IDBI Bank Ltd v. Sub Registrar, Ernakulam; Village Officer, Ernakulam; Lumna Soji

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **WEDNESDAY, THE 20[TH] DAY OF MARCH 2024/30TH PHALGUNA, 1945** **WP(C) NO. 1533 OF 2024** ## **PETITIONER:** **IDBI BANK LTD IDBI TOWER WTC COMPLEX, CUFFE PARADE, MUMBAI, 400 005 AND HAVING ONE OF ITS BRANCH AT M.G. ROAD, ERNAKULAM REPRESENTED BY MR. MANOJ KUMAR DEPUTY GENERAL MANAGER AND AUTHORIZED OFFICER IDBI BANK LTD, RETAIL RECOVERY, 1ST FLOOR, IDBI BUILDING, PANAMPILLY NAGAR, KOCHI, PIN – 682035** **BY ADVS. P.PAULOCHAN ANTONY SREEJITH K.** ## **RESPONDENTS:** **1 THE SUB REGISTRAR SECOND FLOOR PERUMPILLY BUILDING, MAHATMA GANDHI RD, ERANKULAM, PIN - 682011 2 THE VILLAGE OFFICER PARK AVENUE ROAD ERNAKULAM HEAD PO KERALA, PIN - 682011 3 LUMNA SOJI AGED 50 YEARS W/O SOJI KAVALAKATTU, RESIDING AT KAVALAKATTU, KAVALAKATTU MANDIR, AVENUE ROAD, THRISSUR, PIN - 680005 BY ADVS. P.DALBI EMMANUEL JOSMY P. THOMAS(K/457/2021) SUNIL C.G(K/1068/2021) SICILIAMMA C.V(K/1002/2021) SRI.S. GOPINATHAN, SR. GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.1533/2024 : 2 : ## **CR** ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.1533 of 2024 ````````````````````````````````````````````````````````````` _Dated this the 20[th] day of March, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner-Bank seeks to direct respondents 1 and 2 to efface the attachments made after the date of mortgage effected by the 3[rd] respondent. 2. The petitioner states that one Bhama Ramaswamy along with others availed a housing loan aggregating ₹45,17,160/- for the purchase of an apartment with car parking in Muthoot Tower together with undivided share of land situated in Ernakulam Village. The property was W.P.(C) No.1533/2024 : 3 : mortgaged to the Bank. When the borrowers failed to service the loan account, the loan account was declared as NPA on 11.05.2018. 3. The Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Section 13(2) notice was issued. The possession of the property was taken over on 14.03.2022 with the aid of an order of the Additional Chief Judicial Magistrate's Court, Ernakulam under Section 14 of the Act, 2002. 4. The Bank issued Ext.P4 pre-sale notice dated 15.02.2022. Ext.P5 e-auction notice was published on 16.06.2022. There were no bidders initially. However, in the fourth e-auction held on 30.12.2023, one Venugopal N. participated in the auction and emerged as highest bidder. The sale was effected in favour of the said Venugopal and Ext.P6 sale confirmation letter dated 01.01.2024 was issued. 5. The said Venugopal requested the Bank to efface an attachment in respect of the property purchased by him. W.P.(C) No.1533/2024 : 4 : The attachment in question was made much after the mortgage and the sale notification. The petitioner states that the attachment was effected at the instance of the 3[rd] respondent. The attachment was after the date of sale notification issued by the Bank. 6. The counsel for the petitioner-Bank argued that the mortgager's right of redemption was extinguished on the date of e-auction notification, i.e. 20.07.2022. The amendment to Section 38 of the SARFAESI Act states that the right of redemption expires or extinguishes on the date of sale notification. Therefore, the attachment made by the 2[nd] respondent after the sale notification is unsustainable. The Sub Registrar and Village Officer are therefore compellable to efface the attachments effected subsequent to the mortgage, from the relevant records. 7. The 3[rd] respondent resisted the writ petition filing counter affidavit. The 3[rd] respondent stated that the SARFAESI proceedings initiated by the Bank are not proper and fair. The address of the borrower shown in Ext.P3 W.P.(C) No.1533/2024 : 5 : Section 14 order is incorrect. The entire proceedings are void ab initio and is as a result of fraud. 8. The 3[rd] respondent stated that the Bank has conducted the auction in a secretive manner. The 3[rd] respondent has filed a suit in the Munsiff's Court, Ernakulam against the borrower. In the said suit, a conditional order of attachment was passed by the Munsiff. If the attachment made by the Munsiff's Court is lifted, the petitioner's claim will be frustrated. If this Court order lifting of the attachment, it will cause irreparable injury to the petitioner. According to the 3[rd] respondent, the Bank has made an exorbitant claim without properly accounting the repayment of loan by the borrower. The writ petition is therefore devoid of any merit and has to be dismissed, urged the 3[rd] respondent. 9. I have heard the learned counsel for the petitioner, the learned Government Pleader representing respondents 1 and 2 and the learned counsel appearing for the 3[rd] respondent. W.P.(C) No.1533/2024 : 6 : 10. On the failure of a borrower to discharge his liabilities, the petitioner-Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the secured asset was put to sale. The secured asset / mortgaged property was deposited by the borrower with the Bank as per Ext.P1 letter, evidencing deposit of title deeds, on 09.10.2012. A pre-sale notice, Ext.P4, was published on 15.02.2022. Ext.P5 e-auction notice was published on 20.07.2022. In the e-auction held on 30.12.2023, one Venugopal N. emerged as the highest bidder and the sale was confirmed in his name on 01.01.2024. Ext.P6 is the sale confirmation letter. 11. When the Bank attempted to register the sale, the Bank found that there is an attachment in respect of the property in question, made at the instance of the 3[rd] respondent. Ext.P7 encumbrance certificate would show that the attachment was by the Munsiff's Court, Ernakulam in IA No.2/2023 in OS No.100/2023. The Sub Registrar is W.P.(C) No.1533/2024 : 7 : refusing to register the sale effected by the Bank in favour of the auction purchaser due to the attachment. 