Madras High Court
Indian Bank vs The Assistant Commissioner ... on 17 July, 2023
W.P.(MD)No.17222 of 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 17.07.2023
CORAM
THE HONOURABLE MRS.JUSTICE S.SRIMATHY
W.P.(MD)No.17222 of 2020
and
W.M.P.(MD)Nos.14409 and 14411 of 2020
Indian Bank,
Stressed Assets Management,
Branch Chennai.
(Formerly Allahabad Bank
Purasawakkam Branch),
2nd Floor, No.55, Ethiraj Salai,
Egmore, Chennai-600 008,
No.100-101, East Avani Moola Street,
Madurai – 625 001,
represented by its Assistant
General Manager. ... Petitioner
vs.
1.The Assistant Commissioner (S.T.)(FAC),
Sales Tax Department,
Tiruparankundram Circle,
Madurai.
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W.P.(MD)No.17222 of 2020
2.The Assistant Commissioner,
Commissioner Tax Department,
Tiruparankundram Circle,
Madurai.
3.The Joint 1 Sub-Registrar,
Madurai South, Madurai.
4.M/s.K.S.Patel and Sons,
represented by its Managing Partner,
Nathu K.Patel,
No.1/4, Vamadam Road,
Tennur, Trichy-620 017.
5.M/s.Patel Enterprises,
represented by its Managing Partner,
Gopal K.Patel,
No.1/4, Vamadam Road,
Tennur, Trichy – 620 017.
6.M/s.Sridhar Wood Industries,
represented by its Managing Partner,
Hasmukh S.Patel,
No.1/4, Vamadam Road,
Tennur, Trichy-620 017.
7.Shivgan K.Patel
8.Dinesh S.Patel
9.Nathu K.Patel
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W.P.(MD)No.17222 of 2020
10.Gopal K.Patel
11.M/s.Anantha Poly Products Private Limited,
represented by its Managing Director,
A.Sundaralingam,
117-118, SIDCO Industrial Estate,
Kappalur, Madurai-625 008. ... Respondents
(R11 is impleaded, vide Court order,
dated 23.12.2021 in W.M.P.(MD)No.18737
of 2021 in W.P.(MD)No.17222 of 2020)
PRAYER: Writ Petition filed under Article 226 of the Constitution of
India for issuance of Writ of Certiorarified Mandamus, to call for the
records pertaining to the proceedings of the respondents 1 and 2 made in
Roc No.664/2017/A3, dated 02.08.2018 and Na.Ka.No.664/2017/A3/,
dated 30.07.2019, calling upon the 3rd respondent to notify attachment in
relation to the properties subject to prior mortgage with the petitioner
Bank and to quash the same and consequently, to direct the 3 rd
respondent to cancel/delete the encumbrance notified as Doc.No.L40 of
2018 and Doc.No.L58 of 2019 from its file.
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W.P.(MD)No.17222 of 2020
For Petitioner : M/s.Aiyar and Dolia
For R1 to 3 : Mr.B.Saravanan
Additional Government Pleader
For R9 : No appearance
For R11 : Mr.J.Hariharan
for M/s.KV Law Firm
*****
ORDER
This writ petition is filed for writ of Certiorarified Mandamus, to
call for the records pertaining to the proceedings of the respondents 1
and 2, dated 02.08.2018 and dated 30.07.2019, calling upon the 3 rd
respondent to notify attachment in relation to the properties subject to
prior mortgage with the petitioner Bank and to quash the same and
consequently, to direct the 3rd respondent to cancel/delete the
encumbrance notified as Doc.No.L40 of 2018 and Doc.No.L58 of 2019
from its file.
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W.P.(MD)No.17222 of 2020
2. The respondents 4 to 10 stood as guarantors for the credit
facilities availed by M/s.Prabhat International Limited from the
petitioner bank. They executed agreement and created a mortgage over
the immovable properties. The debtor failed to repay the loan. The
petitioner Bank initiated proceedings in SARFASI for a claim of Rs.
42,01,81,972.20/- as on 31.08.2016. Thereafter, the property was
brought to sale and steps were taken to conduct auction on several
occasion and finally e-auction was conducted on 20.09.2021 and the 11th
respondent who is impleaded in this writ petition was the successful
bidder. The sale certificate was issued on 04.12.2021. In the meanwhile,
the petitioner Bank approached the respondents to release the
encumbrance entered in the 3rd respondent office.
3. The contention of the petitioner Bank is that the attachment by
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W.P.(MD)No.17222 of 2020
the Commercial Tax Department was made on 02.08.2018 which is
subsequent to mortgage. The mortgage was mortgage was created on
25.04.2013 and registered on 08.07.2013 in Document No.5363 of 2013.
Hence, the petitioner is having 1st charge over the property, since the
mortgage is prior to attachment. The issue whether the Crown liability
(payment of Tax to government) or the Bank will have the 1st charge over
the property is decided by the several judgments passed by the Hon'ble
Division Bench of this Court, wherein it is held if the mortgage is prior
to the attachment by the Tax authorities, then the bank will have 1st
charge over the property. The following judgments are relevant:
i.Assistant Commissioner (CT) V. Indian Overseas Bank 2016 (6)
CTC 769 (Full Bench)
ii.W.P.(MD)No.12643 of 2020 dated 15.04.2021 (DB)
iii.W.P.(MD)No.19684 of 2019 dated 21.09.2022 (DB)
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W.P.(MD)No.17222 of 2020
iv. W.P.(MD)No.15960 of 2020 dated 19.01.2021 (Single Judge)
Therefore, it is well settled principle of law that the Bank has a priority
over all the debts and the government dues. The Hon’ble Full Bench
(referred supra) has held that on conjoint reading of Section 26-E of the
Sarfaesi Act and Section 31(b) of the Recovery of Debt Due to Bank and
Financial Institutions Act, 1993, it is the Secured Creditor, who has a
priority to realize the debt over all the other government debts and
unsecured creditors.
4. Following the judgments cited supra this Court is of the
considered opinion that the petitioner Bank has 1st charge over the
property and not the Commercial Tax Department, i.e., respondents 1 and
2. The 3rd respondent is directed to remove the encumbrance which is
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W.P.(MD)No.17222 of 2020
entered against Commercial Tax Department and the petitioner is entitled
to the consequential relief as well.
5. With the above said observation and directions, the writ petition
is allowed. No costs. Consequently, connected miscellaneous petitions
are closed.
Index : Yes / No 17.07.2023
Internet : Yes
NCC : Yes / No
Tmg
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W.P.(MD)No.17222 of 2020
To
1.The Assistant Commissioner (S.T.)(FAC),
Sales Tax Department,
Tiruparankundram Circle,
Madurai.
2.The Assistant Commissioner,
Commissioner Tax Department,
Tiruparankundram Circle,
Madurai.
3.The Joint 1 Sub-Registrar,
Madurai South, Madurai.
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W.P.(MD)No.17222 of 2020
S.SRIMATHY, J
Tmg
W.P.(MD)No.17222 of 2020
17.07.2023
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