Upon the sale of mortgaged property in an auction and the confirmation of the sale, the property becomes the exclusive property of the auction purchaser, ceasing to remain as security, and the bank loses its right of general lien under the Indian Contract Act.

JUDGMENT

(Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a Writ of Mandamus, directing the Chief Manager, Indian Overseas Bank, Regional Office, Thoothukudi, the first respondent herein to release the original documents relating to the property bearing Door No. 93-I/5 and No.93-I/5A, Ashok Nagar 3rd Street, Thoothukudi, being item No.4 of the Sale Notice, dated 09.03.2016, to the petitioner within a time frame fixed by this Court.)

1. The petitioner has sought for the issuance of Writ of Mandamus, directing the first respondent to release the original documents relating to the subject property to him, within the time frame fixed by this Court.

2. The case of the petitioner is that he is the absolute owner of the property, bearing Door Nos.93-I/5 and 93-I/5A, Ashok Nagar 3rd Street, Thoothukudi, which was purchased by the petitioner through a registered sale deed, dated 22.02.1989. The petitioner is a retired Government employee and he had purchased the land and put up the construction and was residing with his family.

3. The further case of the petitioner is that the subject property was mortgaged towards the loan availed by the third respondent, which is a Partnership Firm. This property was offered as a security and it was valued at Rs.47.10 Lakhs. Apart from the subject property, six other properties were also taken as security for various loans that were availed by the third respondent Firm.

4. The loan amount was not repaid back and the account of the third respondent was classified as non-performing asset (NPA). Hence, the first respondent initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [hereinafter referred to as ''the SARFAESI Act''].

5. The subject property was also brought for sale by the first respondent towards the recovery of the loan and the petitioner participated in the auction. According to the petitioner, the Bank officials had convinced him to participate in the auction and to submit his bid for the sale of the property. The reserve price was fixed as 60.97 Lakhs and the petitioner offered to purchase the property at Rs.61.97 Lakhs. Since the petitioner was the highest bidder, he was declared as the successful bidder and he paid a sum of Rs.15.50 Lakhs on 15.04.2016, being the 25% of the bid amount. The petitioner was advised to pay the balance consideration of Rs.46.47 Lakhs + 1% income tax within 15 days from the date of receipt of the letter dated 12.05.2016, issued by the first respondent.

6. The petitioner acted upon this letter and paid the entire amount. To the shock and surprise of the petitioner, he was informed that the original documents that were deposited as security for the subject property will not be returned back to the petitioner. The representations that were made by the petitioner also did not evoke any response. It is under these circumstances, the present Writ Petition was filed before this Court.

7. The first and second respondents have filed a counter affidavit. They have taken a stand that the son of the writ petitioner was one of the Partner in the third respondent Firm and this Firm had availed various credit facilities in the form of cash credit loans and term loans from the Bank. The petitioner stood as a Guarantor for the credit facilities and he also executed an agreement of continuing guarantee in favour of the Bank on 06.05.2011. The petitioner executed a registered mortgage by deposit of title deeds, dated 09.06.2011. Even thereafter, the petitioner executed a letter of continuing guarantee on 19.03.2012.

8. It is further stated in the counter affidavit that even though the sale was confirmed in favour of the petitioner and the entire sale proceeds was credited to the loan outstanding, a sum of Rs.2,06,51,084/- remained outstanding and the continuing guarantee given by the petitioner was in subsistence and therefore, the petitioner is not entitled for ret