A mortgage creates a statutory charge that supersedes subsequent claims by decree holders, which must be adjudicated before any sale of property.

JUDGMENT :

EASWARAN S., J.

Karassery Service Co-operative Bank Ltd. has come up with this appeal against the rejection of their claim over the decree scheduled property on the basis of a ‘Gehan’ executed by the judgment debtor in their favour.

The courts below have concurrently found against the appellant.

2. The brief facts necessary for the disposal of the appeal are as follows :

OS No.95/2017 was instituted before the I Addl. Sub Court, Kozhikode by respondent Nos.1 and 2 herein for recovery of the amount due from respondent Nos.3 and 4. Along with the suit, I.A.No.1984/2017 was filed, which is an application seeking interim attachment of the property of the defendants therein as a security for the plaint claim. On 22.8.2017, the application for interim attachment was allowed. Ultimately, the suit was decreed. For execution of the decree, respondent Nos.1 and 2 preferred EP No.257/2018 before the Addl.Sub Court-I, Kozhikode. One of the prayers sought for in the execution petition is to proceed against the property attached, which has been made absolute in the judgment and decree in OS No.95/2017. Prior to the respondents 1 and 2 seeking attachment of the property of the defendants in the suit, it appears that the defendants had created a Gehan (mortgage) in favour of the appellant on 30.07.2015. Notwithstanding the creation of Gehan, it appears that, the decree holders, being unaware of the creation of Gehan, proceeded with the execution proceedings. However, later, finding that there exists a Gehan over the attached property, EA No.633/2019 was filed seeking to serve notice of sale on the appellant. On receipt of the summons from the executing court, the appellant appeared and preferred their objections, producing the details regarding the execution of the Gehan and also the other loan documents. It appears that the executing court did not touch the objections preferred by the appellant. Thereafter, the entire property was proclaimed for sale. However, finding that there were no bidders for the entire extent, the decree holders filed an application, IA No.633/2020, seeking to demarcate the property into plots and thereafter to sell the same in blocks. IA No.633/2020 was allowed, pursuant to which the proclamation of sale was drawn up and the property was sold in auction on 2.12.2021 for a sum of Rs.20,50,000/-, whereas the decree debt was around Rs.24,00,000/-. Finding that the property is sold dehors their first charge, the appellant preferred EA No.153/2022, wherein the executing court held that since the appellant has got a first charge over the property, there is no requirement of creating a fresh charge over the same and accordingly, the said EA was dismissed. Thereafter, the appellant preferred EA No.307/2022 seeking for cancellation of the sale dated 3.12.2021 and also for lifting of attachment. The ground on which the application was sought to be sustained is based on the prior mortgage over the property sold in the public auction. By order dated 21.2.2021, the application was dismissed. Aggrieved, the appellant preferred an original petition before this Court. Pursuant to the judgment of this Court in OP(C) No.1355/2022, the appellant preferred AS No.105/2022 before the Addl. District Court-1, Kozhikode. By judgment dated 18.01.2025, the appeal was dismissed. Hence, the present second appeal.

3. Heard Sri.R.Sudhish, the learned counsel appearing for the appellant and Sri.P.A.Harish, the learned counsel appearing for respondent Nos.1 and 2.

4. Sri.R.Sudhish, the learned counsel appearing for the appellant, submitted that admittedly, the Bank has got first charge over the property. He pointed out that in te