TaxTMI 
TaxTMI 
2020 (8) TMI 921
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....gs initiated by Recovery Officer (RO) pursuant to Decree/Recovery Certificate (RC) obtained by Punjab National Bank (hereinafter referred to as "PNB" or "Secured Creditor"), inter alia on the ground that the erstwhile owner/borrower has to pay certain dues to the Central Excise Department. It has further prayed that direction may be issued to respondent No. 3 to transfer the property in favour of petitioner by holding that the petitioner/auction purchaser is not liable to pay the dues of the erstwhile owner/borrower to the Central Excise. Petitioner has also made an alternative prayer seeking refund of the auction money i.e. Rs. 6,00,10,000/- in case, if the aforesaid prayer is not to be granted. Factual Background 2. The brief facts of the case are that, Punjab National Bank - Respondent No. 1 (hereinafter referred to as "Secured Creditor") had initiated recovery proceedings against the borrower M/s. AIP industries and its guarantors, by filing of Original Application (OA) No. 502/2012 under section 19(1) of the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as "Recovery Act, 1993") before the Debts Recovery Tribunal - III, Chandigarh claiming an amount ....
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....states that according to letter dated 31.12.2015, issued by Central Excise Department, an amount of Rs. 3139.70 lakh is outstanding and decision, with respect to the same may be intimated. Secondly, Urban Ceiling. Officer, Ludhiana vide letter dated 28.09.1987, had restricted the transfer of the said property. The other requirements are of submission of certain documents on the part of the petitioner. 6. On 16.10.2019 (Annexure P-4), petitioner replied and stated that the dues of Excise Department are outstanding and recoverable against the previous owner/borrower i.e. M/s. AIP industries, with which the petitioner has no concern, as it has purchased the secured asset through an open e-auction conducted by the Debts Recovery Tribunal, Chandigarh. He further stated that as per Central Excise Act, 1944, as well as the provisions of the Recovery of Debts and Bankruptcy Act, 1993, the dues of the bank have prior charge over the dues of Central Excise and therefore the petitioner, having purchased the property from the secured creditor under the Act, 1993, was entitled to the transfer of the property in its favour. 7. Petitioner has also placed on record letter dated 06.12.2013 (A....
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....ent has been brought into Act, 1944 by virtue of Finance Act, 2011, by inserting Section 11E, wherein the Act, 1944 itself recognizes the dues payable to secured creditor to have priority over the dues of Central Excise. He further points out that a similar amendment has also, been carried out in Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereafter referred to as "Act, 2002") by the Amending Act, 2016 whereby Section 26E has been inserted which reinforces priority to the secured creditor to recover its dues from the secured assets over and above the Crowns Debt. The said provision has been notified by virtue of notification dated 26.12.2019 and the amendment has been brought in force from 24.1.2020. 9.2. He has further relied upon the judgment of Hon'ble Supreme Court in Union of India v. SICOM Ltd. 2009 (2) SCC 121; Rana Girders Limited v. Union of India - 2013 (10) SCC 746; and Siddhi Sugar and Allied Industries Limited v. State of Maharashtra bearing Writ Petition No. 14248 of 2018, decided on 26/04/2019 by Division Bench of Bombay High Court to support his aforesaid argument. 10. Per contra. Sh. Sunish Bindlis....
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....ntral Excise, but the dues recoverable from the erstwhile owner/borrower/assessee, were crystallized prior to the amendment under all the three enactments i.e. Central Excise Act, 1944, The Recovery Act, 1993 and Securitisation Act, 2002 and hence would be governed by the un- amended position of law, and therefore Central Excise would have priority to recover from the secured asset over and above the right of secured creditor. He further argues, that the Department could not have challenged the sale by filing objections under Rule 60 of the Second Schedule to Income Tax Act, 1961 as applicable to proceedings before Recovery Officer, on account of requirement of making pre-deposit. He further argues that petitioner, should have been aware of the claim of Respondent "No. 4. He further states, there are similar matters pending consideration and hence, the adjudication of the present writ petition should be deferred. By concluding the arguments, it was contended that the claim of the petitioner lacks merit and requires rejection. 11. Sh. R.S. Bhatia, learned counsel appearing for respondent "No. 1 -P"NB (secured creditor) has supported the case of the petitioner and contended that i....
