2020 (6) TMI 85

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....i - 600 034, hereinafter referred to as 'company', is a manufacturer of fluorescent lights and G.L.S. Bulbs. The said company availed financial assistance from many financial institutions, one among which is erstwhile ICICI Ltd., for which, it created a mortgage on 15.12.1993 over the property in Plot No.D-17, SIPCOT Industrial Complex, Gummidipoondi, Tiruvallur District. Subsequently, the said ICICI Bank assigned the debt to the petitioner herein on 31.03.2005, due to which, the petitioner became the holder of the assets along with the underlying securities and the assets of the company vested in the petitioner insofar as the security interest was concerned and the same was further confirmed by ICICI Bank Ltd in favour of the petit....

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....k and in view of the priority conferred on the liability arising under the Act, the State is entitled to have its statutory dues settled in preference to all other creditors, whether secured or unsecured, notwithstanding the existence of any right under mortgage anterior in point of time, prior to creation of charge under Section 24 of the TNGST Act by operation of law; and hence, the respondent is legally entitled to proceed against the petitioner to the extent of the sale proceeds realised by them under the SARFAESI Act and accordingly, issued the impugned notice to the petitioner. Stating so, the respondent prayed to dismiss this writ petition. 4.The learned counsel for the petitioner submitted that the petitioner is neither a debtor of....

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....and perused the materials placed before this Court. 7.Apparently, the company is the defaulter in payment of sales tax to the tune of Rs. 4,80,05,508/- for the assessment years from 1992-93 to 2000-01 to the respondent. There was a mortgagee and mortgagor relationship between the petitioner and the company with effect from 31.03.2005. The property, on which the mortgage was created, was brought to public auction, through SARFAESI proceedings and the sale proceeds were distributed to all the secured creditors and other lenders. However, the arrears of sales tax due to the respondent have not been settled. Hence, the respondent issued the notice impugned herein, calling upon the petitioner to remit the entire sale proceeds of Rs. 97,17,224/-....

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....f the advance amounting to Rs. 3,79,672/- under the cash credit facility and future interest, the mortgaged property was brought to sale. While the suit was pending, the department got impleaded on May 18, 1990 on the ground that the department had a prior claim for a recovery of a sum of Rs. 1,19,122/- as sales tax due from National Iron & Steel Rolling Corporation. In that case, the Supreme Court categorically held that the charge of the Sales Tax Department is the first charge on the property and it has priority over all other charges on the property including a mortgage. The Supreme Court categorically stated that the charge operates on the entire property of the dealer including the interest of the mortgagee therein. Referring to Datta....