Housing Development Finance Corporation Limited v. Sub Registrar, Thrikkakara

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** ## **FRIDAY ,THE 18TH DAY OF JANUARY 2019 / 28TH POUSHA, 1940** ## **WP(C).No. 1530 of 2019** ## **PETITIONERS:** - **1 M/S.HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED DOOR NO.39/6457 OF COCHIN CORPORATION, RAVIPURAM JUNCTION, M.G.ROAD, THRIKKANARVATTOM DESOM, PERUMANOOR.P.O., PIN-682015, ERNAKULAM VILLAGE, KANAYANNUR TALUK, ERNAKULAM DISTRICT, REPRESENTED BY ITS AUTHORIZED OFFICER SRI.SACHIN.A.S., S/O.T.K.SHANAVAS, AGED 37.** - **2 MR.DILEEP D K., S/O.DIVAKARAN NAIR, AGED 44, BUSINESS, KARUTHALA, KALAVAMKODAM, CHERTHALA.P.O., ALAPPUZHA DISTRICT, PIN-685521, REP. BY HIS POWER OF ATTORNEY HOLDER SRI.SYAM.V.S., S/O.SASIKUMAR.V.R., AGED 27, VELLAYIL, KALAVAMKODAM, CHERTHALA.P.O., ALAPPUZHA DISTRICT, PIN-685521.** - **3 USHA GOVINDAN NAIR, W/O.DILEEP.D.K., AGED 41, TEACHER, KARUTHALA, KALAVAMKODAM, CHERTHALA.P.O., ALAPPUZHA DISTRICT, PIN-685521, REP. BY HER POWER OF ATTORNEY HOLDER SRI.SYAM.V.S., S/O.SASIKUMAR V.R., AGED 27, VELLAYIL, KALAVAMKODAM, CHERTHALA.P.O., ALAPPUZHA DISTRICT, PIN-685521.** ## **BY ADV. SRI.SHIJU VARGHESE** ## **RESPONDENTS:** **THE SUB REGISTRAR, OFFICE OF THE SUB REGISTRAR, THRIKKAKKARA, THRIKKAKKARA.P.O., ERNAKULAM DISTRICT-682021.** ## **SRI.SAIGI JACOB PALATTY, SR.GOVT.PLEADER** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.01.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P(C)No.1530 of 2019 2 ## **ALEXANDER THOMAS, J.** ## **============================= W.P(C)No.1530 of 2019** **=============================** Dated this the 18[th] January, 2019 ## **JUDGMENT** The petitioners are aggrieved by the refusal on the part of the respondent Sub-Registrar to register Ext.P-4 sale certificate finalised in accordance with the provisions contained in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), on the ground that there are attachments ordered by the competent civil courts in respect of the subject property even though those attachment orders have been rendered after the date of creation of the mortgage in favour of the 1[st] petitioner-Financial Institution. 2. The prayers in the above Writ Petition (Civil) are as follows: - _"a. Quash the Ext.P5 letter by a writ of Certiorari or any other appropriate Writ, Order or direction_ - _b. To issue a Writ of Mandamus directing the respondent to register the Ext.P4 sale certificate with his office by incorporating the contents of the same in the relevant records maintained with his office; and_ W.P(C)No.1530 of 2019 3 - _c. issue such other orders as this Hon'ble Court deems fit and proper to grant;”_ 3. Heard Sri.Shiju Varghese, learned counsel appearing for the petitioners and Sri.Saigi Jacob Palatty, learned Sr.Government Pleader appearing for the respondent. 4. The 1[st] petitioner is the Housing Development Finance Corporation Ltd., who is a financial institution, who had advanced loan to a borrower (one, Sandra Thomas) mortgaged her property with the 1[st] petitioner. It is stated that the mortgage was created in respect of the subject property, in favour of the 1[st] petitioner on 18.04.2013. 5. Later, the 1[st] petitioner had taken steps under the SARFAESI Act and the subject mortgaged property was sold in terms of the provisions contained in the said Act and Ext.P-4 sale certificate dated 07.01.2019 has been duly issued by the 1[st] petitioner in favour of the 2[nd] & 3[rd] petitioners, who are the purchasers of the said property. That when the petitioners had presented Ext.P-4 sale certificate that incorporated in Non-Judicial Stamp Papers before the respondent-Sub Registrar for registration, he had refused to register the same as informed in Ext.P-5 letter W.P(C)No.1530 of 2019 4 dated 11.01.2019 that attachments have now been recorded in respect of the subject property by orders issued by the competent civil court, etc. 6. Going by the facts pleaded in this case, it is seen that the mortgage in question was created in favour of the 1[st] petitionerFinancial Institution, in respect of the subject property on 18.04.2013. Serial No.2 of Ext.P-3 Encumbrance Certificate, about which reference is made in the impugned Ext.P-5 order is the attachment dated 12.12.2017 rendered by the court of the District Judge, Ernakulam on EA 847/2017 in E.P.No.421/17 in Arbitration KMB/G/102/2016 issued in favour of M/s Kotak Mahindra Bank Ltd., due to the alleged liability incurred by the very same borrower to the said beneficiary of the attachment order. 