SARFAESI enforcement and sale certificate registration cannot be blocked by a mere tax attachment without a specific legal restraint.

A mortgagee bank's SARFAESI enforcement is not automatically barred by a tax recovery attachment; Rule 16 of the Second Schedule restricts transfers only against the defaulter or persons claiming through the defaulter, so the bank may proceed subject to established claims. An auction sale is not void merely because of an attachment, though it remains subject to enforceable tax recovery rights. The Sub-Registrar cannot refuse registration of a sale certificate solely on the basis of an attachment order; refusal is confined to statutory grounds or a specific injunction. The court granted only limited relief for revalidation and registration, leaving rival claims and title disputes to be worked out in appropriate proceedings.

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Issues: (i) Whether a mortgagee bank can exercise powers under the SARFAESI Act despite an attachment order issued by the Tax Recovery Officer; (ii) Whether an auction sale conducted by the bank is void as against the Tax Recovery Officer; (iii) Whether the Sub-Registrar can refuse registration of a sale certificate merely because of an attachment order under tax recovery proceedings or arbitration proceedings; (iv) Whether the petitioner is entitled to the reliefs sought.

Issue (i): Whether a mortgagee bank can exercise powers under the SARFAESI Act despite an attachment order issued by the Tax Recovery Officer.

Analysis: The secured creditor had initiated proceedings under Section 13(4) of the SARFAESI Act, while the tax recovery notice and attachment were in relation to a different assessee. The embargo under Rule 16 of the Second Schedule to the Income-tax Act operates against the defaulter or persons claiming through the defaulter, and not as a general bar against the bank's enforcement powers. The Court also noted that the competing title and inter se rights of the parties required adjudication in appropriate proceedings.

Conclusion: There is no absolute bar on the mortgagee bank exercising powers under the SARFAESI Act, though the exercise remains subject to any established rights arising from the tax recovery proceedings.

Issue (ii): Whether an auction sale conducted by the bank is void as against the Tax Recovery Officer.

Analysis: An attachment under the Second Schedule secures the property for recovery and continues to operate despite subsequent transfers, but it does not by itself nullify the bank's sale or prevent the creation of title; the transfer is only subject to enforceable claims under the attachment. The Court held that the competing claims could not be conclusively determined in writ jurisdiction on the disputed factual matrix.

Conclusion: The auction sale is not declared void as against the Tax Recovery Officer; the sale remains subject to the attachment and other enforceable claims.

Issue (iii): Whether the Sub-Registrar can refuse registration of a sale certificate merely because of an attachment order under tax recovery proceedings or arbitration proceedings.

Analysis: Refusal to register is confined to the statutory grounds under Section 71 of the Registration Act, 1908 and Rule 171 of the Karnataka Registration Rules, 1965. A mere attachment order does not amount to an injunction or a statutory bar on registration. The Sub-Registrar has no jurisdiction to refuse registration on the sole ground that the property is attached, though registration does not extinguish third-party claims.

Conclusion: The Sub-Registrar cannot refuse registration merely because of an attachment order; registration can be refused only where there is a specific injunction or other statutory impediment.

Issue (iv): Whether the petitioner is entitled to the reliefs sought.

Analysis: Since the sale certificate had been issued, the bank was required to revalidate it, and the Sub-Registrar was obliged to register it in accordance with law. However, the Court declined to direct release of attachments or to declare the title free from all encumbrances, because the rival claims of the tax authorities and the other bank had to be worked out in appropriate proceedings. Any surplus amount retained by the bank could be applied towards those claims.

Conclusion: The petitioner was granted only limited reliefs relating to revalidation and registration of the sale certificate, while the rival claims were left open for adjudication in the proper forum.

Final Conclusion: The writ petition succeeded only to the extent of securing revalidation and registration of the sale certificate, but the property and the petitioner's rights remained subject to any valid claims of the Tax Recovery Officer, the other bank, and third parties.

Ratio Decidendi: A Sub-Registrar cannot refuse registration of a sale certificate on the mere existence of an attachment order, and secured creditor rights under the SARFAESI Act are not automatically barred by tax recovery attachment unless a specific legal restraint is established.

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