Secured creditors under the SARFAESI Act hold priority over attachments from Civil Courts, reinforcing creditor protections in insolvency situations.

ORDER :

S. SRIMATHY, J.

The present writ petition is filed for Writ of Mandamus, to direct the 1^st and 2^nd respondents to efface/delete the impugned attachment entry in the encumbrance certificate relating to the property described hereunder which was registered as Document No.3 of 2023, dated 16.03.2024, on the file of the 2^nd respondent within reasonable time period fixed by this Court by considering the petitioner's representation, dated 05.07.2024.

2. The brief facts as stated in the affidavit are that the property in dispute is situated in Old Survey No.628/2, New S.No.628/2A2 in Plot No.29 measuring to an extent of 1097 square feet out of 2194 square feet at Kottaiyur Village, Karaikudi Taluk, Sivagangai District. The respondents 3 to 5 availed home loan facility to the tune of Rs. 23,40,000/- from the petitioner institution. The 3^rd respondent created the valid equitable mortgages for the above said loan facility and executed Memorandum of Deposit of Title deeds which was registered in Document No.1329 of 2019, dated 25.06.2019 before the 2^nd respondent in favour of the writ petitioner financial institution, thereby the property is the 'secured assets' under Section 2 (zc) of the SARFAESI Act. The respondents 3 to 5 defaulted in repayment and the account was classified as Non-Performing Asset (NPA) on 11.03.2023. The petitioner institution issued a demand notice dated 22.03.2023 under Section 13 (2) of the SARFAESI Act to repay Rs.24,61,478/-(Rupees Twenty Four Lakh Sixty One thousand Four Hundred Seventy Eight only) as on 22.03.2023. Thereafter issued a possession notice, dated 02.06.2023, under Section13(4) to the respondents and had taken symbolic possession of the secured asset/subject property. But the respondents 3 to 5 failed to discharge their liability. Thereafter, E-Auction Sale Notice, dated 21.09.2023 was issued. The 7^th respondent participated in the said E-Auction Sale conducted on 11.10.2023 and became the successful bidder for a sum of Rs.24,36,660/- (Rupees Twenty Four Lakh Thirty Six Thousand Six Hundred Sixty only), then the petitioner issued sale certificate, dated 11.12.2023 to 7^th respondent, then registered the above said sale certificate vide Document No.148 of 2024, dated 23.01.2024, on the file of the 2^nd respondent. While registering the sale certificate, it came to the knowledge of the 7^th respondent that there is an attachment entry in favour of the 6^th respondent and the same is reflecting in the Encumbrance Certificate. Hence the petitioner institution verified the Encumbrance Certificate and found that there is an attachment endorsement in the encumbrance certificate which is registered as Document No.3 of 2023, dated 16.03.2023. The petitioner institution also understands that the said endorsement in the encumbrance certificate is created at the instance of the 6^th respondent. Before doing so, the petitioner institution was not issued with any communication or notice or opportunity of hearing. In fact, by suppressing the creation of the memorandum of deposit of title deeds, the said attachment was obtained by the 6^th respondent. The petitioner institution is no way connected to the said attachment. In fact, with an intention to defeat the interest of the petitioner institution, by colluding with the 6^th respondent, the respondents 3 to 5 caused to file I.A.No.1 of 2020 in O.S.No.80 of 2020 and have obtained attachment order in favour of the 6^th respondent. The said impugned attachment entries are per se illegal, unlawful and arbitrary and are not supported by any statutory provisions. The 7^th respondent has made a representation,