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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
S.R. KRISHNA KUMAR, J.
Balakrishna G., Son Of Late K. Govindaswamy Naidu and Ors. – Petitioners
Versus
The Sub Registrar, Jayanagar District (Kengeri), Bangalore and Ors. – Respondents
Writ Petition No. 10383 of 2024 (GM-ST/RN)
Decided On : 19-07-2024
ORDER :
S.R. KRISHNA KUMAR, J.
In this petition, petitioners have sought for the following reliefs:-
“ A) Issue a writ or Order by way of certiorari quashing the impugned Endorsement dated: 22.03.2024, bearing ref No. K/UNOKA/731/23-24 issued by Respondent No.1 at Annexure-A.
B) Issue a writ or Order by way of Mandamus Directing respondent no. 1 to register the sale certificate dated: 20.03.2024 executed in favour of the petitioners by respondent NO.3 at Annexure-B.
C) Grant any additional order or directive that this Honorable Court consider appropriate under the given facts and circumstances of the case, including any applicable costs, in the pursuit of justice and equity.’
2. Heard learned Senior counsel for the petitioners and learned AGA for the 1st respondent as well as learned counsel for respondents 2 and 3 and perused the material on record.
3. A perusal of the material on record will indicate that the 3rd respondent – Bank brought the subject property to sale by way of a public auction to liquidate debt owed by one M/s.Acropetal Technologies Ltd., and a public auction was conducted on 14.03.2024, in which, petitioners are the successful bidders and the sale in their favour was confirmed and a sale certificate dated 20.03.2024 was issued in favour of the petitioners. It is the grievance of the petitioners that when they approached the 1st respondent - Sub-Registrar seeking registration of the sale certificate executed in their favour, the 1st respondent issued the impugned Endorsement at Annexure-A dated 22.03.2024 refusing to take steps for registration of the sale certificate on the ground that a letter dated 01.10.2018 was written by the 2nd respondent – Enforcement Directorate (ED), which required permission to be obtained from the ED before proceeding for registration. Aggrieved by the impugned Endorsement dated 22.03.2024 issued by the 1st respondent refusing registration of the sale certificate, petitioners are before this Court by way of the present petition. In support of his contention, reliance is placed upon the judgment of the Bombay High Court in the case of SBICAP Ventures Ltd, Vs. Joint Director, Directorate of Enforcement (Bengaluru Zonal Office) and others- W.P.No.1360/2023 dated 20.03.2023(Bombay); and judgments of this Court in the cases of T.Bharat Gowda vs. State of Karnataka & others – W.P.No.7872/2024 dated 28.05.2024 as well as Sri.K.M.Srikanta vs. State of Karnataka & others – W.P.No.10530/2023 dated 29.05.2024.
4. While the 3rd respondent – Bank which has issued the sale certificate in favour of the petitioners would support the claim of the petitioners, the 1st respondent – State and 2nd respondent – ED would reiterate the contentions urged in the statement of objections and submit that there is no merit in the petition and that the same is liable to be dismissed. It is also submitted that the 3rd respondent - Bank has instituted proceedings before the DRT in T.S.A.No.5/2024 against the mortgagor of the subject property, the said mortgagor has also preferred W.P.No.19356/2019 before this Court against the ED and others, in which, there is an interim order of stay which is in force from 25.04.2019 onwards. It is therefore submitted that there is no merit in the petition and that the same is liable to be dismissed.
5. I have given my anxious consideration to the rival submissions and perused the material on record.
6. A perusal of the impugned Endorsement at Annexure-A dated 22.03.2024 will clearly indicate that the sole ground on which the 1st respondent / Sub-Registrar has refused registration of the sale certificate is on account of letter / communication dated 01.10.2018 said to have been issued by the 2nd respondent – ED, who has put forth a claim over the subject property. In this context, it is relevant to state that there is no statutory provision under the Prevention of Money Laundering Act, 2002 (for short ‘the PMLA’) which empowers, enables or authorizes the 2nd respondent – ED to call upon
The court established that the rights of secured creditors prevail over claims from the Enforcement Directorate, and the Sub-Registrar must register sale certificates as mandated by law.
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A mortgagee bank's sale certificate cannot be denied registration due to prior attachment orders, as secured creditors' rights under the SARFAESI Act prevail over tax attachment claims.
The court emphasized the priority of charge in favor of the secured creditor over the charge in favor of the State for tax due under the Value Added Tax of the State.
The main legal point established in the judgment is the priority of the secured creditor's dues over other creditors' claims, as determined by the SARFAESI Act and relevant case law.
Point of law: mortgage was created by the assessee much before a demand was made under Rule 2 and even before an order of assessment was passed voidity under Section 281(1) is not automatic, the peti....
Point of law: Whether non-filing of appeal provided under the provisions of the Registration Act, 1908 against the proceedings of the Sub-Registrar, Patamata, Vijayawada dated 20.10.2017, is fatal to....
A secured creditor's rights under the SARFAESI Act are unaffected by a civil court's interim injunction binding only the parties in the suit.
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