Gujarat High Court
Hardik Narsinhbhai Patel vs State Of Gujarat on 2 January, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/5840/2023 ORDER DATED: 02/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5840 of 2023
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HARDIK NARSINHBHAI PATEL
Versus
STATE OF GUJARAT & ORS.
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Appearance:
DEV D PATEL(8264) for the Petitioner(s) No. 1
GOVERNMENT PLEADER for the Respondent(s) No. 1,2,3
MR NEERAJ J VASU(3159) for the Respondent(s) No. 5
MR TATTVAM K PATEL(5455) for the Respondent(s) No. 4
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 02/01/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Dev D. Patel for
the petitioner and learned Assistant
Government Pleader Ms.Shrunjal Shah for
the respondent No.1.
2. By this petition under Article 226 of the
Constitution of India, the petitioner has
prayed for the following reliefs :
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"(a) to issue writ of mandamus or
a writ in the nature of mandamus
or any other appropriate writ,
order or directions, quashing and
setting aside the impugned order
dated 02.04.2020 passed by State
Tax Officer-(1), Unit-33, Kadi and
Revenue Entry No. 35500 mutated in
the revenue record of land bearing
Survey No. 715 paiki 2 admeasuring
5132 sq.yards of village-Kadi
Kasba, Taluka-Kadi, District-
Mehsana (Annexure A);
(b) to issue writ of mandamus or a
writ in the nature of mandamus or
any other appropriate writ, order
or directions, quashing and
setting aside the impugned order
dated 30.01.2023 passed by Ld
Deputy Collector (Prant Adhikari),
Kadi in RTS Takrari Case No.
433/2022 (Annexure B) and further
be pleased to direct respondents
to certify Entry No. 36412 in the
revenue record of Land bearing
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Survey No. 715 paiki 2 admeasuring
5132 sq.yards of village-Kadi
Kasba, taluka-Kadi, District-
Mehsana."
3. The brief facts of the case are as
under :
3.1. The petitioner purchased a land
bearing Survey No. 715 paiki 2 admeasuring
5132 sq.yards of village-Kadi Kasba,
Taluka-Kadi, District-Mehsana by way of
registered sale deed dated 23.07.1990.
Entries to that effect were mutated in the
revenue records vide Entry Nos. 7591 and
7889. The petitioner also put up
construction upon the said land after
getting construction permission on
20.09.1990.
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The petitioner availed the credit facility
of total Rs. 469 lakh including term loan
and cash credit respectively from Union
Bank of India against the equitable
mortgage deed.
3.2 Since, there has been default in
repayment of loan, the petitioner Bank
issued a demand notice dated 30.08.2018
u/s. 13(2) of the Securitisation and
Reconstructions of Financial Assets and
Enforcement of Security Interest Act, 2002
(for short 'the SARFAESI Act') and further
took symbolic possession of the premises.
The Bank further published auction sale
notice on 01.01.2022 and in the said
auction, sale has been confirmed in favour
of the petitioner for the amount of
Rs. 1,41,20,000/-.
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3.3 It is further the case of the
petitioner that the Bank further executed
a sale deed and placed the same before the
Registrar, Kadi for registration. However,
due to complaint filed by one Patel
Prakash Ashokbhai-respondent No.4 herein
against one of the partners of M/s. Keshar
Oil Industries, the Registrar, Kadi
refused registration of the sale deed on
the ground of imposition of bail condition
against one of the partners of M/s. Keshar
Oil Industries imposed in CRMA No. 12503
of 2018 by this Court. The Bank therefore
preferred CRMA No. 1 of 2022 in CRMA No.
12503 of 2018. This Court, vide order
dated 10.08.2022, allowed the application
of the Bank and also lifted the
restriction of sale on the said premises.
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3.4 Thereafter, a sale deed was
executed by the Bank in favour of the
petitioner and the same came to be
registered at Serial No. 15129 of 2022 by
the Registrar, Kadi. Consequently, a
revenue Entry No. 36412 came to be mutated
in the revenue records.
3.5 Thereafter, respondent No.4 has
filed objection against the mutation of
the said entry whereby RTS Takrari Case
No. 433 of 2022 came to be registered.
3.6 Further, respondent No.2-State Tax
Officer vide letter dated 12.01.2023
stated that for the outstanding amount
pending towards the VAT, the said land is
attached vide order dated 04.07.2020 and
an Entry no. 35500 dated 14.10.2020 has
been mutated.
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3.7 It is the case of the petitioner that
the learned Deputy Collector without
appreciating provisions of law, cancelled
revenue Entry No. 36412 vide order dated
30.01.2023. Further, the Corporation Bank
had registered the charge created upon the
said land before the Central Registry of
Securitization Asset Reconstruction and
Security Interests of India under the
SARFAESI Act.
Being aggrieved by the same, the
petitioner has preferred the present
petition.