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.... rest by inserting Section 31B in the Recovery Act, 1993 by enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2016 (hereinafter referred to as "Amendment Act, 2016") and the said provision came into force on 01/09/2016. Section 31B and Section 34, of the Recovery Act, 1993 read as under:- [31B. Priority to secured creditors. - Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. Explanation. -For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016, in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code.] 34. Act to have overriding effect. - (1) Sa....
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.... of secured assets of the borrower, priority to secured creditors in- payment of debt shall be subject to the provisions of that Code." [Emphasis supplied] Thus, the same principle of priority of right of the "secured creditor to recover its dues from the sale of secured asset, was introduced under the Securitisation Act, 2002, akin to Section 31B of the Recovery Act, 1993. Further, Sedition 35 of the Securitisation Act, 2002, from its inception provides overriding effect, which reads as under:- 35. The provisions of this Act to override other laws. - The provisions of this Act shall have effect, notwithstanding anything in consistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 16. Now coming to the Central Excise Act, 1944, it would be interesting to note that even before the Recovery Act, 1993 and Securitisation-Act, 2002 were amended, it was the Act, 1944 which witnessed an amendment by virtue of Finance Act, 2011, whereby Section 11E was inserted into the Act, 1944, which came into force on 08.04.2011, thereby it recognized and saved the prior right of the secured creditor to recov....
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....secured asset, over and above the right of the secured creditor, and the therefore the petitioner cannot place reliance upon the amendments to build up its case. We are afraid, this argument is untenable on both facts and law. While examining this contention on facts, we find that it has been pleaded by Central Excise, that the first Order in Original against the assessee/borrower was passed on 02.11.2010, but it remained a subject matter of appeal which was filed on 03.05.2011 before CESTAT and finally was dismissed on 12.08.2013 on account of non compliance of the mandatory condition of pre-deposit under Section 35F of the Act, 1944. Thus, before the order could attain finality, the Act, 1944 got amended with the introduction of Section 11E on 08.04.2011. The remaining two Orders in Original have been passed on 03.12.12 and 21.01.2013, which are otherwise, after the amendment/insertion of Section 11E in the Act, 1944. In other words, by the time the first order was finalized and the second and third orders were passed, the amendment by way of insertion of section 11E in the Central Excise Act, 1944 was already in place and hence, even on factual aspect, the contention that the....
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....f action even if it has reference to past transactions. Present context is very similar to the situation in Dwarkanath Bhargava and also covered by principles of law laid down in other judgments extracted above. 21. Accordingly, we answer the question in the affirmative and hold that the provisions of the SARFAESI Act apply to existing debts even if loan was advanced earlier. Similarly, as soon as by a notification of Central Government, a financial institution is notified for purposes of Section 2(m), the machinery of the Act becomes available to recover any outstanding and legally recoverable debt even if such loan was advanced earlier. The view taken in Subash Chandra Panda is overruled. We express our agreement with the view taken in Unique Engineering Works and Pradeep Kumar Gupta. The matter may now be listed before the Division Bench for being dealt with on merits." [Emphasis supplied] 20. The aforesaid judgment was then considered and approved by the Hon'ble Supreme Court in M.D. Frozen Foods Exports Pvt. Ltd. v. Hero Fincorp Ltd. 2017 (16) SCC 741, and relevant extract of the judgment i.e. paras No. 38 to 41, reads as under:- "38. The Full Bench....
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....ave no application to the matter in issue,' in view of what we have observed aforesaid. On the other hand, as observed by Buckley, LJ. in West v. Gwynne, (1911) 2 Chi at pp. 11, 12, retrospective operation is one matter and interference with existing rights is another. In that context, it was ruled that the provisions of the Conveyancing of Law and Property Act, 1892 were held applicable to leases containing a covenant, condition or agreement against assigning, under-letting or parting with possession or disposing of land or property leased without license or consent to all leases whether executed before or after the commencement of the Act, Such a construction was held not to make the Act retrospective in operation but merely effected the future existing rights under all leases whether executed before or after the date of that Act. (Discussed in Trimbak Damodhar Raipurkar v. Assaram Hiraman Patil & Ors., 1962 Supp (1) SCR 700). 40. In a similar vein, are the observations made in the case of In re Athlumney. Ex parte Wilson, [1898] 2 Q.B. 547, where the question posed before the Queen's Division Bench was whether Section 23 of the Bankruptcy Act, 1890 was retrospec....
