PIOUS JACOB vs STATE BANK OF INDIA

CNR : KLHC010362642026
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR. SOUMEN SEN
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
TH
TUESDAY, THE 8 DAY OF SEPTEMBER 2026 / 17TH BHADRA, 1948
WA NO. 1075 OF 2026
AGAINST THE JUDGMENT DATED 31.03.2026 IN WP(C) NO.23667
OF 2019 OF HIGH COURT OF KERALA
APPELLANT:
PIOUS JACOB
AGED 60 YEARS
S/O CHACKO CHERIAN, MARATTUKULAM HOUSE,
THRIKKODITHANAM PO, CHANGANACHERRY, PIN - 686105
BY ADV SRI.A.KRISHNAN
RESPONDENTS:
1 STATE BANK OF INDIA
REPRESENTED BY ITS REGIONAL OFFICE,
THIRUVANANTHAPURAM, PIN - 695001
2 THE AUTHORISED OFFICER
CONSTITUTED UNDER SARFAESI ACT IN CHARGE OF
STATE BANK OF INDIA, PUNALUR BRANCH,
KOLLAM, PIN - 691331
BY ADV SHRI.JAWAHAR JOSE
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
07.09.2026, THE COURT ON 08.09.2026 DELIVERED THE
FOLLOWING:

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JUDGMENT
th
Dated this the 8 day of September, 2026
Soumen Sen, C.J.
This appeal is arising out of the judgment delivered by the
st
learned Single Judge on 31 March, 2026 in a writ petition filed
by a prospective auction purchaser challenging the decision of
the secured creditor to forfeit the Earnest Money Deposit
(EMD). The learned Single Judge dismissed the writ petition on
the ground of availability of an alternative remedy, relying upon
the decision of the Apex Court in Agarwal Tracom Private
1
Limited v. Punjab National Bank and Others . Aggrieved by the
said decision, this appeal is preferred.
2. The principal issue raised in the appeal is whether
the secured creditor had committed fraud by suppressing
material information regarding the property in question at the
time of sale. It is contended that the sale notice did not disclose
that the property was subject to an order of attachment and
1 (2018) 1 SCC 626

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that, had this fact been known to the appellant, the appellant
might not have participated in the tender process. It is
submitted that as soon as the appellant became aware that the
said property was subject to attachment, the appellant sought
return of the EMD. The Bank, however, had wrongly and
illegally forfeited the said amount.
3. The learned counsel for the Bank has submitted that
there is a fundamental distinction between an order of
attachment and an encumbrance. It is submitted that what is
required and contemplated under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (SARFAESI Act), read with Rule 8(7) of the
Security Interest (Enforcement) Rules, 2002 (2002 Rules), is
that the sale notice must, inter alia, disclose the description of
the immovable property proposed to be sold, including the
details of the encumbrances known to the secured creditor. It
is submitted that the decision of the Three-Judge Bench of this

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2
Court in Fathima v. Canara Bank has clarified the distinction
between an encumbrance and an attachment. In this regard,
the learned counsel has relied upon paragraphs 67 and 68 of
the said judgment, which read as under:
“67. A learned Single Judge of this Court in Thiru
Venkita Reddiar v. Noordeen, [1977 KLT 877] held that
a sale in pursuance of an attachment will prevail over
all other attachments over the property. It is explained
that with the court sale, all attachments subsisting on
the property will fall to the ground. The observations
therein are profitably extracted below:
"3. xxxx The purpose of the attachment is solely for
the purpose of protecting the attaching creditor's
right to bring to sale in execution the right, title
and interest in the attached property of the
judgment-debtor and there is no reason for holding
that it continued to affect the attached property in
any way when the attached property no longer
continues to be the property of the judgment-
debtor. The auction purchaser takes the property
free from attachment. The consequence no doubt
to an earlier attaching creditor is very serious, but
his rights are sufficiently safeguarded in such a
situation by entitling him a ratable distribution of
the p roceeds of the sale. This is the only way left to
a money-decree-holder when other like decree-
holders proceed against the same property in
execution. If this were not so, complications will
arise between an earlier attaching creditor and a
subsequent attaching creditor. If the sale was
under a private alienation with the earlier sale
there is nothing left with the transferor to transfer
subsequently to another. In the same manner the
prior sale in pursuance of an attachment will
2 2025 SCC OnLine Ker 3453

