Phoenix ARC Private Limited Vs Sub Registrar (Kerala High Court)
The petitioner, an Asset Reconstruction Company, filed the writ petition seeking directions to the Sub Registrar to efface the entry relating to the attachment of its secured asset from the registration records and to register the sale certificate issued pursuant to proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act).
The property had originally been equitably mortgaged by the third respondent in favour of South Indian Bank on 21.12.2009, and the mortgage was extended on 25.10.2013 to secure renewed credit facilities. Following default in repayment, the Bank initiated proceedings under the SARFAESI Act. The third respondent challenged those proceedings before the High Court, which permitted repayment in instalments by judgment dated 06.02.2017. Thereafter, by an assignment agreement dated 17.03.2017, the South Indian Bank assigned the debt, underlying securities, and related rights in favour of the petitioner Asset Reconstruction Company.
After the borrower again defaulted, the petitioner obtained physical possession of the secured asset on 23.05.2022 pursuant to an order of the Chief Judicial Magistrate, Kozhikode, and sold the property in auction to the fifth respondent. A sale certificate was issued in favour of the auction purchaser. When the purchaser presented the sale certificate for registration, the Sub Registrar refused registration because the encumbrance certificate reflected an attachment ordered by the Munsiff Court, Manjeri on 15.07.2022 in O.S. No.263 of 2022. The petitioner contended that this attachment had been effected after the creation of the equitable mortgage and also after the petitioner had taken possession of the secured asset. The petitioner further pointed out that the civil suit had subsequently been decreed on the basis of the third respondent’s admission and agreement to pay the decretal amount in instalments.
