Court upholds Section 26A of KGST Act in SARFAESI mortgage case, dismisses petitions challenging applicability.

The court dismissed the writ petitions, upholding the applicability of Section 26A of the KGST Act to the mortgage created in SARFAESI proceedings, despite the petitioners' arguments to the contrary. The court also ruled that Section 100 of the Transfer of Property Act does not prevent properties in the hands of purchasers from being proceeded against, based on previous judgments and the timing of charge creation. As a result, the court rejected both contentions and dismissed the petitions.

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Issues:
1. Applicability of Section 26A of the KGST Act to mortgage created in SARFAESI proceedings.
2. Impact of Section 100 of the Transfer of Property Act on properties purchased in SARFAESI proceedings.

Analysis:

*Issue 1: Applicability of Section 26A of the KGST Act*
The judgment addresses the contention raised regarding Section 26A of the KGST Act, which states that any charge created during or after proceedings under the Act shall be void against tax claims. The petitioners argued that this section does not apply to the mortgage in their favor. However, the court found this contention untenable as the tax dues were pending against the mortgagors at the time of creating the charge. Citing precedent cases like Hamsa v. Assistant Commissioner, the court upheld that assessment completion is not necessary for Section 26A to apply. Additionally, the argument that Section 26A does not apply to involuntary transfers was rejected based on previous judgments like Lucy Vincent v. District Collector and Shini Linson v. Tahsildar. Thus, the court dismissed the first contention.

*Issue 2: Impact of Section 100 of the Transfer of Property Act*
The second contention raised was regarding Section 100 of the Transfer of Property Act, stating that properties in the hands of purchasers cannot be proceeded against. The petitioners relied on various judgments to support this argument. However, the court referred to the Division Bench's decision in Sherry Jacob v. Canara Bank, which rejected a similar plea. The court held that the charge created at the time of mortgage creation cannot be defeated by a statutory charge later on. Citing Bhikhabhai's case and subsequent judgments, the court dismissed the second contention. Consequently, the court dismissed the writ petitions based on the analysis provided for both issues.

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