UCO Bank v. State of Kerala and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **FRIDAY, THE 21[ST] DAY OF JANUARY 2022 / 1ST MAGHA, 1943** ## **WP(C) NO. 29255 OF 2021** ## **PETITIONER:** **UCO BANK** **MALLAPUZHASSERY BRANCH, MALLAPUZHASSERY, NELLIKALA P.O., PATHANAMTHITTA DISTRICT, PIN - 689 643 REPRESENTED BY ITS BRANCH MANAGER.** **BY ADVS. G.G.MANOJ S.SARATH PRASAD** ## **RESPONDENTS:** - **1 THE STATE OF KERALA REPRESENTED BY SECRETARY TO THE REGISTRATION DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 001.** - **2 THE SUB REGISTRAR (PRINCIPAL) SUB REGISTRAR'S OFFICE, K.K.ROAD, COLLECTORATE P.O., KOTTAYAM - 686 002.** - **3 RIJO PRASAD AGED 38 YEARS S/O.P.P.RAJENDRAPRASAD, VANCHIPURACKAL KARTHIKA, AYMANAM P.O., KOTTAYAM DISTRICT - 686 015.** - **4 P.P.RAJENDRAPRASAD AGED 65 YEARS S/O.P.K.PADMANABHAN, VANCHIPURACKAL KARTHIKA, KOTTAYAM DISTRICT, PIN - 686 015.** **5 P.M.JOHN ATHIRAYIL HOUSE, PEROOR P.O., KOTTAYAM, PIN - 686 637, ATHIRAYIL CURIES PVT.LTD., KUDAKASSERIYIL BUILDINGS, LOGOS JN., KOTTAYAM.** **BY ADVS. V.K.PEERMOHAMED KHAN ABRAHAM MATHEW (VETTOOR) C.J.CHACKO GIRISH KUMAR V.C ANIL ABEY JOSE** **WP(C) NO. 29255 OF 2021** **2** ## **OTHER PRESENT:** **SMT.M.ANIMA.G.P.** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.01.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C) NO. 29255 OF 2021** **3** ## **J U D G M E N T** The UCO Bank, which is a public sector Bank, constituted under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, is the petitioner in this case. 2. The petitioner says that, they had obtained an equitable mortgage over the property involved in this case from respondents 3 and 4, who are its owners, while availing of a financial facility from them; but that since the said respondents did not service the said facility satisfactorily, they were constrained to bring it to sale under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (hereinafter referred to as the 'SARFAESI Act' for short). They say that the sale has been confirmed in favour of the auction purchaser, but that when they attempted to register the Sale Certificate, by presenting it before the 2nd respondent – Sub Registrar, said Authority has refused to accede to it saying that there are certain attachments reflected on the property in question. 3. The petitioner asserts that all the attachments reflected on the property, as are evident from Ext.P5 Encumbrance Certificate, were all much after the date of mortgage - which was 10.09.2014, and **WP(C) NO. 29255 OF 2021** **4** therefore, that, going by the various judgments of this Court, including in **Secretary, Keechery Service Co-operative Bank Ltd v. Sajitha Nizar Alias Sajitha P.M [2020 (6) KLT 68],** they cannot be impeded from proceeding against it or in bringing it to sale, which they have done validly as per the provisions of the SARFAESI Act. They therefore, pray that the Sub Registrar be directed to efface the attachments and to register the Sale Certificate without any further delay. 4. In response, the learned Government Pleader – Smt.M.Anima, submitted that Sub Registrar has been incapacitated from effacing the attachments or from registering the Sale Certificate because he has noticed the orders over the property brought on it by the contesting respondents from a competent Court. She submitted that, however, if this Court is so inclined, the Sub Registrar can register the Sale Certificate and then efface the entries of attachments from the Encumbrance Certificate, provided all other statutory conditions and requirements are satisfied and met by the parties. 5. In response to the afore submissions made by Sri.G.G.Manoj, on behalf of the petitioner, Sri.Abraham Mathew, learned counsel for respondent No.5 argued that the sale conducted by the Bank is in flagrant violation of the provisions of the SARFAESI Act **WP(C) NO. 29255 OF 2021** **5** and that this writ petition suffers from suppression of material facts, including the value of the same. 6. Sri.Abraham Mathew Vettoor, in fact, argued that the owners of the property, namely respondents 3 and 4, had earlier approached the petitioner Bank for One Time Settlement, but that disregarding the same, the property has been brought to sale for a lower amount than what was offered; and therefore, that the entire exercise is vitiated and thus liable to be set aside by this Court. He then supplemented it by saying that, to his information, the owners of the property, namely respondents 3 and 4, have already approached the competent Forum for having the sale set aside and thus prayed that this writ petition be not allowed at this time, when such proceedings are pending. 