PUNJAB NATIONAL BANK v. 1. The State of Telangana

9. Meka Sri Harsha, S/o Meka Nethaii Aged about Major, Occ. not known, Fi/o House No. 18/A M.C.H.No. 16-02-835/35 Plot No.23, Saidabad Colony' Hyderabad.

10.Fatima Begum, W/o Mohammed Khaja Khan, Aged about. Major, Occ. not known, Rl/o H.No.16-9-585, Flat No.l03, Ahmed Tower, Old Malakpet, Amberpet, Malakpet Colony, Hyderabad. 1'1 . Mohammed Khaja Khan, S/o Late Mohammed Khan, Aged about. Major, Occ. not known, R/o H.No.16-9-585, Flat No.103, Ahmed Tower, Old Malakpet, Amberpet, Malakpet Colony, Hyderabad. (RR 7 to 11 are impleaded as per Court Order dated 07.04.2025 in l.A.No. 2t2025.) .....RESPONDENTS Petition Under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ or order or direction more particularly one in the nature of WRIT OF MANDAMUS declaring the action of the 4th respondent in refusing to receive and register the Sale Certificate issued on account of enforcement of SARFAESI ACT in respect of the House No.18/A, M.C.H.No.16-02-835135 admeasuring 388.88Sq.Yds. or 325.1SSq.Mtrs. on Plot No.23 admeasuring 466.67Sq.Yds. in Sy.Nos.10312 and 103/3 situated at Saidabad Colony, Hyderabad on the grounds of impugned order passed by sth respondent in ('1 )

1.A.No.535 of 2024 in A.A.C.F. No.483 of 2O24 on 13-12-2024, (2) t.A.No.02 of 2O25 in A.A.C.F. No.483 of 2024 on 04-01-2025 and (3) l.A.No.12 of 2025 in A.A.C.F.No.4B 2 ot 2024 on 21-O1-2025 as illegal, arbitrary and in violation of Article 14 and 300-A of the Constitution of India and consequently set aside the above impugned orders passed by the Sth respondent and direct the 4th respondent to receive and register the sale certificate pertaining to the petitioner. |.A.NO:1 OF 2025 Petition Under Section 15'l CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant time for further proceedings in SARFAESI ACT in respect of issuance and registration of Sale Certificate by the petitioner in favour off the successful bidders in view of the refusal of 4th respondent to register the sale certificate pending disposal of this writ petition. Counsel for the Petitioner : SRI K.V.MURALIDHAR PATNAIK Counsel for the Respondent Nos.1 to 4 : SMT S.SRAVANTHI, AGP FOR REVENUE Counsel for the Respondent Nos.S, 7 to 9 : - Counsel for the Respondent No.6 : SRI S.VENKATA SURESH counsel for the Respondent Nos.l0 & 11 : sRl G.KRISHNA sAtRAM The Court made the following ORDER HON'BLE SRI JUSTICE K.SARATH W.P.No.8721 of 2O25 ORDER: Heard Sri Muralidhar Patnaik K.V., learned Standing Counsel for the petitioner-bank, Smt. S. Sravanthi, learned Assistant Government Pleader for Stamps and Registration, appearing for the respondent Nos.l to 4, Sri Sistla Venkata Suresh, learned counsel for the respondent No.6 and Sri G Krishna Sairam, learned counsel for the respondent Nos.10 and 11 and perused the material available on record

2. This writ petition is filed seeking for a direction to the respondent No.4/Sub-Registrar, Azarnpura, Hyderabad, to delete the property viz., H.No. 18 / A, M.C.H.No.L6-O2-835/35 admeasuring

388.88 sq yds in plot No.23 admeasuring 466.6T sq. yds. in sy. No.1o3/2 & Lo3/3 situated at saidabad colony, Hyderabad (hereinafter referred to as 'subject 2 SK.J W.P.No.872l of 2025 property") from the list of prohibited properties and to register the Sale Certificate issued by the petitioner bank in favour of the respondent Nos.10 and ll-auction purchasers, under Rule 9 (6) of the Security Interest (Enforcement) Rules, 2OO2.

3. The learned Standing Counsel for the petitioner-bank submits that originally, the subject propert5r was purchased by the respondent Nos.7 to 9 by obtaining loan facility. Later, the said borrowers defaulted in repayment of the said loan. The petitioner-bank, after following the due process of law, initiated proceedings under the provisions of Section 14 of the Securitizatior' and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2OO2 ('SARFAESI Act), took over the possession of the property and later the petitioner-bank brought the mortgaged property for auction which was conducted on 1O-0l-2O25. In the said auction, the respondent Nos.1O and 11 have stood as the highest 3 SK.J W P.No.872l of 2025 bidders and accordingry deposited 2s% of' the bid amount a,d balance amount has to be paid before the time of registration of sale certificate in their favour. However, it was brought to the knowledge of the petitioner-bank by the respondent Nos.r0 and 11 that the schedule property was praced under the 'Prohibited List' by the respondent No.4. Accordingly, the petitioner-bank approached the 4th respondent for removing the schedule property from the .prohibited list' and allotting slot for registration of the sale Certificate.

