BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
M.M. SUNDRESH, S. ANANTHI, JJ.
Tamilnad Mercantile Bank Limited, Chainthamani Branch - Appellant
Versus
The Joint I Sub Registrar, O/o. the Joint I Sub Registrar - Respondent
W.P.(MD)Nos.6976 of 2020 & 1101 of 2021 and W.M.P. (MD)Nos.6403 of 2020 & 956 of 2021
Decided on : 29-01-2021
Bank – Mortgage - Second respondent in both writ petitions availed credit facilities from petitioner Bank and executed loan documents - It was further renewed - Accounts became non-performing - A statutory demand notice was issued by petitioner, followed by sale notice - Properties were brought up for sale - Respondents in W.P and other respondent in W.P.(MD) became the successful bidders - In pursuant to the payment made, sale certificates were issued - When the aforesaid respondents along with petitioner Bank went for registration, they were accordingly denied by respondent on ground that respondent in W.P, who is also arrayed as respondent in W.P. has lent financial assistance to private respondents, being borrowers and on their failure to repay the amount, by complying with terms and conditions, an Arbitrator was appointed, who passed interim orders attaching the secured assets, mortgaged in favour of petitioner - Whether earlier mortgage would prevail as against subsequent interim attachment – Held, submission made on maintainability of the writ petitions is also rejected – Court are not on the merits of the order passed by Arbitration Tribunal, which is by way of an interim measure - Therefore, looking from any perspective, court are of view that petitioner Bank cannot be denied the relief as sought for - In such view of the matter, both writ petitions stand allowed - First respondent in both writ petitions are directed to register sale certificates issued by petitioner Bank in favour of the respondents in W.P. and respondent in W.P. - Consequently, the encumbrance/attachment entry made on file of first respondent with respect to properties, which are subject matter of two mortgage deeds and subject matter of these writ petitions, are directed to be deleted by first respondent - Aforesaid exercise shall be carried out within a period of four weeks from date of receipt of a copy of this order - Consequently, connected miscellaneous petitions are closed.
ORDER :
M.M.SUNDRESH, J.
1. As both the writ petitions involve the same issue and the second respondent in W.P.(MD)No.1101 of 2021 being the sister-concern of the second respondent in W.P.(MD)No.6976 of 2020, both the writ petitions are heard together and are disposed of by way of this common order.
2. The second respondent in both the writ petitions availed credit facilities from the petitioner Bank and executed loan documents in the year 2015. It was further renewed in the year 2017. The accounts became non-performing in the year 2018. A statutory demand notice was issued by the petitioner, followed by sale notice. The properties were brought up for sale in the year 2019. The respondents 7 & 8 in W.P.(MD)No.6976 of 2020 and the 7th respondent in W.P.(MD)No.1101 of 2021 became the successful bidders. In pursuant to the payment made, sale certificates were issued. When the aforesaid respondents along with the petitioner Bank went for registration, they were accordingly denied by the 1st respondent on the ground that the 9th respondent in W.P.(MD)No.6976 of 2020, who is also arrayed as 8th respondent in W.P.(MD)No.1101 of 2021, has lent financial assistance to the private respondents, being the borrowers and on their failure to repay the amount, by complying with the terms and conditions, an Arbitrator was appointed, who passed interim orders attaching the secured assets, mortgaged in favour of the petitioner. Needless to state that these properties were mortgaged with the petitioner Bank at the time of granting loan in the year 2015, ie., on 14.10.2015. It is not in dispute that these mortgage deeds were accordingly registered.
3. The 1st respondent declined to register the sale certificates, quoting the interim order passed by the learned Arbitrator over the properties, which are subject matter of the registered mortgage deeds and the interim attachment orders, having been recorded by the 1st respondent, the request made was declined.
4. Mr.N.Dilip Kumar, learned Counsel appearing for the petitioner Bank, submitted that the provisions under the SARFAESI Act will have primacy over the proceedings in an Arbitration Tribunal. The petitioner has got nothing to do with the arbitration. The loan obtained by the private respondents coupled with the mortgage deeds executed and registered, were admittedly prior to the loan obtained from the 9th respondent in W.P.(MD)No.6976 of 2020/8th respondent in
W.P.(MD)No.1101 of 2021.
5. The learned Counsel appearing for the petitioner has also made reliance upon the following judgments to buttress his submission:
i) 2005 (7) SCC 610, in the case of M/s.S.B.P. & Co. v. M/s.Patel Engineering Ltd and another;
ii) 2017 Supreme (MAD) 274, in the case of Express Infrastructure Private Ltd., Chennai v. B.L.Kashyap & Sons Ltd., New Delhi and others;
iii) 2019 Supreme (SC) 1198, in the case of M/s.Sterling Industries v. Jayprakash Associates Ltd., and others;
iv) W.P.(C)No.3875 of 2017 (H) in the case of South Indian Bank, Thrissur and another v. Sub Registrar, Ernakulam, Kochi and others [Kerala High Court];
v) W.P.(MD)No.4861 of 2018 in the case of Tamilnad Mercantile Bank Ltd., Virudhunagar v. Joint Sub Registrar No.1, Virudhunagar and others;
vi) W.P.(MD)No.19694 of 2019 in the case of Tamilnad Mercantile Bank Ltd., Madurai v. Sub Registrar, Chockikulam SD, Madurai and others;
vii) W.P.Nos.8546 of 2020, etc., batch, in the case of M/s.Aachi Masala Foods Pvt Ltd., Chennai v. M/s.Edelwiss Assets Reconstruction Co., Ltd., Mumbai and others;
viii) 2006-3-L.W.-627, in the case of D.Senthil Kumar and others v. Commercial Tax Officer, Brough Road, Erode and another;
ix) (2007) 1 MLJ 1, in the case of UTI Bank Ltd., Chennai v. Deputy Commissioner of Central Excise, Chennai II Division, Chennai and another;
x) (2016) 6 CTC 769, in the case of Assistant Commissioner (CT), Anna Salai – III Assessment Circle v. Indian Overseas Bank, Central Office and another;
xi) 2016 SCC OnLine Mad 18565, in the case of Ansari v. Commercial Ta
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