Bombay High Court
The South Indian Bank Ltd vs Jitendra Shankar on 17 November, 2025
Author: R.I. Chagla
Bench: R.I. Chagla
2025:BHC-OS:21182-DB
904-wpl-32836-2024[1].doc
jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO.32836 OF 2024
The South Indian Bank Ltd. ...Petitioner
Digitally
signed by
JITENDRA
Versus
JITENDRA SHANKAR
SHANKAR NIJASURE
NIJASURE Date:
2025.11.17
15:09:32
+0530
Municipal Corporation for Greater Mumbai & ...Respondents
Anr.
----------
Mr. R.L. Motwani for Petitioner.
Mr. Bhavik Manik with Ms. Jyoti Mhatre and Mr Sunil Khandagale
i/b. Ms Komal Punjabi for Respondents.
Ms Kavita Bavsar, Dy. Superintendent and Mr. Mahesh Sakare,
Assistant A & C K / W ward present.
----------
CORAM : R.I. CHAGLA AND
FARHAN P. DUBASH, JJ.
Reserved on : 12TH NOVEMBER, 2025
Pronounced on : 17TH NOVEMBER, 2025
J U D G M E N T:
-
( PER : R.I. CHAGLA J. )
1. By this Writ Petition, the Petitioner is seeking a direction
to the Respondents to release / de-seal the subject properties as per
Exhibit - A to the present Writ Petition, so that the order dated 18th
March, 2024 passed by the learned Chief Judicial Magistrate,
Esplanade, Mumbai ("CJM") in Securitization Application
No.1118/SA/2022 can be executed for taking physical possession
904-wpl-32836-2024[1].doc
forthwith or as expeditiously as possible or within a reasonable
period as this Court deems fit and proper.
2. A brief background of facts is necessary :-
(i) The Petitioner which is a banking company within the
meaning of Section 5(c) of the Banking Regulation Act, 1949,
registered and incorporated under the provisions of the
Companies Act, 1956, had sanctioned credit facilities to the
borrowers viz. (i) IPH Ispate LLP, (ii) Isha Girish Sangani, (iii)
Ajay Ramanlal Mehta, (iv) Girish Chimanlal Sangani and (v)
Hataishee Girish Sangani vide sanction letters dated 24th
September, 2018, 15th September, 2020 and 25th June, 2020.
(ii) The borrowers in order to secure the said credit facilities
created a mortgage of the subject properties in favour of the
Petitioner by depositing the original title deeds with the Petitioner.
The mortgage has been recorded vide a letter of confirmation of
Title deeds dated 12th October, 2018.
(iii) The Petitioner had registered its charge over the secured
assets under Central Registry of Securitisation Asset
Reconstruction and Security Interest of India ("CERSAI") i.e. over
the subject properties - Shop No. L21 on 16th April, 2019, Shop
904-wpl-32836-2024[1].doc
No. L23 on 16th April, 2019 and Shop No. L26 on 9th November,
2018.
(iv) The borrowers having availed of the said credit facilities,
failed and neglected to repay their dues to the Petitioner and in
view of the defaults committed by the borrowers, their loan
accounts were classified as Non Performing Asset on 24th March,
2021 as per the directives issued by the RBI.
(v) The Petitioner issued legal notice dated 13th July, 2021
under Section 13 (2) of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
("SARFAESI Act") calling upon the borrowers to repay to the
Petitioner a sum of Rs.2,10,06,538.84 as on 7th July, 2021.
(vi) The borrowers having received the notice issued by the
Petitioner, failed to repay the total outstanding dues as stated in
the notice. In view of which, the Petitioner took symbolic
possession of the subject properties on 21st April, 2022.
(vii) The Petitioner filed an Application under Section 14 of the
SARFAESI Act before the CJM bearing Securitization Application
No.1118/SA/2022.
904-wpl-32836-2024[1].doc
(viii) The Section 14 application of the Petitioner was allowed
by the CJM vide its Order dated 18th March, 2024.
(ix) The Petitioner through an Advocate Court Commissioner
appointed in pursuance of the said Order of the CJM issued a
notice dated 29th August, 2024 to the borrowers for taking
possession of the subject properties on 24th September, 2024.
(x) The Authorized Officer of the Petitioner along with other
officials visited the mortgaged properties for service of the said
notice issued by the Advocate Court Commissioner upon the
borrowers and they found that the subject properties were already
sealed by Respondent No.2 for allegedly non-payment of property
taxes. The Petitioner thereafter followed up with the office of the
Respondent No.2 requesting release / de-sealing of the subject
properties.
(xi) A letter dated 11th September, 2024 was addressed by the
Petitioner to Respondent No.2 informing them that pendency of
the property tax arrears will be mentioned in the sale notice when
issued by the Petitioner.
(xii) The Respondent No.2 had not responded to the said letter
dated 11th September, 2024 of the Petitioner and the subject
904-wpl-32836-2024[1].doc
properties remained in possession and custody of Respondent
No.2.
(xiii) The Advocate Court Commissioner could not take
possession of the subject properties and hence the Order dated
18th March, 2024 of the CJM could not be executed.
