D.Y.CHANDRACHUD, J.

1. The Petitioners have impugned in these proceedings under Article 226 of the Constitution an auction notice issued by the Assistant Commissioner of Sales Tax on 13 September 2011 for the sale of certain immovable property belonging to the Petitioners for the recovery of dues in the amount of Rs.1.22 Crores.

2. The Central Bank of India had sanctioned credit facilities to the Petitioners. On a default in the payment of the dues a notice was issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for a claim in an amount of Rs.9.67 Crores. On 27 October 2008 a measure was taken under Section 13(4). The debt of the bank was assigned to the Second Respondent which is an asset reconstruction company on 30 March 2011. The Second Respondent took symbolic possession on 24 June 2011. On 13 September 2011 as noted earlier an auction notice has been issued by the Assistant Commissioner of Sales Tax, C621 Palghar for the auction of the immovable property of the Petitioners situated at the MIDC area of Tarapur for the recovery of dues.

3. On behalf of the Petitioners it has been urged that – (i) Under Section 13(4) read with Section 13 (6) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the property vests in the Second Respondent on a measure being taken; (ii) the Securitisation Act is a legislation subsequent to the Maharashtra Land Revenue Code and by virtue of the provisions of Section 35 has overriding force and effect; (iii) The Petitioners do not challenge the warrant of attachment levied by the First Respondent nor do they contest the priority created in favour of the First Respondent but the submission of the Petitioners is only that the property can be put to sale only at the behest of the secured creditor. The authorized officer is empowered to make a disbursement under Rule 9(7) of the Security Interest Rules.

4. On the other hand, counsel appearing on behalf of the Revenue relied on the judgment of the Supreme Court in Central Bank of India v. State of Kerala (2009) 4 SCC 94and submitted that it is now a settled position in law that (i) The Securitisation Act does not create a first charge on immovable property; (ii) Section 38C of the Bombay Sales Tax Act 1959 creates a first charge on the property in respect of the sales tax dues of the State Government; (iii) Hence the provisions of Section 35 of the Securitisation Act would not override Section 38C of the Bombay Sales tax Act 1959.

5. The issue which falls for determination in these proceedings is no longer res intergra. In Central Bank of India (supra), the Supreme Court has held that (i) The Securitisation Act – does not create a first charge in favour of banks, financial institutions or secured creditors qua the property of the borrower; (ii) A first charge on property is created by state legislation such as Section 38C of the Bombay Sales Tax Act 1959 which cannot be destroyed by implication or inference notwithstanding the fact that banks fall in the category of secured creditors; (iii) The provisions contained in Section 38C of the Bombay Sales Tax Act are not inconsistent with the provisions of the Securitisation Act so as to attract the non obstante clause contained in Section 35 of the Securitisation Act and (iv) Where a first charge is created statutorily on immovable property, the charge operates on the entire property of the dealer, including the interest of the mortgagee. When a first charge is created by operation of law over any property, that charge would have precedence over an existing mortgage.

In holding thus, the Bench of Three Learned Judges of the Supreme Court has affirmed the correctness of the view taken inter alia in the earlier judgment in State Bank of Bikaner and Jaipur v. National Iron and Steel Rolling Corpn. (1995) 2 SCC 19 The Supreme Court also affirmed the view which