JITHIN JAMEEL, vs. INCOME TAX OFFICER

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WP(C)/4654/2022HC KeralaKLHC01010208202201 July 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.7 pages
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What did the High Court hold?

The High Court held that the petitioner is entitled to succeed. The Court reasoned that the sale by the original mortgagor (5th respondent) to the 6th respondent, occurring after the mortgage was created with the 4th respondent Bank, only transferred the equity of redemption to the 6th respondent. This equity of redemption was subsequently lost when the property was brought to sale by the 4th respondent under the SARFAESI Act and purchased by the petitioner. Therefore, the 6th respondent had no subsisting right over the property. The Court also noted that the 6th respondent had not raised any claim or initiated litigation against the 4th respondent despite the latter taking possession of the secured asset. The Income Tax Department had also stated in court that they had no objection to the attachment being effaced. Accordingly, the Court directed the 2nd respondent (Sub Registrar) to register the sale certificate cum sale deed in favour of the petitioner and the 3rd respondent (Village Officer) to effect mutation upon application.

What were the facts?

The petitioner, Jithin Jameel, purchased a property in a sale conducted by Federal Bank Ltd. under the SARFAESI Act. However, the Sub Registrar refused to register the sale certificate cum sale deed due to an attachment by the Income Tax Department and a prior transfer of the property by the original mortgagor (5th respondent) to the 6th respondent after creating the mortgage. The petitioner contended that a SARFAESI sale is free from encumbrances and that the Income Tax Department had stated in court that the attachment could be effaced. The petitioner also argued that the 6th respondent's purchase was subject to the mortgage, and their equity of redemption was lost upon the SARFAESI sale to the petitioner. The petitioner is in possession of the property.

What were the issues?

1. Whether the Sub Registrar (2nd respondent) can be directed to register the sale certificate cum sale deed in favour of the petitioner, notwithstanding the attachment by the Income Tax Department and the prior transfer to the 6th respondent, given that the sale was conducted under the SARFAESI Act. Assessee's Arguments: - A sale under the SARFAESI Act is free from all encumbrances. - The Income Tax Department has stated in court that the attachment can be effaced. - The 6th respondent's purchase was subject to the mortgage, and their equity of redemption was lost upon the SARFAESI sale to the petitioner. - The petitioner is entitled to registration and mutation. Revenue's Arguments: - The judgment records that the learned Standing Counsel for the Income Tax Department was heard, but no specific arguments are detailed. The Income Tax Department had filed a statement indicating no objection to the attachment being effaced.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. FRIDAY, THE 1ST DAY OF JULY 2022 / 10TH ASHADHA, 1944 WP(C) NO. 4654 OF 2022 PETITIONER: JITHIN JAMEEL,AGED 42 YEARS, S/O. ABOOBACKER SAINULABDEEN, RESIDING AT KUMBALATH HOUSE, PALLIPATTUMURI, THRIKKUNNAPPUZHA P.O., ALAPPUZHA - 690 515. BY ADVS. ZAKEER HUSSAIN K.A.SANJEETHA RESPONDENTS: 1 INCOME TAX OFFICER, INCOME TAX DEPARTMENT, OFFICE OF THE TAX RECOVERY OFFICER, TRO, KOZHIKODE, MANANCHIRA, KOZHIKODE - 673 001. 2 SUB REGISTRAR, THRIKKAKKARA SUB REGISTRY OFFICE, THRIKKAKKARA, KAKKANAD - 682 030. 3 THE VILLAGE OFFICER, THRIKKAKKARA VILLAGE OFFICE, KAKKANAD - 682 030. 4 FEDERAL BANK LTD ., LCRD/ERNAKULAM DIVISION, GROUND FLOOR, FEDERAL TOWERS, MARINE DRIVE , KOCHI - 682 031, REPRESENTED BY ITS AUTHORISED OFFICER. 5 REGGI MATHEW, AGED 54 YEARS, S/O. JOY MATHEW, C-6, HIG APARTMENT, GANDHI NAGAR, KADAVANATHARA, ERNAKULAM - 682 020. 6 SHANIL ABOOBACKER, AGED 36 YEARS S/O. ABOOBACKER.M., KOLLATHODY HOUSE, VELIPPURAM, RAMANATTUKARA P.O, KOZHIKODE - 673 633. BY ADVS. CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT WP(C) NO. 4654 OF 2022 2 MOHAN JACOB GEORGE, SC REENA THOMAS NIGI GEORGE ADV. K.B. SONY (GP) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.07.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 4654 OF 2022 3

JUDGMENT The petitioner has approached this Court being aggrieved by the fact that a property purchased by him in a sale conducted by the 4th respondent Bank under the provisions of the SARFAESI Act is not being registered in his name on account of an attachment effected by the Income Tax Department and also on account of the fact that the original mortgagor had transferred the property to the 6th respondent after creating the mortgage in favour of the 4th respondent.

