A secured creditor's rights cannot be compromised by a civil court's attachment order when not a party to the underlying proceedings, ensuring registration of sale certificates under SARFAESI Act.

ORDER :

1. Heard Sri T. Sasi Kumar, learned counsel for the petitioner, Smt. S. Sravanthi, learned Assistant Government Pleader for Stamps and Registration, appearing for the respondent Nos.1 to 4, and Sri P. Durga Prasad, learned Standing Counsel appearing for the respondent No.5 and perused the material available on record.

2. This writ petition is filed seeking for a direction to the respondent No.4/Sub-Registrar, Marredpally, Secunderabad, to delete the property viz., H.No.12-15-978 & 12-15-978/A, consisting of G+2 floors in Sy. No.169, admeasuring 150 sq yds., situated at Manikeshwari Nagar, Secunderabad, Hyderabad District (hereinafter referred to as ‘subject property”) from the list of prohibited properties and to register the Sale Certificate issued by the petitioner company in favour of the respondent No.6, the Sale Auction Purchaser, under Rule 9 (6) of the Security Interest (Enforcement) Rules, 2002.

3. The learned counsel for the petitioner submits that originally, the subject property was purchased by one M/s.GVS Patanjali Ayurvedic by obtaining loan facility, with co-borrowers viz., Mrs. Gaddamedhi Vijaya Lakshmi and Mr. Sathyanarayana Gaddamedhi and Mr. Pradeep Gaddamedhi. Later, the said borrowers defaulted in repayment of the said loan. The petitioner company, after following the due process of law, initiated proceedings under the provisions of Section 14 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’), took over the possession of the property and later the petitioner-company brought the mortgaged property for auction which was conducted on 25-09-2023. In the said auction, the respondent No.6 has stood as the highest bidder. Accordingly, the petitioner-company has issued Sale Certificate in his favour on 25-09-2023. Thereafter, the petitioner company has submitted the Sale Certificate to the respondent No.4 for registration on 19-12-2023. However, the respondent No.4 has rejected the registration of the Sale Certificate vide his letter dated 19-12-2023 stating that unless and until the attachment order passed by the Deputy Registrar of Chits, Vijayawada is raised and the subject property is removed from the prohibition list, the Certificate of Sale cannot be admitted for Registration and he also informed that the subject property is under attachment in pursuance of the orders dated 27-09-2019 in I.A.No.190 of 2019 in ACP No.195 of 2019, passed by the Deputy Registrar of Chits/Arbitrator at Vijayawada, Krishna District, A.P. under Section 68 (2) of the CHIT FUNDS ACT , 1982 (for brevity ‘the Act, 1982’).

4. The learned Counsel for the petitioner would further submit that the petitioner-company is a secured creditor having first charge over the subject property on 05-09-2018 which is much prior to the attachment orders dated 27-09-2019 and therefore as per Section 68 of the Act, 1982, the attachment order is not binding on the petitioner company and therefore it will not affect the rights of the secured creditor over the subject property, and further, such attachments have no impact on the sale that would be conducted under the Act. In spite of receiving the letter from the petitioner-company, the respondent No.4 did not choose to give reply nor registered the sale certificate and on the other hand insisting the petitioner-company to get the order from the Court for registration. The petitioner-company is not a party to the proceedings in I.A.No.190 of 2019 in ACP No.195 of 2019, initiated by the respondent No.5- M/s. Margadarshi Chit Fund Pvt Ltd., Vijayawada, and therefore the said attachment is not binding on the petitioner-company.

5. The learned counsel for the petitioner-company further submits that the respondent No.