Himanshu Prashar vs Punjab Nationa Bank & Ors
2023 Latest Caselaw 5639 HP

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No. 2719/2022 a/w CWP Nos.1295 & 7553/2022 and

.

CWP No.788/2023

Decided on: 11.05.2023 CWP No. 2719/2022

Himanshu Prashar ....Petitioner

Versus Punjab Nationa Bank & Ors. ......Respondents CWP No. 1295/2021

Acacia Trader

State of H.P. & Ors.

                            r              to
                                           Versus
                                                                      ....Petitioner


                                                                ......Respondents

    CWP No. 7553/2022

    Central Bank of India                                             ....Petitioner

                                           Versus



    State of H.P. & Ors.                                        ......Respondents
    CWP No. 788/2023




    State Bank of India                                               ....Petitioner





                                           Versus
    State of H.P. & Ors.                    ......Respondents
    Coram

The Hon'ble Ms. Justice Jyotsna Rewal Dua, Judge. Whether approved for reporting?1

For the petitioners : Mr. B.C. Negi, Sr. Advocate with Mr. Rajat Awasthi for the petitioner(s) in CWP No.2719 and 1295/2022.

Mr. Ashok Sood, Sr. Advocate with Mr. Khem Raj, Advocate, for the petitioner in CWP No.7553/2022.

Whether reporters of the local papers may be allowed to see the judgment?

Mr. Arvind Sharma, Advocate, for the petitioner in CWP No. 788/2023.

.

For the respondents : Mr. Navlesh Verma, Additional

Advocate General, for the respondents/State.

Mr. Anand Sharma, Sr. Advocate with

Mr. Karan Sharma, Advocate, for respondent No.5 in CWP No.7553/2022.

Mr. Sanjay Dalmia, Advocate, for

the respondent In CWP No. 2719/2022.

Jyotsna Rewal Dua, J

Delink CWP No.1645/2018.

2. Admittedly the main issue involved in all these petitions is

as to whether the different department of State including Excise &

Revenue will have priority over the secure creditor's debt.

3. Learned counsel on both sides have jointly stated that the

issue involved in the present petition is no longer res-integra and has

been settled by the Hon'ble Apex Court in Civil Appeal No.2196/2012

(Punjab National Bank Vs. Union of India & Ors.) decided on

24.02.2022. Relevant part of the judgment reads as under:-

"37. Secondly, coming to the issue of priority of secured creditor's debt over that of the Excise Department, the High court in the impugned judgment has held that "In view of the matter, the question of first charge or second charge over the properties would not arise." In this context, we are of the opinion that the High Court has misinterpreted the issue to state that the question of first charge or second charge over the properties, would not arise. Xxxxxx

38-42. .....................

43. In view of the above, we are of the firm opinion that the arguments of the learned counsel for the Appellant, on the second

.

issue, hold merit. Evidently, prior to insertion of Section 11E in the

Central Excise Act, 1944, w.e.f. 08.04.2011, there was no provision in the Act of 1944 inter alia, providing for First Charge on the property of the Assessee or any person under the Act of 1944.

Therefore, in the event like in the present case, where the land building, plant machinery, etc. have been mortgaged/hypothecated to a secured creditor, having regard to the provision contained in Section 2(zc) to (zf) of SARFAESI Act, 2002, read with provisions

contained in Section 13 of the SARFAESI ACT, 2002, the Secured Creditor will have a First Charge on the Secured Assets. Moreover, Section 35 of the SARFAESI Act, 2002 inter alia, provides that the

provisions of the SARFAESI Act, shall have overriding effect on all

other laws. It is further pertinent to note that even the provisions contained in Section 11E of the Central Excise Act, 1944 are subject to the provisions contained in the SARFAESI Act, 2002.xxxxx 44-46. ......................

47. To conclude, the Commissioner of Customs and Central Excise could not have invoked the powers under Rule 173 Q(2) of the

Central Excise Rules, 1944 on 26.03.2007 and 29.03.2007 for confiscation of land, buildings etc., when on such date, the said Rule

173Q(2) was not in the Stature books, having been omitted by a notification dated 12.05.2000. Secondly, the dues of the secured creditor, i.e. the Appellant-bank, will have priority over the dues of the

Central Excise Department, as even after insertion of Section 11E in the Central Excise Act, 1944 w.e.f. 08.04.2011, and the provisions contained in the SARFAESI Act, 2002 will have an overriding effect on the provisions of the Central Excise Act of 1944. xxxx"

4. In view of above, all these petitions are allowed. Red

entries/lien entered in the revenue documents qua secured assets of

all the petitioners are ordered to be removed. All orders/directions

passed to the contrary by the authorities shall stand quashed. All legal

consequences shall follow.

.

With the above directions/observations the present

petitions are disposed of. Pending application(s), if any, also stand

disposed of accordingly.

                                                 Jyotsna Rewal Dua
                                                       Judge
    11th May, 2023 (Rohit)


                       r          to