Back
2019 Supreme(Online)(KER) 30383
HIGH COURT OF KERALA
ALEXANDER THOMAS, J
SUNDARAM BNP PARIBAS HOME FINANCE LIMITED – Appellant
Versus
JACOB G – Respondent
WRIT PETITION (CIVIL) 2180/2019
Attachments placed after a mortgage are rendered ineffective once a sale is confirmed, allowing for their removal from records to ensure marketability.
Headnote:
Mandamus - Mortgages - Recovery of Debts due to Banks and Financial Institutions Act, 1993; SARFAESI Act - The court emphasized that post-creation attachment orders lose legal effect once the sale is confirmed under the respective acts, mandating removal from encumbrance certificates.
Fact of the Case:
The petitioner, a financing firm, faced challenges selling a mortgaged property due to attachments placed by other creditors after the mortgage was created, resulting in a writ petition for the removal of those attachments.
Finding of the Court:
The court upheld prior judgments establishing that attachments made after the creation of a mortgage do not affect the title once a sale is confirmed. It ordered the petitioner to apply for the removal of subsequent attachments.
Issues: Whether attachment orders made post-creation of a mortgage are valid and if they should be removed from the encumbrance certificate upon confirmation of sale.
Ratio Decidendi: Attachments imposed after a mortgage creation lose efficacy upon sale confirmation under the Recovery of Debts Act, necessitating their removal from legal records to restore clear title.
Final Decision: Writ petition granted; the Sub Registrar directed to consider the removal of attachments.
J U D G M E N T
The prayers in the aforecaptioned Writ Petition (Civil) are as follows:
“i. Issue a Writ of Mandamus compelling the 1st respondent to remove the attachments made subsequent to the creation of Mortgage in the properties having an extent of 4.16 Ares properties comprising in Re.Sy.No.198/1/(Sy.No.346) in Block No.10 of Thiruvankulam village, Ernakulam District.
ii. Declare that the attachment made in properties having an extent of
4.16 ares properties comprising in Re.Sy.No.198/1 (Sy.No.346) in Block No.10 of Thiruvankulam village, Ernakulam district iis free from all encumbrances.
iii Issue such other order or direction as this Honourable Court deems fit considering the facts and circumstances of the case.”
2. Heard Sri. T.Rajesh, the learned counsel appearing for the petitioner and Sri.Saigi Jacob Palatty, learned Senior Govt. Pleader, appearing for the 1st respondent Sub Registrar, Thripunithura. In the nature of the orders proposed to be passed in this Writ petition, notice to R2 and R-3 will stand dispensed with.
3. According to the petitioner, one Sri.P.Venugopal and two others had entered into a loan transaction with the petitioner (M/s.Sundaram BNP Paribas Home Finance Ltd.) and in that process they had mortgaged their property. That the said borrowers had mortgaged their property with the petitioner in the above said loan transaction by depositing of title deed on 1.12.2012. Due to their consistent default, the petitioner had to take recourse to put the mortgaged property in the sale under the provisions contained in the SARFAESI Act .
4. That it appears that R-2 and R-3 are also creditors of the borrowers and had secured attachment of the very same property in question, as per orders dated 25.5.2014 and 23.9.2016 rendered on I.A.No.2231/2014 and I.A.No. 4265/2016 in O.S.No. 201/2016 filed by R-2 and R-3 herein before the District Court, Ernakulam and Sub Court, Ernakulam, respectively. The grievance of the petitioner is that, in view of the encumbrance shown as Serial Nos.4 and 5 in Ext.P3 encumbrance certificate in respect of the above said property due to the abovesaid attachment orders, purchasers are not coming forward in the sale proceedings initiated by the petitioner in respect of the above said property. It is in the light of these aspects, that the petitioner has filed this writ petition with the aforementioned prayers.
5. It is now well settled by series of decisions of this Court as inHDFC v. SRO [2011(3) KLJ 561]= [2011 KHC 851], Madhan V. Sub Registrar reported in [ 2014 (1) KLT 406 ], that in cases where the attachment orders have been rendered after the creation of equitable mortgage, then such attachment orders in respect of the said properties in question will lose its legal efficacy the moment the sale is confirmed in favour of the purchaser concerned as per the provisions contained in the enactments like the Recovery of Debts due to the Banks and Financial institutions Act, 1993, SARFAESI Act , etc. and that in such case, the Sub Registrar concerned is bound to efface such attachments from the encumbrance certificate, so that the clouds created over the title of the property are removed.
6. This Court in the judgment inMadhan V. Sub Registrar [ 2014 (1) KLT 406 ] has considered the issue as to whether attachment effected subsequent to the creation of the equitable mortgage be effaced after the property is purchased in sale conducted by the Recovery Officer of the Debt Recovery Tribunal. It was held that the preponderance of judicial opinion leads to the irresistible conclusion that the sale of the mortgaged property in favour of the purchaser under the sale certificate issued under the said Act is free from all encumbrances and attachments effected subsequent to the mortgage created in favour of the bank would not affect the title and ownership of the bank/purchaser of the subject property. Such attachments have no impact on the sale conducted under the Act and ceases to have any effect or f