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....applicable to the amendments brought under the Recovery Act, 1993 as well, as both these Acts, i.e. Recovery Act, 1993 and Securitisation Act, 2002 are complimentary to each other. This is evident from Section 37 of the Securitisation Act, 2002 which reads as under:- 37. Application of other laws not barred. - The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities, and Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force. [Emphasis supplied] The same view, regarding both the enactments being complimentary to each other, has been taken by the Hon'ble Supreme Court in Transcore v. Union of India 2008 (1) SCC 125. The said view of then considered and reiterated by the Hon'ble Supreme Court in Mathew Varghese v. M. Amritha Kumar 2014(5) SCC 610 and the relevant para of the judgment reads as under:- "42. A close reading of Section 37 shows that the provisions of the SAR....
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....ought under the Recovery Act, 1993 as well. In view of above, we have no hesitation in concluding that the argument of the Central Excise, that the demands of Central Excise having been made/confirmed earlier than the aforesaid amendments under the aforesaid enactments which would have prospective operation in nature, and thus the demands under the Central Excise Act, 1944 would have precedence, is misplaced and hence is rejected. 22. There is yet another reason, why the defence of Central Excise-, claiming right upon the secured asset, must fail. It is the conceded case of Central Excise that the property in question i.e. the secured asset, had never been attached in any manner, much less in the manner and procedure provided under section 11 of the Central Excise Act, 1944. Section 11 of the Act, 1944 reads as under: 11. Recovery of sums due to Government. - In respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules made thereunder, [including the amount required to be paid to the credit of the Central Government under section 11-D] the officer empowered by the [Central Board of Excise ....
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....he Central Excise Act, 1944, can he recovered by attachment and sale of moveable property, specified therein, in custody and possession of the transferee, and not from the immoveable property i.e. the land and building. It is thus, apparent that power of Central Excise to attach is only limited to excisable goods and/or moveable properties of the assessee and not the immoveable property, for which it would have to issue a Certificate to the Collector who would then proceed to recover the dues as arrears of land revenue, in terms of Section 67 of the Punjab Land Revenue Act, 1887, which procedure would then attract attachment.-Section 67 of the Act, 1887 reads as under:- 67. Processes for recovery of arrears. - Subject to the other provisions of this Act, an arrear of land-revenue may be recovered by any one or more of the following processes, namely:- (a) by service of writ of demand on the defaulter; (b) by arrest and detention of his person; (c) by distress and sale of his movable property and uncut or un-gathered crops; (d) by transfer of the holding in respect of which the arrear is due; (e) by attachment of the estate or....
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.....] The aforesaid provision provides two modes for creation of a charge qua immovable property. It could either be by an act of parties or by operation of law. The first mode of creation of charge, is by the act of parties and would include getting the property of the assessee attached in terms of what is provided for, under section 11 of the Central Excise Act, 1944 read with Section 67 of the Punjab Land Revenue Act, 1887 as explained in the previous paragraph. The second mode relates to creation of charge by operation of law itself. This would be in a situation where the statute itself provides for a charge to have been recognised over the property of the assessee in terms of the provisions of the enactment itself. In the present case, as can be seen from the provisions of the Central Excise Act, 1944, there is no such charge created by the statute over the immovable property of the assessee. Therefore, the charge ought to have been created by the Respondent -Central Excise by the first mode provided under Section 100 of the Act, 1882 i.e. the act of the parties, by proceeding to issue a certificate to the Collector to enable him to proceed for attachment of property of the as....
