IMPORTANT POINT
The right of redemption of the mortgaged property under the SARFAESI Act is available only till the publication of auction notice, and any attachment made after the sale notification cannot affect the Bank's right to sell the property.

JUDGMENT :

The petitioner-Bank seeks to direct respondents 1 and 2 to efface the attachments made after the date of mortgage effected by the 3rd respondent.

2. The petitioner states that one Bhama Ramaswamy along with others availed a housing loan aggregating Rs.45,17,160/-for the purchase of an apartment with car parking in Muthoot Tower together with undivided share of land situated in Ernakulam Village. The property was mortgaged to the Bank. When the borrowers failed to service the loan account, the loan account was declared as NPA on 11.05.2018.

3. The Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Section 13(2) notice was issued. The possession of the property was taken over on 14.03.2022 with the aid of an order of the Additional Chief Judicial Magistrate's Court, Ernakulam under Section 14 of the Act, 2002.

4. The Bank issued Ext.P4 pre-sale notice dated 15.02.2022. Ext.P5 e-auction notice was published on 16.06.2022. There were no bidders initially. However, in the fourth e-auction held on 30.12.2023, one Venugopal N. participated in the auction and emerged as highest bidder. The sale was effected in favour of the said Venugopal and Ext.P6 sale confirmation letter dated 01.01.2024 was issued.

5. The said Venugopal requested the Bank to efface an attachment in respect of the property purchased by him. The attachment in question was made much after the mortgage and the sale notification. The petitioner states that the attachment was effected at the instance of the 3rd respondent. The attachment was after the date of sale notification issued by the Bank.

6. The counsel for the petitioner-Bank argued that the mortgager's right of redemption was extinguished on the date of e-auction notification, i.e. 20.07.2022. The amendment to Section 38 of the SARFAESI Act states that the right of redemption expires or extinguishes on the date of sale notification. Therefore, the attachment made by the 2nd respondent after the sale notification is unsustainable. The Sub Registrar and Village Officer are therefore compellable to efface the attachments effected subsequent to the mortgage, from the relevant records.

7. The 3rd respondent resisted the writ petition filing counter affidavit. The 3rd respondent stated that the SARFAESI proceedings initiated by the Bank are not proper and fair. The address of the borrower shown in Ext.P3 Section 14 order is incorrect. The entire proceedings are void ab initio and is as a result of fraud.

8. The 3rd respondent stated that the Bank has conducted the auction in a secretive manner. The 3rd respondent has filed a suit in the Munsiff's Court, Ernakulam against the borrower. In the said suit, a conditional order of attachment was passed by the Munsiff. If the attachment made by the Munsiff's Court is lifted, the petitioner's claim will be frustrated. If this Court order lifting of the attachment, it will cause irreparable injury to the petitioner. According to the 3rd respondent, the Bank has made an exorbitant claim without properly accounting the repayment of loan by the borrower. The writ petition is therefore devoid of any merit and has to be dismissed, urged the 3rd respondent.

9. I have heard the learned counsel for the petitioner, the learned Government Pleader representing respondents 1 and 2 and the learned counsel appearing for the 3rd respondent.

10. On the failure of a borrower to discharge his liabilities, the petitioner-Bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the secured asset was put to sale. The secured asset / mortgaged property was deposited by the borrower with the Bank as per Ext.P1 letter, evidencing deposit of title deeds, on 09.10.2012. A pre-sale notice, Ext.P4, was published on 15.02.2022. Ext.P5 e-auction notice was published on 20.07.2022. In the e-auction held on 30.12.2023, one Venugopal N.