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of <h1>Secured creditors triumph over Central Excise Department in recovery priority dispute</h1> <h3>Punjab State Industrial Development Corporation Limited Versus Union of India and others</h3> The High Court ruled in favor of the petitioner, a secured creditor with a registered charge, over the Central Excise Department in a dispute over ... - Issues Involved: The issue involves determining whether a secured creditor has a preferential right over the dues of the Central Excise Department on account of a registered charge created on the property of a company for recovery of its dues.Judgment Details:Facts of the Case: The petitioner, a Government Corporation, provided financial assistance to a company for setting up an industrial unit. The company secured a loan and mortgaged its properties to the petitioner. Due to loan repayment irregularities, the petitioner took over the assets of the company. The Central Excise Department requested consideration of its dues during the recovery process. Disputes arose regarding the priority of recovery between the petitioner and the Central Excise Department.Legal Arguments: The petitioner argued that secured creditors with a registered charge have preference over crown debts like Central Excise. They cited legal precedents to support their claim. The Central Excise Department contended that their charge predated the petitioner's claim and therefore should be given priority.Court's Decision: The High Court ruled in favor of the petitioner, stating that secured creditors with a registered charge have a preferential right over crown debts like Central Excise. The Court relied on legal principles and precedents to support this decision. The judgment emphasized that crown debts do not have priority over secured private debts. The Court rejected the Central Excise Department's argument based on a different case that did not address the specific issue at hand.Conclusion: The Court allowed the petition, declaring that the petitioner, as a secured creditor with a registered charge, has a preferential right to recover its dues over the Central Excise Department, whose charge is only preferable to unsecured creditors. The writ petition was allowed in favor of the petitioner.
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