7. Sri.Peer Mohammed Khan, learned counsel appearing for the owners of the property, namely respondents 3 and 4, affirmed the afore submissions of Sri.Abraham Mathew Vettoor, saying that a Securitisation Application has already been filed before the Debts Recovery Tribunal (DRT), Ernakulam, assailing the sale and that same is still pending. He predicated that his clients are confident of the sale being set aside because it was done in flagrant violation of the mandatory provision that a sale could have been conducted only 15 **WP(C) NO. 29255 OF 2021** **6** days after the notice had been served on his clients. He also, therefore, prayed that this writ petition be dismissed. 8. When I evaluate the afore rival submissions, it is without requirement to restate that the position of law is well settled that a Bank or a Financial Institution obtains primary right to proceed against the property in question, if they have a prior equitable mortgage. 9. In the case at hand, it is uncontested that the mortgage was dated 10.09.2014 and that all the attachments reflected on the Encumbrance Certificate, at the instance of the contesting parties, are much later. 10. Of course, the submissions of Sri.Peer Mohammed Khan, as recorded above, is that his clients have already challenged the sale and that the matter is pending before the DRT. 11. However, this will not stop registration of the Sale Certificate, if they are so presented by the Bank before the Sub Registrar, in the absence of any interdictory orders being issued by the DRT. Since Sri.Peer Mohammed Khan, has been unable to inform me that any such order has been issued by the said Tribunal, I fail to understand how the Sub Registrar can refuse registration of the Sale Certificate or effacement of entries of attachment, as per the well settled declarations of this Court in a catena of judgments, including in **WP(C) NO. 29255 OF 2021** **7** ## **Sajitha Nizar** ( _supra_ ). 12. Before I tread forward, certainly, as is also argued by the learned counsel for the respondents, the petitioner has only sought effacement of attachments over the property, so as to enable them to have the Sale Certificate registered. 13. Even though there is no specific prayer for a direction to the Sub Registrar to allow Registration of the Sale Certificate, I am of the view that this Court will be justified in moulding the reliefs, because, at the Bar, Sri.G.G.Manoj, learned counsel for the Bank, seeks that effacement of the entries of attachment be succeeded by registration of the Sale Certificate, as and when it is presented before the Sub Registrar by his client. 14. Since the only purpose for effacement of entries of attachment from the Encumbrance Certificate and the Revenue Records is registration of the Sale Certificate, I am of the opinion, that this Court will be justified in issuing orders inspite of a specific relief not being asked for the said purpose because, otherwise, it would serve no purpose whatsoever. In the afore circumstances, I order this writ petition, leaving liberty to the petitioner or the auction purchaser to present the Sale Certificate before the Sub Registrar for registration and if this is done, **WP(C) NO. 29255 OF 2021** **8** then said Authority will consider the same _de hors_ the attachments over the properties and complete necessary action thereon without any avoidable delay. Once the Sale Certificate is so registered, the Sub Registrar will efface all the entries of attachment subsequent to the date of mortgage, namely 10.09.2014, so as to enable the auction purchaser to deal with the property without impediment in future. Needless to say, this Court has not dealt with any of the rights of the contesting parties in any manner whatsoever and they are all left open to be pursued by them appropriately before the competent Forum. Obviously, therefore, if the sale is to be set aside on the application of respondents 3 and 4, or if any modification is to be ordered by the DRT or any other appropriate Forum, it will be binding on the Bank, as also the auction purchaser, subject to their available remedies in law. I also leave liberty to the attaching creditors to move the Bank or the DRT appropriately for claiming the surplus of the sale price, if any, available with the Bank, on the basis of their attachments; for which purpose, all their applicable remedies are reserved. I also clarify that if the sale has not been yet confirmed by the **WP(C) NO. 29255 OF 2021** **9** Bank in favour of the auction purchaser, the liberty of the contesting respondents to approach them seeking redemption of mortgage/settlement, or such other reliefs, are also left open. SD/- **DEVAN RAMACHANDRAN JUDGE** rp **WP(C) NO. 29255 OF 2021** **10** ## **APPENDIX OF WP(C) 29255/2021** ## **PETITIONER EXHIBITS** **Exhibit P1 TRUE COPY OF THE LETTER ISSUED BY THE 3RD RESPONDENT CONFIRMING THE DEPOSIT OF TITLE DEED FOR CREATION OF EQUITABLE MORTGAGE IN FAVOUR OF THE PETITIONER BANK. Exhibit P2 TRUE COPY OF THE ORDER DATED 07/03/2020 ISSUED BY THE HONOURABLE DEBT RECOVERY TRIBUNAL II, ERNAKULAM IN S.A.336 OF 2019.** **Exhibit P3 TRUE COPY OF THE AID SALE NOTICE DATED 19/11/2011 ISSUED BY THE PETITIONER BANK.** **Exhibit P4 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE DATED 17/11/2021 ISSUED BY SUB REGISTRY OFFICE KOTTAYAM.**