1. Bank auctioned mortgaged property under SARFAESI Act; registration of sale certificate refused due to third-party attachment order. (Para 1 , 2 )
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2026 Supreme(Online)(Mad) 10382
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Senthilkumar Ramamoorthy, J
Canara Bank – Appellant
Versus
Sub Registrar – Respondent
W.P. No. 4479 of 2026
Advocates:
For the Appellants/Petitioners: Aishwarya S Nathan
For the Respondents: U.Baranidharan
For the Appellants/Petitioners: Aishwarya S Nathan
For the Respondents: U.Baranidharan
A secured creditor's interest under Section 26E of the SARFAESI Act takes priority over subsequent attachment orders issued in third-party civil suits, ensuring that such orders do not obstruct the registration of a sale certificate.
Headnote:(A) SARFAESI Act - Priority of Secured Creditor - Enforcement of Security Interest - A secured creditor has priority in respect of its security interest under Section 26E of the SARFAESI Act, and an attachment order issued in a suit by a third party after the creation of the mortgage does not obstruct the registration of a sale certificate executed by the secured creditor. (Para 4)
Issues: Whether an attachment order issued in a subsequent civil suit can prevent the registration of a sale certificate issued by a secured creditor under the SARFAESI Act.
Legal Category Hierarchy
- banking and finance
- property law
-
practice and procedure
-
writ jurisdiction
- certiorarified mandamus
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writ jurisdiction
Table of Contents
2. Bank argued priority under Section 26E SARFAESI Act over prior mortgage; attachment order in later suit cannot bar registration. (Para 2 )
3. Mortgage created in 2015; third-party attachment order from 2024 suit cannot prevent secured creditor's sale certificate registration. (Para 4 )
4. A secured creditor's priority under Section 26E SARFAESI Act overrides later attachment orders by third parties. (Para 4 )
5. Impugned refusal slip set aside; bank permitted to re-present sale certificate for registration within two weeks. (Para 4 , 5 )
6. Does a later third-party attachment order bar registration of a sale certificate under the SARFAESI Act?
No, a later attachment order from a third-party suit cannot prevent registration of a sale certificate by a secured creditor. (Para 4 )
7. What priority does a secured creditor have under Section 26E of the SARFAESI Act?
A secured creditor has priority over all other debts and claims, including attachment orders, in respect of its security interest. (Para 4 )
PRAYER: This writ petition is filed under Article 226 of the Constitution of India praying for issuance of Writ of Certiorarified Mandamus calling for the records pertaining to the impugned refusal slip dated 05.01.2026 bearing RFL/Parangipettai / 2/2026 issued by the 1st respondent and to quash the same and consequently direct the 1st respondent to register the sale certificate dated 02.07.2025 executed by the petitioner in favour of the 3rd respondent.
For Petitioner(s): Ms.Aishwarya S Nathan
For Respondent(s): MR.U.Baranidharan, Spl.G.P.
ORDER
The petitioner is a bank. Since the loan account of Majhur Basha and Papitha Begum (the borrowers) became a non-performing asset, by initiating proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act), the petitioner brought the property for sale by auction. The third respondent was declared as the highest bidder and sale certificate dated 02.07.2025 was executed in favour of the said respondent. Upon presentation for registration, the request for registration of the sale certificate was declined under the impugned refusal check slip.
2. Referring to the impugned refusal check slip, learned counsel for the petitioner submits that the reason for refusal is the attachment order issued in I.A.No.475 of 2024 in O.S.No.199 of 2024. She submits that the bank is not a party to the suit and that the suit has been filed in 2024, which is several years after the creation of a mortgage in favour of the bank in the year 2015. She also submits that a secured creditor has priority under Section 26E of the SARFAESI Act. She also placed reliance upon a circular issued with regard to such attachment orders by the Inspector General of Registration.
3. Mr.U.Baranidharan, learned Special Government Pleader, accepts notice for respondents 1 and 2. The third respondent is the party in whose favour a sale certificate has been issued and, therefore, such respondent would not be prejudiced if an order were to be issued in his absence.
4. As contended by learned counsel for the petitioner, a secured creditor has priority in respect of its security interest under Section 26E of the SARFAESI Act. In the case at hand, the record reveals that the mortgage was created in favour of the petitioner on or about 04.03.2015. The property has been brought to sale in enforcement of this mortgage. The order of attachment issued in a suit filed by a third party in 2024 will not stand in the way of the registration of the sale certificate by the secured creditor. Therefore, the impugned refusal check slip cannot be sustained and is hereby set aside. As a consequence, the petitioner is permitted to re-present the sale certificate for registration. Subject to fulfilment of other requirements relating to registration, the sale certificate shall be registered within two weeks from the re-presentation thereof.
5. The writ petition is disposed of on the above terms. No costs.