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....ulter-borrower? Sh. Aalok Jagga, learned counsel for the petitioner has urged and accordingly noticed, that there is a lot of litigation, arising from a situation where the secured creditors are either not able to sell the property owing to rival claims/charges on the property or if eventually sold are not able to achieve the market value of the secured asset due to such encumbrances. Further, large number of cases arise, where after purchasing the assets, the auction purchasers also face lot of difficulties as firstly, there is lot of uncertainty of the sudden claims of previous owner/s which might be foisted on the auction purchaser and secondly, uncertainty also exists over the dues which are payable and those which are not payable. In either of the cases, be it the secured creditor or the auction purchaser, they are forced to contest avoidable litigation to clear such charges being claimed on the property. He further argues that an auction purchaser invests money for purchasing the property to use it for a contemplated purpose. On account of such charges being claimed, it is a common sight to notice (like in the instant case), that such auction purchasers get involved in var....
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....ed in the case in hand. On examination of Issue No. 1, it is clear that the secured creditor has the prior right of recovery from the secured asset, as opposed to the claim of Central Excise. The requirement of determination of the present issue arises, when the secured asset is sold and purchased by the auction purchaser, like in the present case, it faces resistance from the revenue authorities in transferring the property in its favour on account of various claims which are now sought to be enforced against the auction purchaser. Having held that the secured creditor has a prior right of recovery in Issue No. 1, could the said claims be still enforced against the auction purchaser, is the issue to be examined. 26.1. Hon'ble Supreme Court in Union of India v. SICOM Limited reported as 2009(2) SCC 121, dealt with a similar issue and the relevant paras i.e. para 27-32, of the said judgment read as under:- "27. A bare perusal of the aforementioned provision clearly goes to show that the right to recover must start with the sale of excisable goods. It is only when the dues of the Central-Excise Department are not satisfied by sale of such excisable goods, proceedings ....
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....r the Crown debt. 31. Furthermore, the right of a State Financial Corporation is a statutory one. The Act contains a non-obstante clause in Section 46B of the Act which reads as under: "Section 46B-Effect of Act on other laws-The provision of this Act and of any rule or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern." 32. The non-obstante clause shall not only prevail over the contract but also other laws. [See Periyar & Pareekanni Rubber Ltd. v. State of Kerala (2008 (4) SCALE 125)]" [Emphasis supplied] It was thus held, that since section 46B of the State Financial Corporations Act, 1951 had anon obstante clause, the dues of the secured creditor were to be paid in priority to the dues being claimed by Central Excise. Likewise, both ....
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....hinery could be the sales tax etc. payable on the said machinery. As far as dues of the Central Excise are concerned, they were not related to the said plant and machinery or the land and building and thus did not arise out of those properties. Dues of the Excise Department became payable on the manufacturing of excisable items by the erstwhile owner, therefore, these statutory dues are in respect of those items produced and not the plant and machinery which was used for the purposes of manufacture. This fine distinction is not taken note at all by the High Court. 24. We thus conclude that the judgment of the High Court is unsustainable in law. Accordingly, the appeal is allowed and the impugned judgment of the High Court is set aside. As a consequence the notice of the Excise Department calling upon the appellant to pay the dues of the erstwhile owner of the unit in question also stands quashed. The appellant shall also be entitled to cost of this appeal.". [Emphasis supplied]" In the aforesaid case, Hon'ble Supreme Court upheld the prior right of recovery in favor of the secured creditor on account of non obstante clause in the State Financial Corporation Act, ....
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....tization Act provides that the provisions of the Securitization Act shall have effect notwithstanding, anything inconsistent therewith contained in any other law for the time being in force or any "instrument having effect by virtue of any such law. We are not referring to Section 26E of the Securitization Act: Said provision was not in force, at the time the, auction had taken place and the petitioner had purchased the property. However, without aid of Section 26E of the Securitization Act, it can be safely concluded that the secured creditor/bank shall have a priority claim: over the claim of the excise department. 13. The respondent Nos. 2 to 4 have also placed reliance on Section 37 of the Securitization Act. The said provision also does not inures to the benefit of respondent Nos. 2 to 4. Section 37 of the Securitization Act says that the provisions of the said Act shall be in addition to and not in derogation of the acts enumerated therein. The Central Excise Act does not find place in Section 37 of the Securitization Act. 14. Moreover, at the time the movable and immovable assets of the respondent No. 5 were put to auction by the respondent No. 6 and the pe....
