Keechery Service Co-operative Bank Ltd. v. Sajitha Nizar alias Sajitha.P.M. and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR** ## **&** **THE HONOURABLE MR. JUSTICE K.HARIPAL** **THURSDAY, THE 04TH DAY OF JUNE 2020 / 14TH JYAISHTA, 1942** ## **WA.No.634 OF 2020** ## **AGAINST THE JUDGMENT IN WP(C) 11487/2019(I) OF HIGH COURT OF KERALA** ## **APPELLANT/7TH RESPONDENT IN THW WRIT PETITION:** **SECRETARY,KEECHERY SERVICE CO-OPERATIVE BANK LTD. NO.668, MAMPUZHA, KULAYETTIKARA.P.O., PIN-682315, ERNAKULAM DISTRICT.** **BY ADV. P.GEORGE VARGHESE** ## **RESPONDENTS/PETITIONER& RESPONDENTS IN THE WRIT PETITION:** - 1 **SAJITHA NIZAR ALIAS SAJITHA.P.M., AGED 53 YEARS ADVOCATE, W/O.NIZAR.K.S., RESIDING AT KOCHERIL HOUSE, KANGIRAMITTOM.P.O., PUTHUVASSERY DESOM, AMBALLUR VILLAGE, KANAYANNUR TALUK, ERNAKULAM DISTRICT, KERALA-682 315.** - 2 **STATE OF KERALA, REPRESENTED BY ITS SECRETARY, REVENUE DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001.** - 3 **TAHSILDAR, KANAYANNUR TALUK, ERNAKULAM DISTRICT-682 011.** - 4 **VILLAGE OFFICER, AMBALLUR VILLAGE, ERNAKULAM-682 315.** - 5 **SUB REGISTRAR, MULANTHURUTHY SUB REGISTRY OFFICE, MULANTHURUTHY.P.O., PIN-682 314.** - 6 **AUTHORIZED OFFICER, THE FEDERAL BNAK LTD., LCRD DIVISION, THEKKUMKAL BUILDING, T V ROAD, KOTTAYAM-686 001.** ## **R2 TO R5 BY G.P.SRI.RENIL ANTO KANDAMKULATHY** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 04.06.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.A.NO.634 of 2020 2 ## **“C.R.”** ## **JUDGMENT** ## **Ravikumar, J.** This appeal is directed against the judgment in W.P.(C) No.11487 of 2019 dated 3.2.2020. The 7[th] respondent in the said writ petition is the appellant and the writ petitioner therein is the first respondent herein. Hereafter in this judgment the parties are referred to in accordance with their rank and status in this appeal. 2. Heard the learned counsel for the appellant and the learned Government Pleader appearing for respondents 2 to 5. 3. The first respondent herein filed the above mentioned writ petition seeking issuance of a writ of mandamus commanding respondents 2 and 3 therein viz., respondents 3 and 4 herein, to effect mutation of the property in question in her favour pursuant to Ext.P1. The further prayer was for a direction to the Sub Registrar to efface the attachment obtained by respondents 6 and 7 in respect of the property covered by Ext.P1 in the records of the aforesaid Sub Registry, forthwith. The appellant filed counter affidavit resisting the claims and contentions of the first respondent-writ petitioner. The learned Single Judge on analysis of the facts arrived at the conclusion that the case is squarely covered in favour of the writ petitioner as per the decision of this Court in **Madhan.S.** v. **Sub Registrar, Kollam and Others** W.A.NO.634 of 2020 3 reported in **2014 (1) KHC 249** . It is in the said circumstances that, feeling aggrieved by the said judgment, the 7[th] respondent therein preferred this appeal. 4. On going through the pleadings in the writ petition as also in this appeal we do not find involvement of any factual dispute. The undisputed facts obtained from pleadings and materials on record would reveal that the property in question is an extent of 5.56 Ares with a building therein, comprised in Re-survey No.597/14 of Amballoor Village in Kanayannur Taluk, Ernakulam District and its then title holder one Sri.Shamsudeen mortgaged the same with Federal Bank Ltd., on 27.6.2014. Chronic default on the part of the mortgagee in payment of the loan amount constrained the Bank to issue notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity 'SARFAESI Act.”) on 17.7.2015. Consequently, possession of the said property was taken by the Bank on 9.10.2015, after complying with the prescribed procedures. The factum of taking possession of the property was published in two leading newspapers. In accordance with the procedures auction of the property was conducted by the 6[th] respondent herein, the Authorised Officer of the Federal Bank Limited. Being the successful bidder sale certificate was registered in favour of the writ petitioner/the first respondent and thereafter, Ext.P1 sale deed was W.A.NO.634 of 2020 4 executed by the 6[th] respondent herein in favour of the first respondent on 26.2.2019. Thereupon, the first respondent applied for mutation of the property in her name. She was informed as per Ext.P2 that it could not be effected on account