4. The 4th respondent has informed the petitioner-bank that the respondent No.6-M/s. c.v.R. Chits P/t. Ltd., Kothapet Branch, Hyderabad, has initiated the proceedings under Section 6g (1 & 2) of the chit Funds Act, tgg2 against the subject property before the respondent No.S- Deputy Registrar of chits/ Arbitrator, Ranga Reddy District, Terangana, and the respondent No.5 has passed an attachment 4 SK.J W.P.No.872l of2025 orders under Section 68 (2) of the Chit Funds Act, 1982 (for brevity 'the Act, 1982) in I.A.Nos.535 of 2024 in A.A.C.F.No.483 of 2024 dated 13-12-2024, I.A.No.2 of 2025 in A.A.C.F.No.483 of 2024 dated O4- OL-2O25 and I.A.No.12 of 2025 in A.A.C.F.No.482 dated 2l-Ol-2O25, in respect of the subject property and therefore, the property is under the list of prohibited properties and further informed that unless and until the attachment order passed by the respondent No.5 is raised the subject propert5r cannot be removed from the list of prohibited properties and the Certificate of Sale also cannot be admitted for Registration.

5. The learned Standing Counsel for the petitioner would further submit that the Encumbrance Certificate clearly reflects the mortgage created in favour of the petitioner-bank and in the said E.C., the charge of the respondent No.6 over the subject property is not found and therefore the 5 SK,J \l'.P.No.8721 of2025 respondent Nos.7 to t have no authority to transfer the schedule property in favour of the respondent Nos.10 and 11 and therefore the said attachment is not binding on the petitioner-bank.

6. Learned Standing Counsel for the petitioner-company further submits that the action of respondent No.4 in not removing the subject propert5r from the prohibited list is contrary to the Orders passed by this Court in the Citg tlnion Bank Limited. Ys Sub Registrar, ped.dapalli qnd. Others.,l followed by another Division Bench of this Court in W.P.No.38125 of 2Ot8 dated 14.10.2O19 and requested to direct the respondent. No.4 to register the Sale Certificate to be issued by the petitioner-bank in favour ofthe respondent Nos.lO and 11.

7. On the other hand, learned Assistant Government Pleader for Stamps and Registration appearing for the respondent Nos.l to 4 submits that ' zot 8 (s) al-l:tzg 6 SK.J W.P.No.872l of 2025 as per the attachment orders, referred to above, the 4th respondent has entered the subject property in the prohibitory list and in view of the provisions of the Registration Act, 1908, the respondent No.4 is not empowered to delete the subject property from the prohibitory list and requested to dismiss the Writ Petition.

8. Learned counsel for the respondent No.6 has not disputed the orders passed by this Court in Citg Union Bank Limited (supra 1), but requested to direct the petitioner-company, to pay the surplus money, if any remains out of the auction sale proceeds, after adjustment of the entire loan amount, to the respondent No.6 and he relied on the unreported judgment passed by a Division Bench of this Court in the Union Bank of India u. Stafe of Telangana and other*. 2 w.p.No.22518 of 2024 dated t2-t2-2o24 7 1 SK,J W.P.No.872l of2025

9. After hearing both sides and perusing the material available on record, this Court is of the considered view that there is no dispute with regard to the mortgage of the subject property by the respondent Nos.7 to 9 with the petitioner-bank and also the proceedings initiated by the petitioner-bank as per SARFAESI Act against the respondent Nos.7 to 9. The respondent Nos.7 to 9 have availed the loan by mortgaging the subject propergr with the petitioner-bank. The petitioner-bank by following the procedure as contemplated under SARFAESI Act took over possession of the subject property and issued letter of Sale dated 16-0l-2025 in favour of the respondent No.1O and 11. Now, the respondent No.4 has refused to remove the subject property from the prohibited list and register the Sale Certificate on the ground that there is attachment order in respect of the subject propert5r by stating that unless and until the said attachment order is vacated, it cannot be 8 SK,J W.P.No.872l of2025 possible to register the SaIe Certificate. The said contention of the respondent No.4 is contrary to the Orders passed by this Court in Citg Union Bank Limited, (supra 1)

