Excise & Taxation Department cannot raise a priority claim or first charge over and above Petitioner-Bank: Himachal Pradesh HC [Read Order]
Excise – Taxation Department – raise – priority claim – charge over – Petitioner-Bank – Himachal Pradesh HC – taxscan
Excise – Taxation Department – raise – priority claim – charge over – Petitioner-Bank – Himachal Pradesh HC – taxscan
A Division Bench of the Himachal Pradesh High Court, while quashing the denial of the registration of Sale Certificate in revenue records, held that Excise & Taxation Department cannot raise a priority claim over and above the Petitioner-Bank, when, as per Section 26E of SARFAESI Act introduced by amendment carried in 2016.
The revenue and registration departments were thereby directed to allow the registration of the sale certificate in revenue records and to extend all consequential benefits.
The respondent raised a loan of Rs.2.50 Crores, by way of a Cash Credit Loan Facility, for his business purposes from the Petitioner-Bank.
Respondent No.5, stood as guarantor for repayment and discharge of the said loan liability of her husband, i.e. respondent No.4 the borrower herein.
Respondent No. 5 being the owner of a semi furnished Flat having supper area of 93.52 sq. metres, situated on 6th Floor of seven storied building, known as Shankar House, on land comprised in Khewat/Khatauni No. 15/36, Khasra No. 247, total area 0-01-87 Hectare, in Mauja Totu, Shimla, H.P. mortgaged this property by deposit of title deeds, with the Petitioner-Bank on 22.05.2014, Annexure P-2. Since the respondent failed to discharge loan liability, the Petitioner-Bank, being the secured creditor declared the aforesaid loan account as NPA.
Petitioner-Bank contented that after the issuance of Sale Certificate, the aforesaid property ought to have been registered in the name of Auction Purchaser i.e. respondent No.6, for which the Bank as well as respondent No.6 requested the Respondent No.3 i.e. Sub-Registrar (Rural) Shimla and Tehsildar (Rural) Shimla to do the needful.
However, the Respondent No.3 conveyed its inability on the ground that the secured asset i.e. mortgaged property was attached in favour of H.P. State Excise and Taxation Department and, therefore, the property mentioned in Sale Certificate cannot be registered in favour of the Auction Purchaser.
A red ink entry had been made under the orders of Tehsildar (Rural) Shimla, in Jamabandi, for the relevant period to the effect that the secured asset-Flat was attached in favour of H.P. State Excise and Taxation Department.
Seeking quashing of these orders/entries, with the direction to the respondents, to register the Sale Certificate in favour of Respondent, the present petitions were filed before the bench of Justices Tarlok Singh Chauhan and Ranjan Sharma.
It was observed that, “Apex Court has categorically held in Kotak Mahindra Bank Ltd. vs. Girnar Corrugators Private Limited and Others, that non-obstante clause in Section 26E of SARFAESI Act shall prevail over the MSMED Act, in absence of any specific express provision giving priority for payment under the MSMED Act over the dues of the secured creditors or over any taxes or cesses payable to central/state government or local authority.”
“The Petitioner-Bank has first charge over the properties being secured creditor in priority over all Other Debts, Revenues, Taxes, Cesses and Other Rates payable to the Central or State Government or Legal Authority”, the Himachal Pradesh High Court held.
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