The court emphasized the priority of charge in favor of the secured creditor over the charge in favor of the State for tax due under the Value Added Tax of the State.

JUDGMENT

Amit B. Borkar, J. - RULE. By consent of the parties, Rule is made returnable forthwith.

2. By this writ petition, the petitioner is seeking direction against the respondent no. 5 - Sub-Registrar (Class-I) to register sale certificate on receipt of stamp duty and registration charges. In addition to the said prayer, the petitioner is also seeking a direction against the respondent no. 7 - Government of Maharashtra, Through Sales Tax Department to take action against the defaulters for evading taxes and attaching their movable properties and not to obstruct the sale of the properties by the petitioner - Bank for recovery of its dues. The petitioner has also sought a declaration that the respondent nos. 1 and 2 i.e. the State of Maharashtra, Through Ministry of Finance / Revenue and the Collector, Yavatmal are not entitled to recover the dues in view of mandate of Section 26-E of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the Act of 2002").

3. The facts relevant for adjudication of the issues involved in the present petition are as under :-

The petitioner - Bank is a Public Sector Nationalized Bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. The petitioner - Bank initiated proceedings under the provisions of the Act of 2002. The certificate of sale dated 28/09/2020 was issued in favour of Ms. Maroti Cottons, Proprietor : Shilpa Preetam Kohar in exercise of power under the Security Interest (Enforcement) Rules, 2002 (for short "the Rules of 2002"). The copy of the certificate of sale is annexed at Exh. II.

4. The main grievance in this petition is as regards the communication dated 19/10/2020 issued by the respondent no. 5 (Registrar of Assurances, Class-I, Tah. Zarijamni, Dist. Yavatmal) by which the respondent no. 5 refused to register the aforesaid sale certificate in accordance with the provisions of the Registration Act, 1908 (for short "the Act of 1908"). The petitioner has therefore filed the present petition seeking various reliefs. During the course of hearing, learned advocate for the petitioner pressed for prayer clauses (f), (f-a) & (f-b) only, which are referred to in paragraph no. 2 above.

5. This Court by the order dated 29/01/2021 issued notices to the respondents and directed the petitioner to add the Sales Tax Department as party respondent. In pursuance of the notice issued by this Court, the respondents have appeared and have filed their reply. The reply is filed by Tejrao Kisan Pacharne, Joint Commissioner of State Tax (Adm.), Amravati Division, Amravati. In the reply, it is stated that the Sales Tax Department has first charge over the dues of the secured creditor in view of Section 37 of the Maharashtra Value Added Tax Act (for short "MVAT Act"). It is stated that the charge created under Section 37 read with Section 100 of the Transfer of Property Act will continue with the property even if the property is sold by the mortgagor, and therefore the purchaser will have to discharge the liability before registration of sale certificate. It is stated that the property in respect of which the sale certificate was issued has been attached under the provisions of the Maharashtra Land Revenue Code, and therefore the purchaser will have to pay an amount of Rs. 01,04,89,132/- excluding accrued statutory interest thereon.

6. Learned advocate for the petitioner submitted that the Act of 2002 being the Central Statute, the secured creditor shall have the first right to recover its dues from property of the borrower in view of Section 26-E of the Act of 2002. He submitted that Section 37(1) of the MVAT Act shall not override the rights of the secured creditor protected under Section 26-E of the Act of 2002 as the language of Section 37 makes the sales tax dues subject to the provisions under the Central Act. He submitted that even otherwise also, the Registrar of Assurances has no power to consid