CANARA BANK, ARM BRANCH v. SUB REGISTRAR & Ors

SUB REGISTRAR SUB-REGISTRAR'S OFFICE, KUNDARA, PIN - 691501 M/S. UTHRAM CASHEWS REPRESENTED BY ITS PARTNER MR.SANTHOSH KUMAR S/O KRISHNA PILLAI, CHONAMCHIRA, PERINAD P.O. KOLLAM, PIN - 691601 MR. SANTHOSH KUMAR S/O KRISHNA PILLAI NIKUNJAM, CHONAMCHIRA PERINAD POST, KOLLAM, PIN - 691601 SMT. DEEPA W/O SANTHOSH KUMAR NIKUNJAM, CHONAMCHIRA PERINAD POST, KOLLAM, PIN - 691601 SMT.BABY JAYASREE W/O LATE VIJAYA KUMAR KALIYIKKAL HOUSE, KOTTAMKARA CHANDANATHOPE POST, KOLLAM, PIN - 691014 SMT.RADHAMMA W/O PARAMESWARAN PILLAI, KALIYIKKAL HOUSE, KOTTAMKARA CHANDANATHOPE POST, KOLLAM, PIN - 691014 DHANUSH S/O LATE VIJAYA KUMAR KALIYIKKAL HOUSE, KOTTAMKARA CHANDANATHOPE POST, KOLLAM, PIN - 691014 W.P.(C) No.1566/2024 : 2 : 8 9 10 11 12 13 ISHA (MINOR) D/O LATE VIJAYA KUMAR KALIYIKKAL HOUSE, KOTTAMKARA CHANDANATHOPE POST, KOLLAM REPRESENTED BY MOTHER SMT. BABY JAYASREE, PIN - 691014 VILLAGE OFFICER PANAYAM VILLAGE OFFICE, CHONAMCHIRA PANAYAM KERALA, PIN - 691601 TAHSILDAR-RR KOLLAM, PIN - 691001 MANUEL MOHANDAS S/O YESUDAS NADAR, PROPRIETOR, M/S KELVIN CASHEWS, MOHAN ENTERPRISES BUILDING, MAIN ROAD, KOLLAM, RESIDING AT KEVINS, THILLERY, MUNDAKKAL VILLAGE, KOLLAM, PIN - 691001 MUHAMMED ABDUL MU-U-MIN S/O LATE HAJI MUHAMMED KUNJU MUSALIAR, PROPRIETOR, M/S GANAM ENTERPRISES (G2N2M ENTERPRISES AS STATED IN THE ENCUMBRANCE CERTIFICATE), KOOZHAMKULAM, THEVALAKKARA, KOLLAM, PIN - 690524 MRS. ANNIEMOL CHACKO D/O CELINE MARY, MULLANKUZHY VEEDU, KURICHI PANTHA, VAZHICHAL. THIRUVANANTHAPURAM, PIN – 695572 BY ADVS. ASHOK SHENOY B MOHAN LAL B P.S.GIREESH(K/341/2013) SALIH P.A.(K/422/2020) ARJUN R NAIK(K/001044/2020) THEJALAKSHMI R.S.(K/001390/2022) UMASANKER U.U.(K/002793/2023) ASWIN V. NAIR(K/1019/2017) AJAY S. KOSHY(K/003202/2022) SRI.SREEJITH V.S., GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 07.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.1566/2024 : 3 : N. NAGARESH, J. ````````````````````````````````````````````````````````````` W.P.(C) No.1566 of 2024 ````````````````````````````````````````````````````````````` Dated this the 7th day of March, 2024 J U D G M E N T ~ ~ ~ ~ ~ ~ ~ ~ ~ Canara Bank is the writ petitioner. The petitioner seeks to quash Ext.P3 to the extent it includes order of attachment. The petitioner seeks to declare that the attachments mentioned in Ext.P3 are invalid since the attachments are subsequent to the mortgage of the property.

The petitioner states that the 2nd respondent availed a cash credit facility of ₹75 lakhs. The 2nd respondent mortgaged 4.05 Ares of land and a residential building as security. When the 2nd respondent defaulted in repayment, the Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Ext.P2 sale W.P.(C) No.1566/2024 : 4 : notice was issued.

The petitioner states that there are existing orders of attachment against the mortgaged property, as is evident from Ext.P3 encumbrance certificate. The petitioner would urge that as per Section 26E of the SARFAESI Act and Section 31B of the Recovery of Debts due to Banks and Financial Institutions Act, the rights of secured creditors to realise the secured debts by selling assets over which security interest is created, shall have priority over all other debts including government dues. The petitioner therefore seeks to direct the 1st respondent-Sub Registrar to expunge the entries in their Registers concerning the attachments imposed on the property.

The 12th respondent resisted the writ petition filing counter affidavit. The 12th respondent submitted that he filed OS No.97/2014 in the Principal Sub Court, Kollam for realisation of ₹10,31,898/- from the 3rd respondent. The 3rd respondent did not appear in the suit and was declared ex-parte. The Sub Court decreed the suit and allowed the W.P.(C) No.1566/2024 : 5 : 12th respondent to realise ₹11,19,000/- with 6% interest. The petitioner is therefore entitled to realise that amount from the attached property.

I have heard the learned counsel for the petitioner, the respective counsel appearing for respondents 11 and 12 and the learned Government Pleader representing the 1st respondent.

The issue arising in this writ petition is relating to the conflicting rights of the petitioner and the 12th respondent. The petitioner had advanced a loan to the 2nd respondent who pledged 4.05 Ares of land and a residential building in Re-survey No.288/4-2-1 of Panayam Village, Kollam Taluk. The equitable mortgage was created by deposit of title deed on 27.06.2014.

The 12th respondent filed OS No.97/2014 before the Sub Court, Kollam for realisation of ₹10,31,898/- from the 3rd respondent. The attachment was effected on 27.11.2014 as can be seen from Ext.P3 certificate of encumbrance on property. This Court has held in the judgment in Madhan S. W.P.(C) No.1566/2024 : 6 : v. Sub Registrar, Kollam and others [2014 (1) KLT 406] that attachments effected subsequent to creation of equitable mortgage would be effaced after the property is purchased by sale conducted by the Recovery Officer of the Debts Recovery Tribunal. The rights and liberties conferred on the creditor/Bank by virtue of an earlier mortgage created cannot be defeated because of the subsequent attachments ordered by civil courts.

The issue was again considered by a Division bench of this Court in Secretary, Keechery Service Co-operative Bank Limited v. Sajitha Nizar alias Sajitha P.M. and others [2020 (6) KLT 68] this Court held that after creation of equitable mortgage of property, the subsequent attachments created in respect of the property will stand effaced and that the property will be free of all encumbrances and it can be mutated in favour of auction purchaser who purchase the property in SARFAESI proceedings.

In view of the law laid down by this Court, the petitioner-Bank is entitled to succeed. Ext.P3 is therefore W.P.(C) No.1566/2024 : 7 : quashed to the extent it includes orders of attachment dated