Kerala Gramin Bank v. Sub Registrar, Sub Registry Office, Kulathupuzha, Kollam District

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **THURSDAY, THE 28TH DAY OF JUNE 2018 / 7TH ASHADHA, 1940** **WP(C).No. 19535 of 2018** **-----------------------** **PETITIONER : ----------** **KERALA GRAMIN BANK HEAD OFFICE, KGB TOWERS, A.K. ROAD, MALAPPURAM, KERALA 676 505 REPRESENTED BY ITS REGIONAL HEAD, REGIONAL OFFICE, COASTAL TOWERS, PIPELINE ROAD, NEAR JANATHA JUNCTION, PALARIVATTOM, ERNAKULAM - 682 025.** **BY ADVS.SRI.K.MADHUSOODANAN SRI.T.G.PAUL SRI.MATHEW JACOB (KUNNATHU) SRI.SYRIAC JOSEPH** **RESPONDENT : ----------** **THE SUB REGISTRAR SUB REGISTRY OFFICE, KULATHUPUZHA, KOLLAM DISTRICT - 691 310.** **BY SENIOR GOVERNMENT PLEADER SRI. SAIGI JACOB PALATTY** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 28-06-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **bp 09/7/2018** **WP(C).No. 19535 of 2018 (N) ---------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS -----------------------** **EXHIBIT P1. TRUE COPY OF LETTER DATED 11.03.2013 EVIDENCING CREATION OF MORTGAGE IN FAVOUR OF THE PETITIONER EXHIBIT P2. TRUE COPY OF SALE DEED NO.1123/2012 DATED 28.12.2012 OF KULATHUPUZHA SRO EXHIBIT P3. TRUE COPY OF THE POSSESSION NOTICE DATED 01.03.2016 EXHIBIT P4. TRUE COPY OF THE ORDER IN MC.491/17 DATED 04.01.2018 OF CJM COURT, KOLLAM ALLOWING ADVOCATE COMMISSIONER TO TAKE POSSESSION OF THE PROPERTY EXHIBIT P5. TRUE COPY OF THE RECEIPT DATED 23.03.2018 ISSUED BY THE PETITIONER EXHIBIT P6. TRUE COPY OF THE ENCUMBRANCE CERTIFICATE NO.1158/2016 EXHIBIT P7. TRUE COPY OF THE LETTER DATED 10.05.2018 SUBMITTED TO THE SUB REGISTRAR EXHIBIT P8. TRUE COPY OF THE REPLY DATED 14.05.2018 OF THE SUB REGISTRAR** **RESPONDENT'S EXHIBITS : NIL.** **//TRUE COPY//** **P.A. TO JUDGE** **bp 9/7/2018** ## **ALEXANDER THOMAS, J.** ===================== ## **W.P(C)No.19535 of 2018** ===================== Dated this the 28[th] day of June, 2018 ## **JUDGMENT** It is stated that the petitioner-Kerala Gramin Bank has granted a loan of Rs.15 lakhs on 11.03.2013 on the strength of a mortgage by deposit of title deed as security. As the borrowers had caused default of repayment, the loan had fallen into NPA category and the petitioner-Bank had initiated recovery proceedings against the borrowers under SARFAESI Act and the possession of the property was taken on 01.03.2016. Later, sale notice was published and sale of the property was duly conducted from public auction on 23.03.2018 and that one Sri.M.Abdul Siraj had knocked the auction and remitted the required amount on 23.03.2018 itself, it is averred. Later, on taking Ext.P-6 Encumbrance Certificate issued by the respondent SRO, Kulathupuzha, Kollam district, it was found that there are two court attachments on the property effected subsequent to the mortgage. According to the petitioner, the mortgage in question was created on 11.03.2013 and both the attachments referred to in W.P(C)No.19535 of 2018 2 Ext.P-6 Encumbrance Certificates are after that date. As the property was under equitable mortgage to the petitioner-Bank from 11.03.2013 continuously, the Bank took steps to execute the sale deed and get it registered in favour of the auction purchaser. On approaching the respondent Sub Registrar for registration of the property, the petitioner was advised to get the attachment lifted. Thereupon, the petitioner had submitted Ext.P-7 letter requesting the respondent SRO to register the document to which Ext.P-8 reply was given by that respondent declining to register the sale transaction. It is in the light of these aspects, the petitioner has filed the instant Writ Petition (Civil), with the following prayers : - “(i) call for the records of the matter., - (ii) issue a writ of certiorari and/or other writ directions or orders to quash Exhibit.P8; - (iii) issue a writ of mandamus and/or other appropriate writ, directions or orders directing the respondent to register the Sale Certificate as a Sale Deed in favour of the Auction purchaser of the property. - (iv) issue such other writs directions or orders as are deemed just and necessary in the interest of justice.” 2. Heard Sri.K.Madhusoodanan, learned counsel appearing for the petitioner and Sri.Saigi Jacob Palatty, learned W.P(C)No.19535 of 2018 3 Sr.Government Pleader appearing for the respondentSub-Registrar. 3. It is a case of the petitioner that in the instant case, the mortgage was created on 11.03.2013, whereas the two mortgages referred to in Exts.P-6 encumbrance certificates are on 21.10.2013 and 21.11.2013 respectively, which is stated to be after the date of the mortgage. This Court in the judgment in **Madhan v. Sub Registrar** reported in **2014 (1) KLT 406** had occasion to consider the question as to whether the attachments effected subsequent to the creation of the equitable mortgage be faced after the property is purchased by another in sale conducted by the recovery officer of the DRT etc. It was held by this Court that in **Madhan’s case** supra that the preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property in favour of the purchaser, is free of all encumbrances and that the attachments effected subsequent to the mortgage created in favour of the bank