2018 (12) TMI 1703 - HC - Indian Laws

Refusal to register the sale deed - refusal on the ground that there were adverse encumbrances/attachments available against the said property - HELD THAT - The order of attachment before judgment cannot be a bar for the first respondent to register the sale certificate in respect of the property in question and hence there cannot be any impediment for the first respondent to register the sale certificate dated 14.03.2018 issued in favour of the tenth respondent. Petition allowed.

Summary

Issues:
1. Writ petition filed seeking Certiorarified Mandamus for records relating to attachment entries and refusal of registration of sale certificate.
2. Default in loan repayment by respondents, leading to NPA classification and auction proceedings.
3. Petitioner bank's application under SARFAESI Act for physical possession of property.
4. Refusal by first respondent to register sale certificate due to adverse encumbrances.
5. Individual civil suits by respondents 5 to 9 resulting in attachment orders before judgment.
6. Priority of secured creditors over other dues as per SARFAESI Act and Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Analysis:
1. The petitioner filed a writ petition seeking Certiorarified Mandamus for records related to attachment entries and refusal of sale certificate registration. The petitioner bank provided credit facilities to the second respondent, with respondents 3 and 4 as guarantors. Default in loan repayment led to NPA classification, possession notice, and auction proceedings, ultimately resulting in sale to the tenth respondent. The petitioner sought registration of the sale certificate, which was refused by the first respondent citing adverse encumbrances.

2. The petitioner bank's application under the SARFAESI Act for physical possession of the property was granted, leading to the auction sale and issuance of the sale certificate. Despite pending recovery proceedings before the Debts Recovery Tribunal, the first respondent refused to register the sale certificate. The petitioner argued that their rights as a secured creditor should take precedence over attachment orders obtained by respondents 5 to 9 in individual civil suits.

3. The judgment of the Full Bench of the Court in Assistant Commercial Tax Officer v. Indian Overseas Bank clarified the priority of secured creditors in realizing debts over other dues. The introduction of Section 31B in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 emphasized the priority of secured creditors in debt realization. Section 26-E of the SARFAESI Act further reiterated the priority of debts due to secured creditors over other debts and government dues.

4. The Court, relying on the legal provisions and precedents, held that the order of attachment before judgment should not impede the registration of the sale certificate in favor of the tenth respondent. The impugned order refusing registration was quashed, directing the first respondent to register the sale certificate within a specified period. The judgment highlighted the priority of secured creditors in debt recovery processes, emphasizing the rights of the petitioner bank in this case.