A subsequent order of attachment, including interim measures under Section 9 of the Arbitration Act, cannot override the priority rights of a prior secured creditor (mortgagee) or affect the absolute title of an auction purchaser who acquired the property through legal recovery proceedings.

PRAYER:- Arbitration Application filed to raise an order of attachment in A.No.5864 of 2013 dated 24.01.2014 and thereby to remove the entries of attachment in the schedule property before the SRO, Madhavaram, Chennai.

ORDER

The present Application has been filed to raise an order of attachment in A.No.5864 of 2013 dated 24.01.2014 and thereby to remove the entries of attachment in the schedule property before the SRO, Madhavaram, Chennai.

2. Heard Mr.R.Subramanian, learned counsel for the applicant, Mr.R.Uma Shankar, learned counsel appearing on behalf of M/S.Sri & Shankar Associates for the first respondent and Mrs.Shubharanjani Ananth, learned counsel appearing on behalf of the fifth respondent.

3. Mr.R.Subramanian, learned counsel appearing for the applicant would submit that by an order dated 24.01.2014 an attachment of the immoveable property had been made by this Court which has been reflecting in the Encumbrance Certificate of the jurisdictional Sub-Registrar. He would submit that the said order of attachment came to be made on the failure of respondents 2 to 4 to furnish security in respect of a loan agreement that they had entered with the first respondent. He would further submit that the aforesaid properties were also the subject matter of Debt Recovery proceedings initiated by the Syndicate Bank which had now merged with the fifth respondent, wherein Recovery Certificates were issued and the property was brought for auction under the said proceedings which had been successfully bided by the applicant. Pursuant to which the Sales Certificate was issued and has also been registered as Document No.5580 of 2021 dated 16.06.2021 with the Sub-Registrar, Madhavaram, Chennai. The applicant had also been in possession and enjoyment of the same without any interruption from anyone.

4. He would further submit that an ex-parte order also came to be passed against the respondents 2 to 4 at the behest of the first respondent, pursuant to which an Execution Petition came to be filed in the year 2022 and the very same property had been attached. When the Bailiff had attempted to attach the property, it was found that the property had already been sold through DRT proceedings and a Report had also been submitted by the Bailiff and thereafter, the Execution Petition itself was withdrawn. Hence, he would submit that the order of attachment made by this Court as early as in the year 2014 causes severe prejudice to the applicant.

5. He had also relied upon the judgment of this Court made in 2020 SCC Online Mad 15471 to contend that when a property is the subject matter of a mortgage prior to an order of attachment, the rights of the mortgagee under the said mortgage would have a priority and the order of attachment made by a Court subsequent to the date of the mortgage cannot affect the Bank or the auction purchaser to get an absolute title. Hence, he prays this Court to raise the order of attachment.

6. Countering his arguments, Mr.R.Uma Shankar learned counsel appearing for the first respondent would submit that originally an order of attachment had been passed almost a decade ago, on 24.01.2014 on the failure of the respondents 2 to 4 to provide security as directed by this Court. An Award also came to be passed as early as on 16.10.2014 as against the respondents 2 to 4 for payment of sum of Rs.21,97,622/- together with interest at the rate of 18% per annum from the date of the plaint till the date of realisation together with the cost of Rs.10,000/-.

7. An Execution Petition was filed and when it was informed that in a public auction conducted by the Recovery Officer of DRT-II, the order of attachment passed in the EP could not be effected. Hence, the said Execution Petition was permitted to be withdrawn with liberty to the petitioner to file a fresh Execution Petition on the basis of the Award. He would submit that the Sale Certificate in favour of the applicant was given, pending the attachment made under Section 9 of the Arb

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