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WP-31816-2023-30-04-2024--F.docx
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Shraddha Talekar, PS
the properties.
3. For the reasons set out in this judgement, we allow the Writ
Factual Matrix:
sold in auction by SBI. The details of the Secured Assets and the purchase
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that :-
a) The Petitioner paid the aforesaid values for the purchase of the
certificates were issued on 1st August, 2023 and 31st July, 2023
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respectively;
sales tax dues owed by the Borrower, and towards this end, on
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being filed.
authorities can chase either the purchaser of the Secured Assets, or the
7. This issue has been answered time and again by this Court, both by
another Division Bench in the case of Union Bank of India vs. Deputy
Commissioner of Sales Tax & Ors.1 (Union Bank), as indeed by this very
State Tax & Ors.2 (Indian Overseas Bank). Each of Union Bank and
Indian Overseas Bank relies on a decision of the Full Bench of this Court
in Jalgaon Janta Sahakari Bank & Anr. Vs. Joint Commissioner of Sales
1
Writ Petition No. 248 of 2020, disposed of by judgement dated 22 nd January, 2024
(by Division Bench comprising G.S. Kulkarni and Firdosh P. Pooniwalla JJ)
2
2024 SCC OnLine Bom 907
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CERSAI prior in time, upon Chapter IVA of the SARFAESI Act coming
into force on 24th January, 2020, the order of priority of security interests
over the asset in question would follow the priority in which such
26-C(1) of the SARFAESI Act, the registration with CERSAI would act as
claim of the creditor who registers prior in time would have priority over
any subsequent security interest registered over the same asset. The
prior in time.
9. This scheme of the law is very simple and clear, and when applied
to the facts of the case, it is apparent that the claim of SBI would have
priority over the claim of the State’s tax authorities. The mortgage over
the Secured Assets in favour of SBI was created in 2010 and was
10. The provisions of Section 26-C of the SARFAESI Act came into
3
2022 SCC OnLine Bom 1767
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force on 24th January, 2020, and with effect from that date, the priority of
the right to claim and enforce against the Secured Assets. Therefore, SBI
Division Bench of this Court dealt with a similar conflict between the
interests of a lender from whom secured assets were purchased and the
interests of the State’s tax authorities. In the case of Union Bank, the
lender’s security interests had been created between 2008 and 2011, with
2019. Auctions were conducted between May 2019 and November 2019.
encumbrances was not paid heed to, leading to that petition. The
from the Full Bench decision in the case of Jalgaon Janta (Paragraphs 84
to 89; Paragraph 92; and Paragraphs 189 to 192 thereof), the Division
Bench clearly held that the Sales Tax Department cannot claim priority
over the dues payable to the lender who is the secured creditor. We are in
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agreement with this conclusion. It is clear from Jalgaon Janta that even
24th January, 2020 (when Section 26-E of the SARFAESI Act was brought
into effect), but no further steps were taken before the said date towards
priority over the dues payable to the Secured Creditor, who enjoys the
12. Likewise, in Indian Overseas Bank, this very Bench, also relying
returned a similar finding. In the interest of brevity, all the extracts from
Jalgaon Janta cited in Union Bank and in Indian Overseas Bank are not
extracted again.
13. Ms. Jyoti Chavan, the Learned Additional Govt. Pleader on behalf
of the State, suggested that the priority may only mean that the first shot
registered earlier, but that does not mean that the subsequently
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get to continue enforcement against the same asset, each time in the
hands of the next purchaser. Such a construction would turn the very
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a) SBI enjoys priority of security interest and its enforcement over the
the enforcement against the Secured Assets led to a clean and clear
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the State’s tax authorities over the Secured Assets towards tax dues
accordance with law, within a period of two weeks from today; and
16. Rule is made absolute in the aforesaid terms. The Writ Petition is
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