TaxTMI 
TaxTMI 
2026 (7) TMI 991
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....the Respondent/State: Ms. Anjali Helekar, G.P. a/w Ms. Jyoti Chavan, Addl G. P. and Ms. Nazia Sheikh, AGP in WP(L)/15997/2024. For the Respondent/State: Ms. Anjali Helekar, G. P. a/w Ms. Jyoti Chavan, Addl G. P. and Mr. Amar Mishra, AGP in WP(L)/21078/2024. For the Respondent/State: Ms. Anjali Helekar, G. P. a/w Mr. Mohit Jadhav, Addl G. P. and Mr. Himanshu Takke, AGPs, in WP(L)/31148/2024. For the Respondent/State: Ms. Anjali Helekar, G. P. a/w Mr. Vishal Thadhani, Addl G. P. and Mr. Amar Mishra, AGPs, in WP(L)/31453/2024. For the Respondent No. 5: Mr. Raghunath Gawde, in WP(L)/15997/2024. For Petitioner: Mr. Nikhil Rajani, i/b M/s V. Deshpande & Co., in WP/8103/2025. For the Petitioner: Mr. Sarthak Diwan, in WP/3350/2026. For the Petitioner: None in WP/13658/2024. For the Respondent No. 3: Mr. Dheer Sampat (through VC), i/b M. V. Kini & Co. in WP/8103/2025. For the Respondent No. 6: Mr. Malhar Zatakia, a/w Mr. Deepak Saxena (through VC), a/w Mr Shyam Sarangi, a/w Mr. Ayman Khan and Ms. Roshni Dumpala, i/b Legal Prism in WP/8103/2025. For the Respondent/State: Ms. S. D. Vyas, Addl. G. P. in WP/8103/2025. For the Respondent/State: Ms. G. R. Raghuwan....
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.... the Respondent State, the Full Bench in the aforesaid judgment of this Court came to the conclusion that the dues of secured creditors under the provisions of the SARFAESI Act would have priority. Various aspects were considered, which in our opinion, answer the objections that are raised on behalf of the State in these petitions also. 7. A perusal of the reply affidavits and additional affidavits filed on behalf of the Respondent State through various departments in these writ petitions shows that the objections pertain to the use of the expression "notwithstanding anything to the contrary contained in any law" as found in the Maharashtra Goods and Services Tax Act, 2017 (MGST Act), an amendment brought about in the Maharashtra Value Added Tax Act (MVAT Act) in Section 37 and an objection with regard to situations where the attachment orders issued by the Respondent State pertain to a period prior to 24/01/2020, i.e. the date on which the aforesaid amendment was brought about in the SARFAESI Act. It is claimed on behalf of the Respondent State that even if the Full Bench judgment in the case of Jalgaon Janta (supra) is taken into consideration, the petitions ought not to be al....
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....bordinate to the paramount charge on a land if in respect of such land, land revenue is in arrears. Viewed from this angle, there is no magic in the words "first charge". Even a "first charge", by express statutory intendment, can be made subordinate or subservient to a paramount charge such as arrears of land revenue. We, therefore, are unable to accept the argument of the State/respondents that since neither the SARFAESI Act nor the RDDB Act uses the words "first charge" but the word "priority", such "priority" cannot have precedence over "first charge" created by the State legislations. 83. However, notwithstanding that section 169(1) of the MLR Code is the dominant legislation and does not expressly say that it would be subordinate or subservient to any Central Act creating "first charge", nothing really turns on it. The express language of section 26E of the SARFAESI Act and section 31B of the RDDB Act, wherever applicable, is sufficient to off- set the "paramount charge" created by sub-section (1) of section 169. Similarly, even if there were no express intendment in the relevant provisions of the BST Act (section 38C) and the MVAT Act (section 37) to the effect that....
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....elief to the Petitioners in these petitions. In the above quoted paragraph 85 of the Full Bench Judgment, it is categorically laid down that the dues of the secured creditor shall have priority over all others, including all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority. 12. As regards the objection raised on behalf of the Respondent State that the attachment orders were issued prior to the amendment dated 24/01/2020 being brought about in the SARFAESI Act, the Full Bench in the aforesaid judgment specifically considered such a factual situation and held that even if that be so, the Respondent State would have to demonstrate on facts that after issuing the attachment order, it had taken all necessary steps under the Maharashtra Land Revenue Code, including issuance of proclamation and other steps contemplated therein. The relevant portion of the judgment of the Full Bench in the case of Jalgaon Janta (supra) in this context reads as follows: "151. However, there could be attachments orders which might have been issued much prior to giving effect to the 2011 Rules, as amended. In respect of such orders of....
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....withstanding the secured dues of the secured creditors; but in the absence of an order of attachment being made public in a manner known to law, i. e., by a proclamation, once Chapter IVA of the SARFAESI Act or section 31B, as the case may be, has been enforced, the dues of the secured creditor surely would have "priority". In other words, if the immovable property of the defaulter is shown to have been attached in accordance with law prior to Chapter IVA of the SARFAESI Act, or for that matter section 31B of the RDDB Act, being enforced, and such attachment is followed by a proclamation according to law, the "priority" accorded by section 26E of the former and section 31B of the latter would not get attracted. Answer to question (g)" 13. In the reply affidavits filed in these writ petitions, the Respondent State has failed to demonstrate that it complied with the aforementioned specific statutory requirements as noted in the above quoted portion of the Full Bench Judgment and therefore, the objection pertaining to the attachment orders being prior to the amendment being brought about in the SARFAESI Act, also deserves to be rejected. 14. As regards the contention ra....
