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TMI Blog2023 (7) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the Full Bench decision of this Court in the case of Jalgaon Janta Sahakari Bank Ltd. and Anr. has rested the controversy of priority of the secured creditor viz-a-viz the dues of the Central Government or State Government or local authority under Section 26-E of the SARFAESI Act, 2002, the lien/charges/encumbrance/mutation entry, if any, registered with Respondent No.5 by Respondent Nos. 1 2 cannot be allowed to stand and Respondent No. 4 would have to be directed to record/register the Sale Certificate/Sale Deed under the provisions of the Registration Act, 1908 as free from any encumbrances of the Respondent No. 1 and 2. Petition allowed. - WRIT PETITION (L) NO.1747 OF 2023 - - - Dated:- 28-6-2023 - B.P. COLABAWALLA M.M. SATHAYE, JJ. For the Petitioner : Ms. Savita Nangare i/b. Ms. Pooja Kharat,. For the Respondent Nos. 1 2 : Mr. J.B. Mishra, Advocate. For the Respondent No. 3 : Mr. Anant Bamne i/b. M/s. A.R. Bamne Co., Advocate. For the Respondent Nos. 4 5 : Mr. H.S. Venegaonkar, Advocate. JUDGMENT (PER B. P. COLABAWALLA, J.) 1. Leave granted to the Petitioner to correct the typographical mistake in prayer clause (b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 4.55 crores and thus the Petitioner deposited the required 25% of the bid amount [i.e. Rs. 1,13,75,000/-] with Respondent No. 3 by 10th August 2022. The Petitioner was required to deposit the balance 75% of the bid amount within 15 days from the date of the auction as per the provisions of the SARFAESI Act. Since the Petitioner had applied for a loan with Yes Bank Ltd. [for making payment of the balance 75% of the bid amount to Respondent No. 3], it intimated Respondent No. 3 that Yes Bank Ltd. required certain clarifications from Respondent No. 3 for sanctioning the loan. One of the clarifications that Yes Bank Ltd. needed from Respondent No. 3 was whether the Secured Asset was free from encumbrances and that there were no statutory dues pending against the said Secured Asset. In response to the query raised by Yes Bank Ltd., Respondent No. 3, vide email dated 21st September 2022, confirmed that there were no encumbrances and neither were there any pending statutory dues against the Secured Asset. Based on Respondent No. 3 s confirmation, Yes Bank Ltd. disbursed a loan of Rs. 3 crores to the Petitioner on 22nd September 2022 and accordingly the Petitioner remitted the bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner has availed credit facilities against the Secured Asset], may charge penalty to the Petitioner for nonsubmission of the registered Sale Certificate with the said Bank. It is under these circumstances the Petitioner has filed the present Petition to remove the charges/lien/encumbrances and mutation entry of Respondent No. 1 and 2 from the records of the Respondent No. 4 and 5 and for a direction to register the Sale Certificate/Sale Deed issued by Respondent No. 3 to the Petitioner. 11. In this factual backdrop, the learned counsel for the Petitioner submitted that Respondent No. 3 has sold the Secured Asset under the provisions of the SARFAESI Act, and thus, as per Section 26- E thereof, a Secured Creditor who has registered the security interest or other creditor who has registered the attachment order in his favour with CERSAI, shall have priority over the claims of other creditors having a subsequent security interest created over the property in question. The learned counsel submitted that mortgage of the Secured Asset was created in favour of Respondent No. 3 by one Mr. Prem Prakash Sarogi on 14th December 2007 for securing an aggregate loan limit of Rs. 809 lakhs gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance on a judgment of the Hon ble Supreme Court in the case of Punjab National Bank vs Union of India and Ors. [2022] 7 SCC 260 to contend that the dues of the secured creditor would have priority over the dues of Respondent Nos.1 2 herein. For all the aforesaid reasons, the learned counsel for the Petitioner submitted that the above Writ Petition be allowed in terms of prayer clauses (a), (b) and (d) respectively. 14. The learned counsel for Respondent No. 3 has supported the arguments of the Petitioner and further submitted that Respondent No. 1 and 2 are claiming arrears of revenue payable by the M/s Goldstar Polymer Pvt. Ltd., which is a private limited company a separate legal entity from its directors. He submitted that the Secured Asset belonged to and was owned by Mr. Prem Prakash Sarogi and not by M/s Goldstar Polymer Pvt. Ltd. and therefore Respondent No. 1 and 2 are not entitled to recover the arrears of dues payable by Goldstar Polymer Pvt. Ltd. from the properties of Mr. Prem Prakash Sarogi. Consequently, Respondent No. 1 and 2 could not have recorded their liens/charge in the records of Respondent No. 4 and 5, was the submission. 