High Court of KeralaSingle Judge2019-02-05Disposed of with directions.

SABU VARGHESE v. SUB REGISTRAR, SREEMOOLANAGARAM; VILLAGE OFFICER, VADAKKUMBAGAM; DEWAN HOUSING FINANCE CORPORATION LIMITED; BINOY; INDUS IND BANK LIMITED; P J MATHAI; EDDAKKALATHOOR CHITTIES AND LOANS PVT LTD.

Case / Petition Number:WP(C).No.3392 of 2019

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Alexander Thomas
Judgment Date: 2019-02-05
Court Decision / Holding: The court disposed of the writ petition with directions: if the attachments in Ext. P6 were created after the mortgage, they have no legal efficacy and would stand deleted once the sale is confirmed in favour of the purchaser under SARFAESI and related Acts. The petitioner is to file an application before the Sub Registrar for deletion of the impugned attachments and to produce Ext. P6, along with a certificate from the DHFL showing the loan details and the date of mortgage creation. The 1st respondent is to issue notices to affected parties (respondents 4–7) and hear the petitioner and those parties to determine whether the attachments were after the mortgage. If so, steps are to be taken to update Book No.1 under Sec.89(5) of the Registration Act to delete the attachments and to issue a fresh encumbrance certificate; the Village Officer will delete the attachments from village/revenue records. The petition stands finally disposed of with these directions.
Final Disposition: Disposed of with directions.

Parties to the Case

Appellants / Petitioners

SABU VARGHESE

Respondents

1 Sub Registrar, Sub Registrar Office, Sreemonalanagaram, Ernakulam-683580
2 Village Officer, Vadakkumbagam Village Office, Ernakulam-683501
3 Dewan Housing Finance Corporation Limited, Mumbai; Regional Office at Kochi, Ernakulam-682025
4 Binoy, S/o.K Chandran, Kochitty, North Paravur, Ernakulam-683513
5 Indus Ind Bank Limited, Hotel Palace Tower, North Bus Stand, Thrissur-680020
6 P J Mathai, S/o.P M Johny, Punna kuzhi yil House, Puthussery Road, Tripunithura, Ernakulam-682301
7 Edakkalathoor Chitties and Loans Pvt Ltd., Pallithazham Shopping Complex, Thrissur Village, Thrissur-680002

Legal Representation & Advocates

Counsels for Petitioners

• Sri. S. Sunil Kumar (Palakkad)

Counsels for Respondents

• Smt. Priya Shanavas

Case Synopsis & Summary

This writ petition challenges the refusal of the Sub Registrar to approve and register a draft sale deed (Ext. P7) where the subject property, mortgaged in favour of Dewan Housing Finance Corporation Limited (DHFL) under a loan agreement dated 6.8.2001, was sold under the SARFAESI Act following borrower default. The sale certificate (Ext. P5) dated 13.6.2018 conferred title to the petitioner. The Sub Registrar refused registration on the ground that registration could be considered only after lifting encumbrances evidenced by Ext. P6 (encumbrance certificate), which lists attachments in favour of respondents 4–7. The attachments were issued after creation of the mortgage, and the petitioner contends that post-mortgage attachments lose legal efficacy once a sale is confirmed under SARFAESI/DRT regimes, and must be effaced to preserve marketability and title. The respondents contend attachments must be cleared before registration. The Court cites established Kerala precedents holding post-mortgage attachments ineffective after sale and ultimately directs orderly deletion of such attachments, filing of a deletion application, and issuance of fresh encumbrance certificates, with hearing to affected parties, thereby disposing of the petition with directions for relief to the petitioner.

Provisions of Law Cited

Sarfaesi Act, Sec.13(2) r/w Sec.32Registration Act, 1908 Sec.89(5)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that Ext.P7, the draft sale deed prepared by him after purchase under the SARFAESI sale, should be approved and the deed registered by the Sub Registrar. He emphasises the mortgage in favour of the 3rd respondent (DHFL) on 6.8.2001 and the subsequent sale in 2018, arguing that the attachments listed in Ext.P6 were created after the mortgage and should have no continuing effect once a sale is confirmed under the SARFAESI framework; hence the Sub Registrar should delete these encumbrances and permit registration. He cites Kerala High Court precedents that post-mortgage attachments lose efficacy after sale and must be effaced, so as to secure marketable title for buyers. He prays for a direction to delete encumbrances and to proceed with registration after furnishing the necessary certificates from the DHFL, as evidence of the mortgage, and to hear affected parties.

