Secured creditors under the SARFAESI Act hold priority over subsequent encumbrances or attachments, reaffirming their right to enforce security interests effectively.

JUDGMENT

The petitioner is a banking Company. The 3rd respondent herein secured credit facilities from the petitioner, for which purpose, he mortgaged his property having an extent of 4.05 Ares along with the commercial building covered under Ext.P1 sale deed. The mortgage was confirmed by a letter dated 13.10.2004 issued by the 3rd respondent. Later, default was committed by the 3rd respondent in repaying the borrowed amount and the asset was classified as Non-Performing Asset. Proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( SARFAESI Act for short) was initiated and the property was finally brought to sale by issuing sale notice dated 14.07.2020 as is evident from Ext.P2. The auction sale was conducted on 03.08.2020 and the sale was confirmed in favor of the successful bidders vide Ext.P3 letter.

2. The petitioner contends that they took steps for registration of the sale certificate. However, the 1st respondent refused to register the same on the ground that there is a subsisting attachment in respect of the property. Ext.P4 is the copy of the encumbrance certificate, which would reveal that the attachment order is issued by the Family Court, Ettumanoor and it was effected on 28.06.2017 on a petition filed by the 4th respondent. According to the petitioner, the attachments cannot claim precedence over the right of the auction purchaser, who has obtained ownership of the property pursuant to a sale effected by the petitioner under the SARFAESI Act .

3. It is in the afore circumstances, that the petitioner has approached this Court seeking a direction to the 1st respondent to register the sale certificate and also to efface the order of attachment dated 28.06.2017 as noted in Ext.P4 encumbrance certificate and also for a further direction to the 2nd respondent to effect mutation of the property consequent to the registration of the sale certificate.

4. I have heard Sri.K.N.Sivasankaran, the learned counsel appearing for the petitioner, Sri.Purushan.K., the 3rd respondent, who appeared in person and Sri.Bimal K.Nath, the learned Government Pleader.

5. Sri.K.N.Sivasankaran, the learned counsel has referred to Ext.P5 judgment passed by this Court and it was argued that in respect of another property attached by the Family Court, this Court had directed the 1st respondent to register the sale certificate. The learned counsel would further contend that Section 26E of the SARFAESI Act grants priority to secured creditors and it states that the dues to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, Cesses and Rates due to the Central Government, State Government or Local Authority. Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act , 1993 also declares the position in the same lines.

6. Sri.K.Purushan, the 3rd respondent, who appeared in person, submitted that before effecting sale, the 3rd respondent was offered to settle the entire dues under the One Time Settlement Scheme and he was granted only a few days' time. According to the learned counsel, as per the OTS scheme, he was called upon to pay only a sum of Rs.75 lakhs, but by the sale of his property, substantial amounts have been realised. It is his submission that necessary directions be issued to the petitioner not to proceed against the property of the guarantors now that the entire dues have been wiped off.

7. In response, Sri.Sivasankaran pointed out that Ext.P2 would reveal that the total amounts due from the petitioner is Rs.1,70,56,596.29/- as on 14.07.2020 and the property which was sold fetched only a sum of Rs.41 lakhs. According to the learned counsel, the contentions now advanced by the party in person have no relevance insofar as the present proceedings are concerned.

8. I have considered the submissions advanced. I have narrated the grievance of the 3rd respondent as he had appeared in person before this Court. Howe