CMA No. 2001 / 2022

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 17.07.2023

CORAM :

THE HONOURABLE MR. JUSTICE SUNDER MOHAN

Civil Miscellaneous Appeal No. 2001 of 2022

and

C.M.P. No. 610 of 2023

The South Indian Bank Limited,

Madurai Main Branch,

Represented by its Chief Manager,

No.24, LIC Building, West Marret Street,

Madurai – 625 001.

... Appellant

Versus

1.M/s.Equitas Small Finance Bank Limited,

(Formerly known as Equitas Finance Limited),

Represented by its Deputy Vice President (Legal),

Spencer Plaza, 4^th Floor, Phase II,

No.769, Mount Road, Chennai – 600 002.

2.M/s.Shree Sharavana Traders,

Represented by its Partner,

Mr. Singaravel Surlivel,

S/o.Mr. Singaravel,

No. 22, Gate Lock Road,

Old Anuppandi Road, Madurai – 625 009.

3.Mr.Singaravel Surlivel, Partner,

M/s.Shree Sharavana Traders,

No.137/A/4, Kamarajar Salai,

Opp.to Kannan Department Store,

Madurai – 625 009.

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CMA No. 2001 / 2022

4.Mr.Sivasingaravel, Partner,

M/s.Shree Sharavana Traders,

S/o.Mr.Singaravel,

No.137/A/4, Kamarajar Salai,

Opp. To Kannan Department Store,

Madurai – 625 009.

... Respondents

PRAYER : Civil Miscellaneous Appeal filed under Section 37 of the

Arbitration and Conciliation Act, 1996 seeking to set aside the impugned

order dated 23.04.2018 in Application No.29/2017 in Arbitration Case

No.29/2017 in Arbitration Case No.19/2017.

For Appellant : Mr. M.L. Ganesh.

For Respondents : Mr. A. Dhamodharan for R1.

R2 – R4 given up.

J U D G M E N T

The appeal has been filed by a third party to the arbitration

proceedings challenging the interim order of attachment passed by the

sole arbitrator.

2.The facts leading to the filing of the appeal are as follows; The

first respondent herein filed claim petition before the arbitrator against

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the respondents 2 to 4 claiming a sum of Rs.50,16,109/-. Admittedly, the

said loan was unsecured. Pending arbitration proceedings, the first

respondent filed an application to attach the properties viz., land situated

at Sub-Registration District of Theppakula Village, Kalikappan, 2^nd Beet,

Resurvey No.220, U.D.R.S. No. 104, land and building situated at Sub-

Registration District of Ababi and Village Iyvarathanallur, bearing T.S.

No. 229/2, Door No.137-A/4 and land and building situated at Sub-

Registration District of Ababi and Village Iyvarathanalur, bearing T.S.

No. 2391/2, belonging to the respondents 2 to 4. The impugned order

came to be passed on the said application.

3.The appellant claiming to be the secured creditor of the

respondents 2 to 4 have filed this appeal stating that the respondents 2 to

4 had mortgaged some of the attached properties with them on

26.08.2015. Since the respondents 2 to 4 defaulted in payments, the

appellant initiated proceedings under the SARFAESI Act and sold the

properties to a third party through an auction. The sale certificate was

also registered in favour of the third party on 21.12.2018. It is the

grievance of the appellant that in view of the attachment order passed by

the Arbitrator, there is an entry in the encumbrance certificate which is

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CMA No. 2001 / 2022

likely to affect the title of the auction purchaser in whose favour the sale

certificate has already been registered.

4.The learned counsel for the first respondent per contra submitted

that they were not aware that the properties were subjected to a mortgage

and hence their application and the impugned order cannot be said to be

bad in law. The respondents 2 to 4 have been given up by the appellant.

The learned counsel for the appellant has also made an endorsement to

that effect.

5.Though several grounds have been raised to challenge the award

passed by the Arbitrator including stating that the first