Locus standi and secured creditor priority: company challenge to director-owned property attachment failed, and provisional attachment was upheld.

A company generally lacks locus standi to challenge provisional attachment orders issued against immovable properties standing in the name of one of its directors, because the company is a separate juristic person and such a challenge would ordinarily lie with the director concerned. Secured creditor priority under section 31B of the SARFAESI Act gives precedence in recovery over government dues at the stage of distribution, but it does not bar the Income Tax Department from invoking provisional attachment under section 281B over properties already securitised or mortgaged; absent a bank challenge or other legal impediment, the attachment may be maintained.

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Issues: (i) Whether a company had locus standi to challenge provisional attachment orders passed against immovable properties standing in the name of one of its directors. (ii) Whether the Income Tax Department could make provisional attachment under section 281B of the Income-tax Act, 1961 of immovable properties that were already securitised or mortgaged in favour of a bank.

Issue (i): Whether a company had locus standi to challenge provisional attachment orders passed against immovable properties standing in the name of one of its directors.

Analysis: The attachment orders were directed against properties belonging to an individual director, while the writ petitioner was a separate juristic entity. A company is distinct from its directors, and a challenge to attachment of a director's personal assets would ordinarily lie at the instance of that individual. The company had also approached the Court through an authorised signatory other than the director whose properties were attached.

Conclusion: The challenge by the company was not maintainable on the issue of locus standi.

Issue (ii): Whether the Income Tax Department could make provisional attachment under section 281B of the Income-tax Act, 1961 of immovable properties that were already securitised or mortgaged in favour of a bank.

Analysis: The priority accorded to secured creditors under section 31B of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 gives them precedence in realisation of secured debts over government dues. That priority, however, does not eliminate the power of the Income Tax Department to order provisional attachment; it only means that if realisation occurs, the secured creditor's rights may prevail at the stage of distribution. On the facts, the bank itself had not come forward to assert that the properties were securitised, and the Court found no legal impediment to the original attachment.

Conclusion: The Income Tax Department was not barred from passing the provisional attachment orders.

Final Conclusion: The writ petitions failed on maintainability and on merits, and the provisional attachment orders were left undisturbed.

Ratio Decidendi: A separate juristic person cannot ordinarily challenge attachment of a director's personal properties, and the secured creditor's statutory priority over government dues does not prevent the Income Tax Department from making provisional attachment of secured properties.

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