Point of Law: Adjudication of claims to, or objections to attachment of, property - Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions

JUDGMENT :

Prayer: Appeal Suit has been filed under Section 96 of the Civil Procedure Code, 1908 praying to set aside the order and decree and order dated 09.03.2018 in E.P.No.57 of 2016 in E.P.No.183 of 2014 on the file of the Principal District Judge, Krishnagiri.

1. The property, which is the subject matter of the appeal, is 3.00 acres land bearing plot No.26, SIPCOT Industrial Complex, Zuzuvadi Village, Hosur Taluk, Krishnagiri District, Tamil Nadu.

2. The parties are litigating their respective right and title over the said property. Based on the sale deed Ex.P-11 dated 25/07/2016 executed in favour of the appellant, pursuant to a private treaty under Rule 8 (5)(d) of the Securities Interest Rules and based on the sale certificate Ex.R-5 dated 05/08/2016, issued to it by the Execution Court pursuant to the Court auction sale in favour of the third respondent in a suit for recovery of money.

3. The point for determination in this appeal is, in the peculiar facts and circumstances of the instant case, whether the sale in favour of the appellant under the SARFAESI Act in respect of the immovable property mortgaged to the Allahabad Bank as security for the loan will prevail over the Court auction sale in favour of the 3rd respondent for recovery of money decree?

4. Facts leading to the appeal:-

The first respondent herein filed a suit in O.S.No.13/2011 for recovery of Rs.32,07,760.80, being the costs with interest for the goods sold and delivered to the second respondent herein. The Court passed ex parte decree against the second respondent on 20/07/2012. For realisation of the decree amount, R.E.P.No.183/2014 filed by the first respondent/decree holder for attachment and sale of the subject property. The Execution Court ordered attachment on 16/06/2015. The attachment was made absolute on 07/07/2015. After paper publication, auction was conducted on 06/06/2016. The third respondent herein was the successful bidder in the said auction for a sale price of Rs.1,51,00,000/-. Towards the sale price, the third respondent deposited Rs.36,61,720/- on the day of auction and balance Rs.1,13,25,000/- on 15/06/2016. The sale was confirmed on 03/08/2016 and sale certificate was issued on the same day. The Court on behalf of the judgment debtor/first respondent herein, registered the sale certificate in favour of the auction purchaser/third respondent on 13/08/2016.

5. The appellant herein as a third party claimant filed an application E.A.No.57/2016 on 06/09/2016 under Order XXI, Rule 58 of the Civil Procedure Code, to recall the sale certificate issued by the Court in favour of the 3rd defendant/auction purchaser and consequentially to raise the order of attachment effected in E.P.No.183/2014 as against the subject property in execution of the decree dated 20/07/2012 passed in O.S.No.13/2011.

6. The said application was filed by the appellant premising that the subject property owned by M/s UT Limited (second respondent herein) was under mortgage with Allahabad Bank for the financial assistance availed. For failure to discharge the loan, Allahabad Bank declared the assets as Non-Performing Assets (NPA) and caused notice dated 01/08/2011 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter to be shortly referred as “SARFAESI Act”) to the borrower/the second respondent to clear the debts within 60 days from the date of the notice. The second respondent did not clear the debt within the given time. Consequentially, the possession of the property was taken on 17/11/2011 in exercise of the power conferred under Section 13(4) of the SARFAESI Act r/w Rule 8(1) of Security Interest (Enforcement) Rules, 2002. Later, Allahabad Bank assigned the debt in favour of M/s Pegasus Assets Reconstruction Pvt. Ltd., who in turn sold the property to the appellants herein on 28/04/2016 and issued the sale certificate. The sale deed was executed in favour of the appellant on 25/07