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prevail over a subsequent sale even if the latter
sale was in pursuance of an earlier attachment. In
other words with the court sale all attachment
subsisting on the property will fall to the ground."
68. The aforesaid view was reiterated by this Court in
Francis v. Navodaya Kuries & Loans (P) Ltd., [(2010) 3
KLT 609] and Axis Bank v. Hilal Ahmed Bhat, [(2022) 4
KLT 406]. We find it to be the correct exposition of law.
Thus, Section 64 of the Code does not create a total
bar for a private alienation, but it enunciates only that
any private transfer contrary to the attachment which
matured into sale shall be void as against all claims
enforceable under the attachment resulting in the sale.
The subsequent private sale will therefore be void to
the extent of enforceability of the claim arising from the
attachment, which resulted in the sale. Once the sale
is made in execution of the decree, all previous
attachments effected upon the property sold would fall
on the ground as well.”
4. The learned counsel has also relied upon the
decisions in Authorised Officer, Central Bank of India v.
3
Shanmugavelu , Assistant Commissioner (CT) LTU, Kakinada
and Others v. Glaxo Smith Kline Consumer Health Care
4
Limited and Assistant Commissioner of Central Excise v.
5
Krishna Poduval to contend that the appropriate remedy would
3 (2024) 6 SCC 641
4 (2020) 19 SCC 681
5 2005 (4) KLT 947

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be to prefer an appeal before the Debts Recovery Tribunal
(‘DRT’, for short) and that the forfeiture of the earnest money in
exercise of the power under Rule 9(5) is also approved by the
said decisions.
5. It is submitted that, in any event, the appellant
cannot now approach the Tribunal as the prescribed period of
filing an application before the DRT has expired.
6. The learned counsel for the appellant has submitted
that on a true and meaningful interpretation of Rule 8(7)(f) read
with Rule 9(5) of the 2002 Rules, it is clear that the authorised
officer is required to disclose all materials which are likely to
influence the decision of an auction purchaser.
7. What constitutes the concealment of a material fact
would depend upon the facts and circumstances of each case. If
there is a requirement to disclose a fact that is likely to
influence the decision of a person intending to participate in a
proceeding, non-disclosure of such fact would amount to the
concealment of a material fact.

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8. In the present case, the property was sold on an 'as
is where' and 'as is what is' basis. This means that the auction
purchaser participated in the tender with his eyes wide open,
fully aware that participation in such a tender involves an
element of risk. By incorporating the expressions 'as is where is'
and 'as is what is' in the sale notice, the Bank insulated itself
from any claim regarding the perfection of title that might pass
to the auction purchaser upon his becoming the successful
bidder.
9. For a better appreciation of the submissions made on
behalf of the parties, it is necessary to refer to Rules 8(7) and
9(5) of the 2002 Rules. The said rules are set out below:
“Rule 8. Sale of Immovable secured assets.-
xxxxxxx
xxxxxxx
(7) Every notice of sale shall be affixed on the
conspicuous part of the immovable property and the
authorised officer shall upload the detailed terms
and conditions of the sale, on the web-site of the
secured creditor, which shall include-

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(a) the description of the immovable property
to be sold, including the details of the encumbrances
known to the secured creditor;
(b) the secured debt for recovery of which the
property is to be sold;
(c) reserve price of the immovable secured
assets below which the property may not be sold;
(d) time and place of public auction or the time
after which sale by any other mode shall be
completed;
(e) deposit of earnest money as may be
stipulated by the secured creditor;
(f) any other terms and conditions, which the
authorized officer considers it necessary for a
purchaser to know the nature and value of the
property.”
“Rule 9. Time of sale, issue of sale certificate
and delivery of possession, etc.-
xxxx
(5) In default of payment within the period
mentioned in sub-rule (4), the deposit shall be
forfeited and the property shall be resold and the
defaulting purchaser shall forfeit to the secured
creditor all claim to the property or to any part of the
sum for which it may be subsequently sold.”
10. While clause (a) of Rule 8(7) clearly states that there

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is a requirement to mention the details of the encumbrances
known to the secured creditor, clause (f) states that any other
terms and conditions, which the authorised officer considers it
necessary for a purchaser to know the nature and value of the
property should also be disclosed.
11. The issue is not whether an encumbrance operates
as an attachment, which in law it does not, but whether the
order of attachment ought to have found place in the sale notice
so as to enable the prospective bidder to take an informed
decision.
12. Rule 8(7)(f) requires the authorised officer to disclose
such other facts as may be necessary for a purchaser to know
the nature and value of the property. Non-compliance with the
statutory rules would be fatal for a secured creditor. A secured
creditor cannot auction the asset and issue a sale certificate
and thereafter simply wash its hands off the matter. Non-
compliance of the statutory requirements may disentitle the
secured creditor to get any relief from constitutional courts.