(xiv) Accordingly, the present Writ Petition has been filed on
21st October, 2024.
3. Mr. Motwani, the learned Counsel appearing for the
Petitioner has submitted that its charge on the subject properties (in
the form of a mortgage by deposit of title deeds) has been registered
with CERSAI prior in point of time to the attachment of the subject
properties by the Respondents viz. on 16th April, 2019 in the case of
Shop Nos. L21 and L23 and on 9th November 2018 in the case of
Shop No. L26. The Respondents in their Affidavit in Reply filed in the
Petition on 6th September, 2024 has stated that the attachment of the
entire mall including the subject properties was effected on 6th
September, 2024. This, in view of outstanding property tax inter alias
on the subject properties i.e. Shop No. L21 being Rs.2.84 lakh, Shop
L23 being Rs.3.47 lakh and Shop L26 being Rs.2.29 lakh as on 31st
March, 2025 as per the statement annexed to the said Affidavit. This,
904-wpl-32836-2024[1].doc
against the dues of the Petitioner which stood at Rs.5.58 Crore as on
11th September, 2024.
4. Mr. Motwani has submitted that the Respondents have
not even registered their attachment / charge with CERSAI. He has
submitted that Section 26E of the SARFAESI Act begins with a non-
obstante clause. The use of the word "priority" therein is to be given
effect to. Where the secured creditors have registered their charge
over the secured assets with CERSAI prior to the attachment order,
the attachment order would be subject, to the registered charge.
5. Mr. Motwani has relied upon the judgment of the Full
Bench of this Court in Jalgaon Janta Sahakari Bank Ltd. & Ors. Vs.
Joint Commissioner of Sales Tax Nodal - 9 Mumbai and Ors. 1 in this
context. He has in particular relied on paragraphs 189 to 191 of the
said judgment. The Full Bench of this Court has held that the secured
creditor is extolled to a higher pedestal and the subsequent act of
recording a charge in the record of right of the secured asset cannot
dilute the right of priority in payment, under Section 26C(2) and 26E
of the SARFAESI Act. The non-registration of the claim and / or
attachment order by the Respondent No.1 under Section 26B(4) of
1 MANU/MH/3011/2022 decided on 30th August, 2022.
904-wpl-32836-2024[1].doc
the SARFAESI Act, can only be at the peril of the Department. The
Full Bench of this Court has further held that under sub-section 2 of
Section 26C, any attachment order subsequent to the registration of
the security interest with the CERSAI shall be subject to prior
registered claim.
6. Mr. Motwani has also placed reliance upon the judgment
of this Court in Ronak Industries Vs. Assistant Commissioner Central
Excise and Customs, Division II and Ors. 2, wherein this Court has
relied upon the Full Bench judgment of this Court in Jalgaon Janta
Sahakari Bank Ltd. (Supra). In that case, the charge of Respondent
No.3 - Bank over the secured asset was registered with CERSAI prior
to the attachment of Respondent Nos.1 and 2. Accordingly, by virtue
of Section 26E of the SARFAESI Act, the Respondent No.3 - Bank's
claim would get priority over the attachment of Respondent Nos.1
and 2. The Counsel for Respondent Nos.1 and 2 had accepted this
position and submitted that the Respondent No.3 - Bank is required
to remit the surplus sale proceeds, if any, to the Respondent Nos.1
and 2.
7. Mr. Motwani has accordingly submitted that the
2 MANU/MH/2419/2023 decided on 28th June, 2023.
904-wpl-32836-2024[1].doc
Respondents having failed to register their charge with CERSAI and
the attachment of the subject properties being subsequent to the
registration of the Petitioner's charge with CERSAI, the prior
registered claim will have priority.
8. Mr. Motwani has submitted that the sealing of the
mortgaged properties of the Petitioner is contrary to the settled law
and is preventing the Petitioner from executing the Order of the CJM,
under Section 14 of the SARFAESI Act. He has accordingly sought
that the present Petition to be allowed.
9. Mr. Bhavik Manik, the learned Counsel for the
Respondents has submitted that the attachment of the subject
properties by the Respondents - Corporation is to be treated
differently than Revenue's charge over the subject properties which
fell for consideration in Jalgaon Janta Sahakari Bank Ltd. (Supra).
He has submitted that under Section 212 of the Mumbai Municipal
Corporation Act (MMC Act), the Corporation with regard to property
tax is held to have a first charge on the property, namely, land and
building and that this provision is required to be given full effect to.
He has placed reliance upon the judgment of this Court in Rajesh
904-wpl-32836-2024[1].doc
Parekh and Ors. Vs. Municipal Corporation of Gr. Bombay and Ors. 3
at paragraph 8 in this context.
10. Mr. Manek has also placed reliance upon the judgment
of the Supreme Court in Municipal Corporation of Delhi Vs. Trigon
Investment and Trading Pvt. Ltd. and Anr. 4 at paragraph 15, wherein
the Supreme Court has held that property taxes due under the Act in
respect of any land or building constitute first charge upon such land
and building subject only to the prior payment of the land revenue, if
any, due to the Government thereon. This, in the context of the
provisions of the Delhi Municipal Corporation Act. He has submitted
that likewise, Section 212 of the MMC Act provides for the
corporation to have a first charge on the property namely, the land
and building.
