The auction purchaser's title prevails over subsequent attachments, as the attachment occurred after the auction sale, reaffirming the priority of security interests under Section 26(E) of the SARFAESI Act.

ORDER :

The writ petitioner is a SARFAESI auction purchaser. He seeks for a writ of mandamus to raise the attachment over the property situated at S.F.Nos.667/1B, 3A, 3B, 3C, 697/1, 697/2, 700/1A, 6, 700/1B, to an extent of 7.21 acres of Samusigapuram Village, Rajapalayam Taluk, Virudhunagar District.

2. The properties had been mortgaged by the previous owner with the State Bank of India. The mortgagor defaulted in payments of amounts. This constrained the second respondent to invoke the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “SARFAESI Act”) and the Rules made thereunder. The property was brought for sale by e-auction on 24.08.2022. The writ petitioner participated and he was successful. The second respondent Bank also issued a sale certificate to that effect. The petitioner presented the sale certificate for registration with the first respondent. The first respondent demanded the payment of 7% as stamp duty and 4% as registration charges. Aggrieved by the same, the petitioner filed W.P(MD) No.1033 of 2023. The said writ petition was allowed. It is pleaded by the petitioner that against the order dated 20.04.2023, an appeal has been preferred by the first respondent in W.A.SR (MD) No.34328 of 2024.

3. In the meantime, when he approached the first respondent for registration, he was informed that on 09.01.2023, an endorsement was made that the property has been attached by the third respondent. The third respondent claimed that the defaulter/borrower had left dues to an extent of Rs.8,25,752/- (Rupees Eight Lakhs Twenty Five Thousand Seven Hundred and Fifty Two) with the EPFO and hence, they attached the property as a prelude for recovery. Aggrieved by the same, the petitioner has filed this writ of mandamus to raise the attachment.

4. When the matter came up for admission, Mr.R.Suresh Kumar, took notice for the first respondent and Mr.N.Dilip Kumar, for the second respondent. I ordered private notice to the third respondent. Mr.R.Ravikumar, has entered appearance for the third respondent. He requested time to go on the record by way of a counter. The counter having been filed, I have taken up the writ petition for final disposal.

5. Mr.Saravanan, appearing for Mr.A.Sivaji, urges that as the petitioner has purchased the property pursuant to a SARFAESI notification sale, he is entitled to the benefit of Section 26(E) of the SARFAESI Act. According to him, all debts and other dues in the form of taxes, cesses and other rates payable to the Central Government or the State Government or a local authority, are subject to the security interest, created in favour of the mortgagee. He relies upon a judgment of a Division Bench of this Court in Tamilnadu Mercantile Bank Ltd. Vs. The Sub Registrar, Rajakilpakkam and another, [2024-5-L.W.502], to press home this point.

6. Mr.Suresh Kumar, states that being a registering authority, the first respondent is duty bound to register any encumbrance that is brought to their notice by a statutory authority. In the present case, all that the first respondent has done is to bring on record the attachment that has been effected by the third respondent.

7. Mr.Jegadeesan, appearing for Mr.N.Dilip Kumar, states that the writ petitioner is a purchaser in a SARFAESI auction sale held by the second respondent. He supports the plea of the writ petitioner that security interest created in favour of a mortgagee will have a priority, by virtue of Section 26(E) over the claims of the third respondent.

8. The only villain in the game is Mr.Ravikumar, who strongly opposes the writ petition. Relying upon his counter-affidavit, he states that the property was attached invoking Section 11(2) of the Employees' Provident Funds and Miscellaneous Provisions Act of 1952. He states it is an Act to provide for benefits like provident fund, pension and insurance benefits for employees at the lower realms and by virtue of Se