An equitable mortgage supersedes subsequent encumbrances, establishing the mortgagee's priority in property matters.

JUDGMENT

The petitioner is stated to be a Co-operative Bank, operating under the provisions of the Kerala Co- operative Societies Act, 1969, and under the sanction of the Reserve Bank of India.

2. The petitioner says that they had obtained equitable mortgage over the property involved in this case from respondents 5 and 6, who had availed of a loan from them on the strength of collateral security having been created over it, towards its repayment.

3. The petitioner alleges that, however, since respondents 5 and 6 refused and failed to honour their commitments under the loan agreement, they were constrained to bring the property in question into sale, under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act', for short); and since there were no bidders, they themselves purchased it. They say that, however, when they presented Ext.P3 Sale Certificate before the 2nd respondent – Sub Registrar, he refused to accede to it, saying that there are various attachments over the property, as are reflected in Ext.P5 Encumbrance Certificate.

4. The petitioner says that, since all the attachments over the property, as seen from Ext.P5, have been made much after 08.03.2010, being the date of mortgage in their favour, the Sub Registrar was obligated to register Ext.P3 and to efface all such entries from the records, so as to enable them to deal with it without impediment in future. They thus pray that 2nd respondent be directed to register Ext.P3 Sale Certificate, as also to efface all entries of attachments over the property covered by it, within a time frame to be fixed by this Court.

5. I have heard Sri.Lindons C.Davis – learned counsel for the petitioner; Sri.Sunil Kumar – learned counsel appearing for the 10th respondent and Smt.K.Amminikutty – learned Senior Government Pleader appearing for the official respondents.

6. Even though notices from this Court have been validly served on respondents 7 to 9, they have chosen not to be present in person or to be represented through counsel; while, the notices to respondents 5 and 6 have been returned with an endorsement 'left'.

7. Sri.Sunil Kumar – learned counsel for the 10th respondent submitted that, though he cannot stand in the way of the registration of Ext.P3, going by the declarations of law by this Court and that of the Hon'ble Supreme Court in this matter, his client has a genuine apprehension against the sale conducted by the Bank in their own favour under the provisions of the SARFAESI Act. He submitted that since the validity of the sale is suspected, this Court may not allow Ext.P3 Sale Certificate to be registered.

8. Smt.K.Amminikutty – learned Senior Government Pleader, in response, submitted that the 2nd respondent – Sub Registrar, has been incapacitated from registering Ext.P3 Sale Certificate - in favour of the petitioner, because he noticed that there were several attachments over the property in question, ordered by the competent Civil Courts. She, however, added that if this Court is so inclined, 2nd respondent is willing to register the Sale Certificate, as also to efface the entries of attachments subsequent to 08.03.2010 - which is the date of mortgage claimed by the petitioner Bank.

9. When I evaluate the afore submissions, it is indubitable that law has now been well settled – without requirement of reinstatement – that the petitioner Bank obtains a first charge over the property on the strength of the equitable mortgage. Therefore, if the equitable mortgage is of the year 2010, as has been claimed by them, then certainly all other attachments, as reflected in Ext.P5 Encumbrance Certificate, which are subsequent to that date, cannot impede their right to deal with the property or to sell the same, including to themselves.

10. That said, the contention of the 10th respondent, that the sale itself is bad, is not something that can be impelled before this Court