of pendency of I.A.No.2354/2015 in O.S.No.505 of 2015 before Munsiff Court, Muvattupuzha, involving the said property. The first respondent thereupon, obtained the encumbrance certificate to find existence of order of attachment obtained by respondent No.6 in the writ petition and the appellant respectively from the Munsiff Court, Muvattupuzha and from the Arbitration Court/Joint Registrar, Co-operative Societies (General), Ernakulam. The Munsiff's Court passed the order of attachment on 21.10.2015 and the Arbitration Court passed the order of attachment on 7.7.2015, evidently after the creation of mortgage of the property with Federal Bank Limited. It is in the said circumstances that the writ petition was filed seeking the aforementioned prayers. 5. The 6[th] respondent in the writ petition who obtained order of attachment from the Munsiff Court, Muvattupuzha in O.S.No.505 of 2015 did not contest the writ petition. It is the case of the appellant who was the 7[th] respondent in the writ petition that in ARC.No.216/2015 the Joint Registrar of Co-operative Societies, Ernakulam passed an order of attachment viz., Ext.R7(a) dated 6.7.2015. According to the appellant, one Shamsudheen and his sons W.A.NO.634 of 2020 5 namely, Sham.P.S. and Shaji.P.S., who were conducting a Jewellery in Arayankavu, cheated the appellant Bank by pledging fake gold ornaments and receiving about Rs.1,60,00,000/-. Against them the appellant filed 5 Arbitration cases including ARC.No.216/2015. Evidently, in ARC No.216/2015 Ext.R7(a) order of attachment dated 6.7.2015 was passed. As noticed hereinbefore, in respect of the property mortgage was created as early as on 27.6.2014. After initiating proceedings under the SARFAESI Act that property was taken into possession by Federal Bank and consequently, the 6[th] respondent conducted auction. Ext.P1 sale deed was registered by the 6[th] respondent in favour of the first respondent as she was the successful bidder. In view of the aforesaid indisputable facts it is evident that the question arising for consideration is, what is the effect of the subsequent attachment effected after creation of an equitable mortgage of the property and in such circumstances whether the subsequent attachment should be effaced. We have no hesitation to hold that taking note of the factual situation obtained in the case the learned Single Judge had rightly arrived at the conclusion that the issue involved is whether a subsequent attachment effected after the creation of equitable mortgage should be effaced and whether the said question is squarely covered by a judgment of this Court in **Madhan's** case (supra). The chronology of the events relating creation of equitable W.A.NO.634 of 2020 6 mortgage of the property with Federal Bank; the order of attachment issued under Ext.R7(a) and the order of attachment passed by the Munsiff Court, Muvattupuzha as discernible from the records would reveal that the orders of attachment of the Munsiff Court, Muvattupuzha were passed only after the creation of equitable mortgage of the property with Federal Bank Limited. Hence, certainly the question crop up for consideration is whether the subsequent attachment effected after the creation of equitable mortgage should be effaced. The question which was considered and decided in **Madhan's** case (supra) is as follows, as is evident from the very opening sentence in the said decision:- “Can the attachments effected subsequent to the creation of equitable mortgage be effaced after the property is purchased by another in sale conducted by the Recovery Officer of the Debts Recovery Tribunal ?” The said question was answered in the affirmative in **Madhan's** case (surpa). Paragraphs 8 and 9 of the judgment in **Madhan's** case (supra) assume relevance in this context. They read thus:- “8. I shall quote from a few other decisions also to give completeness to the judgment taking note of the elaborate arguments of the petitioner and the absence of any case law on the point under the Act. ## (i) **Thiru Venkita Reddiar** Vs. **Noordeen [1977 KLT 877]** : “The consequence is on the happening of a judicial sale all previous attachment effected upon the property sold fall W.A.NO.634 of 2020 7 to the ground”. ## (ii) **Leelavathy Bai** Vs. **Gangadharan [1987 (2) KLT SN Case No. 38]** : “Attachment will not confer any title in favour of the person who attaches. Injunction granted or attachment ordered or effected