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of <h1>Bank prevails over State Gov in SARFAESI Act priority case, quashing attachment & directing mutation.</h1> <h3>AXIS BANK LIMITED Versus STATE OF GUJARAT & 5 OTHER (S)</h3> AXIS BANK LIMITED Versus STATE OF GUJARAT & 5 OTHER (S) - TMI Issues:- Priority of charge under SARFAESI Act over State Government claim for VAT dues- Validity of charge of attachment on subject property- Mutation of property card in favor of auction purchaser- Relief sought by the writ-applicantPriority of charge under SARFAESI Act over State Government claim for VAT dues:The High Court considered the case where the bank claimed precedence over the State Government in recovering VAT dues from the original borrowers. The bank relied on Section 26E of the SARFAESI Act and previous judgments to support its position. The Court referenced the judgment in Kalupur Commercial Co-operative Bank Ltd. case, emphasizing that the bank holds the first charge over secured assets, not the State Government. The Court ruled in favor of the bank, stating that the State cannot claim a first charge over the subject property for tax recovery purposes. The judgment clarified that any excess amount would be adjusted towards State dues but noted that the State cannot proceed against purchasers of properties sold under SARFAESI Act.Validity of charge of attachment on subject property:The writ-applicant challenged the registration of the charge of attachment on the subject property as illegal, unjust, and contrary to the SARFAESI Act provisions. The Court examined the auction process where the respondent no.5 emerged as the highest bidder, leading to possession of the property and issuance of a sale certificate. The Court acknowledged that the bank had the first charge over the subject property due to the SARFAESI Act provisions. Consequently, the Court quashed the action of the authority in registering the charge of attachment on the subject property and directed the mutation of property card in favor of the auction purchaser.Mutation of property card in favor of auction purchaser:The Court directed the respondent no.6 authority to record the name of the auction purchaser in the property card of the subject property promptly. This direction was given considering the auction purchaser's status pending the hearing and final decision of the writ petition. The Court emphasized the importance of recording the auction purchaser's name in the property card in the interest of justice and equity.Relief sought by the writ-applicant:The writ-applicant sought various reliefs, including quashing the action of the authority in registering the charge of attachment, directing mutation of property card in favor of the auction purchaser, and granting other suitable reliefs in the interest of justice. The Court allowed the writ-application, declaring that the State cannot claim a first charge over the subject property and directing the respondent no.6 authority to record the certificate of sale by the bank in favor of the auction purchaser. Any State entry as a charge in the revenue records was ordered to be deleted, and the writ-application was disposed of accordingly with direct service permitted.
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