ORDER

The petitioner is a bank represented by its authorised officer cum Chief Manager, having its Regional Office in Madurai. One Surulivel and Siva are the co-owners of the property having an extent of 5.27 cents of land in T.S.No.229/2, Iravadhanallaur, Madurai South Taluk, Madurai together with building thereon in D.No.137A/4, Kamarajar Salai Madurai.

2.The said Surulivel and Siva mortgaged the same with the petitioner bank by deposit of their title deeds, which was duly recorded in a memorandum of deposit of title deeds dated 26.08.2015 registered as document No.2885/2015 as security for the loan availed by their partnership firm M/s.Shree Saravana Traders. The amount borrowed by the firm was to the tune of Rs.55,20,00,000/-. Subsequently, the partnership firm redeposited the title deeds by supplemental memorandum of deposit of title deeds dated 14.12.2015 registered as document No.4085/2015 towards security for availing an additional cash credit facility of Rs.8,26,00,000/-.

3.The borrowers not repaid the loans in terms of the agreement and the loan account was declared as Non Performing Asset (NPA) and the petitioner bank initiated SARFAESI proceedings, which led to the auction of the subject properties. According to the petitioner, the auction sale was conducted on 11.12.2018 and the property was sold for a consideration of Rs.74,00,000/-. In the meanwhile, it appears that the 2nd respondent initiated arbitration proceedings against the borrower M/s.Shri Saravana Traders and the Arbitrator passed an interim order of attachment of the subject property on 23.04.2018 and the attachment order has been duly effected by the proceedings of the District Judge, Madurai under the provisions Section 17 of the Arbitration and Conciliation Act, 1996 read with Section 136 of CrPC. In view of the interim attachment order of the Arbitrator corresponding entries have been made in the encumbrance document in respect of the subject property by the 1st respondent office and registered as document No.

07/2018 dated 29.11.2018.

4.As far as the auction sale is concerned, the sale certificate was issued on 07.01.2021 in favour of the 3rd respondent. In view of the attachment and the entries made in the encumbrance certificate of the subject property, the 1st respondent refused to register the document namely, the sale certificate presented for registration and the refusal slip is the subject matter of challenge in this writ petition.

5.Mr.Om.Prakash, learned Senior Counsel appearing for the petitioner would submit that the bank being the secured creditor and the mortgage of the subject property had taken place much prior to the attachment order by the Arbitrator in 2018, the bank has the first charge over the subject property. According to the learned Senior Counsel that there are number of judgments on the legal aspect that the right of secured creditor to the mortgaged property would have precedence over other creditors. There are relevant judgments in similar circumstances, wherein directions were issued to the Sub Registrar to remove any encumbrance of the attachment made in respect of the properties in order to facilitate the registration of documents presented by the secured creditors for registration.

6.The learned Senior Counsel would submit that in this case the admitted facts are that there was a memorandum of deposit of title deeds, which was recorded on 26.08.2015 as registered document and subsequently supplemental memorandum of deposit of title deeds dated 14.12.2015, was registered as document No.4085/2015. Both being securities for the loan amount borrowed by the firm M/s.Shri Saravana Traders. It is not open to the 1st respondent to rely on the subsequent attachment order of the Arbitrator at the instance of the 2nd respondent on 23.04.2018, and refuse to register the sale certificate issued by the Bank to the auction purchaser, the 3rd respondent herein.

7.It also transpired that after the petitioner had come to know of the arbitr