TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 193
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.... remove the lien/charge/encumbrance/mutation entry of Respondent No. 1 and 2 from the records of Respondent No. 4 and 5 in respect of the immovable property bearing Survey No. 366/5 admeasuring 1200 sq.mtrs Plot No. 16, and Survey No. 366/6 admeasuring 1200 sq.mtrs Plot No. 17, totally admeasuring 2400 sq.mtrs and structures thereon along with plant and machinery lying at the Premier Industrial Estate, Kachigam, within the village panchayat jurisdiction of Kachigam, Taluka Daman, sub-district and district of Daman pin code 396 215 (for short the 'Secured Asset') and to direct Respondent No. 4 to accept and register the document of sale/sale certificate issued by Respondent No. 3 in favour of the Petitioner. 4. It is the case of the Petitioner that the Petitioner came to know about the said Secured Asset through the Free Press Journal newspaper wherein a Sale Notice [dated 27th June 2022] was published for sale of the Secured Asset under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the "SARFAESI Act") r/w The Enforcement of Security Interest Rules, 2002 (for short the "said Rules") at a reserve....
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....n issuance of the Sale Certificate, the Petitioner visited the office of Respondent No. 4 for registering the said Sale Certificate. It is at that time the Petitioner found that Respondent No. 1, through their letter dated 24th February 2020, had registered entries in the records of Respondent No. 4 for their pending dues of Rs. 9,24,344/-. The Petitioner also found that Respondent No. 1 has created a mutation entry in the records of Respondent No.5 pursuant to the said letter dated 24th February 2020. 8. In these circumstances, the Petitioner sought an explanation from Respondent No. 3 about the said encumbrance. In response thereto, Respondent No. 3 assured the Petitioner that Respondent No. 3 has a priority over the dues of Respondent No. 1, and therefore, Respondent No. 4 and 5 must register the Sale Certificate/Sale Deed issued in favour of the Petitioner. Respondent No. 3 also issued a letter dated 6th October 2022 to the Respondent No. 4 and 5 intimating that the Secured Asset was sold under the provisions of SARFAESI Act and by virtue of Section 26-E thereof, and Section 31- B of the Recovery of Debt and Bankruptcy Act, 1993, Respondent No. 3 had a priority over the dues o....
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....e of Jalgaon Janta Sahakari Bank Ltd. and Anr. Vs Joint Commissioner of Sales Tax Nodal 9, Mumbai and Anr. [2022 (5) Mh.L.J. 691] in support of the proposition that the dues of Respondent No. 3 would have priority over the dues of Respondent Nos.1 & 2 and that they would have to stand in queue after the realisation of the dues of the secured creditor (i.e. Respondent No. 3). 12. In addition to the aforesaid argument, the learned counsel of the Petitioner further submitted that Respondent No. 1 and 2 have not registered their claim and/or attachment order under Section 26B(4) of the SARFAESI Act which is also a mandatory requirement for Respondent No. 1 and 2 to claim priority over the sale proceeds of the Secured Asset. She submitted that section 26C(2) provides that: "(2) Where security interest or attachment order upon any property in favour of the secured creditor or any other creditor are filed for the purpose of registration under the provisions of Chapter IV and this Chapter, the claim of such secured creditor or other creditor holding attachment order shall have priority over any subsequent security interest created upon such property and any transfer by way of sale, leas....
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...., Respondent No. 3, by virtue of Section 26-E of the SARFAESI Act, 2002, would get priority over the dues of Respondent No. 1 & 2. He, however, submitted that Respondent No. 3 is required to remit the surplus proceeds recovered from the sale of the Secured Asset, if any, to Respondent No. 1 and 2. 16. We have heard the learned counsel for the parties at some length. We have also perused the papers and proceedings in the above Writ Petition. The facts in the present case are really undisputed. On 14th December 2007 the Secured Asset was mortgaged with Respondent No. 3 by Mr. Prem Prakash Sarogi as a guarantor for the facilities granted to M/s Goldstar Polymer Pvt. Ltd. (the Borrower) to Respondent No. 3. This mortgage was created long before any attachment was levied on the Secured Asset by Respondent Nos. 1 and/or 2. Respondent No. 3 also registered its security interest over the Secured Asset with CERSAI on 24th February 2012. Since the dues of Respondent No. 3 were not paid, they, to recover dues, sold the Secured Asset to the Petitioner under the provisions of the SARFAESI Act, 2002 for valuable consideration and issued a Sale Certificate in favour of the Petitioner. The proble....
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....ection 26, that the dues of the secured creditor shall have 'priority' over all other including all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. 86. A debt that is secured or which, by reason of the provisions of a statute, becomes a 'first charge' on the property, in view of the plain language of Article 372 of the Constitution, must be held to prevail over a Crown debt, which is an unsecured one. The law, as it stands even today, is that a Crown debt enjoys no priority over secured debts. This principle has been repeatedly reaffirmed including, inter alia, in the decision of the Supreme Court reported in (2000) 5 SCC 694 (Dena Bank vs. Bhikhabhai Prabhudas Parekh & Co.) where the Court observed: "10. However, the Crown's preferential right to recovery of debts over other creditors is confined to ordinary or unsecured creditors. The common law of England or the principles of equity and good conscience (as applicable to India) do not accord the Crown a preferential right for recovery of its debts over a mortgagee or pledgee of goods or a secured creditor. It is only in cases where the Crown's right and that ....
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.... been kept preserved. [See Workmen v. Firestone Tyre and Rubber Co. of India (P) Ltd., (1973) 1 SCC 813]. 43. If Parliament while amending the provisions of the Companies Act intended to take away such a valuable right of the first charge-holder, we see no reason why it could not have stated so explicitly. Deprivation of legal right existing in favour of a person cannot be presumed in construing the statute. It is in fact the other way round and thus, a contrary presumption shall have to be raised. 44. Section 529(1)I of the Companies Act speaks about the respective rights of the secured creditors which would mean the respective rights of secured creditors vis-à-vis unsecured creditors. It does not envisage respective rights amongst the secured creditors. Merely because Section 529 does not specifically provide for the rights of priorities over the mortgaged assets, that, in our opinion, would not mean that the provisions of Section 48 of the Transfer of Property Act in relation to a company, which has undergone liquidation, shall stand obliterated. 45. If we were to accept that inter se priority of secured creditors gets obliterated by merely responding to a public....
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....a secured creditor (subject of course to CERSAI registration) and subject to proceedings under the I & B Code would rank superior to the dues of the relevant department of the State Government." (emphasis supplied) Further, we are of the view that since Respondent No. 1 and 2 have not registered their claim/attachment order with CERSAI, Respondent No. 1 and/or 2 cannot claim priority over dues of Respondent No. 3. This has also been clearly laid down in the full bench decision of this court in the case of Jalgaon Janta Sahakari Bank Ltd. and Anr. (supra), and more particularly, paragraphs 189 to 192 thereof, which read thus: "189. In the case at hand, we have seen that the secured creditor had registered the security interest with CERSAI on 25th October 2017. Post enforcement of Chapter IV-A of the SARFAESI Act, under sub-section (4) of section 26B of the SARFAESI Act, the department of the Government which professes to recover any tax or other Government dues, is enjoined to register such claim with CERSAI. 190. It does not appear that the respondent no. 1 registered its claim or attachment over the secured asset with CERSAI, post enforcement of Chapter IV-A of the SAR....