Secured creditors have priority in registration and enforcement of sale certificates over subsequent attachment orders.

O R D E R

This writ petition has been filed challenging the refusal check slip issued by the first respondant, dated 06.11.2024 thereby refused to register the sale certificate dated 09.10.2024 on the ground that there is already an order of attachment in respect of the subject property.

2. Heard the learned counsel appearing on either side and perused the materials placed before this Court.

3. The petitioner is an Asset Reconstruction Company coming within definition of section 2(b) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 ( SARFAESI Act ). As per the resolution, dated 26.05.2020, made by the Board of Directors of this Petitioner Company, the petitioner is authorized to exercise all powers and functions contemplated under SARFAESI Act . While being so, one M/s. Sri Appala Raman Appala Depo and M/s. Akshay Internets Services Pvt. Ltd had availed loan facilities from the City Union Bank Ltd. In order to secure the repayment of the loan amount with interest, M/s Appala Raman depo had executed the Memorendum of deposit of title deeds, dated 04-03-2020 in document No.8184/2020 in favor of the bank in respect of the property comprised in S.No.8/24 under patta No.1635 to an extent of 86 cents situated at Vannivelampatti village, Peraiyur Taluk, Madurai District. Thereafter, borrowers failed to repay the loan amount and committed default, therefore, their loan account was declared as Non-Performing Asset (NPA) as per the guidelines issued by Reserve Bank of India and recovery proceedings were initiated under SARFAESI Act . Thereafter, the said property was taken physical possession on 02.09.2021 and brought the property for auction sale. Therefore, the petitioner continuned proceedings under SARFAESI Act . Accordingly e-auction sale was conducted on 25.09.2024 and the property was sold out in favour of the third respondent. The third respondent issued sale certificate and the same was presented for registration. However, the first respondent refused to register the same on the ground that subject property was already attached by the Assistant Commissioner of Commercial Tax Department, Thirumangalam, Madurai District.

4. The learned counsel for the petitioner would submit that Section

26E of the SARFAESI Act deals with Priority to secured creditors. Section 31B deals with Recovery of Debts and Bankruptcy Act, 1993 also provides Priority to secured creditor. Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest in created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. Further it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016, in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that code. It is further submitted that in the light of the Circular No.21343/C1/2021 dated 10.07.2021 which has been issued by the Inspector General of Registration, that if any sale certificates presented for registration by the bank in the capacity of secured creditors, thereon not to give refusal check slip for the reason of attachment order issued by the Court. The refusal of the first respondent in not register the sale certificate is wrong. Th