12. Evidently, the owner of the property, who borrowed money from Bank, had mortgaged the property on 09.10.2012. Possession of the property was taken over by the Bank on 14.03.2022. A pre-sale notice was published on 15.02.2022. The sale notification is dated 16.06.2022. The attachment effected by the 3[rd] respondent is on 08.09.2023, after the sale notification. 13. The question arising is whether the right of redemption of mortgaged property subsists after the date of sale notification. Section 13(8) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 provides that where the amount of dues of the secured creditor together with all costs, charges and expenses incurred by him is tendered to the secured creditor at any time before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or W.P.(C) No.1533/2024 : 8 : sale of the secured assets, the secured assets shall not be transferred by way of lease, assignment or sale by the secured creditor. In case any steps have been taken by the secured creditor for transfer by way of lease or assignment or sale of the assets before tendering of such amount, no further steps shall be taken by such secured creditor for transfer by way of lease or assignment or sale of such secured assets. 14. Sub-section (8) to Section 13 was amended as per Act 44 of 2016 with effect from 01.09.2016. Prior to the amendment, sub-section (8) provided that if the dues of the secured creditor together with all costs, charges and expenses incurred by him are tendered to the secured creditor at any time before the day fixed for sale or transfer, the secured assets shall not be sold or transferred by the secured creditor, and no further steps shall be taken by him for transfer or sale of that secured asset. 15. In the judgment in _**Mathew Varghese v. M. Amritha Kumar and others** [(2014) 5 SCC 610]_ , the Hon’ble W.P.(C) No.1533/2024 : 9 : Apex Court held that no sale should take place before expiry of 30 days from the date on which the public notice of sale is published in the newspapers or notice of sale was served on the borrower. Service of individual notice to borrower specifying clear 30 days time gap for effecting any sale of immovable secured asset is a statutory mandate. The objective behind the requirement of notice is to enable owner/borrower to take all efforts to retain his/her ownership by tendering the dues. The Apex Court held that once sale does not take place pursuant to a notice issued under Rules 8 and 9 of the Security Interests (Enforcement) Rules, 2002, the procedure prescribed will have to be followed afresh, as the notice issued earlier would lapse. The Apex Court held that the endeavour or the role of secured creditor while resorting to any sale for realisation of dues of a mortgaged asset, should be that the mortgager is entitled for some lenience, if not more to be shown, to enable the borrower to tender the amounts due in order to ensure that the constitutional right to property is preserved, rather than it W.P.(C) No.1533/2024 : 10 : being deprived of. 16. It was after the judgment in _**Mathew Varghese**_ (supra), Section 13(8) was substituted as per Amendment Act 44 of 2016. The Hon’ble Apex Court considered the impact of the amendment to Section 13(8) in _**Celir LLP v. Bafna Motors (Mumbai) Private Limited** [2023 (5) KLT 599]._ The Apex Court held that with the advent of the 2016 amendment, Section 13(8) of the SARFAESI Act now uses the expression “before the date of publication of notice for public auction or inviting quotations or tender from public or private treaty for transfer by way of lease, assignment or sale of the secured assets”. The Apex Court held that the right of redemption of mortgage is available to the borrower under the SARFAESI Act only till the publication of auction notice, in the light of the amended Section 13(8). 17. In _**Celir LLP**_ (supra), the Apex Court further held that the statutory right of redemption under the Transfer of Property Act, 1882 will not be applicable to the SARFAESI Act in view of the amended Section 13(8) and any right of W.P.(C) No.1533/2024 : 11 : redemption of a borrower must be found within the SARFAESI Act in terms of the amended Section 13(8). 18. In the case of the petitioner, the sale notification in respect of the property sold by the petitioner-Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was on 16.06.2022. The right of the mortgager to redeem the mortgage stood extinguished with effect from that date. Therefore, any attachment effected by a claimant subsequent to 16.06.2022 cannot affect the right of the Bank to sell the property. In the case of the 3[rd] respondent, the attachment effected by him on the property was admittedly after the sale notification. The 3[rd] respondent therefore cannot make any objection to the sale of the property by the Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The 1[st] respondent-Sub Registrar is compellable to efface the attachment made in respect of the secured asset. W.P.(C) No.1533/2024 : 12 : The writ petition is therefore disposed of directing respondents 1 and 2 to efface the attachment of the property in question from the revenue records. Sd/- **N. NAGARESH, JUDGE** aks/19.03.2024 W.P.(C) No.1533/2024 : 13 : ## **APPENDIX OF WP(C) 1533/2024** ## **PETITIONER'S EXHIBITS** **Exhibit P1 TRUE COPY OF THE LETTER EVIDENCING DEPOSIT OF TITLE DEEDS DATED 09.10.2012 Exhibit P2 TRUE COPY OF THE ORDER DATED 12.08.2019 IN MC NO 507/2019 Exhibit P3 TRUE COMPUTER COPY OF PROCEEDINGS FROM THE WEBSITE DATED 30.03.2022 Exhibit P4 TRUE COPY OF THE PRE -SALE NOTICE DATED 15.02.2022 Exhibit P5 TRUE COPY OF THE PAPER PUBLICATION DATED 16.06.2022 Exhibit P6 TRUE COPY OF THE SALE CONFIRMATION LETTER DATED 01.01.2024 Exhibit P7 TRUE COPY OF THE EC DATED 16.09.2023**