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State Bank of India, Stressed Assets Management Branch, Chennai Versus The Tax Recovery Officer, Income Tax Department, Govt. of India, Pondicherry and The Sub-Registrar of Puducherry, and Smt. Devaki Thirunavakkarasu, Proprietrix of M/s. Devaki Agencies

2016 (6) TMI 242 - MADRAS HIGH COURT

Denial of Registration of sale certificate - auction sale under SARFAESI Act - Held that:- It is crystal clear that it is well settled principle of law that the order of attachment cannot be a bar to register the document. It is clear that the sale of any property, pending the order of attachment, is void only as against the claims enforceable under the order of said attachment and not in respect of other claims. Hence, if a document is presented for registration in compliance with the provision .....

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, etc. Therefore, in the absence of any interim order from the competent Court nor any of the grounds available under Rule 55, the Sub Registrar cannot deny the registration.

Writ Petition is allowed and the 2nd respondent viz., Sub-Registrar, Puducherry, is directed to register the Sale Certificate dated 12.01.2016 issued by the petitioner and to release the registered document, within a period of two weeks from the date of receipt of a copy of this order. - W.P.No.6685 of 2016 and .....

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ARMELI , Layout, Carmel Convent, Muthyalpet, Village No.40, Pondicherry Revenue Village, comprised in R.S.No.4/1, measuring an extent of 6055 sq.ft., covered by Doc.No.7359/2011, sold in the Auction held on 18.12.2015 under the provisions of SARFAESI Act, within a time frame. 2.In the affidavit filed in support of the writ petition, it has been averred by the petitioner, inter alia, as follows:- 2-1.The property being vacant plot bearing Plot No.39 FLOS CARMELI , Layout, Carmel Convent, Muthyalp .....

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on 29.03.2012 with an intention to create mortgage to secure the facilities availed by (1)Devaki Traders, (2)Devaki Steels, (3)Devaki Steels & Cements, (4)Devaki Agencies and (5)Devaki Cement Agencies, for the total existing limit of ₹ 37.50 crores. The 3rdrd respondent having deposited the original title deeds and created equitable mortgage, confirmed the same by a letter of confirmation dated 30.03.2012. The credit facilities availed by the 3rdrd respondent and her family concerns we .....

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on the file of the 2nd respondent confirming the equitable mortgage for the total limit of ₹ 54 crores. The 3rdrd respondent had also extended the equitable mortgage for the further enhanced limit of ₹ 64 cores on 23.101.2013 and confirmed the same by letter dated 24.10.2013. 2-3.The business concerns of the 3rdrd respondent had committed default in repayment of the dues after having availing huge credit limits in the name of (1)Devaki Traders, (2)Devaki Steels, (3)Devaki Steels &am .....

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015 and the reserve price for the said property was fixed as ₹ 1,36,00,000/-. Pursuant to the said E-Auction Sale Notice published by the petitioner-Bank in the newspapers, bids were submitted by prospective purchasers evincing interest in purchasing the said property. The Auction was accordingly conducted on 18.12.2015 and one Mr.Abdul Kader was the highest bidder for the said property at ₹ 1,38,00,000/- and the auction was confirmed in his favour. The said highest bidder being the .....

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for registration stating that the 1stst respondent has passed an order of attachment against the said property. The 1stst respondent has further informed the petitioner that unless a No-Objection Certificate (NOC) is obtained from the 1stst respondent, the document cannot be received for registration. 2-5.It is further stated by the petitioner that even prior to the conclusion of the auction sale under SARFAESI Act, the petitioner was informed about the income tax dues of the 3rdrd respondent a .....

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writ petition seeking for the relief as stated supra. 3.When the matter is taken up for consideration, the learned counsel for the petitioner, by relying upon the judgment passed by this Court in W.P.No.36076 of 2015, dated 04.03.2016 (S.Praveen Bohra Vs. Joint-I Sub-Registrar (In the cadre of District Registrar), submitted that in the said case, this Court by relying on the judgment of the Hon'ble Supreme Court in reported in (1985) 2 SCC 167, Balkrishan Gupta and others vs. Swadeshi Polyt .....

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he 1stst respondent, by filing a counter, contended that since the effective date of attachment by the Income Tax Department precedes the date on which the property was mortgaged with the petitioner-Bank, the mortgage is void and the Income Tax Department has priority over the Bank. Thus, the learned counsel for the 1stst respondent sought for dismissal of the writ petition. 6. I have also heard the learned Government Pleader appearing for the 2nd respondent also and perused the materials availa .....

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, and it was held as follows:- 18.In (1985) 2 SCC 167 (supra), the Hon'ble Supreme Court has held as under: 30.The consequence of attachment of certain shares of a company held by a shareholder for purposes of sale in a proceeding under section 149 of the Land Revenue Act is more or less the same. The effect of an order of attachment is what Section 149 of the Land Revenue Act itself says. Such attachment is made according to the law in force for the time being for the attachment and sale of .....

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he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor, or by another person in trust for him or on his behalf, is liable for attachment and sale in execution of a decree against him. Section 64 of the Code of Civil Procedure, 1908, states that where an attachment of a property is made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment debtor of any debt, di .....

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that is, not void as against all the world but void only as against the claims enforceable under the attachment. Until the property is actually sold the judgment debtor retains title in the property attached. Under Rule 76 of Order 21 of the Code of Civil Procedure, 1908, the shares in a corporation which are attached may be sold through a broker. In the alternative such shares may be sold in public auction under Rule 77 thereof. On such sale either under Rule 76 or under Rule 77, the purchaser .....

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nt (1985) 2 SCC 167 (supra), gives a fitting answer to the issue raised in this writ petition. So far as the order of attachment passed by the DRT is concerned, the transfer is not void generally but it is void only as against the claims enforceable under the said attachment. Therefore, I am of the opinion that the sale of the property attached cannot be construed as illegal sale. However, if the 2nd respondent bank exercises its right as against the property, the petitioner cannot raise any obj .....

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and not in respect of other claims. Therefore, the sale of the property, which is under attachment, cannot be said as illegal. In the light of what is stated above, the writ petition is allowed and the 1st respondent, Sub- Registrar, Kochiadai, Madurai, is directed to release the registered document in favour of the petitioner within a period of one week from the date of receipt of a copy of this order. No costs. 8. It is also worthwhile to refer to the unreported judgment of Madurai Bench of M .....

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ht acquired by the petitioner, vide settlement deed, dated 04.07.2011, it is always subject to further orders to be passed by the Civil Court. The petitioner's case is that she acquired title by way of settlement deed dated 04.07.2011, much prior to the order of attachment. Further, the learned counsel appearing for the petitioner placed reliance on Order 38, Rule 10 C.P.C. stating that attachment before judgment shall not affect the rights, existing prior to the attachment, of persons not p .....

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