Contentions of Respondents

The respondents contend that registration cannot be allowed while encumbrances exist; the attachments noted in Ext. P6 must be lifted before registration to preserve the integrity of the chain of title and for proper record-keeping. They rely on the attachments’ validity at the time they were issued and contest that the court should require the statutory process to excise encumbrances only after due hearing and as per established procedure.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
HDFC v. SRO	2011 (3) KLT 567	Positive	Cited as authority that attachments created after the mortgage must be effaced after sale, supporting post-male mortgage post-sale erosion of encumbrances.
Madan v. SRO	2014 (1) KLT 406	Positive	Cited as authority aligning with the principle that post-mortgage attachments lose efficacy upon sale, reinforcing the petitioner's position.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **TUESDAY, THE 5TH DAY OF FEBRUARY 2019 / 16TH MAGHA, 1940 WP(C).No. 3392 of 2019** ## **PETITIONER:** **SABU VARGHESE, AGED 50 YEARS, C/O.SOSAMMA SABU, PUTHUKALATHIL KAYALPURAM, PULINKUNNU, KUTTANAD, ALAPPUZHA-688504.** **BY ADV. SRI.S.SUNIL KUMAR (PALAKKAD)** ## **RESPONDENTS:** - **1 THE SUB REGISTRAR, SUB REGISTRAR OFFICE, SREEMOOLANAGARAM, ERNAKULAM-683580.** - **2 THE VILLAGE OFFICER, VADAKKUMBAGAM VILLAGE OFFICE, ERNAKULAM-683501.** - **3 DEWAN HOUSING FINANCE CORPORATION LIMITED, HAVING ITS REGISTERED OFFICE AT WARDEN HOUSE, 2ND FLOOR, SIR P.M.ROAD, MUMBAI-400001, HAVING ITS REGIONAL OFFICE AT 1ST FLOOR, KMM BUILDINGS, PALARIVATTOM, KOCHI682025, REPRESENTED BY ITS AUTHORIZED OFFICER.** - **4 BINOY, S/O.K CHANDRAN, KOCHITTY, NORTH PARAVUR, ERNAKULAM-683513.** - **5 INDUS IND BANK LIMITED, HOTEL PALACE TOWER, NORTH BUS STAND, THRISSUR680020, REPRESENTED BY ITS AUTHORISED OFFICER.** - **6 P J MATHAI, S/O.P M JOHNY, PUNNAKUZHIYIL HOUSE, PUTHUSSERY ROAD, TRIPPUNITHURA, ERNAKULAM- 682301.** - **7 EDAKKALATHOOR CHITTIES AND LOANS PVT LTD., PALLITHAZHAM SHOPPING COMPLEX, THRISSUR VILLAGE, THRISSUR-680002, REPRESENTED BY ITS CHAIRMAN.** **SMT.PRIYA SHANAVAS, GOVT.PLEADER** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## ALEXANDER THOMAS, J. --------------------------------- ## W.P.(C)No.3392 of 2019 --------------------------------Dated this the 5[th] day of February, 2019 ## J U D G M E N T The prayers in the above Writ Petition (Civil) are as follows: “ _1. To direct 1[st] respondent to approve the Exhibit P7 Draft Sale Deed prepared by the petitioners and register the fair deed of the same in the name of petitioner._ _2. To direct respondents No.1 and 2 to efface the attachments noted after the creation of Exhibit P1 mortgage._ _3. To pass any other order as this Hon'ble Court deems fit. ”_ 2. Heard Sri.S.Sunil Kumar, learned counsel appearing for the petitioner and Smt.Priya Shanavas, learned Government Pleader appearing for the respondents 3. The petitioner is aggrieved by the refusal on the part of the 1[st] respondent Sub Registrar in approving and registering Ext.P-7 draft deed on the ground that registration on secured asset was not permissible without lifting the attachments endorsed in Ext.P-6 encumbrance certificate dated 29.8.2018 in respect of the subject property. It is stated that the borrower concerned had availed financial assistance from the 3[rd] respondent financial institution after mortgaging his property with that institution on 6.8.2001 pursuant to Ext.P-1 loan W.P.(C).No.3392/2019 ..3.. agreement dated 6.8.2001. And when the borrower had defaulted the 3[rd] respondent was constrained to initiate SARFAESI proceedings and by virtue of the powers conferred under Sec.13(2) r/w Sec.32 of the SARFAESI Act had conducted sale of the subject property on 13.6.2018 in respect of 4.30 ares of land in Re-Survey No.328/18 of Vadakkumbhagam Village, Aluva Taluk, Ernakulam Revenue District and it was sold to the petitioner as per Ext.P-5 sale certificate dated 13.6.2018 in accordance with the provisions contained in the SARFAESI Act. The petitioner had also prepared the draft sale deed and presented the same before the 1[st] respondent for approval, who on verification had raised objection that any such registration can be considered only after lifting attachments endorsed in Ext.P-6 encumbrance certificate. Further it is stated that the mortgage of the subject property has been created by the borrower in favour of the 3[rd] respondent financial institution as per Ext.P-1 loan agreement on 6.8.2001. The details of the attachment orders issued in favour of contesting respondents 4 to 7 which they have secured against the very same borrower as shown in Ext.P-6 encumbrance certificate are tabulated as follows:- W.P.(C).No.3392/2019 ..4.. |Respondent No.|Date of Attachments|Serial Number in Exhibit P-6| |---|---|---| |Respondent No.4 Binoy|27.7.2006|2| |Respondent No.7 Edakkalathoor Chitties and Loans Pvt. Ltd.