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....o clear the liabilities created on the business/assets by the erstwhile owner/borrower, which is similar to the situation in the present case. The said judgment therefore, also completely supports the case of the petitioner herein. 26.4. There is another reason why the claim of Central Excise would not be sustainable against the petitioner. In view of the second part of section 100 of the Transfer of Property Act, 1882 ibid, which while defining charge, states that "...no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge" except if saved by the provisions of the statute under which the claim is sought to recovered from auction purchaser. Thus, even assuming there would have been a charge in favor of Central Excise (concededly, there is no transferable charge over immovable property under the Central Excise Act, 1944 in the present case), it would still have to be seen that whether the petitioner/auction purchaser, to whom the property has been transferred for consideration had the notice of charge or not. This is because the second part of section 100 of the TP Act,....
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....orporation created a charge over the property of the defaulter. However, the property was sold in execution of a mortgage decree. When the Municipal Corporation purported to exercise their charge over the property, the purchaser in court auction filed a suit for a declaration that he was the owner of the property and that the arrears of municipal taxes due by the transferor were not recoverable from him by proceeding against the property purchased in auction. In the appeal before this Court, the Municipal Corporation's main argument was that where the local law provided for the creation of a charge against a property for which municipal taxes were due, transferees of such properties were imputed with constructive knowledge of any charge created against the properties that they had purchased. This argument was, however, rejected. This Court; held that while constructive notice was sufficient to satisfy the requirement of notice in the proviso to section 100 of the TP Act, whether the transferee had constructive notice of the charge had to be determined on the facts and circumstances of the case. In other words, this Court held that there could be no fixed presumption as to the t....
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.... in terms of section 100 of the TP Act, 1882 by the Central Excise, it only enables itself to be entitled to raise a claim against the secured asset, though its claim for priority would still be determined in view of Section 31B Recovery Act, 1993 and Section 26E Securitisation Act, 2002 i.e. the enactments invoked by the secured creditor to recover its debts. As stated before in para No. 14 to 17 and 26.1, both these enactments i.e. Recovery Act, 1993 and Securitisation Act, 2002 not only have a non obstante clause in the provisions providing for prior right of recovery in favour of the secured creditor but also provides for overriding effect of the provisions of these twin enactments of whatever is found to be inconsistent thereto. Therefore, the secured creditor and for that matter, even the auction purchaser, would not be adversely effected with the prior charge of the Central Excise. 26.7. Apart from above, we find that in many cases the Authorities concerned, after creating a charge, do not proceed further towards recovery. Thus, in a given case, it would also need examination regarding the enforceability of such charge on the touchstone of principles of Limitation, as wel....
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....[hereinafter referred to as "Rules, 2002"] framed by the Central Government in exercise of powers under Section 38 of the Securitisation Act, 2002. Rule 9(7) to Rule 9(10) of the Rules, 2002 read as under:- "9. Time of sale, issue of sale certificate and delivery of possession, etc. (1) to (5) xxxxxxxxx (6) On confirmation of sale by the secured creditor and if the terms of payment have been complied with, the authorized officer exercising the power of sale shall issue a certificate of sale of the immovable property in favour of the purchaser in the Form given in Appendix V to these rules. (7) Where the immovable property sold is subject to any encumbrances, the authorized officer may, if he thinks fit allow the purchaser to deposit with him in the money required to discharge the encumbrances and any interest due thereon together with such additional amount that may be sufficient to meet the contingencies or further cost, expenses and interest as may be determined by him. (8) On such deposit of money for discharge of the encumbrances, the authorized officer may issue or cause the purchaser to issue notices to the persons interested in or....
