TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 89
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....cial Assets and Enforcement of Security Interest Act, 2002 ('the SARFAESI Act, 2002' hereinafter). On 13.08.2018 the petitioner Bank took actual possession of the secured assets. 2.2 The respondent No.2-State Tax Officer issued a letter on 21.09.2019, which the petitioner came to know when it approached the office of Sub-Registrar on 13.11.2020. Respondent No.2 needed to recover the Value Added Tax from the respondent No.3-the borrower to the tune of Rs. 40,26,963/-. 2.3 On 11.12.2020 the Bank informed the respondent No.2 that the petitioner-Bank had the first right to recover its due and amended the SARFAESI Act. 2.4 On 18.07.2020 the petitioner served the said notice to the respondent No.3borrower proposing to sale of the property for the reserved price of Rs. 1,73,77,000/on 05.08.2020 for the recovery of dues and also published the e-auction notice in daily newspaper as provided under the SARFAESI Act & Rule 2002 whereby it invited the bids for the public in general. 2.5 On 05.08.2020 the petitioner-Bank received the bid for property and the highest bid was received of Rs. 2,11,77,000/- from one M/s. Khusbu Metal Industries and Minerals and upon upfront payment of 25% of the....
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....t proceed against purchaser of the property who has been lawfully sold the subject property under the SARFAESI Act." 3. This Court (Coram: Justice J.B.Pardiwalaand Justice Ilesh J. Vora) had issued the notice for final disposal on 22.02.2021. 4. Affidavit-in-reply came to be filed by the State Tax Officer, Unit-76, Bhavnagar on 28.09.2021 denying all averments set out in the affidavit-in-reply. According to the respondent No.2, in view of the provision under Section 26 (E) amendment to the SARFAESI Act, 2002. The petitioner has wrongly prayed that as per provision 26(E) of the Amendment to the SARFAESI Act,2002 the petitioner remains in possession of the property in question. 4.1 It is further contended that the property comprised of Non Agricultural Land at village Kobadi, Taluka & District Bhavnagar bearing revenue survey No.110 paiki comprising of plot Nos.1 and 2 both admeasuring 5512.87 sq.mtrs in the name of Mr.Jivrajbhai Parsottambhai Lathiya, who was the guarantor in NPA Account. According to the respondent No.2, the petitioner had intimated the department on 30.12.2020 that he had mortgaged the same on 15.11.2010. 4.2 It is further contended that in the instant case th....
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.... have the primacy over the dues of the petitioner-Bank. The provision also start with Non-obstante clause and being a later in point of time she has sought to rely upon the authorities in support of her submissions: 1. State of MP and Another vs. State of Indor and others, reported in (2002) 10 SCC 441. 2. Dena Bank vs. Bhikabhai Prabhudas Parekh and ors., reported in (2000) 5 SCC 694. 3. Commissioner of Employee Provident Fund vs. Official Liquidator of Esskey Ltd, reported in (2011) 10 SCC 727. 4. State of Maharashtra vs. Bharat Shantilal Shah, reported in (2008) 13 SCC 5. 5. Central Bank of India vs. State of Kerala, reported in (2009) 4 SCC 94. 7. On thus hearing the learned advocates on both the sides the law on the subject firstly needs to be discussed. 7.1 In case of Dena Bank vs. Bhikhabhai Prabhudas Parekh, reported in (2000) 5 SCC 694 the Apex Court held that the principle of priority of Government debts is founded on the rule of necessity and of public policy. The basic justification for the claim of priority of State debts rest on the well recoginsed principle that the State is entitled to raise money by taxation because unless etiquette revenue is received ....
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....he Bombay Sales Tax Act, 1959 and Section 26 B of the Kerala General Sales Tax Act, 1963 although contain Non-obstante clauses and give statutory recognition to the priority of the State's charge over other debts, which was recognized by the Indian High Courts before 1950. 8.1 The Apex Court held that while enacting the DRT and Securitisation Act, the Parliament was aware of the law laid down by the Supreme Court wherein priority of the State dues was recognized. If Parliament intended to create first charge in favour of Banks, Financial Institutions or other secured creditors on the property of the borrowers in priority over the first charge created under the State legislations then it would have incorporated provision similar to those contain in Section 14 A of the Workmen's Compensation Act, 1923, Section 11 (2) of the EPF Act, Section 74 (1) of the Estate Duty Act, 1953, Section 25(2) of the Mines and Minerals (Development and Regulation) Act, 1957, Section 30 of the Gift-Tax Act and Section 529 A of the Companies Act, 1956. However, no such provision has been incorporated in either DRT Act or the Securitisation Act. 8.2 In absence of any specific provision to that effect, ov....
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....pplication succeeds and is hereby allowed. The impugned attachment notice dated 22.01.2018 (Annexure-A) and the impugned communication dated 19.04.2018 (Annexure-B) issued by the respondent No.2 is hereby quashed and set aside. It is hereby declared that the Bank has the first charge over the properties mortgaged from M/s. M. M. Traders by virtue of Section 26 E of the SARFAESI Act." 11. Adverting to the facts here, the petitioner Bank had already registered all the mortgaged documents in the Central Registry as per Section 20 of the SARFAESI Act, 2002 and by virtue of provision of Section 26 E it is rightly held that the Bank being a secured creditor after registration of the security interest would enjoy priority over all other debts and all revenues, taxes, cesses and other rates. The petitioner appears to have registered all the mortgaged documents with the Central Registry as per the procedure prescribed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules, 2011. 12. It appears that the petitioner-Bank also had given the public advertisement for nearly five times. After the Amendment in the Act in the y....