Union Bank of India v. Village Officer Mutttambalam Village, Kanjikuzhy, Kottayam; Dhanalakshmi Bank Ltd., Kottayam Branch; Binukumar M.P.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **WEDNESDAY, THE 22[ND] DAY OF MAY 2024 / 1ST JYAISHTA, 1946 WP(C) NO. 42118 OF 2023** ## **PETITIONER:** **UNION BANK OF INDIA, K.K. ROAD, KANJIKUZHY, KOTTAYAM, REP. ITS BRANCH MANAGER NAMELY BINOY KUMAR, PIN – 686004** **BY ADVS. ASP.KURUP SADCHITH.P.KURUP C.P.ANIL RAJ SIVA SURESH RESHMA RAJ** ## **RESPONDENTS:** - **1 THE VILLAGE OFFICER MUTTAMBALAM VILLAGE, KANJIKKUZHY, KOTTAYAM, PIN – 686002** **2 DHANALAKSHMI BANK LTD. KOTTAYAM BRANCH, BHAGYALAKSHMI ARCADE CHILDREN'S LIBRARY, THIRUNAKKARA, KOTTAYAM, REP. BY ITS BRANCH MANAGER, PIN – 686001** - **3 BINUKUMAR M.P S/O. M.K. PRABHAKARAN, MATHIRAPPALLIL HOUSE, MARIATHURUTHU PO, KOTTAYAM, PIN – 686017** W.P.(C) No.42118 of 2023 : 2 : **BY ADVS. SRI.KARUNAKARAN C.K.-R2 SRI.VINOD JABAR-R3 SRI.K.V.KRISHNAKUMAR(D/758/2015) SMT.SHIFNA MUHAMMED SHUKKUR(K/000671/2020) SRI.KRISHNA SURESH(K/000727/2021) SMT.MEKHA MANOJ(K/001711/2023) SRI.BINOY DAVIS-GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22.05.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.42118 of 2023 : 3 : ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.42118 of 2023 ````````````````````````````````````````````````````````````` _Dated this the 22[nd] day of May, 2024_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner which is a Nationalised Bank and a Body Corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, has filed this writ petition seeking to declare that the 2[nd] respondent is not entitled to proceed against the property covered by Exts.P1 to P3 under the Kerala Revenue Recovery Act and to quash the revenue recovery proceedings initiated against the properties at the instance of the 2[nd] respondent. The petitioner also seeks to direct the 1[st] respondent-Village Officer to efface the entry of revenue recovery proceedings as noted in Ext.P4 and consequentially effect mutation and accept land tax in the name of the 3[rd] respondent. W.P.(C) No.42118 of 2023 : 4 : 2. The petitioner had granted financial advances to M/s.Orient Spice Company. The borrowers created equitable mortgage and charge over a flat owned by them. The borrowers failed to maintain the loan account. The Bank thereupon invoked the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and sold the secured assets to the 3[rd] respondent as per Ext.P3 Sale Deed dated 16.11.2023. 3. When the 3[rd] respondent approached the 1[st] respondent-Village Officer for mutation of the property, the 1[st] respondent declined stating that revenue recovery proceedings are pending pursuant to a request made by the Dhanalaxmi Bank Limited. 4. The petitioner states that the requisition was made only on 12.01.2021 which was subsequent to the mortgage. Therefore, revenue recovery action against the mortgaged property is unsustainable. 5. Standing Counsel representing the 2[nd] respondentBank resisted the writ petition filing a statement. The 2[nd] W.P.(C) No.42118 of 2023 : 5 : respondent submitted that the petitioner has already sold the property and therefore the seller has no further right in the property conveyed. The sale of the property was on “as is where is” basis. There was an attachment over the property at the time of the sale, of which the purchaser had notice. A purchaser on “as is where is” basis is estopped from later contending that he is not bound by the terms and conditions of the auction notice. 6. I have heard the learned counsel for the petitioner, the learned Government Pleader representing the 1[st] respondent, the learned Standing Counsel appearing for the 2[nd] respondent as also the learned counsel representing the 3[rd] respondent. 