11. Mr. Manek has further submitted that there is large
outstanding property tax due to the Respondents - Corporation by
the borrowers and which would also include penalty imposed on
them and for which the entire mall including the subject properties
had been attached on 6th September, 2024. He has submitted that
3 MANU/MH/1342/2006 decided on 21st November, 2006.
4 (1996) 3 Supreme Court Cases 630.
904-wpl-32836-2024[1].doc
the Respondents - Corporation is having priority in respect of
recovery of property taxes. He has submitted that if the relief is
granted by this Court, it will cause revenue loss to the Respondents -
Corporation.
12. Having considered the submissions, the issue of the
secured creditor, in this case the Petitioner, having priority over an
attachment Order, in view of its prior registration of its security
interest with CERSAI, is no longer res integra. It has been held by the
Full Bench of this Court in Jalgaon Janta Sahakari Bank Ltd. (Supra)
that an attachment Order subsequent to the registration of security
interest with CERSAI shall be subject to such prior registered claim.
The Department of the Government which professes to recover any
tax or other Government dues, is enjoined to register their claim /
charge with CERSAI. It is by virtue of Section 26C and 26E of
SARFAESI Act that the secured creditor is extolled to a higher
pedestal and the subsequent act of recording a charge in the record
of right of the secured asset cannot dilute the right of priority in
payment over any subsequent attachment.
13. The judgment of Full Bench has been followed by this
904-wpl-32836-2024[1].doc
Court in Ronak Industries (Supra). This is also been followed in a
recent decision of this bench in Cholamandalam Investment &
Finance Company Ltd. Vs. State of Maharashtra & Anr. 5 In the said
decision, this Court had considered Section 192 of the Maharashtra
Land Revenue Code and Rule 11(2) of the Maharashtra Realization
of Land Revenue Rules, 1967 which provide that any attachment of
the property must be followed by a proclamation in prescribed form.
In that case, the Respondent No.1 had failed to produce any evidence
of proclamation having been issued in the prescribed form in
compliance with Section 192 of the Code and Rule 11(2) of the 1967
Rules. In view of which the priority of the Petitioner as secured
creditor accorded by Section 26E of the SARFAESI Act gets attracted.
Further, it was observed that in Jalgaon Janta Sahakari Bank Ltd.
(Supra), it has been held that the attachment is required to be
followed by a proclamation according to law and it is only then that
the 'priority' accorded by Section 26E of the SARFAESI Act, and
Section 318 of the RDDB Act, would not get attracted.
14. In the present case, the Petitioner - Secured Creditor
having registered its charge over the subject properties with CERSAI
5 Writ Petition (L) No.19679 of 2024 decided on 8th September, 2025.
904-wpl-32836-2024[1].doc
i.e. Shop No. L21 on 16th April, 2019, Shop No. L23 on 16th April,
2019 and Shop No. L26 on 9th November, 2018 would, in light of
the law laid down by the Full Bench judgment in Jalgaon Janta
Sahakari Bank Ltd. (Supra) have priority over the subsequent
attachment. The Respondents - Corporation apart from attaching the
property has not even issued proclamation and as has held by the
Full Bench, absent such proclamation the priority accorded by
Section 26E of the SARFAESI Act and Section 318 of the RDDB Act,
would get attracted.
15. The submission of the Respondents that the Respondents
Corporation would have a first charge on the subject properties
under Section 212 of the MMC Act and the reliance placed on the
judgment of this Court in Rajesh Parekh & Ors. (Supra) and the
judgment of the Supreme Court in Municipal Corporation of Delhi
(Supra) is misconceived and / or misplaced. These judgments have
not considered the aforementioned provisions of SARFAESI Act and /
or the priority which has been accorded to the secured creditor who
has registered its charge with CERSAI prior in point of time to the
attachment order of the MMC. Accordingly, we find no merit in the
opposition to the Writ Petition, particularly in view of the settled law.
904-wpl-32836-2024[1].doc
16. We allow the present Writ Petition and pass the
following Order:-
(i) The Respondents - Corporation shall release / de-seal the
subject properties described in Exhibit A to the Petition within a
period of two weeks from the uploading of this Order, in order for
the Order dated 18th March, 2024 passed by the CJM, Mumbai in
Securitization Application No.1118/SA/2022 to be executed for
taking physical possession of the subject properties.
(ii) The Petitioner shall in the sale notice when issued by it
mention the pendency of property tax raised on the subject
properties and that upon sale of the subject properties, the surplus
proceeds, if any, shall be remitted by the Petitioner to the
Respondents - Corporation towards the unpaid property taxes.
(iii) Writ Petition is accordingly disposed of. There shall be no
order as to costs.
[ FARHAN P. DUBASH, J. ] [ R.I. CHAGLA J. ]