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....SI Act. 15. The Full Bench rejected the contention that the phrase "priority in payment" under Section 26E falls short of creating a first charge. It ruled that, "Statutory priority given to secured creditors under the SARFAESI and RDDB Acts shall override any charge created under State laws, including Sections 37 and 38C of the MVAT Act and Bombay Sales Tax Act ("BST Act", for short) respectively, in view of their express subordination to Central enactments." 16. The bank has registered its security interest with CERSAI on 30th June 2012, which is very much prior to the attachment order dated 18th March 2020 of the department. Therefore, in view of the legal position settled by the Full Bench, the bank has priority to realize its dues. 17. The unamended Section 37 of the MVAT Act made the MVAT Act expressly subordinate or subservient to any central legislation creating first charge and by way of amendment, the State of Maharashtra has in essence only removed such subordination or subservience to the central legislation. The Full Bench discussed and dealt with similar provisions and scenario at length in paragraphs 81 to 92. The Full Bench in paragraph 82....
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..... We are therefore in agreement with the contention of learned counsel for the Petitioner that where a secured creditor has registered its security interest under the SARFAESI Act, the claim of such secured creditor must prevail. We have no hesitation in holding that the bank has priority in realization of dues over the dues of the department. The department having even failed to register its charge with CERSAI cannot claim any first charge over the said secured asset." 15. The said position of law was recently followed by this Court in an order dated 06/07/2026 passed in Writ Petition (L) No. 21301 of 2024 (M/s. Leon Laboratories v. The Deputy Commissioner of Sales Tax & Ors). After relying upon the said judgment of the Division Bench of this Court in the case of bank of Baroda (supra), an identical contention was rejected and the writ petition was allowed. 16. It is pertinent to note that in one of the petitions, an objection was also raised on behalf of the Respondent State that since the auction purchaser had purchased the subject property in an auction sale conducted on as is where is whatever is basis, the auction purchaser cannot be permitted to turn around and contest....
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....the proposition suggested, the secured creditor would first enforce its charge against the asset and thereafter the MVAT Authorities would yet again enforce their charge against the very same asset to recover their dues. Thereafter if there are other security interests with an inferior priority, every single beneficiary of every such security interest would keep enforcing their security interest against the very same asset. Such an absurd proposition turns on its head, the very meaning of having a security interest over an asset in priority over others. Needless to say, no person in his right mind would ever bid for an asset against which enforcement of multiple charges is contemplated. This because he would have to face the endless queue of subsequent enforcement actions against the very same asset. To underline the absurdity, for example, if the secured asset were being sold when its market value is Rs.5 Crores and the dues of the MVAT Authorities are Rs.10 Crores, a potential purchaser of the property would effectively have to be ready to pay Rs.15 Crores for the property worth Rs.5 Crores. This would indeed be absurd to say the least. We therefore have no hesitation in rejectin....
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....rned department of the Respondent State to Respondent No. 5 Society consequently also stand set aside. 22. In Writ Petition (L) No. 21078 of 2024, the Petitioner is a bank (secured creditor), praying for quashing and setting aside of the orders dated 16/11/2015 and 23/06/2016 passed by the Deputy Commissioner of Sales Tax with regard to the dues of the said department, in the context of a property which is the secured asset of the Petitioner bank. This writ petition deserves to be considered with Writ Petition No. 3350 of 2026, wherein the Petitioner is the auction purchaser of one of the secured assets. 23. In the said case, the security interest of the petitioner bank was registered with CERSAI on 29/06/2007, while the registration of the charge of the concerned department of Respondent State is dated 06/01/2025. The registration in favour of the Petitioner bank is obviously much prior to the registration of the charge of the concerned department of the State. 24. In any case, the impugned orders dated 16/11/2025 and 23/06/2016 purportedly assert rights in respect of the secured assets for the period between 2009 to 2014. Even if this is to be treated as a case of dues p....
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.... dated 03/06/2024. The documents placed on record show that the security interest on the Petitioner bank was registered with CERSAI as far back as on 10/08/2011. The impugned intimation notice dated 19/10/2023, letter dated 30/04/2024 and the attachment order dated 03/06/2024 have been issued much later. Although the charge of the concerned department of the Respondent State is said to have been registered with CERSAI on 20/07/2024, the same is also more than a decade after the CERSAI registration of the security interest of Petitioner bank on 10/08/2011. 31. In any case, even if the dues of the concerned department of the Respondent State pertain to the years prior to the amendment being brought about in the SARFAESI Act, as noted hereinabove, the State was required to demonstrate that it had complied with all requirements, including issuance of proclamation etc. Since such requirements have not been satisfied, the said petition also deserves to be allowed. 32. In this petition, Interim Application (L) No. 39495 of 2025 has been filed by the auction purchaser, which essentially supports the prayer made in the writ petition. Hence, we allow the intervention application. We ha....