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13. The Bank has filed an affidavit stating that, till the
th
date of the filing of the said affidavit, i.e. 29 July, 2026, the
Bank was unable to find out whether the order of attachment
was prior to the sale notice. However, during the course of
hearing, the learned counsel has submitted, on instruction,
that the order of attachment was subsisting at the time of
issuance of the sale notice.
14. Insofar as the reliefs in the writ petition are
concerned, we are of the view that the Tribunal is best suited to
decide the issue, in view of the decisions in Agarwal Tracom
6
Private Limited (supra) read with M.Rajendran v. KPK Oils and
Celir LLP v. Bafna Motors (Mumbai) Private Limited and
7
Others .
15. The remedy available under the SARFAESI Act being
efficacious, the same needs to be exhausted. It is for the
Tribunal to decide whether non-disclosure of the order of
6 (2026) 3 SCC 505
7 (2024) 2 SCC 1

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attachment would come within the purview of Rule 8(7)(f),
which is the relevant sub-clause requiring consideration.
Whether such disclosure is material for an intending auction
purchaser in deciding whether he would participate in the
tender process is for the Tribunal to consider and decide.
16. The writ petition was disposed of merely on the
ground of availability of an efficacious alternative remedy. The
Bank has not argued before the learned Single Judge that the
said liberty cannot be granted to the writ petitioner as the
remedy of the writ petitioner would be time barred.
Considering the fact that the appellant has been pursuing a
remedy with due diligence and there is some substance in the
matter and that the writ petition was dismissed merely on the
ground of availability of an efficacious alternative remedy and
also having regard to the fact that the auction purchaser had
deposited the amount and upon becoming aware of the
attachment subsequently, sought refund thereof, we are of the
view that the argument that the application under the

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SARFAESI Act is otherwise barred by limitation, should not
stand in the way of the appellant approaching the DRT in view
of paragraphs 33 and 34 of the judgment in Agarwal Tracom
Private Limited (supra), which read as under:
“33. In the light of the foregoing discussion, we are of
the considered opinion that the writ court as also the
appellate court were justified in dismissing the
appellant's writ petition on the ground of availability of
alternative statutory remedy of filing an application
under Section 17(1) of the SARFAESI Act before the
Tribunal concerned to challenge the action of PNB in
forfeiting the appellant's deposit under Rule 9(5). We
find no ground to interfere with the impugned judgment
of the High Court.
34. The appellant is, accordingly, granted liberty to file
an application before the Tribunal concerned (DRT)
under Section 17(1) of the SARFAESI Act, which has
jurisdiction to entertain such application within 45 days
from the date of this order. In case, if the appellant files
any such application, the Tribunal shall decide the same
on its merits in accordance with law uninfluenced by
any of the observations made by this Court and the High
Court in the impugned judgment.”
th
Moreover, the writ petition was filed on 29 August 2019
immediately after the Bank had refused to refund the amount.
In any event provisions of Limitation Act apply to a proceeding

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under the SARFAESI Act. The appellant has an arguable case
on merit and with a bonafide belief, approached the writ court
without being aware of the decision of the Hon’ble Supreme
Court in Agarwal Tracom Private Limited (supra). In any event
the Bank has opposed the writ petition only on the ground of
availability of an alternative remedy. The learned Single Judge,
in fact, has disposed of the writ petition with the following
observation:
“On an anxious consideration of the rival submissions
and materials on record, I find considerable force in
the submissions made by the learned counsel for the
respondents. The Honourable Apex Court, in the
decision in Agarwal Tracom Private Limited (supra),
has categorically held that the remedy of the auction
purchaser seeking refund of the EMD or the amount
deposited, is to approach the DRT under Section 17 of
the SARFAESI Act and not under Article 226 of the
Constitution of India. In such circumstances, without
going into the merits of the matter, I relegate the
petitioner to approach the DRT and seek the reliefs
now sought for in the writ petition.”
The respondent Bank has not preferred any cross-appeal.
17. Under such circumstances, we dispose of the writ

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appeal by granting liberty to the appellant to approach the DRT.
In the event an application is filed before the DRT within a
period of three weeks from the date, the same shall be accepted
by the DRT without insisting for an application for condonation
of delay and shall decide the matter in accordance with law.
18. The appeal is disposed of with the aforesaid
modification of the impugned judgment. However, there shall
be no order as to costs.
Sd/-
Soumen Sen,
Chief Justice
Sd/-
Syam Kumar V.M.,
Judge
ds 07.09.2026

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APPENDIX OF WA NO. 1075 OF 2026
RESPONDENT ANNEXURES
Annexure-R1a True copy of the notice dated 2-5-2019
issued by the 1st respondent.
Annexure-R1b True copy of the notice dated 16-6-2020
issued by the 1st respondent.
Annexure-R1c True copy of the sale certificate dated
5-10-2020 issued by the 1st respondent.
PETITIONER ANNEXURES
Annexure A THE TRUE COPY OF THE JUDGEMENT OF THIS
HON'BLE COURT IN W. P(C) NO. 8131 OF 2022
DATED 24.03.2022
Annexure B THE TRUE COPY OF THE ENCUMBRANCE
CERTIFICATE NO. P38284772 DATED
09.07.2026 ISSUED BY THE SUB. REGISTRAR,
PUNALUR ALONG WITH TYPED COPY OF ENGLISH
TRANSLATION