2.

The learned counsel for the petitioner submits that a sale under the SARFAESI Act is free from all encumbrances. It is pointed out that the Income Tax Department had filed a statement in this Court stating that the attachment effected by the Income Tax Department can be effaced. It is submitted that the purchase of the mortgaged property by the 6th respondent can only be subject to the mortgage to the 4th respondent and all that the 6th respondent obtained was the equity of redemption. It is stated that on the property being brought to sale by the 4th respondent Bank and the sale being confirmed in favour of the petitioner, that equity of redemption was also lost. It is, therefore, submitted that WP(C) NO. 4654 OF 2022 4 the 2nd respondent may be directed to register the sale certificate cum sale deed executed in favour of the petitioner and the 3rd respondent may be directed to effect mutation. The learned counsel also points out that the possession of the property is with the petitioner.

3.

I have heard the learned Standing Counsel appearing for the Income Tax Department, the learned Government Pleader appearing for respondents 2 and 3 and the learned Standing Counsel appearing for the 4th respondent.

4.

The notice issued from this Court to the 5th respondent (original mortgagor) has been returned with the endorsement “addressee left”. The notice issued by this Court to the 6th respondent has been served. However, there is no appearance for the 6th respondent.

5.

Having heard the learned counsel appearing for the petitioner, the learned Government Pleader for respondents 2 and 3 and the respective Standing Counsel for the 1st and 4th respondents, I am of the opinion that the petitioner is entitled to succeed. There is merit in the contention raised by the learned counsel for the petitioner that since the sale by the 5th respondent

WP(C) NO. 4654 OF 2022 5 to the 6th respondent was subsequent to the creation of mortgage with the 4th respondent, the only right that was transferred to the 6th respondent is the equity of redemption. The said equity of redemption is lost when the property was brought to sale by the 4th respondent under the provisions of the SARFAESI Act and the property was purchased by the petitioner. Therefore, the 6th respondent has no existing right over the property in question. I must also note that despite the 4th respondent having taken possession of the secured asset under the provisions of the SARFAESI Act, before sale, the 6th respondent has not raised any claim and has not initiated any litigation against the 4th respondent in that regard. The possession of the property is also stated to be with the petitioner. The Income Tax Department has also filed a statement stating that they have no objection in the attachment effected on the property at their instance being effaced.

6.

Taking all the aforesaid facts cumulatively into consideration, I am of the view that the petitioner is entitled to succeed. Accordingly, this writ petition is allowed and 2nd respondent is directed to register Ext.P1 sale certificate cum sale deed in favour of the petitioner subject to compliance with usual formalities. The 3rd respondent shall also effect mutation on WP(C) NO. 4654 OF 2022 6 application by the petitioner. The writ petition is disposed of as above. GOPINATH P. JUDGE DK

WP(C) NO. 4654 OF 2022 7

Appendix — schedule of exhibits
APPENDIX OF WP(C) 4654/2022 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE SALE CERTIFICATE DATED 02/12/2019 ISSUED BY THE BANK. Exhibit P2 TRUE COPY OF THE SALE DEED NO. 574/2001 OF THRIKKAKKARA SUB REGISTRY OFFICE IN RESPECT OF 36.014 ARES OF PROPERTY. Exhibit P3 TRUE COPY OF THE SALE DEED NO. 576/2001 OF THRIKKAKKARA SUB REGISTRY OFFICE IN RESPECT OF 36. 421 ARES OF PROPERTY. Exhibit P4 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE DATED 28/01/2022 ISSUED BY THE THRIKKAKKARA SUB REGISTRY OFFICE. Exhibit P5 TRUE COPY OF THE UNDERTAKING DATED 12/1/2011 SUBMITTED BY THE MORTGAGER TO THE BANKp

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