do not affect the title and ownership of the purchaser over the subject property and 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 W.P(C)No.19535 of 2018 4 is confirmed in favour of the petitioner. The declaration so sought by the petitioner is therefore granted by this Court and the SubRegistrar and the revenue official concerned are directed to efface the attachments effected subsequent to the mortgage from the relevant records. Otherwise, it was said by this Court that those attachments would remain as a permanent taboo prejudicial effacly affecting the marketability and title to the property even though they ceased to have any legal efficacy. It would be pertinent to refer to paras 1 and 9 of the abovesaid judgment of this Court in **Madhan’s case** supra reported in **2014 (1) KLT 406** is reads as follows : “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? 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 attachments W.P(C)No.19535 of 2018 5 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.” 4. This Court in the judgment in **Housing Development Finance Corporation v. Sub Registry Officer** reported in **2011 (3) KLJ 561** had also occasion to take a similar view in the matter. It was held therein that the rights conferred on the creditor/bank by mortgage of security property and the right to conduct sale of the security property under SARFAESI Act cannot be defeated by subsequent attachments ordered by the Civil Court. Sale certificate so obtained can be registered and the auction purchaser is entitled to remit the property tax and obtain possession certificate, irrespective of attachment effected subsequent to the mortgage. It will be profitable to refer to para 7 and 8 of the judgment of this Court in **Housing Development Finance Corporation’s case** supra reported in **2011 (3) KLJ 561** . 5. A Division Bench of this Court in **Rajalekshmi Amma v. Basheer** reported in **2013 (4) KLT 443** held that when a mortgage is created in terms of the provisions of the W.P(C)No.19535 of 2018 6 Transfer of Property Act, it amounts to an encumbrance. An order of attachment before judgment creates no charge. There is nothing in the provisions of the Revenue Recovery Act or in the State Financial Corporations Act, which changes the jurisprudential content of a mortgage, in terms of the Transfer of Property Act etc. Equally, the quality of the mortgage created, does not, in any manner, get extinguished or reduced in terms of its legal character and statutory potency in terms of the Transfer of Property Act. It was held that quality of the mortgage as an encumbrance does not get watered down to be subservient to by an order of attachment by the civil court under the CPC and that an order of attachment does not override or deserves to be preferred over the rights of a mortgagee or the effect of the mortgage as an encumbrance etc. 6. In the light of these aspects, it is ordered that the petitioner and/or the purchaser concerned (Sri.Abdul Siraj), the petitioner will be at liberty to file appropriate applications before the respondent-Sub Registrar, SRO, Kulathupuzha, Kollam district and if necessary, also before the appropriate revenue official concerned, who have endorsed those attachments in their respective records requesting for effacing of the said attachments W.P(C)No.19535 of 2018 7 on the ground that those attachments are after the grievance of the mortgage in question. Representations in that regard will be submitted by the petitioner before the respondent and the revenue official concerned. The petitioner may also make the beneficiaries of the attachment orders referred to in Ext.P-6 encumbrance certificate as parties in those applications. The respondent SRO and the revenue official concerned will issue notice of hearing to the petitioner and the beneficiaries of the said attachment orders and will pass orders on this representation in the light of the abovesaid legal position. It is ordered and clarified that if it is found by the respondent SRO and the revenue official concerned that as a matter of fact the attachments in question have been effected after the date on which the mortgage is being created, then those attachments are liable to be effaced from the relevant records. 7. Orders in this regard should be passed by the respondent and the other officials concerned within 6 weeks from the date of production of the certified copy of this judgment. Petitioners may file applications/representations before the above authorities, without any further delay, along with the certified copy W.P(C)No.19535 of 2018 8 of the judgment. The orders should be passed by the abovesaid authorities within 6 weeks from the date of submission of these representations. As and when orders are passed by the respondent SRO on the request for the effacement of the attachments from the records maintained by that office, then the respondent need not wait for any further orders from the revenue official concerned and he may proceed further with the matter in relation to the registration of the document, in accordance with law. With these observations and directions, Writ Petition (Civil) will stand finally disposed of. Sd/- **ALEXANDER THOMAS, JUDGE** vgd/03.07.18