7. The grievance of the petitioner is over the attachment orders on the secured asset of the Bank and revenue recovery proceedings at the instance of the 2[nd] respondent-Bank against the property. 8. Evidently, the property was mortgaged by the 3[rd] respondent to the petitioner-Bank in the year 2012. Ext.P1 W.P.(C) No.42118 of 2023 : 6 : memorandum of deposit of title deed is dated 20.07.2012. 9. The 1[st] respondent initiated revenue recovery pursuant to a requisition made by the 2[nd] respondent. Ext.P4 is the requisition made by the 2[nd] respondent-Bank. Ext.P4 requisition was made only on 12.01.2021, which is much later than the equitable mortgage created in favour of the petitioner. It is settled proposition of law that any conveyance of property effected by the owner-mortgagor will always be subject to the equitable mortgage already created. 10. In _**Madhan v. Sub Registrar** [2014 (1) KLT 406],_ the question that came up for consideration before this Court was whether the attachments effected subsequent to the creation of equitable mortgage will be effaced after the property is purchased by another in a sale conducted by the Recovery Officer of the Debt Recovery Tribunal. This Court held that 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 is free of all encumbrances. The attachments effected subsequent to W.P.(C) No.42118 of 2023 : 7 : 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 by the Recovery Officer and the same ceases to have any effect or fall to the ground the moment the sale is confirmed in favour of the petitioner. Therefore, this Court directed the SubRegistrar and the Village Officer to efface the attachments effected subsequent to the mortgage from the relevant records. 11. In _**Keechery Service Co-operative Bank Ltd. v. Sajitha Nizar** [2020 (5) KHC 231],_ a Division Bench of this Court agreed with the declaration of law in _**Madhan**_ (supra). Paragraphs 6 and 7 of that judgment read thus: “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 the property purchased by them in the auction under the SARFAESI Act. The reason for not effecting mutation was an order W.P.(C) No.42118 of 2023 : 8 : 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 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.” (underline supplied) W.P.(C) No.42118 of 2023 : 9 : 12. In view of the law laid down by this Court as above, the revenue recovery against the secured asset mortgaged by the 3[rd] respondent cannot take precedence over the claim of the petitioner-Bank. The petitioner is therefore entitled to reliefs. 13. The 1[st] respondent-Village Officer is directed to efface the entry of revenue recovery proceedings as noted in Ext.P4. Application, if any, made by the petitioner-Bank for mutation shall be entertained in spite of the revenue recovery notice and transfer of registry shall be allowed if the petitioner satisfies all other parameters. The 1[st] respondent shall also accept land tax in the name of the 3[rd] respondent. It is made clear that the claim, if any, of the 2[nd] respondent will be subject to the superior claim of the writ petitioner-Bank. The writ petition is disposed of as above. **N. NAGARESH, JUDGE** aks/29.05.2024 W.P.(C) No.42118 of 2023 : 10 : ## **APPENDIX OF WP(C) 42118/2023** ## **PETITIONER'S EXHIBITS** **Exhibit P1 A TRUE COPY OF THE MEMORANDUM OF DEPOSIT OF TITLE DEED DATED 20.7.2012 EVIDENCING MORTGAGE OF THE PROPERTY Exhibit P2 A TRUE COPY OF THE MEMORANDUM OF DEPOSIT OF TITLE DEED DATED 26.6.2013 Exhibit P3 A TRUE COPY OF SALE DEED NO.2132/2023 DATED 16.11.2023 OF KOTTAYAM ADDITIONAL SRO IN THE NAME OF THE 3RD RESPONDENT Exhibit P4 A TRUE COPY OF THE DETAILS OF REQUISITION MADE BY THE 2ND RESPONDENT OBTAINED FROM THE REVENUE RECOVERY PORTAL Exhibit P5 A TRUE COPY OF THE JUDGMENT DATED 3.10.2023 IN WPC NO. 18781/2023**