CANARA BANK Vs. PALCO RECYCLE INDUSTRIES LTD

JUDGEMENT

(1.) At the time of hearing of this Letters Patent Appeal preferred by the respondent No.2 of the Special Civil Application being SCA No. 17441 of 2011 against an order dated 25th June 2012 passed by a learned Single Judge in Civil Application for interim relief being C.A. No. 1534 of 2012, we decided to hear out the writ-application itself, instead of remanding the matter back to the learned Single Judge, as the questions involved are pure questions of law.

(2.) The facts giving rise to the filing of this Letters Patent Appeal may be summed up thus.

(3.) Mr. Shah, the learned advocate appearing on behalf of the appellant, did not dispute the fact that the PF authorities had, by letter dated 18th February 2010 informed his client about the attachment of the property by its order dated 16th March 2009. He also did not dispute the fact that in the auction notice it was clearly mentioned that to the best of the knowledge of the Bank, there was no encumbrances. He, however, raised a pure question of law, and according to him the moment the secured creditor, in exercise of powers conferred under section 13(4) of the Securitization Act takes possession of the property, the title of the debtor vest in the secured creditor and such thing having occurred in the year 2007, the PF authorities had no right to create charge in 2009 over the property of a defaulter as at that point of time, the title of the defaulter had extinguished by act of taking possession by his client. Secondly, the Bank having decided to sell the property in the month of August 2010 by way of public auction on 18th September 2010, and the Bank having issued Sale Certificate in favour of the auction purchaser in the absence of any demand prior to the said date or after the auction by the Bank, the PF authorities have waived its right to recover the amount from the Bank.