4. Learned advocate Mr.Dev D. Patel for the
petitioner submitted that as per the
provisions of Section 26D of the SARFAESI
Act, the petitioner has already registered
the charge with the Central Registry under
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the provisions of the the SARAFESI Act and
accordingly, as per the provisions of
Section 26E of the SARFAESI Act, the
petitioner is having the priority of the
charge on the mortgaged property over the
dues of the respondents-State.
4.1 It was further submitted that as
per the settled legal position as held by
this Court in case of Kalupur Commercial
Cooperative Bank Limited versus State of
Gujarat rendered in Special Civil
Application No.17891 of 2018 as well as
the decision in case of Partners of
Siddheshwar Tax Fab & Ors versus State of
Gujarat & Ors rendered in Special Civil
Application No.2527 of 2023, the
petitioner being a secured creditor shall
have the priority of the charge upon the
mortgaged property over the dues of the
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respondent-State and therefore, the
attachment order passed in the year 2011
by the respondent is liable to be quashed
and set aside and accordingly, mutation of
the revenue entries is required to be
cancelled.
5. On the other hand, learned Assistant
Government Pleader Ms.Shrunjal Shah for
the respondent No.1 could not controvert
the facts of the case to the effect that
petitioner had created the charge over the
properties in the year 1988 whereas, the
attachment order under Section 48 of the
SARFAESI Act was passed in the year 2011.
6. Considering the above submissions, it
would be germane to refer to the decision
of this Court in case of Partners of
Siddheshwar Tax Fab & Ors versus State of
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Gujarat & Ors (supra) which read as
under :
"36. From the above, it is clear
that the Judgment in case of
Rainbow Papers Ltd. (Supra) is
confined to the facts of the said
case only and therefore, it would
not be required to relook the
decision of the Kalupur Commercial
Cooperative Bank (Supra)
considering the decision of the
Rainbow Papers Ltd. (Supra) of the
Apex Court, as the facts of the
present case are in the realm of
the provisions of the RDB Act
decision and of SARFAESI the Apex
Act, whereas Court in case the of
Rainbow Papers Ltd. (Supra) was in
realm of IBC Code confined to the
facts of the said case as observed
in the subsequent decision of the
Apex Court.
37. It is also pointed out by the
learned AGP that Papers the Ltd.
Decision (Supra) of was the
Rainbow considered in review,
which is disposed of by the Apex
Court as per para 26 and 27
extracted herein above. In such
circumstances, we are of the
decision opinion of the that
Hon'ble the Apex subsequent Court,
in case of Rainbow Papers Ltd.
(Supra) would not be applicable
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with regard to the applicability
of provision of Section 26E of the
SARFAESI Act as well as provisions
of Section 31B of RDB Act vis-a-
visSection 48 of the vat Act as
analysed and discussed by this
Court in Kalupur Commercial
Cooperative Bank (Supra).
38. In view of the above analysis
and facts, we would also like to
refer to the subsequent decision
of the Coordinate Bench in case of
Odhavji Mohanbhai Gadhiya Vs.
State of Gujarat (supra), wherein
it is observed by this Court, that
it is a settled legal position
that VAT and Sales Tax dues has no
precedence over the dues of the
Bank for recovery of which the
bank exercises powers under the
SARFAESI Act and dues in nature of
sales tax and VAT payable by the
original owner cannot claim
priority over the dues of the
secured creditor and the principle
that the state debt or crown debt
has no prior claim or the dues
payable to the secured creditors
is no longer resintegra,wherein
the Coordinate Bench of this Court
has also referred to the decision
of the Hon'ble Apex Court in case
of Bank of Bihar Vs. State of
Bihar reported in (1972) 3 SCC 196
which is followed in the decision
of the Dena Bank (Supra) and the
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law laid down is that preferential
right of the Crown to recover the
debt over the creditors is limited
to the class of unsecured
creditors and the common law
principles of of England equity or
and the good conscience would not
allow the Crown to have
preferential right for recovery of
debt over the mortgagee or pledge
of goods of secured creditors.
39. In view of the above settled
legal position, the charge in
respect of the property in
question created for sales tax
dues or VAT dues is of no availand
has no efficacy in law in view of
the provisions of SARFAESI Act and
the RDB Act. The property in
question was sold by respondent
no.6-Bank under the provisions of
SARFAESI Act and the petitioners
were successful purchasers and the
sale certificate is issued and
sale deed is also executed by
which the petitioners have become
absolute owners of the property
and therefore considering the
existing position of law, the
charge created by the respondent
State over the property in
question in the year 2018, cannot
be sustained and is accordingly
quashed and set aside and as a
consequence the mutation entries
in revenue records also stands
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deleted. The petition accordingly
succeeds in the aforesaid terms.
Rule is made absolute to the
aforesaid extent. No order as to
costs."
7. In view of the above settled legal
position, the attachment order of the
respondent-State would not survive and is
accordingly ordered to be quashed and set
aside and consequently, the mutation
entries in the revenue record also stand
cancelled. The petition is accordingly
disposed of. No orders as to cost.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
JYOTI V. JANI
