IMPORTANT POINT
Auction sale of mortgaged asset – After confirmation of sale, Registrar is duty bound to grant Certificate of Sale bearing his seal and signature.

JUDGMENT

The West Chalakudy Service Co-operative Bank Limited has filed this writ petition seeking to quash Ext.P14 and to direct the 3rd respondent-Joint Registrar to issue sale confirmation of the auction conducted pursuant to Exts.P3 and P4 Awards, as discernible from Exts.P5 to P7 documents.

2. The petitioner is a Co-operative Society functioning under the provisions of the Kerala Co-operative Societies Act, 1969. The petitioner is a Primary Agricultural Credit Society. One Smt. Sheela, a member of the Society, availed a credit facility of Rs.8,00,000/-. Her husband, Sri.Rajan, stood as guarantor. The loan was availed in the month of March, 2014, mortgaging five cents of property of Sri.Rajan. The said Rajan also availed a credit facility of Rs.15 lakhs, pledging the same property. When the borrowers failed to repay the loan amount, the petitioner preferred Arbitration Cases. The Arbitration Court passed Exts.P3 and P4 Awards in ARC Nos. 2431 and 2440 of 2017.

3. The petitioner thereafter initiated Execution Proceedings. The property was put to sale. The property was purchased by the petitioner-Society in public auction, for an amount of Rs.51,23,140/-. The petitioner was then informed that there is a pending payment of Rs.1,56,576/- from Sri. Rajan towards the Motor Vehicle Department, Government of Kerala on account of which there is a charge over the property. The petitioner states that though Section 36A of the Kerala Cooperative Societies Act provides for prior charge to the petitioner-Society, the Society paid the said amount in order to get the Sale Confirmation issued.

4. In order to get confirmation of sale, the entire files were forwarded to the 3rd respondent-Joint Registrar. The 3rd respondent thereupon issued Ext.P14 communication dated 25.05.2024, wherein the Joint Registrar has stated that Sale Confirmation would be issued once the petitioner-Society procure No Objection Certificate from the Tahsildar, Chalakudy certifying that there is no pending dues towards the property. The petitioner thereupon submitted Ext.P15 request to the Tahsildar seeking to issue No Objection Certificate. The Tahsildar, however, has not issued the No Objection Certificate.

5. The petitioner states that Ext.P14 communication of the Joint Registrar requiring the petitioner to produce a No Objection Certificate from the Tahsildar for the purpose of confirming the sale, is highly illegal and unwarranted. Section 36A of the Kerala Co-operative Societies Act provides for prior charge of a mortgaged property with the Society. Neither the Co-operative Societies Act nor the Kerala Co-operative Societies Rules empowers the Registrar / Joint Registrar to demand a No Objection Certificate from the Tahsildar, for the purpose of confirming sale of a property sold under the provisions of the Kerala Co-operative Societies Act and the Rules.

6. Counsel for the petitioner argued that under Rule 83(3) of the Kerala Co-operative Societies Rules, if no application to set aside a sale is made within 30 days from the date of sale, the Registrar shall confirm the sale. The Rule does not provide any other circumstance in which Registrar can refuse to confirm a sale.

7. The counsel for the petitioner further pointed out that in Nahala v. Adish and others [ILR 2019 (1) KER 264], this Court has held that Section 36A of the Kerala Cooperative Societies Act, 1969 creates special charge on movable or immovable property of the borrower, in favour of the Society, on the borrower executing Gehan, which has all the characteristic features of a mortgage under the provisions of the Transfer of Property Act. When Section 36A provides for a special charge, it is obvious that a charge created by a decree cannot prevail over Gehan / mortgage.

8. The 3rd respondent resisted the writ petition filing a statement. The 3rd respondent stated that the petitioner granted a Mortgage Loan to Sheela for Rs.8 lakhs on 29.03.2014 and another Mortgage Loan of Rs.15 lakhs to Rajan on 0