Madras High Court
Indian Overseas Bank vs The Assistant Commissioner on 27 September, 2023
W.P.No.19742 of 2021 & etc. batch
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 27.09.2023
CORAM :
THE HON'BLE MR.SANJAY V.GANGAPURWALA, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE P.D.AUDIKESAVALU
W.P.Nos.19742, 25082 & 4542 of 2021, 365 of 2022
and 267, 9336, 179, 1785 & 14596 of 2023
[W.P.No.19742 of 2021]
Indian Overseas Bank
Asset Recovery Management Branch
Rep. by its Chief Manager
Central Office, Annexe Building, Third Floor
763, Anna Salai, Chennai – 600 002. .. Petitioner
Vs.
The Assistant Commissioner
(Commercial Ta, Cuddalore Town)
St.Joseph's School Road
Mangakuppam, Cuddalore – 607 001. .. Respondent
Prayer: Petition filed under Article 226 of the Constitution of India
seeking a writ of certiorari, calling for the records of the respondent in
Na.Ka.No.A3/1048/2014 dated 10.08.2021 and quash the same as
being illegal and against the provisions of law as per the judgment
dated 10.11.2016 in W.P.No.2675 of 2011 passed by the Full Bench of
this Court.
https://www.mhc.tn.gov.in/judis
W.P.No.19742 of 2021 & etc. batch
For the Petitioners in : Ms.Ananda Gomathy Murugesan
W.P.Nos.19742 & 25082
of 2021 and 9336 of
For the Petitioner in : Mr.V.Chandrasekaran
W.P.No.14596 of 2023
For the Appellant in : Mr.Jayesh B.Dolia
W.A.No.365 of 2022 Senior Counsel
for Mr.V.Kalyanaraman
For the Appellant in : Mr.P.Muthukumar
W.A.No.267 of 2023 State Government Pleader
For the Petitioner in : Mr.Srinath Sridevan
W.P.Nos.179 of 2023 and Senior Counsel
4542 of 2021 for Mr.T.K.Bhaskar
For the Appellant in : Mr.P.Elayaraj Kumar
W.A.No.1785 of 2023 for M/s.Ramalingam and Associates
For the Respondents in : Mr.Haja Nazirudeen
W.P.Nos.19742 of 2021 Additional Advocate General
and 9336 of 2023 assisted by Mr.M.Venkateswaran
Special Government Pleader (Tax)
For the Respondents in : Mr.Haja Nazirudeen
W.P.No.25082 of 2021 Additional Advocate General
assisted by Mr.M.Venkateswaran
Special Government Pleader (Tax)
for R1
Mr.P.Muthukumar
State Government Pleader
assisted by Mrs.R.Anitha
Special Government Pleader
for R2
https://www.mhc.tn.gov.in/judis
W.P.No.19742 of 2021 & etc. batch
For the Respondents in : Mr.Haja Nazirudeen
W.P.No.14596 of 2021 Additional Advocate General
assisted by Mr.M.Venkateswaran
Special Government Pleader (Tax)
for R2
Mr.P.Muthukumar
State Government Pleader
assisted by Mrs.R.Anitha
Special Government Pleader
for R1
For the Respondents in : Mr.Haja Nazirudeen
W.A.No.365 of 2022 Additional Advocate General
assisted by Mr.M.Venkateswaran
Special Government Pleader (Tax)
for R1
For the Respondents in : Mr.D.Krishna Pradeep
W.A.No.267 of 2023 for R1 & R2
Ms.Ananda Gomathy Murugesan
for R3
For the Respondents in : Mr.R.S.Balaji and
W.P.Nos.179 of 2023 and Mrs.S.Premalatha
4542 of 2021 for R1
COMMON ORDER
(Made by the Hon'ble Chief Justice)
The issue involved in these present matters is priority of charge.
