Attachments to properties sold under SARFAESI Act must not affect auction purchaser's rights; proper endorsement necessary post-sale.

ORDER

The Writ Petition has been filed seeking issuance of a Writ of Mandamus directing the first respondent to efface the encumbrance attachment entry in Document No.12 of 2024 dated 05.03.2024 on the file of the first respondent, Thirumangalam Sub Registrar Office, Madurai.

2. Upon hearing the learned counsel for the petitioner and perusing the materials placed on record, the grievance of the petitioner is that the Bank sold the subject property by way of public auction under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the “SARFAESI Act”). It is contended that once the sale takes place under the SARFAESI Act, the same takes precedence and any prior or subsequent attachment would not affect the rights of the auction purchaser. In the present case, a subsequent attachment in respect of the same debtor was made by the second respondent, and the said attachment continues to be reflected in the Encumbrance Certificate even after the auction sale. Hence, the petitioner seeks to efface the said entry.

3. When the matter was taken up for hearing, the learned Additional Government Pleader appearing on behalf of the second respondent submitted that the issue has already been considered and decided by the Division Bench of this Court in M/s.Tamilnadu Mercantile Bank Ltd., Represented by its Branch Manager vs. The Sub Registrar, Sembakkam, Chennai and another (W.P.No.

15451 of 2024, decided on 19.10.2024)¹ .

4. Upon consideration of the rival submissions and on perusal of the judgment of the Division Bench of this Court, it is clear that the attachment entry itself need not be effaced, as the record must reflect all events up to the relevant date. However, it has been directed that after registration of the sale certificate, the registering authority shall make an appropriate entry in the Encumbrance Certificate cancelling the attachment, by specifically mentioning the relevant document number.

1 2024 SCC OnLine Mad 5692

5. In view of the above, this Writ Petition is allowed on the following terms:

(i) The first respondent shall cause an entry in the Encumbrance Certificate by making an endorsement that the attachment made by the second respondent vide Document No.12 of 2024 dated 05.03.2024 stands cancelled.

(ii) Upon making such entry, the due Encumbrance Certificate shall be issued to the petitioner.

No costs.