7. The matter is no longer _res integra_ and is covered in favour of the petitioner by a series of judgments of this Court as in _**HDFC v. SRO**_ [2011(3) KLJ 561], _**Madan v. Sub Registrar**_ [2014(1)KLT 406], etc., wherein it has been consistently held that the sale of the mortgage property in favour of the purchaser under sale certificate issued under the enactments like the Recovery of Debts due to Banks and Financial Institutions, 1993, SARFAESI Act, 2002, etc. will be free from all encumbrances, if the W.P(C)No.1530 of 2019 5 attachments effected are subsequent to the mortgage created in favour of the financial institution and so it will not affect the title and ownership of the purchaser of the subject property. That in such cases, the attachments will have no impact on the sale conducted under the said Acts and the attachment orders will cease to have any effect or will fall to the ground, the moment when the sale is confirmed in favour of the purchaser. Accordingly, this Court has consistently held and directed that the Sub-Registrar concerned and the Village Officer concerned are liable to efface attachments effected subsequent to the mortgage from the relevant records, as otherwise attachment should remain as a permanent taboo, prejudicially affecting the marketability and title to the property even though they have seized any legal efficacy. 8. In the light of these aspects, it is only to be ordered and declared that in case the attachment orders pertaining to this case have been rendered after the creation of the mortgage, then the same can have no legal efficacy and falls to the ground the moment the sale of the mortgage property has been confirmed under the SARFAESI Act. In such case, the competent officials like the respondent Sub-Registrar, Village Officer concerned are liable to ensure that such attachments are effaced and deleted from the W.P(C)No.1530 of 2019 6 relevant encumbrance records and revenue records, accordingly ordered and declared. Accordingly, the impugned refusal order, as per Ext.P-5 will stand set aside and the matter will stand remitted to the respondent-SRO for consideration afresh. 9. However, the beneficiaries of the attachment order, as per serial No.2 of Ext.P-3 Encumbrance Certificate as it referred to in Ext.P-5 has not been made a party in this W.P(C). Accordingly, it is ordered that the petitioners may file appropriate applications before the respondent-SRO producing therewith a certificate showing the details of the loan transaction entered into by the 1[st] petitioner-Financial Institution with the said borrower and also clearly certifying the date of creation of the said mortgage and may also produce copies of Ext.P-3 Encumbrance Certificate. The original of Ext.P-4 sale certificate should also be produced by the petitioners before the respondent-SRO, along with the attested copy of the same and the respondent-SRO may verify, as to whether Ext.P-5 certificate has been properly stamped and may return the original of the sale certificate to the petitioners concerned. Thereafter, the respondent-SRO will issue notice of hearing to the petitioner and the beneficiary of the attachment orders as per serial No.2 of Ext.P-3 Encumbrance Certificate and will determine the W.P(C)No.1530 of 2019 7 limited factual issue as to whether the impugned attachment order has been rendered after the date of creation of the mortgage and if it is so found, then he shall make additional entry in Book No.1 pertaining to the said property as conceived in Sec.89(5) of the Registration Act, 1908, so as to delete and efface such attachments from the encumbrance records. Thereafter, the petitioners may submit an application for issuance of fresh Encumbrance Certificate after deletion of such attachments and upon which the respondentSRO will issue such fresh Encumbrance Certificate subject to payment of cost or fee, in that regard. 10. Thereafter, the petitioners may present Ext.P-5 sale certificate for registration before the SRO, who shall register the same, if it is otherwise in order. 11. The petitioners will also be at liberty to produce a copy of the said fresh Encumbrance Certificate issued by the SRO, after deletion and effacement of the attachment order therefrom before the competent Village Officer concerned, who will thereafter ensure that the said attachment made in the village/revenue records concerned are also effaced and deleted. W.P(C)No.1530 of 2019 8 With these observations and directions, this Writ Petition (Civil) will stand disposed of. Sd/- ## **ALEXANDER THOMAS, JUDGE** vgd/19.01.19 W.P(C)No.1530 of 2019 9 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE SALE CERTIFICATE ISSUED BY THE 1ST PETITIONER EXHIBIT P2 TRUE COPY OF THE HOME LOAN AGREEMENT DATED 18.4.2013. EXHIBIT P3 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE BEARING NO. 6246/2018 DATED 20.6.2018 EXHIBIT P4 TRUE COPY OF THE SALE CERTIFICATE DATED 7.1.19 EXHIBIT P5 TRUE COPY OF THE LETTER BEARING NO. C 12/2019 DATED 11.1.2019.**