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2020 Supreme(Ker) 667
IN THE HIGH COURT OF KERALA AT ERNAKULAM
S. MANIKUMAR, SHAJI P. CHALY, JJ.
K.J. Binu – Petitioner
Versus
The Secretary, Nedumangad Municipality – Respondent
W.P. (C) No. 19984 of 2020
Decided On : 25-09-2020
Advocate Appeared:
For the Petitioners: Sri. S. Gopakumaran Nair, Sri. Sooraj T. Elenjickal, Smt. T.S. Maya, Sri. D.S. Sreekumaran.
For the Respondents: Sri. P. Ramakrishnan, Sri. Aravind Kumar Babu.
IMPORTANT POINTS:
Ownership of the property under mortgage, remains with the borrower. Even taking it for granted that the bank/secured creditor is in possession, the bank or any other person can acquire title, only by way of sale in accordance with the law-A mortgage is the transfer of an interest and not the entire right and title, which takes place only in sale.
Headnote:
Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 –Section 13-The Constitution of India- Article 300A-The Authorized officer-Brings the property for auction- Performs only his duty under the SARFAESI Act, 2002-For recovery of the amount due to the bank, and by mere publication of an auction notice, right of the owner to redeem the property is not lost- Merely because there is a charge on the property, it cannot be contended that the borrower has lost his status as the owner of the property.
Statement of facts:
Petitioner, an elected Councillor of Nedumangad Municipality, being interested in clean administration of the Municipality, has filed this writ petition, seeking to quash Exhibit-P4 ownership certificate dated 21.08.2020, issued by the Municipal Secretary of Nedumangad Municipality to the 5th respondent, applicant, who, according to him, has ceased to be owner/occupier of the building in question
Finding of the court:
The borrower, who had defaulted to pay the loan amount with interest for which, properties are brought for auction, is still the owner of the property and entitled to seek for enforcement of his rights, under the laws in force-The 5th respondent, can seek enforcement of his property rights under Article 300A of the Constitution of India
Result: Writ petition is dismissed.
JUDGMENT :
S. MANIKUMAR, J.
1. Instant public interest writ petition is filed for the following reliefs:
(a) Issue a writ of certiorari or any other writ, direction or order, quashing Exhibit-P4 ownership certificate dated 21.08.2020 issued by Nedumangad Municipality to the 5th respondent.
(b) Issue a declaration that Exhibit-P4 is null and void, as respondents 1 and 2, viz. The Secretary, Nedumangad Municipality, Thiruvananthapuram and Nedumangad Municipality, represented by its Secretary, have no authority or jurisdiction to issue the same, in view of Exhibits-P2 and P3 notifications dated 26.10.2018 and 23.01.2020 respectively.
(c) Issue a further declaration that all consequential and further official acts based on and relying on Exhibit-P4 ownership certificate dated 21.08.2020 are null, void and without any basis.
2. Facts leading to the filing of instant writ petition are that, petitioner, an elected Councillor of Nedumangad Municipality, being interested in clean administration of the Municipality, has filed this writ petition, seeking to quash Exhibit-P4 ownership certificate dated 21.08.2020, issued by the Municipal Secretary of Nedumangad Municipality to the 5th respondent, applicant, who, according to him, has ceased to be owner/occupier of the building in question.
3. Petitioner has further stated that the disputed building is the subject matter of a corporate loan for more than Rs. 50 Crores, granted by the Industrial Financing Corporation of India Ltd. (IFCI), represented by its Managing Director, New Delhi, respondent No. 8, to the 5th respondent, on security. Since the 5th respondent has committed default of the loan amount, with interest, 8th respondent has initiated recovery proceedings under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter referred to as, the ‘SARFAESI Act’ for brevity), by taking over possession and ownership of the said building, and has put the same in public auction, by notification in a newspaper. Hence, the 5th respondent has ceased to be, either the owner or the occupier of the said building.
4. Petitioner has further stated that since the sale notification was issued and published by the secured creditor on 07.03.2020, the 5th respondent borrower has lost his opportunity to redeem the same, as stipulated in the SARFAESI Act, 2002. However, despite the above legal position, as covered by the provisions of the SARFAESI Act, the 1st respondent has issued Exhibit-P4 ownership certificate to the 5th respondent, for making use of the same to obtain a bar licence, completely overlooking the fact that ownership and possession of the building has been taken over by the 8th respondent irrevocably, in accordance with the provisions of the SARFAESI Act.
5. Petitioner has contended that though the above facts were brought to the notice of the 1st respondent, Secretary of Nedumangad Municipality through Exhibits-P5 and P6 representations dated 06.08.2020 and 24.08.2020 respectively, requesting to cancel the certificate, the same has been ignored by the 1st respondent and there is neither any action nor any response to his complaints. Left with no alternative efficacious remedy, this Writ Petition is filed for quashing Exhibit P4 ownership certificate and the consequential actions on the basis of the same.
6. On the above pleadings, petitioner has contended that the ownership certificate dated 21.08.2020 (Ext-P4) issued by Nedumangad Municipality to the 5th respondent is illegal, unsustainable in the eyes of law, and without jurisdiction, in view of Section 13 of the SARFAESI Act, 2002, and, therefore, liable to be quashed. He has further contended that the Secretary of Nedumangad Municipality, respondent No. 1, ought not to have issued the said certificate, in the light of Exhibit-P3 newspaper notification, for sal