15. The learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the respective parties, we find that issue raised in the present Petition is squarely covered by the decision of the Full Bench of this Court in the case of Jalgaon Janta Sahakari Bank Ltd. and Anr. Vs Joint Commissioner of Sales Tax Nodal 9, Mumbai and Anr. [2022 (5) Mh.L.J. 691]. In this decision, the Full Bench has clearly held that if the security interest of the secured creditor is registered with CERSAI, then the secured creditor would get priority over the dues of the Government. The relevant portion of this Full Bench decision reads thus:- 84. ..The next query that would obviously follow is: whether the word priority appearing in section 26E of the SARFAESI Act, i.e., paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority , was used without a purpose? This reply has to be in the negative. 85. Priority means precedence or going before (Black s Law Dictionary). In the present context, it would mean the right to enforce a claim in preference to others. In view of the splurge of first charge used in multiple legislation, the Parliament advisedly us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to other creditors of the pawnor without the claim of the pawnee being first fully satisfied. Rashbehary Ghose states in Law of Mortgage (TLL, 7th Edn., p. 386) It seems a government debt in India is not entitled to precedence over a prior secured debt . 87. It would also not be inapposite to draw guidance from the decision of the Supreme Court reported in (2006) 10 SCC 452 (ICICI Bank Ltd. vs. SIDCO Leathers Ltd.) where the Court ruled as follows: 41. While enacting a statute, Parliament cannot be presumed to have taken away a right in property. Right to property is a constitutional right. Right to recover the money lent by enforcing a mortgage would also be a right to enforce an interest in the property. The provisions of the Transfer of Property Act provide for different types of charges. In terms of Section 48 of the Transfer of Property Act claim of the first charge-holder shall prevail over the claim of the second chargeholder and in a given case where the debts due to both, the first charge-holder and the second charge-holder, are to be ealized from the property belonging to the mortgagor, the first charge-holder will have to be repaid first. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic reference to debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority and ordains that the dues of a secured creditor will have priority , i.e., take precedence. Significantly, the statute goes quite far and it is not only revenues, taxes, cesses and other rates payable to the State Government or any local authority but also those payable to the Central Government that would have to stand in the queue after the secured creditor for payment of its dues. 89. The effect of using the word priority in section 26E of the SARFAESI Act, according to us, is this. The rights accorded to first charge holders by Central as well as State legislation having been known to the Parliament, in such a situation, what the Parliament intended by exercising its legislative power by introducing amendments in the SARFAESI Act, more particularly by incorporating section 26E therein, was to explicitly make the valuable right of the first charge holder, subordinate to the dues of a second creditor. The rights of such of the first charge holders accorded by several legislations enacted by the State, having regard to the lang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , can only be at the peril of the department. Mere recording of the purported charge in the record of right of the secured asset, in the absence of the registration with CERSAI, in our considered view, cannot be to the detriment of the auction purchaser, though the auction sale was on as is where is and as is what is basis . 192. Mr. Sen, learned senior advocate appearing for the petitioner submitted that in the event the Court is persuaded to allow the writ petition, it is necessary to extend the time to adjudicate the stamp duty on the sale certificate and register the same. There are provisions in the Maharashtra Stamp Act, 1958 (sections 31 and 32) and the Registration Act, 1908 (sections 23 and 25) which stipulate the time for tendering the instrument for adjudication, determination of stamp duty thereon and registration of the instrument from the date of its execution. Since the petitioner had instantaneously lodged the sale certificate for adjudication, we are inclined to direct that the time commencing from the lodging of the said sale certificate till the decision of this writ petition, be excluded from consideration in computing the statutory period for adjudicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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