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....ould inter-alia include details of property, its Reserve Price', amount of debt and any other thing, which the Recovery Officer, considers it material for a purchaser to know, in order to judge the nature and value of the property. Rule 53, reads as under: "53. Contents of proclamation. - A proclamation of sale of immovable property shall be drawn up after notice to the defaulter, and shall state the time and place of sale, and shall specify, as fairly and accurately as possible,- (a) the property to be sold; (b) the revenue, if any, assessed upon the property or any part thereof; (c) the amount for the recovery of which the sale is ordered; [*] [(cc) the reserve price, if any, below which the property may not be sold; and] (d) any other thing which the Tax Recovery Officer considers it material for a purchaser to know, in order to judge the nature and value of the property. [Emphasis supplied] Thus, in case, if the property is decided to be sold with encumbrances, Rule 53, would enable the Recovery Officer, to include such encumbrances as it may deem fit and in that eventuality the purchaser would be liable to clear s....
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.... asset, are virtually derivative rights from the secured creditor. Thus, if the auction purchaser has purchased the property from the secured creditor, it is the secured creditor which has exercised its right of priority to sell the secured asset to recover and appropriate its dues and hence the auction purchaser cannot be called upon to pay the dues of the previous owner/borrower. 27.2. In so far as dues of Semi Government and/or Government Agencies are concerned, it is commonly seen that the properties of the defaulters/borrowers are got attached, for recovery of their dues. For the purpose of illustration, it could be dues being claimed by various state procurement agencies, which allot paddy for purposes of milling of rice to various rice shellers pursuant to a milling agreement. If these millers default in supply of the contractual rice out of the allotted paddy or commit breach of milling agreement, it is commonly seen that these agencies proceed to attach the property of the defaulter miller/borrower to secure recovery of their dues and claims, either under Section 9 or Section 17 of the Arbitration and Conciliation Act, 1996 or during execution of the award against the d....
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....plete and perfect before that of the King commences, the rule does not apply, for there is no point of time at which the two rights are at conflict, nor can there be a question which of the two ought to prevail in a case where one, that of the subject, has prevailed already. In Giles v. Grover, 1832 All England Reporter 563 it has been held that the Crown has no precedence over a pledgee of goods. In Bank of Bihar v. State of Bihar and others, AIR 1971 SC 1210, the principle has been recognised by this Court holding that the rights of the pawnee who has parted with money in favour of the pawnor on the security of the goods cannot be extinguished even by lawful seizure of goods by making money available to other creditors of the pawnor without the claim of the pawnee being first fully satisfied. Rash-behary Ghose states in Law of Mortgage (T.L.L., Seventh Edition, p. 386) - 'It seems a Government debt in India is not entitled to precedence over a prior secured debt.'" [Emphasis supplied] Thus, it is apparent that such attachments are unsecured claims over the property and such unsecured claims even by the Government or Semi Government agencies, would not have preferenc....
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....that the legislature intended to give first preference/priority to the dues of the secured creditor and hence provided first and prior right of recovery, over and above the right of other claimants, in favour of the secured creditors exercising their right of recovery under the Recovery Act, 1993 and Securitisation Act, 2002. The said intent cannot be left mid-way to restrict the benefit only to the secured creditor but definitely would travel to the auction purchaser as well, who derives the title to the property through an auction conducted by or on behalf of the secured creditor. 27.5. Apart from above, section 48 of the TP Act, 1882 would also protect the rights of the secured creditor in whose favour prior mortgage is sought to be disturbed by a subsequent attachment order. Section 48 of the Act, 1882 reads as under:- 48. Priority of rights created by transfer. -Where a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right-shall, in the absence of a special contract or reservation binding the earlier transferees,....
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....n of mortgage prior to the passing of such attachment order under section 83 CrPC, 1973 would give prior right to the secured creditor to recover its dues notwithstanding the attachment effected by the Court under section 83 of the Cr.P.C., 1973 This is for the reason, that firstly the right upon the property has been created in favour of the secured creditor prior point in time i.e.. before passing of the attachment order under Section 83 Cr.P.C., 1973 and hence principles of Section 48 of the Act, 1882 would apply. Secondly, attachment is an unsecured claim which cannot prevail over the secured claim for the reasons explained in the previous paras especially in view of the judgment of Hon'ble Supreme Court in Dena Bank's case (supra). Thirdly, because of the prior right of recovery reserved in favour of the secured creditors under the Recovery Act, 1993 and Securitisation Act, 2002, which have an overriding effect over anything which is inconsistent to the provisions of these twin Acts. Fourthly, it is the secured creditor which has advanced loan against the creation of security and hence, it is a transaction of creation of security against advancing of consideration from....
