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Secured creditor has no role after property sale

The issue raised in the writ petition United Bank of India & Anr. Vs. State of West Bengal & Ors., is whether a secured creditor is entitled to invoke the provisions of Section 14 of the Act of 2002 subsequent to the sale of an immovable property over which it claims security interest?

The petitioners submited that, the first petitioner had made an application under Section 14 of the Act of 2002 before the concerned District Magistrate on September 9, 2013. Such application has not been considered and decided till date. He seeked expeditious disposal of such application.

The Calcutta High Court said that the words ‘sale and ‘transfer’ used in Section 14 of the Act of 2002 are not synonymous. The word ‘transfer’ used as a verb means that, a person is conveying or removing from one place or one person to another or is passing or handing over something to another person. It can also mean changeover of the possession or control of a given thing. Transfer is, therefore, wider than sale. As noted above, it may include an element of making over of possession.

The word ‘transfer’ used in Section 14, therefore, can mean making over of possession of an immovable property. It is contended by the petitioners that, since the word ‘transfer’ used in Section 14 of the Act of 2002 includes an act of making over of possession, the petitioner as the secured creditor can legitimately invoke Section 14 of the Act of 2002 even after a conveyance in respect of an immovable property sold, has been executed and registered. With respect, this contention of the petitioner overlooks the fact that, the right, title and interest of the secured creditor and the vendor stands transferred to and vested with the purchaser upon the execution and registration of the deed of conveyance which is otherwise duly stamped. On and from the date of such document, the secured creditor ceases to have any interest in respect of the immovable property concerned. The legal or the deeming fiction of Section 13 ceases to operate upon such sale deed being registered. Therefore, the secured creditor does not retain any further right to meddle with the immovable property under the provisions of the Act of 2002 in order to invoke Section 14 of the Act of 2002 for the purpose of possession or otherwise.

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