A secured creditor, who got registration of security interest, has priority in the matter of payment of the dues over all other debts and all revenues, taxes, cesses and other rates payable to the Central and State Government or local authority.

ORDER :

U. Durga Prasad Rao, J.

The petitioner prays for writ of mandamus declaring the action of respondents 2 and 3 in not returning the sale amount paid by the petitioner pursuant to the e-Auction notice dated 28.05.2021 in respect of the residential house in an extent of 319.89 square yards with RCC roof, ground, first and second floors covered by Door No.12-2-5/12, old ward No.4, New Ward No.10, Prakash Nagar, Narasaraopet Municipality (for short, “subject property”) as illegal and contrary to the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the SARFAESI Act") and consequently direct the respondents 2 and 3 to return the money of Rs.1,25,90,000/- with interest @ 18% p.a. to the petitioner.

2. The petitioner's case is thus :

(a) Pursuant to the e-auction notice dated 28.05.2021 published in newspapers dated 28.05.2021 and 01.06.2021 for sale of the subject property, the petitioner participated and became the highest bidder. The respondents 2 and 3 suppressed the fact that there were several encumbrances over the subject property and auctioned the same in favour of the petitioner in a deceitful manner. After payment of the entire sale consideration and obtaining Sale Certificate, the petitioner came to know that as against the borrower Sri Aravapalli Seetharamanjaneyulu and another, various suits and execution petitions were filed by various parties seeking to attach the subject property which was sold in e-auction in favour of the petitioner. O.S.Nos.205/2018, 46/2019, 50/2019, 51/2019, 53/2019, 360/2019, 386/2019, 33/2020, 34/2020, 35/2020, 39/2020, 42/2020, 50/2020, 54/2020, 107/2020, 247/2020, 257/2020, 298/2020, 299/2020, 124/2021, 130/2021, 143/2021, 171/2021, 216/2021, 228/2021 are the suits pending against A. Seetharamanjaneyulu on the file of the Principal Junior Civil Judge and II Additional Junior Civil Judge, Narasaraopet. In those suits, attachment was made in respect of the subject property and the Registering authorities were informed of the said fact which is within the knowledge of respondents 2 and 3. Apart from the suits, there are execution petitions. i.e., E.P.Nos.7/2020, 18/2020, 19/2020, 9/2021, 41/2021, 64/2021, 65/2021, 66/2021, 68/2021, 69/2021 and 70/2021, which are pending. Hence the petitioner made a representation dated 05.08.2021 to refund the bid amount of Rs.31,50,000/- with interest and cancel the sale certificate and also to cancel the loan granted to him by the 3rd respondent in respect of remaining bid amount of Rs.1,25,90,000/-. However, the respondents have not taken any action. The respondents 2 and 3 were well aware of the cases pending against the subject property and thereby they were not entitled to sell the property without clearing the encumbrances. However, they sold the property in public auction suppressing all the facts. The petitioner paid the bid amount under the impression that the property was free from encumbrances and the said property is a freehold property. Hence the writ petition.

3. Respondents 2 and 3 filed counters and opposing the writ petition, inter alia contending thus :

(a) Firstly it is contended that the writ petition is not maintainable and the petitioner should approach the Debts Recovery Tribunal if he is aggrieved. Nextly it is contended that pursuant to the e-Auction notice dated 28.05.2021 the petitioner submitted his application on 16.06.2021 with tender/EMD amount of Rs.12 lakhs and inspected the property and visited the branch and verified the title deeds of the property and also obtained copy of legal scrutiny report dated 01.03.2007 which was issued by the panel advocate of the bank. The said report was issued by the panel advocate at the time of sanction of loan to its borrower-cum-mortgagor Sri Aravalli Seetaramanjaneyulu. After having satisfied with the title that there were no encumbrances over the property as per EC issued by the Sub Registrar only the petition