKS APARTMENT, NOW RESIDING AT HAOMA WELLNESS, HRBR, 3RD BLOCK, KALYAN NAGAR, BANGALORE – 560 084. 6 THE VILLAGE OFFICER OFFICE OF THE KOTTAYAM VILLAGE, KOTTAYAM – 686 001. 7 THE SECRETARY KOTTAYAM MUNICIPALITY, KOTTAYAM – 686 001. BY ADVS. SRI. ANANTHAKRISHNAN A. KARTHA SRI. AJIT JOY - SC ANIL D.KARTHA SURESH G. SHARATH ELDO PHILIP NAMITA PHILSON SREEKUMAR G. ANANTHASANKAR A. KARTHA SMT. DEEPA V - GP** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07.12.2023, THE COURT 20.12.2023 DELIVERED THE FOLLOWING:** **W.P(C) No.17579 of 2023** **3** ## **JUDGMENT** The 1[st] petitioner, a non-banking housing finance company, along with petitioners 2 and 3, the auction purchasers of its secured assets, have filed this writ petition for a direction to quash Ext. P6 communication of the 2[nd] respondent Sub Registrar, refusing to register Exhibit P3 sale certificate and for direction to register the same. 2. The respondents 4 and 5 (hereinafter referred to as 'borrowers') availed financial facilities from the 1[st] petitioner on 04.06.2014 by creating an equitable mortgage by deposit of title deed. Since the borrowers failed to repay the loan, the 1[st] petitioner initiated proceedings against them under the provisions of the SARFAESI Act, and the property was sold in public auction **W.P(C) No.17579 of 2023** **4** to petitioners 2 and 3. Ext.P2 is the sale certificate dated 30.03.2023. 3. When the petitioners approached 2nd respondent for registration of Ext.P3 sale certificate, the same was refused stating that there is an attachment on the property by the Court of Addl. Munsiff, Kottayam by order dated 01.10.2022 in I.A. No. 1/2022 in O.S. No. 561/2022. The 2[nd] respondent also issued Ext.P6 communication in this regard. The petitioners state that the aforesaid attachment was not reflected in Ext.P4 encumbrance certificate for the relevant period. The petitioners contend that the aforesaid attachment is subsequent to the creation of the equitable mortgage in favour of the 1[st] petitioner by the borrowers, and the same will not affect the sale conducted by the 1[st] petitioner under the SARFAESI Act and the attachment has to be effaced from Book No. 1 maintained under the Registration Act, 1908. Accordingly, this writ petition is filed to quash Ext.P6 and to direct the 2[nd] respondent to **W.P(C) No.17579 of 2023** **5** register Ext.P3 sale certificate and for direction to respondents 6 and 7 to carry out the mutation of the property in the name of petitioners 2 and 3. 4. Heard the learned counsel for the petitioners, learned Government Pleader and the learned counsel for the 3[rd] respondent. Though notice was taken to respondents 4 and 5 by paper publication, there is no appearance. 5. The learned counsel for the petitioners relied on the decision of this Court in **Madhan S.** _**v**_ **. Sub Registrar, Kollam and Others [2014 (1) KHC 249: 2014 (1) KLT 406: ILR 2014 (1) Ker.586: 2014 (1) KLJ 483: AIR 2014 Ker.54]** and contends that the attachment effected subsequent to the creation of equitable mortgage will not affect the right of the 1[st] petitioner to sell the mortgaged property and the attachment has to be effaced from the encumbrance register. **W.P(C) No.17579 of 2023** **6** ## 6. 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 in favour of the petitioner under Ext. P5 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 petitioner. The confirmed in favour of the declaration so sought by the petitioner is therefore granted and I_ **W.P(C) No.17579 of 2023** **7** _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 prejudicial 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.”_ 7. 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.612/2015)** has affirmed the law laid down in Madhan's case. In **Secretary, Keechery Service Co-operative Bank Ltd.** **W.P(C) No.17579 of 2023** **8** **v. Sajitha Nizar alias Sajitha P.M. and Others [2020 (5) KHC 231: ILR 2020 (4) Ker.249: 2020(6) KLT 68: 2020(4) KLJ 970]** , 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. 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_ **W.P(C) No.17579 of 2023** **9** _(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 1[st] petitioner under the SARFAESI Act and has to be effaced from the encumbrance register. 8. It is evident from the documents produced in the writ petition that the attachment effected by the Court of Addl. Munsiff, Kottayam by order dated 01.10.2022 in I.A. No. 1/2022 in O.S. No. 561/2022 is subsequent to the creation of equitable mortgage by the borrowers in favour of the 1[st] petitioner. Accordingly, Ext.P6 is quashed. There will be a direction to the 2[nd ] respondent to register Ext.P3 **W.P(C) No.17579 of 2023** **10** sale certificate as and when presented, if the same is otherwise in order. The respondents 6 and 7 shall carry out the mutation of the property in the name of petitioners 2 and 3 as and when applied for and if there are no other impediments. The registration of Ext.P3 sale certificate or mutation will not impede other rights of the 3[rd] respondent in the civil proceedings against the borrowers. The writ petition is disposed of. **Sd/-** **MURALI PURUSHOTHAMAN JUDGE** SPR **W.P(C) No.17579 of 2023** **11** ## **APPENDIX** ## **PETITIONERS EXHIBITS:** |**EXHIBIT P1**|**TRUE COPY OF THE LOAN AGREEMENT ENTERED BETWEEN**| |---|---| ||**THE 1ST PETITIONER AND RESPONDENTS 4 & 5 DATED**| ||**04.06.2014.**| |**EXHIBIT P2**|**TRUE COPY OF THE SALE CERTIFICATE ISSUED IN**| ||**FAVOUR OF THE PETITIONERS 2 & 3 DATED 30.03.2023.**| |**EXHIBIT P3**|**TRUE COPY OF THE DULY EXECUTED SALE CERTIFICATE**| ||**PREPARED FOR REGISTRATION IN THE STAMP PAPER**| ||**VALUED AT RS.1,80,200/- DATED 12.05.2023.**| |**EXHIBIT P4**|**TRUE COPY OF THE ENCUMBRANCE CERTIFICATE DATED**| ||**08.03.2023 FOR THE PERIOD FROM 01.01.2007 TO**| ||**04.03.2023.**| |**EXHIBIT P5**|**TRUE COPY OF THE ORDER OF ATTACHMENT OBTAINED BY**| ||**THE 3RD RESPONDENT IN THE PROPERTY SCHEDULED IN**| ||**THE SALE CERTIFICATE IN FAVOUR OF 2ND AND 3RD**| ||**PETITIONER WHICH WAS PLACED FOR REGISTRATION.**| |**EXHIBIT P6**|**THE ORDER OF REFUSAL FOR REGISTRATION WHICH IS**| ||**SERVED BY THE 2ND RESPONDENT SUB REGISTRAR.**| ## **RESPONDENTS EXHIBITS: NIL.**