Secured creditors' rights under the SARFAESI Act take precedence over tax attachments, mandating registration of Sale Certificates despite prior encumbrances.

ORDER

(Order of the Court was delivered by S.SRIMATHY, J.

The present writ petition is filed for Writ of Certiorarified Mandamus to quash the impugned proceedings of 2^nd respondent made in RFL/Thillainagar/2/2024, dated 08.01.2024 and consequently, to direct the 2^nd respondent to register the Sale Certificate, dated 08.01.2024, issued by the petitioner bank in favour of the 7^th respondent / Auction purchaser and consequently, to direct the 1^st respondent / Sub Registrar and 3^rd, 4^th and 5^th respondents / Income Tax Department to efface/delete the encumbrance attachment entries in the concerned documents on the file of the 1^st respondent / Sub Registrar, Woraiyur Sub Registrar Office, Tiruchirapalli, within a time frame.

2.The brief facts as stated in the affidavit are that the 6^th respondent/borrower availed credit facility by mortgaging their properties and on 17.04.2013. The 6^th respondent/borrower executed a registered mortgage deed to and in favour of the petitioner Bank on 17.04.2013 vide document No.2864 of 2013. However, the Income Tax Department / the 3^rd, 4^th, 5^th respondents, passed the order of attachment on 03.11.2015, 24.07.2016, 27.07.2016, 23.01.2017, 18.07.2017, and 04.01.2018, for recovery of the tax dues, in respect of the properties over which mortgages were already created. The properties belonging to the borrowers were mortgaged with the petitioner bank prior to the order of attachments passed by the 3^rd, 4^th and 5^th respondents, and hence, the said attachments are non-est/invalid. The 6^th respondent/borrower failed to adhere to the repayment schedule, therefore on 29.05.2016 the loan facility extended to them was classified as "non-performing asset" within the meaning of Section 2(o) of the SARFAESI Act in accordance with directions/guidelines issued by the Reserve Bank of India. Subsequently, the petitioner bank had issued statutory notice under Section 13(2) of the Act to the borrowers and took the physical possession of the secured asset as per the Section 14 order, on the file of the Chief Judicial Magistrate Court, Trichy and then the petitioner bank put the secured asset to public auction for the recovery of petitioner bank's outstanding dues.

3.On 29.11.2023, the petitioner bank published the SARFAESI e- Auction sale notice in "The New Indian Express" and "Dinamani" for sale of the secured asset at a reserve price of Rs. 10,00,00,000/- (Rupees Ten Crores only) and fixed the date of auction on 15.12.2023 and in this regard, the petitioner bank issued the said sale notice to the borrowers by register post. On publication of the said SARFAESI e-Auction sale notice, the 7^th respondent has participated in the said e-Auction held on 15.12.2023 and his bid amount of Rs. 10,05,00,000/- (Rupees Ten Crores and Five Lakhs Only) has been declared highest as bid amount by the petitioner bank, Subsequently, the 7^th respondent paid the entire sale price/bid amount to the petitioner bank and accordingly the petitioner bank issued the Sale Certificate dated 08.01.2024 to in favour of the 7^th respondent. However, when the Auction purchaser/7^th respondent and the petitioner bank went for registration of the said sale certificate and the same was declined to be registered by the 2^nd Respondent by his "Refusal Check Slip” in vide Refusal No: RFL/Thillai Nagar/2/2024, dated 08.01.2024, on the ground that the 3^rd , 4^th and 5^th respondent's attachment orders in vide Document Nos: 45/2015, 46/2015 and 47/2015, dated 03.11.2015, and Document Nos: 64/2016 dated 24.07.2016, 62/2016 and 63/2016, dated 27.07.2016, and Document Nos: 7/2017, 8/2017 and 9/2017, dated