TaxTMI 
TaxTMI 
2021 (8) TMI 444
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....Maharashtra, Through Ministry of Finance / Revenue and the Collector, Yavatmal are not entitled to recover the dues in view of mandate of Section 26-E of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the Act of 2002"). 3] The facts relevant for adjudication of the issues involved in the present petition are as under :- The petitioner - Bank is a Public Sector Nationalized Bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The petitioner - Bank initiated proceedings under the provisions of the Act of 2002. The certificate of sale dated 28/09/2020 was issued in favour of Ms. Maroti Cottons, Proprietor : Shilpa Preetam Kohar in exercise of power under the Security Interest (Enforcement) Rules, 2002 (for short "the Rules of 2002"). The copy of the certificate of sale is annexed at Exh. II. 4] The main grievance in this petition is as regards the communication dated 19/10/2020 issued by the respondent no. 5 (Registrar of Assurances, Class-I, Tah. Zarijamni, Dist. Yavatmal) by which the respondent no. 5 refused to register the aforesaid sale certificate in accordance ....
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....tra reported in 2020 (2) BCR 243 and in the case of Axis Bank Limited, Mumbai vs. State of Maharashtra & anr. reported in 2017 (3) BCR 456. 7] Per contra, learned AGP submitted that in view of the language of Sub-section (1) of Section 37 of the MVAT Act, the first charge is created over the property of the borrower and the said charge being the statutory charge, it will go with the property and will follow the property, whoever may be the purchaser. She submitted that the petitioner - Bank had sufficient knowledge of the attachment and encumbrances over the said property, therefore it is the duty of the purchaser to clear the dues of the respondent no. 7. The sale certificate issued in favour of the auction purchaser can be registered by the Registrar of Assurances after getting the No Objection Certificate from the respondent no. 7. She therefore submitted that the Registrar of Assurances is therefore justified in refusing to register the sale certificate issued in favour of the auction purchaser. She placed reliance on the un-reported judgment of this Court in W.P. No. 7971/2019 (Medineutrina Pvt. Ltd. vs. State of Maharashtra) dated 18/02/2021. 8] With the assistance of learn....
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....s Tax. The respondent no. 7 in its reply has stated that it has attached the property which is the subject matter of sale certificate under the Maharashtra Land Revenue Code and has registered its encumbrance in revenue record. For deciding the said objection, it is necessary to note that the State of Maharashtra made an amendment in the form of Section 22-A of the Act of 1908 vide Act No. 24 of 1938 read with 35 of 1958. Section 22-A reads as under :- "22-A. Documents registration of which is opposed to public policy - (1) The State Government may, by notification in the Official Gazette, declare that the registration of any document or class of document is opposed to public policy. (2) Notwithstanding anything contained in this Act, the registering officer shall refuse to register any document to which a notification issued under sub-section (1) is applicable." 11] At this stage, it is necessary to note that similar amendment incorporated in the State of Rajasthan was challenged before the High Court of Rajasthan. The High Court of Rajasthan held the said amendment to be unconstitutional and struck it down. The decision of High Court of Rajasthan holding the similar amendmen....
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....he case of Park View Enterprises, it has been observed that the function of the Registering Officer is purely administrative and not quasi-judicial. He cannot decide as to whether a document presented for registration is executed by person having title, as mentioned in the instrument. We agree with that exposition." 13] The purported source of power for rejection of sale certificate is under Clause (i) of Sub-Rule (1) of Rule 44 of the Rules of 1961. The notification dated 27/07/2006 published in the Official Gazette on 22/07/2006 incorporates Clause (e) (which is in Marathi) and Clause (i) (which is in English). Clause (i) reads thus :- "44(1). Before accepting any document for registration, a registering officer may not concern himself with its validity, but shall ascertain (a) ..... (b) ..... (c) ..... (d) ..... (e) ..... (f) ..... (g) ..... (h) ..... (i) that, if the transaction which is intended by the document, is prohibited by any existing act of Central or State Government, then the true copy of requisite permission or No Objection Certificate from the Competent Authority under the said act, has been attached along with the document, and that, the docum....
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....rt in favour of the purchaser, the said becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. It is well settled that when an auction purchaser derives title on confirmation of sale in his favour, no further deed of transfer from the Court is required. The sale certificate itself is evidence to such sale and title. Therefore, the respondent no. 5 ought to have taken into consideration this position of law before refusing to register the sale certificate issued by the Authorized Officer. 17] Much emphasis is made on Section 26-E of the Act of 2002 by learned advocate for the petitioner - Bank. Insofar as the priority of the secured creditor to recover its debt over the liability to pay the tax under the MVAT Act is concerned, the issue is no longer res-integra in view of the pronouncement of the three judgments of the Division Bench of this Court in the case of State Bank of India (supra), ASREC (India) Limited, Mumbai (supra) and Axis Bank Limited, Mumbai (supra). It is categorically held by this Court that if any Central Statute creates priority of a charge in favour of the secured creditor, the s....