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of <h1>Secured Creditors' Priority Confirmed Over State Departments Under SARFAESI Act, 2002; Court Orders Property Ownership Updates</h1> <h3>Nugenic Pharma Pvt Ltd Versus Indian Bank and Ors</h3> The HC ruled that the secured creditor's debt takes precedence over state departments like Excise & Revenue, referencing the SC's decision in 'Punjab ... Recovery of dues - whether the different departments of State including Excise & Revenue will have priority over the secured creditor's debt? - HELD THAT:- The issue in question is no longer res integra in view of the authoritative judgment of the Hon'ble Supreme Court reported in PUNJAB NATIONAL BANK VERSUS UNION OF INDIA & ORS. [2022 (2) TMI 1171 - SUPREME COURT] where it was held that the dues of the secured creditor, i.e. the Appellant bank, will have priority over the dues of the Central Excise Department, as even after insertion of Section 11E in the Central Excise Act, 1944 w.e.f. 08.04.2011, and the provisions contained in the SARFAESI Act, 2002 will have an overriding effect on the provisions of the Central Excise Act of 1944. This Court is left with no other option, but to allow this petition by directing respondents No. 4 and 5 to attest mutation of sale deed dated 18.9.2021 (Annexure P-5) issued by the Indian Bank, in favour of the petitioners and further respondents No. 4 and 5 are directed to enter the names of the petitioners as owner of the property in question in the revenue records having been purchased by them in an auction conducted by the Indian Bank under the provisions of SARFAESI Act and respondents No. 2 to 5 are further directed to remove the red entries made in the revenue record/jamabandi of the property in question. Petition disposed off. Issues involved:The priority of different state departments, including Excise & Revenue, over secured creditor's debt.Judgment Summary:Issue 1: Priority of state departments over secured creditor's debtThe High Court considered the question of whether state departments, such as Excise & Revenue, would have priority over a secured creditor's debt. The Court referred to a previous authoritative judgment of the Supreme Court in the case of 'Punjab National Bank Vs. Union of India & Ors.' and highlighted that the secured creditor would have a first charge on the secured assets. The Court emphasized that the provisions of the SARFAESI Act, 2002 would have an overriding effect on the provisions of the Central Excise Act, 1944. It was concluded that the dues of the secured creditor, in this case, the Appellant bank, would take priority over the dues of the Central Excise Department. The Court directed the concerned authorities to attest the mutation of sale deed in favor of the petitioners and update the revenue records accordingly, acknowledging the rights of the petitioners as the owners of the property purchased in an auction conducted under the SARFAESI Act.Final Decision:The Court allowed the petition, directing the respondents to make the necessary changes in the revenue records to reflect the petitioners as the rightful owners of the property purchased through the auction conducted by the Indian Bank under the SARFAESI Act. The Court also clarified that any red entries in the revenue records would not affect the legal rights of the petitioners regarding loans or other permissions. The petition was disposed of, and any pending applications were also resolved with each party bearing their own costs.
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