The mortgage of the secured creditor gets prior charge over the charge of the Respondents for tax/VAT dues.

JUDGMENT :

Abhay Ahuja, J.

1. Heard. Rule. Rule made returnable forthwith. By consent of the learned counsel for the Petitioner and the Respondent Nos.1 and 2, this petition is being finally heard. Respondent No.3 is not represented despite service. However, considering the issue in the matter, we proceed on the basis of the pleadings and submissions on behalf of the Petitioner and the Respondents Nos.1 and 2.

2. By this petition filed under Article 226 of the Constitution of the India 1950, Petitioner as secured creditor is challenging the attachment of the Plot No.W-7 in Gokul Shirgoan Industrial Area in Kolhapur (the said property/Plot No.W-7) under the provisions of Section 32 of the Maharashtra Value Added Tax Act, 2002 (the “MVAT Act”) and proceedings under the Maharashtra Land Revenue Code (“MLRC”) initiated by the Respondent No.2 for recovery of VAT dues of Respondent No.3 as detailed in the communication dated 28th March 2018 from Respondent No.2 even though the said property has been mortgaged by Respondent No.3 in favour of the Petitioner. In short, Petitioner is claiming priority of charge on the said property as secured creditor in respect of secured debt owed by Respondent No.3 to Petitioner over the sales tax dues payable by Respondent No.3 to Respondent No.2.

3. Petitioner has filed this petition seeking the following reliefs:

a. for Writ of Mandamus or Writ direction or Order in the nature of Mandamus, any other Writ, direction or Order directing the Respondent Nos.1 and 2 to:

(i) forthwith remove their charge from the Plot No.W-7; and

(ii) forthwith raise their attachment on the said Plot No.W-7 informed vide the Notice dated 28.03.2018 bearing Ref. No. DCST/KOL-VAT-E-008/Krishna Industries/Recovery/B-271.

b. for an interim order and injunction of this Hon’ble Court pending hearing and final disposal of this Petition directing the Respondent Nos.1 and 2 to;

(i) forthwith remove their charge from the said Plot No.W-7; and

(ii) forthwith raise their attachment on the said Plot No.W-7 informed vide the Notice dated 28.03.2018 bearing Ref. No. DCST/KOL-VAT-E-008/Krishna Industries/Recovery/B-271.

(iii) forbear from interfering in any manner with the Petitioner’s right to proceed under the provisions of the SARFAESI Act to enforce its security interest in the said Plot No.W-7 of the Respondent No.3.

c. Ad-interim reliefs in terms of prayer (b) above;

d. for costs of this petition;

e. for such other and further reliefs as the nature and circumstances of the case may require and this Hon’ble court may deem fit and proper.

4. Before we proceed to deal with the controversy at hand, brief facts of the case are set out as under.

5. Petitioner is a Bank, constituted and functioning under the State Bank of India Act 1955 with its Corporate Center at State Bank Bhawan, Madame Cama Road, Mumbai– 400 021 and its Branch amongst others at Stressed Assets Recovery Branch, Shankarsheth Road, Pune 411 042.

6. Respondent No.1 is the State of Maharashtra through Finance Department and Respondent No.2 who is the Deputy Commissioner of Sales Tax exercises powers and functions under the Maharashtra Value Added Tax Act, 2002 (“MVAT” Act). Respondent No.3 is the borrower of the Petitioner as well as dealer being assessed by the authority under the MVAT Act.

7. Pursuant to request of Respondent No.3, Petitioner had sanctioned various credit facilities in favour of Respondent No.3 by sanction letters being Letters of Arrangement dated 13.01.2014, 22.02.2014, 02.02.2015, 26.03.2015 and 31.03.2016. That to avail of the sanctioned credit facilities, Respondent No.3 from time to time executed in favour of the Petitioner various security documents including security by way of mortgage/charge over, inter-alia, the said property being the piece and parcel of land known as Plot No.W-7 admeasuring 720 sq. mtrs. along with the construction of 112.50 sq. mtrs. built up in Gokul Shirgaon Industrial Area within the Village limits of Gokul Shirgaon and outside the limi