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2010 Supreme(Online)(KER) 13075
HIGH COURT OF KERALA
C.K. ABDUL REHIM, J
ABDUL RAHIMAN – Appellant
Versus
STATE BANK OF TRAVANCORE – Respondent
WP(C)/23836/2010
SRI.P.V.JYOTHI PRASAD, SRI.T.SETHUMADHAVAN, SRI.PUSHPARAJAN KODOTH, SRI.K.JAYESH MOHANKUMAR, SRI.ABU BAKER KUNJU, SMT.REHUMATHINISA BALACHANDRAN
A subsequent purchaser of mortgaged property cannot challenge the enforcement actions of a lender under the SARFAESI Act.
Headnote:
Securitization - Property Dispute - SARFAESI Act - Sections 13(4) - The court found that the petitioner, as a subsequent purchaser after a mortgage, lacks standing to dictate recovery proceedings and has no entitlement to intervene with the bank's actions under the SARFAESI Act.
Fact of the Case:
The petitioner challenges a notice under the SARFAESI Act regarding mortgaged property, asserting that the bank's actions are arbitrary since he bought the property without knowledge of the mortgage and claims that all mortgaged properties should be sold to recover the dues.
Issues: Whether the petitioner, as a buyer of a mortgaged property, has standing to challenge the bank's actions under the SARFAESI Act and request simultaneous sale of all mortgaged properties.
Ratio Decidendi: The court held that the validity of the mortgage precludes the rights of the subsequent purchaser to dictate the bank's recovery actions; thus, the bank is free to pursue its recovery as per the loan agreements.
Final Decision: The writ petition is dismissed without merit.
J U D G M E N T
Petitioner is challenging Ext.P3 notice issued under Section 13(4) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), by the 1st respondent. The property which is scheduled in Ext.P3 notice is 9 cents of land comprised in survey No.181/1 in R.S.No.173/62 of Kalpetta Village. According to the petitioner, the said property was purchased by him from the 3rd respondent without knowing that the property in question was mortgaged in favour of the 1st respondent Bank. It is revealed that respondents 3 and 4 had availed business loan for the purpose of the 2nd respondent Company by pledging the above said property along with other properties. Consequent to default committed by the 2nd respondent, the proceedings under the SARFAESI Act has now been initiated.
2. The case of the petitioner is that the 1st respondent Bank is not taking any effective steps against properties belonging to the respondents 2 to 4 due to extraneous reasons and the proceedings now initiated against the property purchased by the petitioner alone, is arbitrary and unreasonable. If the 1st respondent proceed against with sale of all the items of the properties mortgaged, the entire arrears will be recovered from respondents 2 to 4, is the contention.
3. In a statement filed by the 1st respondent, it is mentioned that the loan in question was availed as early as in the year 2004 by mortgaging four items of property, including the property claimed to have been purchased by the petitioner. It is evident that the petitioner had purchased the property only in the year 2009 by virtue of Ext.P1 sale deed. The original title deed of the property in question is in the custody of the Bank and the petitioner had not taken any care to verify the original title deed. It is contended that the petitioner is not a party to the loan transaction and that he cannot insist on the Bank to sell other items of properties simultaneously. However, it is mentioned that the Bank has initiated proceedings against all the four items of the properties. It is mentioned that the Bank has also approached the Debt Recovery Tribunal by filing O.A.No.217 of 2009.
4. Learned counsel for the petitioner had brought to my notice that with respect to another item, which was mortgaged, there was a sale effected by the 4th respondent in favour of one Sri.N.A.Sonni. When the said property was proceeded against, the purchaser had approached this Court by filing W.P(C) No.12251 of 2010. A copy of the judgment in that case dated 31.5.2010 was made available for my perusal. It is noticed that the counsel appearing for the Bank made a submission in that case, to the effect that all the items of the properties are being proceeded against and that no arbitrariness or discrimination will be shown with respect to any of the items of the properties. Referring to the averments contained in the statement filed by the Bank that two items of properties offered as collateral security are agricultural properties, learned counsel appearing for the petitioner strongly refuted correctness of such a statement. According to him the respondents 3 and 4 are conducting a home stay (resort) in the properties mortgaged and if coercive steps are initiated against the said properties, the respondents 2 to 4 will definitely settle the arrears. Under such circumstances, he makes a limited prayer for issuing direction to the 1st respondent Bank to conduct sale of all the four items of properties, simultaneously.
5. Learned counsel for the 1st respondent Bank opposed the submission in this regard contending that the petitioner has absolutely no locus standi to suggest any course regarding the recovery steps, which is being pursued at the instance of the Bank. The petitioner is not a bonafide purchaser and he could not dictate terms on the first respondent regarding steps, is the contention.
6. Considering the facts and circumstances and contentions on bo
