9911796707
TMI Blog2021 (12) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 26-E of the SARFAESI Act and Section 37 of the MVAT Act it would be clear that the secured creditor would have a first charge over an asset and the charge created in favour of the State of Maharashtra under Section 37 of the MVAT Act would be subject to the first charge created by the Central Legislation namely, Section 26-E of the SARFAESI Act. In view of this settled legal position and in the background of the facts established in this case, the action initiated by the respondent Nos.1, 2 and 3 to the extent of two properties cannot be sustained. Petition allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner - Bank, therefore, under Section 13(2) of the SARFAESI Act issued notice to take possession of the said assets on 31/03/2014. On failure of the respondent Nos.4 to 6 to deliver possession of the secured assets, the petitioner - Bank made an application to the District Magistrate, Nagpur under Section 14 of the SARFAESI Act and which came to be allowed on 31/07/2015. 3] The respondent No.2 by a letter dated 19/06/2014 informed the petitioner -Bank that they have already issued notice under Section 38(1) of the Maharashtra Value Added Tax Act, 2002 (for short 'MVAT Act') to the respondent Nos.4 to 6 for recovery of sales tax dues outstanding against them and also informed the petitioner - Bank that the Sales Tax Department is havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the action of attachment and creating charge over the secured assets by the respondent Nos.2 and 3 and also, the order of attachment dated 31/10/2017. 4] The respondent No. 2 opposed the petition inter alia contending that there is no substance in the petition. The petitioner-Bank has tried to defeat the right of the respondent Nos.2 and 3. There is no bar for attachment of the property, by the Department, which is mortgaged with the petitioner-Bank. The action on the part of the petitioner- Bank is not diligent. The action initiated by the respondent Nos. 2 and 3 was prior to the coming into force of Section 26-E of the SARFAESI Act and Section 31-B of the Recovery of Debts and Bankruptcy Act, 2002 (for short 'RDB Act'). The attachment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milarly, Section 37 of the MVAT Act is also relevant. This Act came into force on 01/04/2005. Section 37 reads thus : "37. Liability under this Act to be the first charge Notwithstanding anything contained in any contract to the contrary, but subject to any provision regarding creation of first charge in any Central Act for the time being in force, any amount of tax, penalty, interest, sum forfeited, fine or any other sum payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer or, as the case may be, person." 8] The respondent Nos. 2 and 3 are heavily relying upon the provisions of Section 37 of the MVAT Act. Perusal of Section 26-E would show that it begins with non obstante clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and auction of the mortgaged property. The said process as can be seen from the record to the extent of the two properties mortgaged with the petitioner- bank has been stalled due to the order dated 31/10/2017 issued by the respondent No. 3. The question is whether such action can be sustained in view of the provisions of Section 26-E of the SARFAESI Act. Section 26-E provides for priority in favour of the secured creditors. One of the important conditions to exercise this right of priority is that the security interest must be registered with the authority. Perusal of the record would show that on 30/03/2012 the security interest was registered with the central Registry of the Securitisation Asset Reconstruction and Security interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seat at Bombay has held that on harmonious reading of Section 26-E of the SARFAESI Act and Section 37 of the MVAT Act it would be clear that the secured creditor would have a first charge over an asset and the charge created in favour of the State of Maharashtra under Section 37 of the MVAT Act would be subject to the first charge created by the Central Legislation namely, Section 26-E of the SARFAESI Act. In view of this settled legal position and in the background of the facts established in this case, in our view, the action initiated by the respondent Nos.1, 2 and 3 to the extent of two properties mentioned in para No. 6 and 7 of the petition, cannot be sustained. We, therefore, proceed to pass following order: ORDER 1] The action of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