|11.8.2006, 21.8.2006, 21.8.2006 & 9.6.2010|3, 4, 5 & 8| |Respondent No.5 Indus Ind Bank Ltd.|23.12.2006 & 26.3.2012|6 & 9| |Respondent No.6 P.J.Mathai|24.3.2008|7| 4. It is specific case of the petitioner that all the impugned attachment orders noted as encumbrances in favour of contesting respondents 4 to 7 in Ext.P-6 encumbrance certificate have been rendered by the appropriate Civil Court/DRT concerned much after the date of mortgage of subject property in favour of the 3[rd] respondent. It is by now well established by a series of rulings of this Court as in _**HDFC v. SRO (2011 (3) KLT 567), Madan v. SRO (2014 (1) KLT 406),**_ etc that attachments effected subsequent to creation of mortgages will have to be effaced after the property is purchased by another in a sale conducted under the provisions of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 and the SARFAESI Act, etc and that where such attachment orders have been issued after the creation of W.P.(C).No.3392/2019 ..5.. mortgage then such attachment orders have no legal efficacy whatsoever and will stand fallen to the ground the moment sale is confirmed in favour of the purchaser under the abovesaid Acts, and that therefore the Sub Registrar and the Village Officer concerned are obliged to efface such attachments effected subsequent to mortgage for the relevant records as otherwise those attachments would remain as permanent taboo prejudicially affecting marketability and title of the property even though they have seized to have any legal efficacies. 5. Accordingly it is ordered and declared that if the impugned attachment orders in this case issued in favour of contesting respondents 4 to 7 have been rendered after the creation of mortgage of the subject property in favour of the 3[rd] respondent then the said attachment orders noted as encumbrances in Ext.P-6 encumbrance certificate will have no legal efficacy whatsoever and would stand fallen to the ground the moment the same has been confirmed in favour of the purchaser. Accordingly it is ordered that the petitioner will file an appropriate application before the 1[st] respondent Sub Registrar seeking deletion of impugned attachments and should also produce a copy W.P.(C).No.3392/2019 ..6.. of Ext.P-6 encumbrance certificate and also a certificate issued by the 3[rd] respondent financial institution showing the details of Ext.P-1 loan agreement and also the exact date of creation of mortgage of subject property in favour of subject property, etc. Thereafter the petitioner should also array as a respondent in the said application, affected parties like respondents 4 to 7. Thereafter the 1[st] respondent will issue notices to those affected parties who are the beneficiaries of the impugned attachment orders and then will hear the petitioner and the said parties and determine the limited factual issue as to whether the impugned attachment orders have been rendered after the date of creation of mortgage in the instant case. 6. If it is so found that the impugned attachment orders have been rendered after the date of creation of mortgage then the 1[st] respondent will immediately take steps to make additional entries in Book No.1 in respect of subject property in terms of Sec.89(5) of the Registration Act, 1908 so as to efface and delete such attachments from the encumbrance records. Thereafter the petitioner may make application for issuance of fresh encumbrance certificate and may pay the necessary fee in that regard and W.P.(C).No.3392/2019 **==> picture [18 x 9] intentionally omitted <==** thereupon the 1[st] respondent will issue fresh encumbrance certificate after deletion of such encumbrances and attachments. Thereupon the petitioner may produce a copy of the said fresh encumbrance certificate after deletion of attachments and before the 2[nd] respondent Village Officer who will then take steps to efface all such attachments from the relevant village/revenue records. With these observations and directions, the above Writ Petition (Civil) will stand finally disposed of. Sd/- ALEXANDER THOMAS, JUDGE MMG W.P.(C).No.3392/2019 ..8.. ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE LOAN AGREEMENT DATED 6.8.2001.** **EXHIBIT P2 TRUE COPY OF THE LETTER DATED 23.11.2016 ISSUED BY THE RESPONDENT NO.3 TO ADVOCATE COMMISSIONER.** **EXHIBIT P3 TRUE COPY OF THE SALE NOTICE PUBLISHED IN INDIAN EXPRESS DAILY DATED 12.4.2018.** **EXHIBIT P4 TRUE COPY OF THE SALE NOTICE PUBLISHED IN DEEPIKA DAILY DATED 12.4.2018.** **EXHIBIT P5 TRUE COPY OF THE SALE CERTIFICATE DATED 13.6.2018.** **EXHIBIT P6 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE DATED 29.8.2018 ISSUED BY THE 1ST RESPONDENT IN RESPECT OF THE SECURED ASSET.** **EXHIBIT P7 TRUE COPY OF THE DRAFT SALE DEED PREPARED BY THE PETITIONER.**