Asset Reconstruction Co. (India) Ltd. Vs. S.P. Velayutham

COURT: Supreme Court of India

CORAM: Justices Hemant Gupta and V. Ramasubramanian

DATE OF JUDGMENT: 4 May 2022

FACTS

In 1992, Indian Bank sanctioned certain loan facilities to M.V.R. Group of Industries. The borrower gave a mortgage on an immovable asset as Collateral Security for financial facilities the bank granted. When defaulted, the bank allocated the debt and collateral security to the Appellant. The Appellant issued a Sale Notice based on the Assignment. The original Owners registered a Power of Attorney in the first Respondent’s name that forbade the Agent from encumbering any real estate. The Agent was granted the power of sale by executing a second deed of power, but it was not recorded. The Respondent sold the property to his son under the terms of the first registered power of attorney. Appellant filed a Writ Petition for declaring the act of the Sub-Registrar, in registering the Sale Deed executed by Respondent in favor of his son, null & void as the Registrar failed to verify the (1st) Power Document before registering the sale on that basis. The Writ Petition was allowed, but it was reversed by the Division Bench on the ground that the Appellant ought to have filed a Civil Suit.

Hence, the appeal is before the supreme court.

ISSUE RAISED

Whether the invocation of the writ jurisdiction of the High Court by the appellant was right, especially when civil suits at the instance of third parties are pending and when this Court had already directed the appellant, in proceedings arising under section 145 of the Code of Criminal Procedure, to move the civil Court?

JUDGEMENT

“A declaration that a document is null and void, is exclusively within the domain of the civil court, but it does not mean that the High Court cannot examine the question whether or not the Registering Authority performed his statutory duties in the manner prescribed by law.”

The Court held that pronouncing a document to be null and void is solely the purview of the civil court, but this does not preclude the High Court from considering whether or not the Registering Authority fulfilled its legal obligations.