The confirmation of sale under SARFAESI Act extinguishes prior attachments on the property, rendering them ineffective.

JUDGMENT

In this appeal, the appellant is challenging the order dated 5.3.2024 in E.A.No.72/2021 in E.P.No.28/2019 in O.S.No.6/2018 of the Sub Court, Alappuzha, passed by the learned Sub Judge, Kochi. The appellant is the decree holder. The decree in O.S.No.6/2018 of the Sub Court, Alappuzha was transferred to the Sub Court, Kochi for execution, as the decree schedule property is situated within the territorial jurisdiction of the Sub Court, Kochi.

2. The 1^st respondent filed E.A.No.72/2021 under Order XXI Rule 58 of C.P.C. The 1^st respondent contended that the decree schedule property was mortgaged by the judgment debtor in favour of it on 5.8.2017 to avail overdraft facility of Rupees Twenty-eight lakhs. Equitable mortgage was created by depositing the title deeds of the property. Later, on 31.3.2018, the loan account was classified as non-performing asset and notice under Section 13(2) of the SARFAESI Act was issued on 26.6.2018. Since the amounts were not paid, Section 13(4) of the SARFAESI Act was invoked and symbolic possession of the property was taken on 9.10.2018. Thereafter M.C.No.394/2019 was filed before the Chief Judicial Magistrate’s Court, Ernakulam. The petition was considered by the Special Additional Chief Judicial Magistrate. Advocate Commissioner was appointed for taking possession and on 9.12.2019 the 1^st respondent took possession of the property. The property was proclaimed for sale on various dates and finally on 25.8.2021 it was bid in sale by the 1^st respondent as no other buyer was available. Sale certificate was issued on 21.10.2021. Nine documents were produced by the 1^st respondent in support of its case. The 1^st respondent contended that the attachment over the property cannot be sustained in view of the confirmation of sale under Section 13(8) of the SARFAESI Act and hence sought to lift the attachment.

3. The appellant filed objection in E.A.No.72/2021.

According to the appellant, the proceedings under the SARFAESI Act were illegal. It was contended that the 1^st respondent being a Co-operative Bank was not entitled to invoke the provisions of the SARFAESI Act . Further, it was contended that the property was attached on 19.2.2018 and hence the proceedings initiated by the 1^st respondent were improper. The learned Sub Judge heard the parties and allowed the E.A. by the impugned order.

4. Heard the learned counsel for the appellant and the learned counsel for the 1^st respondent. Though notice was served there was no appearance for the respondents 2 to 5. 5. The appellant impleaded the judgment debtor as additional 6^th respondent; however, subsequently, I.A.No.1/2025 was filed to delete the additional 6^th respondent. The I.A. was allowed by order dated 8.9.2025 at the risk of the appellant.

6. Learned counsel for the appellant contended that the impugned order is illegal and improper. The learned counsel reiterated the grounds raised in the memorandum of appeal and submitted that learned Sub Judge went wrong in allowing the E.A. He further contented that the decree schedule property was not a secured asset under the SARFAESI Act . The learned counsel submitted that the 1^st respondent was not entitled to proceed under the SARFAESI Act and the legally justifiable remedy available to it was to file a suit for recovery of money. The learned counsel further contended that as the proceedings which culminated in the sale of the property are ex-facie illegal, the learned Sub Judge erred in lifting the attachment and subsequently dismissing the E.P.

7. The learned counsel for the 1^st respondent submitted that an equitable mortgage was created in favour of the bank on 5.8.2017. As evident from the encumbrance certificate the property was attached by