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TMI Blog2020 (5) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... ill prevail. The intention of the Constitution makers is evident that there must be uniform application of laws throughout the territory of India and in the event of any inconsistency between the Central law and the State law, the former alone shall be operative. When the inconsistency between the provisions of a Central Act and a State Act is of such a nature that they come into direct collision with each other, and it is impossible to comply with one without disobeying the other, a clear case of repugnancy arises. Repugnancy may also arise between the two enactments, even though obedience to each of them is possible without disobeying the other, if the competent Legislature of superior efficacy, expressly or impliedly evinces by the legislation, a clear intention to cover the whole field - it can safely be concluded that the provisions of SARFAESI Act and RDB Act (as amended) containing provisions commencing with non-obstante clauses and giving specific priority to secured creditors even over the taxes due from the Governments, will prevail over the KVAT Act. The sale carried out either under the SARFAESI Act or under the RDB Act takes precedence over the statutory charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kottarakkara, to register the sale deed. A further amount of ₹ 65,60,480/- (Rupees Sixty five lakhs sixty thousand four hundred and eighty only) was spent towards purchase of stamp papers and the sale certificate was drawn as evidenced by Annexure-A4. However, when the sale certificate was attempted to be registered, the Registering Officer noticed an endorsement in the tax receipt as follows revenue recovery for sales tax D5/3605/16 . On the basis of the said endorsement on the tax receipt, Annexure-A7 memo was issued by the Sub Registrar stating that the sale certificate can be presented for registration only after the endorsement in the tax receipt relating to the sale tax revenue recovery is deleted. It is in the above factual scenario that this application is filed seeking a direction to the Sub Registrar to register the original of Annexure-A4 sale certificate and also to direct the Village Officer to effect mutation in respect of the property that was the subject of sale. 5. A statement has been filed by the Federal Bank pointing out that three loans were taken by the defaulter between 2012 and 2014 and as many as six items of properties were mortgaged. It is state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d other secured creditors over the statutory charges created under different statutes. 8. Kerala Value Added Tax Act, 2003 ('KVAT Act' for short) creates a statutory charge in respect of any tax payable by a person under that Act. S. 38 of the KVAT Act reads thus: 38. Tax payable to be first charge on the property-Notwithstanding anything to the contrary contained in any other law for the time being in force, any amount of tax, penalty, interest and any other amount, if any, payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer, or such person. Normally, the aforesaid statutory charge will have priority over all other debts for the purpose of realization. 9. However, by the Amendment Act, 2016, two new provisions which are of relevance were incorporated into the SARFAESI Act and the RDB Act as S. 26E and S. 31B respectively. For the purpose of reference, S. 26E of the SARFAESI Act is extracted below: 26-E. Priority to secured creditors.--Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and State enactment can occur in two situations both of which are dealt with in Art. 254(1) of the Constitution of India. The first situation covers instances where a provision of law made by the Legislature of a State is repugnant to any provision of law made by the Parliament, which the Parliament is competent to enact. In such an instance, the provision of law of the State Legislature to the extent of its inconsistency with the Parliamentary enactment will be void. The second situation covers instances where the Central enactment and State enactment on any field of entry mentioned in List-III of the 7th Schedule (Concurrent list) is repugnant to each other. In such circumstances, as per Art. 254, the Central law will prevail, subject of course to the provisions in Art. 254(2). If a provision of law contained in the Concurrent list is made by the State legislature and receives assent of the President, then such a State enactment will prevail. The intention of the Constitution makers is evident that there must be uniform application of laws throughout the territory of India and in the event of any inconsistency between the Central law and the State law, the former alone shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 SCC 201). Numerous other decisions of the Supreme Court have also been rendered on the aforesaid concept including the Constitutional Bench decision in State of W.B. v. Committee for Protection of Democratic Rights, (2010 (1) KLT 723 (SC) : (2010) 3 SCC 571) and UCO Bank Another v. Dipak Debbarma Ors. (2017 (1) KLT OnLine 2206 (SC) : (2017) 2 SCC 585). In the decision in UCO Bank (Supra) relying upon the earlier decisions, it has been held that the constitutional scheme visualizes a federal structure giving full autonomy to the Parliament as well as to the State legislatures in their demarcated fields of legislation. It was stated therein that the problem will become complex when the two legislations may seemingly fall within the respective domains of the legislatures concerned and yet may have intrusion into areas that fall beyond the assigned fields of legislation. In such a situation-it is the plain duty of the Constitutional Court to see whether the conflict can be resolved by acknowledging the mutual existence of the two legislations and if that is not possible, by virtue of provisions of Art. 246(1), the Parliamentary legislation would prevail and the State legislation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject. 16. In a recent judgment reported in Pioneer Urban Land and Infrastructure Ltd. Anr. v. Union of India Ors. (2019 (3) KLT OnLine 3035 (SC) : (2019) 8 SCC 416) dealing with the inconsistency that arose between the provisions of the Insolvency and Bankruptcy Code, 2016 and the provisions of the Real Estate (Regulation and Development) Act, 2016 it was held that ordinarily the non-obstante clause creates primacy over an earlier Act containing a non-obstante clause, since Parliament must be deemed to be aware of the earlier legislation. 17. Viewed in the above principles of law, it can safely be concluded that the provisions of SARFAESI Act and RDB Act (as amended) containing provisions commencing with non-obstante clauses and giving specific priority to secured creditors even over the taxes due from the Governments, will prevail over the KVAT Act. 18. In spite of the above said proposition of law, an issue still remains to be addressed. The issue relates to the effect of not notifying the provisions of the SARFAESI Act as amended. We notice that Chapter IV-A of the Amendment Act, 2016 comprising of S. 26E of the SARFAESI Act has not yet been notified. However, ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since they relate to attachments effected subsequent to the creation of equitable mortgage. 22. Hence, we hold that the sale carried out either under the SARFAESI Act or under the RDB Act takes precedence over the statutory charges due to the Government created under KVAT Act or under other State Enactments after the Amendment Act of 2016. A secured creditor in whose favour a security interest has been created thus has priority in sale and payment over all other statutory charge holders. 23. In the result, this application is allowed and we direct the 2nd respondent Sub Registrar, Kottarakkara to register the original of Annexure-A4 sale certificate as and when the same is presented for registration. Consequent to such registration as directed above is carried out, the 3rd respondent shall effect transfer of registry in respect of the property that is the subject of Annexure-A4 sale certificate, on production of necessary documents required for carrying out the transfer of registration. 24. It is submitted by the Counsel for all parties that the validity of Stamp paper purchased by the applicant for executing Ann. A4 sale certificate had expired by 31.03.2020. Since this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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