The court established that in execution proceedings, the rights of a secured creditor with a prior charge must be addressed before confirming any sale of the property.

JUDGMENT

1. The petitioner - Sree Subramanyeshwara CoOperative Bank Ltd., is before this Court assailing order dtd. 15/7/2023 passed by the LXIX Additional Civil City and Sessions Judge, Bengaluru (CCH-70) (for short, 'Executing Court') in Ex.No.2424/2019, confirming the sale on hearing memo dtd. 17/6/2023 filed by petitioner herein.

2. Heard the learned counsel Sri.Gaurav G.K., for Ms.Anusha Nandish, learned counsel for the petitioner/bank and learned counsel Sri.V.B.Shivakumar for respondent No.1/Decree Holder. There is no representation for respondent No.2. Perused the writ petition papers.

3. The respondent No.1 filed Execution Petition No.2424/2019 to execute the judgment and decree dtd. 16/3/2019, partly decreeing the suit directing the defendants therein i.e., respondent Nos.2 and 3 herein to refund Rs.24, 50, 000.00 with interest at the rate of 18% p.a., to the plaintiff i.e., respondent No.1 herein. The respondent No.1/Decree Holder has sought for sale of schedule property to realize the amount due from respondent Nos.2 and 3. The petitioner herein who is not a party to the suit, filed intervening application under Order I Rule 8A of CPC in the Execution Proceedings. No orders are passed on the said intervening application and the said intervening application is pending consideration before the Executing Court. The petitioner contends that petitioner/bank has prior charge over the execution schedule property which is put into execution. Since it has first charge, the Executing Court could not have proceeded against the said schedule property.

4. By order dtd. 11/10/2022 in Execution Petition No.2424/2019, the Executing Court while deferring the passing of order on the application filed by the petitioner for intervening observed as follows:

"The applicants charge being the first one, after satisfying the charge created in favour of the co-operative bank, prayer of the present DHR is accepted. Therefore, the discharging of the mortgagor/present applicant after satisfying the amount the balance out of the auctioned amount is to be disbursed to decree holder in accordance to law. Hence, this Court at this stage satisfied not to pass any order against DHR. The applicant's prayer will be considered only after deposit of auction amount. The orders passed with regard to auction and other proceedings shall remain effective. Call on hearing date."

5. The Executing Court has observed that petitioner charge being the first charge, after satisfying the charge created in favour of the Co-operative Bank, the prayer of the Decree Holder would be considered. The above order protects the interest of the petitioner/bank.

6. Thereafter, the sale has taken place. When the matter was taken up with regard to confirmation of sale, the petitioner/bank filed memo dtd. 17/6/2023 which reads as follows:

"MEMO

The undersigned counsel appearing on behalf of the impleading applicant - Bank, i.e., Sree Subramanyeswara Co-operative Bank Ltd, submits that the said bank has initiated proceeding to recover the due payable to it from the Judgment Debtors herein, the dues as is forthcoming from the statement produced herewith. It is submitted that the bank has custody of the original title deeds concerning the auctioned property and has taken possession of the said property under the provisions of SARFAESI Act. It is therefore necessary to discharge the prior charge towards the Judgment Debtors' liability to the bank, to enable handing over of possession and title documents concerning the auctioned property which is with the bank, as per the order dtd. 11/10/2022 passed by this Hon'ble Court in the above case, in the interest of justice and equity."

7. The above memo indicates that petitioner/bank prayed to discharge the prior charge over the execution schedule property to enable handing over of possession and the title document concerning the auctioned property. Under impugned order, memo filed by petitioner was dismissed and the Court confirmed the sale co