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....he auction -purchaser would be liable to clear the dues of the electricity consumed by the previous owner/occupier of the property. The said issue would not detain us any longer, in view of the recent decision of the Hon'ble Supreme Court in Telangana State Southern Power Distribution Company Limited v. M/s. Srigdhaa Beverages, Hon'ble Supreme Court held that the auction purchaser would be liable to clear the electricity dues, utilized by the erstwhile owner/consumer. The relevant paras of the judgment read as under:- "3. The aforesaid auction notice shows that the unit was being sold on "as is where is, what is there is and without any recourse basis", as per Rules 8 & 9 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the 'said Rules'). The aforesaid clauses of the E-auction sale notice show that the total outstanding dues were much larger, but the reserve price fixed was lower, and the actual sale consideration of the successful auctioneer was Rs. 9,18,65,000, which is approximately Rs. 10 lakh more than the minimum reserve price. Clause 24 reproduced aforesaid makes it clear that when the reference is to a sale on "as is....
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....Service Connection The seller of the property should clear all the - dues to the Company before selling such property. If the seller did not clear the dues as mentioned above, the Company may refuse to supply electricity to the premises through the already existing connection or refuse to give a new connection to the premises till all dues to the Company are cleared." 6. We may also take note of the fact that the aforesaid dues partake the character of statutory dues under the Electricity Act, 2003 read with the General Terms &'Conditions of Supply. Xxxxxx xxxxxx 15. We have gone into the aforesaid judgments as it was urged before us that there is some ambiguity on the aspect of liability of dues of the past owners who had obtained the connection. There have been some differences in facts but, in our view, there is a clear judicial thinking which emerges, which needs to be emphasized: A. That electricity dues, where they are statutory in character under the Electricity Act and as per the terms & conditions of supply, cannot be waived in view of the provisions of the Act itself more specifically section 56 of the Electricity Act, 2003....
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....ier in, accordance with law. 28.2. As regards, other dues are concerned including transferable and recoverable statutory dues, pending installments due and payable to the allotting agency, Internal and External Development Charges payable to Development Authority, Extension fee/non-construction charges. Water and Sewerage dues etc., which are directly emanating out of the usage of the -property in question, would also be payable by the auction purchaser, where the properties are being sold on "as is where is basis". This is because, these are the charges which are arising out of the utilization of the property itself and are not claims arising out of attachment being foisted or enforced upon the property/These are services or utilities attached to the property and provide meaningful utilization of the property and because of their such nature, the dues emanating therefrom, shall form part of dues attached to the property and would be liable to be paid by the purchaser. An illustration would further clarify the above position. For example, a property has been allotted by the allotting agency or a builder, to an allottee and the purchase consideration is to be paid, in 4 equal ....
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....urchaser, pursuant to an auction conducted by DRT under Recovery Act, 1993 would NOT be liable to pay the dues being claimed by Central Excise originally payable by the erstwhile owner/assessee/borrower. ISSUE NO. 3 30. The next and the last issue which arises for consideration is whether Respondent No. 3-GLADA could have refused the transfer of the property in question in the name of petitioner. A perusal of the writ petition would reveal that petitioner submitted request letter dated 04.10.2019, vide diary No. 3921 to Respondent No. 3, pursuant to which, it issued the impugned letter dated 15.10.2019 (P-3), vide which transfer of property is sought to be resisted by Respondent No. 3 predominantly on five grounds. The first one being, that Urban Ceiling Officer Ludhiana vide letter dated 1275 dated 28.09.1987, has restricted the transfer of the property in question, and the decision in that regard is sought to be intimated to it. Petitioner has replied to the same, vide letter dated 16.10.2019 (P-4), stating that Urban Ceiling Law, is not applicable to the property in question. Since, Urban Land (Ceiling and Regulation) Act, 1976, was repealed by the Parliament by passing Ur....