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IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. DHANDAPANI, J.
Indian Overseas Bank Asset Recovery Management Branch, Represented by its Chief Manager - Petitioner
Versus
M/s. TLS Tyres, represented by its Managing Partner Mr. Valliappan and Ors. - Respondents
W.P.No.15009 of 2022 And W.M.P.No.14228 of 2022
Decided On : 18-07-2022
Writ Petition - Registration of Sale Certificate - [SARFAESI Act, 2002, Section 13(2)] - The court directed the third respondent to register the sale certificate in favor of the auction purchaser as presented by the petitioner Bank not withstanding the attachment obtained by the first respondent on 22.06.2015 as mentioned in EC in respect of secured property belonging to the second respondent, in terms of the order of this Court made in the case of Sabapathi Palanisamy and another Vs. The Sub Registrar, Avinashi and another [W.P.No.17901 of 2020, dated 11.12.2020]
Fact of the Case:
The petitioner sought a Writ of Mandamus directing the third respondent to register the sale certificate in favor of the auction purchaser, despite the attachment obtained by the first respondent on the secured property belonging to the second respondent.
Finding of the Court:
The court found that the attachment obtained by the first respondent should not be a bar to register the sale certificate, as it is void only as against the claims enforceable under the order of attachment and not in respect of other claims.
Issues: The main issue was whether the attachment obtained by the first respondent should prevent the registration of the sale certificate in favor of the auction purchaser.
Ratio Decidendi: The court relied on previous orders and judgments to establish that an order of attachment cannot be a bar to register a document, and the sale of a subject property pending the order of attachment is void only as against the claims enforceable under the order of attachment and not in respect of other claims.
Final Decision: The court directed the third respondent to register the sale certificate in favor of the auction purchaser as presented by the petitioner Bank, not withstanding the attachment obtained by the first respondent, in terms of the previous court order.
ORDER :
(Prayer : Petition filed under Article 226 of the Constitution of India to issue a Writ of Mandamus directing the third respondent to register the sale certificate in favour of the auction purchaser as presented by the petitioner Bank not withstanding the attachment obtained by the first respondent on 22.06.2015 as mentioned in EC in respect of secured property belonging to the second respondent.)
The petitioner has filed this writ petition seeking issuance of Writ of Mandamus directing the third respondent to register the sale certificate in favour of the auction purchaser as presented by the petitioner Bank not withstanding the attachment obtained by the first respondent on 22.06.2015 as mentioned in EC in respect of secured property belonging to the second respondent.
2. The case of the petitioner is that the second respondent purchased the land and building together with plant and machineries, accessories etc., belonging to M/s.Tamil Nadu Sponge Limited and availed various credit facilities from time to time from the petitioner to run its business operations in the said property. Cash credit facility, working capital demand loan, term loan LGLC and A & E extended by the petitioner was for a sum of Rs.241.52 Crores and inorder to secure the aforesaid credit facilities, the second respondent had created primary security on hypothecation of stocks, stocks in trade, book debts, receivables, consumables and collateral security of the said property. Besides these, guarantors Mrs.Kamalam, Mr.Ranjith and corporate guarantors namely, M/s.Hi-Tech Trades and Consultants Private Limited, M/s.Yuktha Wind Farm Private Limited also offered immovable properties.
3. The further case of the petitioner is that the second respondent had become non-functional from the year 2014 and since the second respondent, its guarantors and corporate guarantors failed to repay the outstanding loan amount, the petitioner invoked SARFAESI action and caused demand notice under Section 13(2) of SARFAESI Act on 21.02.2014 to the second respondent, its guarantors and corporate guarantors to recover the huge outstanding loan amount of Rs.216,63,91,070.59 as on 21.02.2014.
4. The further case of the petitioner is that the petitioner caused sale notice on 09.03.2022 to bring the factory land and building for e-auction on 29.03.2022 and in the said auction M/s.SKM Animal Feeds and Foods (India) Private Limited was the successful bidder and has remitted the mandatory deposit within the stipulated time, however, the petitioner is not in a position to execute and register the sale certificate in favour of the auction purchaser, due to the attachment obtained on 22.06.2015 by the unsecured creditor/ first respondent towards its dues before the Sub – Court, Namakkal, which has been effected with the office of the third respondent. Hence, this writ petition.
5. The learned counsel appearing for the petitioner submitted that the first respondent is not having any priority over the debts of the secured creditor and further submitted that the registering Authority has no right to reject the document on the ground of attachment. The learned counsel further submitted that the issue involved in the present case has already been settled by this Court in the case of Sabapathi Palanisamy and another Vs. The Sub Registrar, Avinashi and another [W.P.No.17901 of 2020, dated 11.12.2020]. Hence, this Court may issue direction to the third respondent to register the sale certificate presented by the petitioner in favour of the auction purchaser.
6. The learned counsel appearing for the first respondent submitted that though the petitioner is the secured creditor, this Court may permit the first respondent to work out the remedy in the manner known to law for recovering the amount as against the defaulter/ second respondent.
7. The learned Special Government Pleader submitted that the sale certificate presented by the petitioner in favour of the auction purchaser will be entertained and
An order of attachment cannot be a bar to register a document, and the sale of a subject property pending the order of attachment is void only as against the claims enforceable under the order of att....
Secured creditors have priority over debts, permitting registration of sale certificates despite existing civil court attachments, with purchasers taking the property subject to said attachments.
Creditor rights under the SARFAESI Act allow registration of sale certificates despite existing court attachments when they arise post-mortgage.
A mortgagee bank's sale certificate cannot be denied registration due to prior attachment orders, as secured creditors' rights under the SARFAESI Act prevail over tax attachment claims.
The main legal point established in the judgment is that attachment orders subsequent to the mortgage do not affect the rights of the secured creditor over the subject property, and sale certificates....
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