TaxTMI 
TaxTMI 
2009 (7) TMI 1154
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....as preferred by the bank against the Tamil Nadu Government Gazette No. 01 dated January 5, 2007 and consequential order bearing No. NK.A3.2310/2002 dated March 16, 2007, so far as it relates to the property situated at plot No. 97, SIDCO Industrial Estate, SIPCOT, Ranipet. By the aforesaid proceedings, the auction conducted by the bank in regard to the property in question was held to be void on the ground that the State Government has priority over the property as regards the owner having not paid the arrears of tax due to the Government, which is outstanding and the said action has been initiated under the Revenue Recovery Act for the purpose of recovering the arrears of tax. Similar matter, earlier, fell for consideration of a Division ....
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....ificate in favour of the auction purchaser. Similarly, the property comprised in S. No. 476/5B was also sold and registered in favour of a third party/purchaser. The third respondent purchased the property comprised in plot No. 97, SIDCO Industrial Estate, SIPCOT, Ranipet, measuring to an extent of 19,520 sq.ft., together with shed, on March 5, 2007 for a sum of Rs. 19.23 lakhs. A sale certificate was issued to the third respondent. While so, the first respondent/State issued the impugned proceedings dated March 16, 2007 informing that since the owner of the property, viz., the second respondent has committed default in payment of sales tax to the tune of Rs. 37,09,966, the provisions of section 24 of the Tamil Nadu General Sales T....
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....nsel for the bank who referred to one or other provisions. The learned Special Government Pleader appearing for the State also brought to our notice different provisions as was referred to by the learned single judge. But, as the matter stands decided by the Division Bench decision in M. Nagarajan v. Deputy Commercial Tax Officer, Tindivanam (W.P. No. 10246 of 2007 dated June 12, 2009- unreported Since reported in [2009] 25 VST 175 , we are not repeating such submission as was taken before the learned single judge. In the case of M. Nagarajan [2009] 25 VST 175 (Mad), the court noticed various decisions of the Supreme Court and this court. DRT Act and Securitisation Act do not create first charge in favour of the Bank. This was held by the ....
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....tled to have preference over the claim of the Deputy Commissioner of Central Excise, first respondent herein." In the case of Union of India v. SICOM Ltd. [2009] 147 Comp Cas 531 (SC); [2009] 1 JT 87 (SC), the question that fell for consideration is whether realisation of excise duty will have priority over secured debts of Financial Corporation. In the said case, the Supreme Court held that "crown debts" mean debts due to the State or the king; debts which as a prerogative entitles the crown to claim priority before all other creditors, but the same must be held to mean unsecured creditor. In fact, the following observation was made by the court in the said case. (para 11, page 535 Comp Cas) "10. Generally, the rights of the crown to reco....
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.... has been considered by this court in a series of judgments." Having noticed the relevant provisions, the Division Bench, by aforesaid unreported judgment dated June 12, 2009 in M. NagarajanSince reported in [2009] 25 VST 175 (Mad) held as under: (page 184, para 21 supra) "15. Having regard to the judicial pronouncements rendered by courts and noticed above, we may sum up the law as under: (i) Arrears of tax due to the State can claim priority over unsecured debts. (ii) The common law doctrine about priority of crown debts/State debts is recognised law in force within the meaning of article 372 (1) of the Constitution of India. (iii) The doctrine will not apply if first charge by way of priority is not claimed under the statute.....
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....t has not been considered whether the mortgage of the property is only under the general law or the secured creditor has any secured interest over the secured asset. It is not in dispute that the bank is a "secured creditor" within the meaning of section 2(zd) of the SARFAESI Act, 2002. It has "secured interest" over the secured asset. Section 2(zc) defines "secured asset" as property on which security interest is created. Security interest is defined under section 2(zf), as right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31. Security agreement is already existing between the bank and....