Tag: Sarfaesi and Tax Act

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), Section 13(2)(4), 14, 26D, 26E - Secured Debt – Red entry/ Lien by Excise and Income Tax department – Prior Right – Lien of the Bank as per Section 26 D noted and entered in the CERSAI  dated 06.03.2013, which clearly establishes the fact that the Bank is not only a secured creditor but has created the first charge over the property in question as far as back in the year, 2013 -  Whereas the charge of the department had been created and reflected in revenue record on dated 05.02.2018 - Once the petitioner is a secured creditor and has moreover created the first charge over the property, then obviously, it has the first right to realise its dues - Writ petition allowed, respondents directed to remove the red entry qua the property in question. Himachal Pradesh High Court | Before: Justice Tarlok Singh Chauhan, Justice Satyen Vaidya | STATE BANK OF INDIA  Versus STATE OF H. P. & Ors. | CWP No. 8502 of 2023 | Tarlok Singh Chauhan, J. (ORAL) – (15.12.2023) | Download

Securitisation and Reconstruction of Financial Assets and Enforcement of Security interest Act, 2002 (54 of 2002), Section 26E –  Transfer of Property Act, 1882,  Section 48  – Criminal Procedure Code, 1973 (II of 1974) Section 83 – Clearly stipulates that where different rights have been created upon immoveable property at different times and in case same cannot co-exist, then, rights which have been created prior in time would have preference over the rights created subsequently – In the present case, it is not in dispute that mortgage in favour of the bank was created prior to the alleged order of attachment and thus, on the basis of the abovesaid principle also, the rights of the secured creditor as well as subsequent rights in favour of auction purchasers i.e. petitioners, would be protected. | 2022 PLRonline 5550

“The Crown's preferential right to recovery of debts, over other creditors is confined to ordinary or unsecured creditors. The Common Law of England or the principles of equity and good conscience (as applicable to India) do not accord the Crown a preferential right for recovery of its debts over a mortgagee or pledgee of goods or a secured creditor. It is only in cases where the Crown's right and that of the subject meet at one and the same time that the Crown is in general preferred. Where the right of the subject is complete and perfect before that the King commences, the rule does not apply, for there is no point of time at which the two rights are at conflict, nor can there be a question which of the two ought to prevail in a case where one, that of the subject, has prevailed already.”  | Read HERE

 There is, thus, no doubt that the rights of a secured creditor to realise secured debts due and payable by sale of assets over which security interest is created, would have priority over all debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority.  | read HERE