2. The secured creditors claim the priority of charge as against
the Sales Tax, Commercial Tax and Income Tax dues. The secured
creditors rely upon the provisions of Section 26E of the Securitisation
https://www.mhc.tn.gov.in/judis
W.P.No.19742 of 2021 & etc. batch
and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (for brevity, hereinafter referred to as “the
SARFAESI Act, 2002”).
3. Per contra, according to the learned Additional Advocate
General, the crown debt has the priority charge. He relies upon the
judgment of the Division Bench of the Bombay High Court in the case
of Medineutrina Pvt. Ltd. vs District Industries Centre and Ors1.
4. The Full Bench of this Court, in the case of Assistant
Commissioner (CT) Anna Salai-III Assessment Circle vs Indian
Overseas Bank and Another2 has framed the following issues for
consideration:
“a) As to whether the Financial Institution, which is a
secured creditor, or the department of the
Government concerned, would have the 'Priority
Charge” over the mortgaged property in question,
with regard to the tax and other dues.
1 AIR 2021 Bom 135
2 AIR 2017 Mad 67 (FB)
https://www.mhc.tn.gov.in/judis
W.P.No.19742 of 2021 & etc. batch
b) As to the status and the rights of a third party
purchaser of the mortgaged property in question.”
5. The Full Bench of this Court, answered the reference and held
that the rights of the secured creditors to realise secured debts, due
and payable to them, by sale of assets over which security interest is
created, shall have priority and shall be paid in priority over all other
debts and Government dues including revenues, taxes, cesses and
rates due to the Central Government, State Government or Local
Authority.
6. The Full Bench of the Bombay High Court. In the case of
Jalgaon Janta Sahakari Bank Ltd. and Anr vs Joint Commissioner of
Sales and Anr3 held that the secured creditor would have the priority
charge, as contemplated under Section 26E of the SARFAESI Act,
2002, in case the same is registered under Section 26B of the
SARFAESI Act, 2002. The secured creditors, in these petitions claims
that their security is registered under Section 26B of the SARFAESI
3 2022 Online SCC Bom 1767
https://www.mhc.tn.gov.in/judis
W.P.No.19742 of 2021 & etc. batch
Act, 2002.
7. In view of the Full Bench judgments, as referred to above, it is
held that the secured creditor has priority charge over the claims of
the Sales Tax, Commercial Tax and Income Tax.
8. In case auction is held by the secured creditors and the sale
certificates are not placed and/or registered, then the Registering
Authority may register the same, notwithstanding the attachment of
Sales Tax, Income Tax or Commercial Tax Departments.
9. In case the auction sale is conducted by the secured creditor
and they have received excess amount than their dues, then they are
liable to remit the excess amount to the Departments. However, if they
have not received the amount in excess of the amount due and
payable to them, then they are not required to remit any amount to
the Departments and the Departments cannot sustain prosecution
against the Authorised Officer or the Officer of the secured creditor for
not remitting the amount.
https://www.mhc.tn.gov.in/judis
W.P.No.19742 of 2021 & etc. batch
10. The present matters are disposed of in the above term.
There will be no order as to costs. Consequently, W.M.P.Nos.21016,
21018, 26423, 26425 & 5170 of 2021, 20165 & 2929 of 2022 and
2761, 8171, 9444, 9445, 169 & 14075 of 2023 are closed.
(S.V.G., CJ.) (P.D.A., J.)
27.09.2023
Index : Yes/No
Neutral Citation : Yes/No
drm
To
1. The Assistant Commissioner
(Commercial Ta, Cuddalore Town)
St.Joseph's School Road
Mangakuppam, Cuddalore – 607 001.
https://www.mhc.tn.gov.in/judis
W.P.No.19742 of 2021 & etc. batch
THE HON'BLE CHIEF JUSTICE
AND
P.D.AUDIKESAVALU, J.
(drm)
W.P.No.19742 of 2021 & etc. batch
27.09.2023
https://www.mhc.tn.gov.in/judis
