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.

ORDER :

P.B. BALAJI, J.

This Writ petition is preferred by the Petitioner Bank, a secured creditor seeking a direction to register the sale certificate in favour of the auction purchaser notwithstanding the attachment of the learned Additional District Judge, District Court No. I, Salem, dated 15.03.2024 which is subsequent to the registration of mortgage in favour of the petitioner bank on 30.11.2016 and registration under Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) dated 07.09.2023.

2. We have heard Mr.V.Chandrashekaran, learned counsel for the writ petitioner and Mr.K.Karthik Jagannath, learned Government Advocate for the first respondent and Mr.L.Sivakumar, learned counsel for the second respondent.

3. According to the learned counsel for the petitioner, the petitioner Bank had obtained a mortgage by way of memorandum of deposit of title deeds on 30.11.2016 from one Mr.P.Nathan, sole proprietor, M/s New Krishna Traders, towards credit facilities availed by executing the said Memorandum of Deposit of Title Deeds dated 30.11.2016, which was registered as Document No.4290 of 2016 on the file of the Sub Registrar Office, Joint I, Salem East. The property was also registered under Section 26D of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), 2002 on 08.09.2023. (Though it is mentioned in the affidavit as 07.09.2023, on perusal of documents we find that it is 08.09.2023)

4. According to the learned counsel for the petitioner, the said loan became a non-performing asset on 31.08.2019 and the petitioner Bank invoked the provisions of SARFAESI Act and issued Section 13(2) notice on 19.09.2019, calling upon the borrower to pay Rs.78,47,877.56 as on 31.08.2019, together with future interest of 11.35% compounded- monthly rests and also 2% penal interest. According to the learned counsel for the petitioner, the property was sold in public auction on 28.02.2024 and one Mrs.A.Priyadharshini, bid for purchase of the said property at Rs.1,50,25,000/-. The petitioner Bank also closed the loan account on 28.05.2024 by remitting the entire sale consideration towards the loan account and issued a sale certificate in favour of the auction purchaser on 29.05.2024.

5. According to the petitioner Bank, after realization of the sale proceeds and adjustment of dues to the petitioner Bank, a sum of Rs.17,59,910.75 was available in excess and the petitioner Bank has kept it separately, considering that there is an attachment made by the Civil Court in REP. No.27 of 2023 in OS.No.36 of 2019.

6. The learned counsel for the writ petitioner would submit that the second respondent has filed a suit for recovery of money in OS.No.36 of 2019 on the file of the l earned Principal District Judge, Tiruchirappalli and a decree was also passed in favour of the second respondent on 02.02.2021. In order to realize the decree amount, the second respondent had initiated Execution Proceedings in REP.No.27 of 2023 and by the Orders of the Executing Court, the very same property was attached in Execution Proceedings on 15.03.2024. The learned counsel for the petitioner would submit that though the second respondent had approached the Court even in 2019, he obtained a decree much later and an Order of attachment was admittedly passed only in March 2024 and even the Memorandum of Deposit of Title Deeds was duly registered under section 26D of SARFAESI Act, much prior to the order of attachment. The petitioner has