in relation to immovable properties will not make the suit one in which any right to immovable property is directly and specifically in issue so as to attract the bar of lis pendens provided in Section 52 of the Transfer of Property Act”. ## (iii) **Kolappa Pillai** Vs. **Sukumaran Nair [1987 (2) KLT SN Case No. 54]:** “Section 64 hits only a private transfer or delivery of the property attached or of any interest therein. The passing of a decree by a court of law declaring a charge on such property or the court sale and delivery of the property in execution of such a decree can in no sense be said to be a private transfer or delivery of the property or of any interest therein”. ## (iv) **Francis** Vs. **Navodaya Kuries and Loans Pvt. Ltd. [2010 (3) KLT 609]** : “Hence the attachment before judgment though made prior on point of time in O.S. No. 94/1989 ceased to have effect with the court sale in favour of respondent No. 1 (in O.S. No. 1156 of 1991) on 21.12.1995” ## (v) **Kabidi Venku Sah** Vs. **Syed Abdul Hai and another [AIR 1984 SC 117]** : “The attaching creditor can bring the property to sale only subject to the mortgage so long as it is subsisting. That is to say he could bring only the mortgagers equity of redemption to sale if it had not already been extinguished by its sale in execution of any decree obtained on that mortgage.” W.A.NO.634 of 2020 8 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 confirmed in favour of the petitioner. The declaration so sought by the petitioner is therefore granted and I further direct the Sub Registrar and the Village Officer to efface the attachments effected subsequent to the mortgage from the relevant records. Otherwise those 9 WP(C) No.28728/2013 attachments would remain as a permanent taboo prejudicially 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.” Thus, it is obvious that it is after considering the authorities on the consequences of a judicial sale that the learned Single Judge settled the law in **Madhan's** case. 6. The issue was again considered by a Division Bench of this Court in an unreported decision in **Ali Asharaf.M.M. & Another** v. **Sub Registrar, Thrissur (W.A.No.612 of 2015)** . That was a case where the appellants/writ petitioners purchased property in question in an auction proceedings conducted under the SARFAESI Act. The appellants - petitioners were constrained to approach this Court by filing W.P.(C)No.23435 of 2014, from which the said appeal arose, on account of refusal on the part of the Village Officer to effect mutation of W.A.NO.634 of 2020 9 the property purchased by them in the auction under the SARFAESI Act. The reason for not effecting mutation was an order of attachment effected by Munsiff Court, Thrissur in respect of the same property. The learned Single Judge as per judgment dated 13.10.2014 in W.P. (C)No.23435/2014 directed the writ petitioners to approach Munsiff Court, Thrissur for vacating the order of attachment in respect of the property purchased by them in the auction sale conducted under the SARFAESI Act. The Division Bench took note of the indisputable and undisputed fact that the attachment of the property involved therein was subsequent to the date of mortgage of the said property with the Bank whose Authorised Officer conducted the auction proceedings under the SARFAESI Act. In the said circumstances, the Division Bench, in full agreement with the dictum laid down in **Madhan's** case (supra), declared that the attachments effected by the Munsiff Court, Thrissur after the date of mortgage are invalid and consequently, directed the Sub Registrar and the Village Officer, concerned to efface the attachments effected after 8.7.2008 that is, the date on which the mortgage of the property was created with the Bank. 7. In the light of the aforesaid declaration of law by this Court the order of dismissal of the petition filed for lifting the attachment ordered under Ext.R7(a) viz., Ext.R7(b) by the Federal Bank would pale into insignificance. We do not find any reason to disagree W.A.NO.634 of 2020 10 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 (supra), carrying the directions to effect mutation of the property as also to efface all encumbrance over the property effected after 27.6.2014, the date on which the property in question was mortgaged with Federal Bank. Resultantly, this writ appeal stands dismissed. Sd/- **C.T.RAVIKUMAR Judge** Sd/- **K.HARIPAL Judge** TKS