10. The relevant portion of the Judgment in Citg Union Bank Limited. (supra 1) is as follows: "8. It is needless to obserue that the ciuil Court has no juri.sdiction to deal with subject matters pertaining to the SARFAESI Act In the present scenario, the secured creditor was not a partg to the ciuil suits before the Courts below and thus the orders of attachment before judgment are not binding on the secured creditor/ Bank. More so, the cause of action before the Courts belout is not within the ambit of SARFAESI Act. 9 1O. Upon fair readirq of S.O. 219 in the light of Section 64 of CPC, thi.s Court b of the uiew that it only pertains to a ciuil dispute between the piuate parties and it does not include an institutianal sale und.er a statute. Though Section 64 comes into plag only after the alienation of the propertg under attachment amongst the piuate persons, the said legal position does not create an embargo upon the Registrar to proceed with the registratbn of sale certiftcates under the SARFAESI Act as the bank is not a parlA to the suit and the sale is not being effected bg a party to the attachment order. 11

12. In similar circumstances, tle Kerala High Court in The South Indi.an Bank Ltd. u. The Sub 9 SK,J \V.P.No.872l of 2025 \.-g?_ogl (s) wp (c) No. ss\s of 2o 17 dated 24.11.2O16, consid"ered the question-whether o certificate i.s liabte- to be regitered. or not in uiei of "ot" the order of attachry?t-biyore jud.gment passed bg the ciuir court and. herd. that the secured. cred.itor is entttled to proceed with the registration and. the Regbtration Authorttg cannot stall the procctss o/ regi.stration under.-the garb of an order o7 itto":,ii.nt passed bg the ciuil Court." 1 1' The above said finding of the Division Bench of this Court would squarely apply to the instant case and the Registration Authority cannot stall the process of registration of the sale certificate on the ground of attachment order. 72- 'rhe relevant portion in para Nos.3 and 4 of the order relied on by the learned counsel for the respondent No.6 in the union Bank of India (supra 2) is bxtracted as under; ,,3. Learrted counsel for the parties jc,intlg submtt that the controuersg tnuorued. in the tnstant petttion i.s- ^squarelg coueied bA on ord", dated 19.12.2018 pa.ssed in W.p.No.+"+Ot+ if iOtA.

4. Releuant extract of the order dated. 19.12.2018 passed in W.p.wo.++T14-of 201g reads as under: *Therefore, the wrtt petttion is; dbposed of directing tn" s"6_i"i"itro, I l0 SK,J W.P.No.872l of2025 to register the sale certificate. Howeuer, if after adjustment of tlrc entire loan amount, anA surplus maneA remains out of the auction sale proceeds, the Bank shall not paA it to the 7th respondent borrower but shall pay it to the Sth respondent-companA, after notice to the 7th respondent. There will be no order as to cosf,s. "

13. In the instant case also, the petitioner- bank followed the procedure as contemplated under the SARFAESI Act in respect of the subject property and the letter of SaIe was issued in favour of the respondent Nos.10 and 11. In view of the settled law, the respondent authorities have no power to refuse the registration of the Sale Certificate under the SARFAESI Act on the ground of attachment orders obtained from the Civil Court or any other authorities for the same property. In view of the sarne, the Registering Authority has to delete the subject property from the prohibitory list for registration of the Sale Certificate to be issued by the petitioner- bank in favour of the respondent Nos. 10 and 1 1 without taking into account the attachment orders. \ \ SK,J W.P.No.872l of 2025

74. In view of the above findings, the Writ Petition is disposed of directing the Respond.ent No'4/the sub Registrar, Registration & Stamps, office of the Sub-Registrar, Azampura, Hyderabad, to remove the subject property from the prohibited rist, and register the sale certificate to be issued by the petitioner-bank in flavour of the respondent Nos. 1o and 1 1, without reference to the attachment orders passed in I.A.Nos.535 of 2024 in A.A.c.F.No.4g3 of 2024 dated 13-12-2024, I.A.No.2 of 2o2s in A'A'c.F.No.483 of 2024 dated o4-o r-2o2s and I.A.No.12 of 2O2S in A.A.C.F.No.4g2 dated 21-o7-2o2s by the respondent. No.S-Deputy Registrar of chits / Arbitrator, Ranga Reddy District. However, if after adjustment of the entire loan amount, any surplus money remains out of the auction sale proceeds, the petitioner-bank shall not pay it to the respondent Nos.7 to g, but shall pay it to the respondent No6-M/s. c.v.R. chits pri'ate Limited, t2 SK,J W.P.No.672l of 2025 Kothapet Branch, Hyderabad, after giving notice to the respondent Nos.7 to 9.

15. Accordingly, the Writ Petition is disposed of. There shall be no order as to costs

16. Miscellaneous petitions pending, if arry, shall also stand closed. sd/- SREENTVASA //TRUE COPYII SECTION OFFICER To 1

5. 6

7. 8. 9. 10. SA MP (ft' HIGH COURT DATED:2511112025 ORDER WP.No.8721 ol 2025 ,i 16- 3 0BE$rut (, t'' .:] ,1. * Og {lr+ r, , ,.., r€o f' DISPOSING OF THE W.P WITHOUT COSTS. (+- 7/ I t t >t 5