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TMI Blog2016 (12) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... whether crown debts would have precedence over the debts payable to a secured creditor? This issue is no longer resintegra and has been answered by the Full Bench of this Court in the case of The Assistant Commissioner (CT) Vs. The Indian Overseas Bank and another [2016 (12) TMI 373 - MADRAS HIGH COURT]. Thus, by applying the decision of the Full Bench referred above, the law having come into force, governs the parties even in respect of litigations which are pending. Therefore, the Income Tax Department cannot claim any precedence over the secured creditor in proceeding against the subject property for the recovery of the income tax arrears in the light of the law laid down by the Full Bench, which was rendered taking note of the recent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of M/s.Feena Petro Products Ltd., represented by its directors Mr.A.S.T.Winston, Mr.A.S.T.Newton, Mr.A.S.T.Milton and Mr.A.S.T.Silverster. The property in question was the individual property owned by Mr.A.S.T.Winston, who had purchased the same, vide sale deed, dated 06.07.1995. The said A.S.T.Winston was one of the Directors of M/s.Feena Petro Products Ltd., which availed financial assistance from Dena Bank. It appears that the property in question, the individual property of A.S.T.Winston was offered as collateral to secure a loan transaction of M/s.Feena Petro Products Ltd., with the Bank. The borrower defaulted in payment and the Dena Bank initiated recovery proceedings in O.A.No.136 of 2000 on the file of the Debt Recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, the petitioner approached the first respondent, Tax Recovery Officer, Chennai to lift the attachment by representation dated 14.04.2016 followed by another representation to the Commissioner on 12.05.2016. The first respondent enquired into the matter and passed the impugned order stating that the properties are attached as far back as on 29.02.2000. 4. For the purpose of examining the correctness of the stand taken in the impugned order, it may not be necessary for this Court to traverse into the factual allegations set out in the counter affidavit, as the Court is going to test the correctness of the impugned order purely on legal grounds. 5. Admittedly, the property was brought for public auction by the Dena Bank, which was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Explanation. - For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016, in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code.'' 3.There is, thus, no doubt that the rights of a secured creditor to realise secured debts due and pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor in proceeding against the subject property for the recovery of the income tax arrears in the light of the law laid down by the Full Bench, which was rendered taking note of the recent enactment viz., the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016. 6. In the light of the above, the Writ Petition is allowed and the impugned order is quashed. The sixth respondent, viz., the Sub Registrar, Keelur, Tuticorin District is directed to delete the encumbrance which has been entered based upon the request made by the Tax Recovery Officer and the said direction be complied with, within a period of three weeks from the date of receipt of a copy of this order. Needless to state th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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