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Judgment
Murali Purushothaman, J
The petitioner, a banking company, has filed this writ petition for a direction to the 1st respondent, Sub Registrar, Alangad to delete the entry of attachment in the encumbrance register in respect of its secured assets.
One Mr.Baiju John, proprietor of M/s. Kochin Food Mall, Ernakulam, availed credit facilities from the petitioner Bank by mortgaging two items of properties comprised in Survey No.319/4 of Varapuzha Village. The equitable mortgage by deposit of title deeds was created by the borrower on 06.11.2006 and 13.08.2011. Since the borrower defaulted payment of installments, the petitioner initiated proceedings under the SARFAESI Act and the property was sold by way of a private treaty in favour of the 3rd respondent as per Ext.P11 sale certificate dated 27.09.2023.
The 4th respondent, the Special Deputy Collector (RR), Kerala State Housing Board, has attached the mortgaged property as per order dated 16.02.2018 for an amount of Rs.2,03,976/- with interest and other charges due to them. The petitioner contends that the aforesaid attachment effected by the 4th respondent subsequent to the creation of equitable mortgage in favour of the petitioner is liable to be effaced consequent to the sale conducted by the petitioner under the SARFAESI Act. According to the petitioner, the right of redemption of the borrower has been extinguished by the operation of Section 13(8) of the SARFAESI Act and even after the sale, further amounts are due to the petitioner.
Heard the learned counsel for the petitioner, the learned Government Pleader and the learned Standing Counsel for the 4th respondent.
The learned counsel for the petitioner relied on the decision of this Court in Madhan S. v. Sub Registrar, Kollam and Others [2014 (1) KHC 249: 2014 (1) KLT 406: ILR 2014 (1) Ker.586: 2014 (1) KLJ 483: AIR 2014 Ker.54] and the decision of a Division Bench of this Court in Secretary, Keechery Service Co-operative Bank Ltd. v.Sajitha Nizar alias Sajitha P.M. and Others [2020 (5) KHC 231: ILR 2020 (4) Ker.249: 2020(6) KLT 68: 2020(4) KLJ 970] and contends that the attachment effected subsequent to the creation of equitable mortgage will not affect the right of the Bank to sell the mortgaged property and the attachment has to be effaced from the encumbrance register.
In Madhan's case (supra), this Court held in paragraph 9 as follows:-
“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 petitioner. The confirmed in favour of 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 would remain as a permanent taboo prejudicial 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.”
A Division Bench of this Court in Ali Asharaf M.M. and Another v. Sub Registrar, Thrissur (Judgment dated 24.7.2015 in W.A. No.612/2015) has affirmed the law laid down in Madhan's case (supra). In Keechery Service Co-operative Bank case (supra), another Division Bench of this Court also affirmed the law laid down in Madhan's case (supra) and held in paragraph 7 as under:-
“7. …. 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 27/06/2014, the date on which the property in question was mortgaged with Federal Bank”.
Thus it is trite law that attachment effected subsequent to the creation of equitable mortgage does not have any effect on the sale conducted by the Bank under the SARFAESI Act and has to be effaced from the encumbrance register. The attachment effected by the 4th respondent is subsequent to the creation of equitable mortgage in favour of the petitioner.
Accordingly, there will be a direction to the 1st respondent to delete the entry of attachment noted in favour of Respondent No.4 in the encumbrance register (Ext.P12) in respect of the immovable property having an extent of 2.27 Ares, with building No.XIII/400 and all improvements thereon, comprised in Sy.No.319/4 of Varapuzha Village, Parur Taluk, Ernakulam District and land having an extent of 1.62 Ares, with building No.XIII/400 and all improvements thereon, comprised the same survey number and Village and to register Ext.P11 sale certificate, it is is otherwise in order. There will be a further direction to the 2nd respondent to effect mutation on registration of sale deed as above.
The writ petition is disposed of.