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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
Ninala Jayasurya, J.
State Bank of India & Ors. - Appellants
Versus
The State of Andhra Pradesh - Respondent
Writ Petition Nos. 6488, 7087 and 478 of 2022
Decided On : 17-11-2023
SARFAESI Act - Registration of Sale Certificates - City Union Bank Limited v. The Sub-Registrar, Peddapalli, 2018 SCC Online Hyd 370 : (2018) 5 ALT 279 (DB)
Fact of the Case:
The petitioners, nationalized banks, sought to declare the actions of the respondents in not registering sale certificates executed in favor of auction purchasers as illegal, arbitrary, and contrary to the SARFAESI Act and other orders. The properties were mortgaged to the banks, and the respondents refused registration citing attachment orders and government circulars.
Finding of the Court:
The court found that the attachment orders subsequent to the mortgage do not affect the rights of the secured creditor over the subject property. It held that the sale certificates under the SARFAESI Act are free of encumbrances and must be registered, rejecting the contentions of the respondents and justifying the petitioners' actions.
Issues: The issues revolved around the refusal of registration by the respondents based on attachment orders and government circulars, and the priority of the banks' rights under the SARFAESI Act.
Ratio Decidendi: The court relied on the legal position established in City Union Bank Limited v. The Sub-Registrar, Peddapalli, emphasizing that attachment orders subsequent to the mortgage do not affect the rights of the secured creditor over the subject property. It held that the sale certificates under the SARFAESI Act are free of encumbrances and must be registered.
Final Decision: The writ petitions were allowed, and the court directed the respondents to receive, register, and release the sale certificates in favor of the auction purchasers, setting aside the actions of the respondents. The court also ordered the deposit of any remainder of the sale consideration to the credit of the respective court cases.
COMMON ORDER
Ninala Jayasurya, J. - As the issue involved in these writ petitions is identical, the same are disposed of by this Common Order.
2. W.P.No.6488 of 2022 is filed to declare the action of the 2nd respondent in not registering the Sale Certificate dated 16.06.2021 executed by the petitioner-Bank in favour of the 5th respondent in the auction conducted in respect of residential building to an extent of 145.50 sq.yards or 121.44 sq.meters together with Ground & First Floor House bearing Door No.12-176, besides Girls Hostel, situated in Survey No.491 of Tummapala Village, Anakapalli Mandal, Visakhapatnam District as illegal, arbitrary, violative of principles of natural justice, contrary to Articles 14 and 300-A of Constitution of India as also contrary to Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, 'the SARFAESI Act') and orders passed by this Court in W.P.Nos.29922 of 2018 dated 06.02.2019, W.P.No.10432 of 2020 dated 19.08.2020 and for a consequential direction to the 2nd respondent to receive, register and release the Sale Certificate dated 16.06.2021 in favour of the 5th respondent in respect of the subject matter property by setting aside the proceedings of the 2nd respondent dated 01.07.2021.
3. W.P.No.7087 of 2022 is filed to declare the action of the 2nd respondent in not entertaining and registering the Sale Certificate dated 28.09.2021 executed by the petitioner-Bank in favour of the 5th respondent in the auction conducted in respect of property consisting of RCC roof framed structure Ground and First floor building admeasuring 100 sq.yds., or 83.61 sq.meters of site situated at Door No.65-3-273, Sri Nilayam under the Assessment No.760081772 Western part situated in Plot No.133, Survey No.35 of Gullalapalem, Ex-Serviceman Colony, Sriharipuram, Visakhapatnam, on the ground that an attachment order has been passed in I.A.No.307 of 2018 in O.S.No.715 of 2018 dated 20.01.2018 by VII Addl.Senior Civil Judge, Visakhapatnam as illegal, arbitrary, violative of principles of natural justice, contrary to Articles 14, 21 and 300-A of Constitution of India as also contrary to SARFAESI Act and orders passed by this Court in W.P.Nos.29922 of 2018 dated 06.02.2019, W.P.No.10432 of 2020 dated 19.08.2020 and for a consequential direction to the 2nd respondent to receive, register and release the Sale Certificate dated 28.09.2021 in favour of the 5th respondent in respect of the subject matter property.
4. W.P.No.478 of 2022 is filed to declare the action of the 4th respondent in not registering the Sale Certificate dated 20.12.2018 executed by the petitioner-Bank in favour of the 6th respondent under the provisions of the SARFAESI Act in respect of RCC roofed building to an extent of 222 sq.yards located at Survey No.212/1C3, Jaya Prakash Mahar colony, Godarigunta Area, within the limits of 4th respondent, as illegal, arbitrary, unconstitutional and contrary to the provisions of the Registration Act, 1908 and the Rules made therein and the Rules made therein, and for a consequential direction to the 4th respondent to receive, register and release the Sale Certificate in favour of the 6th respondent in respect of the subject matter property.
5. The facts of the cases, as per the averments made in the Writ Petitions, in brief, are to the effect that the subject matter properties in the instant writ petitions were mortgaged towards loan transactions and in view of non-discharge of loan amounts, the petitioner-Banks initiated proceedings under the provisions of the SARFAESI Act, being the secured creditors. The petitioners-Nationalized Banks issued public auction notices for sale of subject schedule properties by e-auction mode, un-official respondent No.5 in the respective Writ Petitions was declared as successful highest bidder. On payment of the sale considerations in respect of the subject matter properties, the petitioners issued Certificates of Sale under Rule
The main legal point established in the judgment is that attachment orders subsequent to the mortgage do not affect the rights of the secured creditor over the subject property, and sale certificates....
The SARFAESI Act's provisions override civil court injunctions, allowing secured creditors to enforce their rights despite conflicting orders.
Secured creditors' rights under the SARFAESI Act take precedence over subsequent attachment orders, allowing for the registration of sale certificates.
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