Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Revati Mohite Dere, Prithviraj K. Chavan, JJ.
Saraswat Co-operative Bank Ltd. - Petitioner
Versus
Purnanadu Shekharmal Jain, deceased Through LRs. and ors. – Respondents
Criminal Writ Petition No. 1983 OF 2023
Decided On : 08-08-2024
Priority - Property Attachment - SARFAESI Act - MPID Act - The court held that the SARFAESI Act supersedes the MPID Act regarding properties mortgaged prior to the attachment under the MPID Act, affirming the rights of secured creditors.
Fact of the Case:
The petitioner sought to quash an attachment order under the MPID Act, arguing that the properties were mortgaged prior to the attachment and thus should be governed by the SARFAESI Act.
Finding of the Court:
The court found that the properties were mortgaged before the MPID attachment and that the SARFAESI Act provisions, particularly Section 26-E, provided priority to the secured creditor, thus quashing the MPID attachment.
Issues: Whether the properties mortgaged prior to the MPID attachment could be attached under the MPID Act and if the SARFAESI Act supersedes the MPID Act.
Ratio Decidendi: The court established that the SARFAESI Act provides secured creditors with priority over properties mortgaged before any attachment under the MPID Act, thus affirming the legal precedence of the SARFAESI Act.
Result: The petition is allowed, quashing the MPID attachment on the secured properties.
JUDGMENT :
Revati Mohite Dere, J.
1. At the outset, learned Counsel for the petitioner seeks leave to amend the prayer clause. Leave granted. Amendment to be carried out forthwith during the course of the day.
2. Heard learned Counsel for the parties.
3. Rule. Rule is made returnable forthwith, with the consent of the parties and the petition is taken up for final disposal.
4. By this petition, the petitioner seeks the following substantive relief :-
5. Mr. Kamat, learned Counsel for the petitioner submits that the MPID Court had no jurisdiction to attach the properties in question, which were the subject matter under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, SARFAESI Act). He further submits that since the properties in question were mortgaged prior in point of time to the petitioner i.e. prior to the attachment of the properties by the learned Special Judge, Mumbai (under the MPID Act), i.e. in March 2011, the SARFAESI Act would override the provisions of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (for short, “MPID Act”).
6. Learned Counsel for the petitioner relied on the judgment of this Court in the case of (i) Invent Assets Securitisation and Reconstruction Pvt. Ltd. Vs. The State of Maharashtra (EOW), dated 29th August 2023 passed in Criminal Writ Petition (L) No. 22056 of 2023 and; (ii) The State of Maharashtra Vs. Aryarup Tourism Club Resorts Pvt. Ltd. (In Liquidation) dated 25th August, 2022 passed in Appeal No. 396 of 2017, in support of his submission that SARFAESI Act would prevail over the MPID Act, where the property in question was mortgaged prior to the invocation of the MPID Act i.e. prior to the attachment under the MPID Act.
7. Perused the papers. A few dates, which are relevant for deciding the petition are as under :-
(b) The respondent no.1 thereafter purchased another property from Mr. Nafisa M. Rajkotwala by an Agreement for Sale on 16.12.2004.
(c) On 21.03.2011, the petitioner was granted overdraft facility against both the properties of Rs.1.2 crore.
(d) On 30.03.2011, the respondent no.1 furnished documents in respect of both the properties, for securing a loan of Rs.1.2 crore.
(e) On 30.03.2011, the respondent no.1 mortgaged the suit properties in favour of the petitioner to secure the loan amount and deposited Title Deeds of the suit property with the petitioner.
(f) On 06.03.2012, the petitioner no.1 registered the mortgage with the Central Registry (CERSAI Registration) under Section 26-E of the provisions of the SARFAESI Act.
(g) On 30.09.2014 as there were multiple defaults in making the payment, the account was declared as a Non Performing Asset (NPA).
(h) Pursuant thereto, a Notice dated 20.07.2015 was issued by the petitioner under Section 13(2) of the SARFAESI Act and recovery action was initiated against the respondent no.1. The respondent no.1 admittedly did not file a reply to the said notice.
(i) On 01.04.2016, the respondent no.3 issued a Notification under Section 4(1) r/w Sections 5, 8 and 12 of the MPID Act and as such, attached the secured assets.
(j) On 01.03.2017, the petitioner preferred an application under Section 14 of the SARFAESI Act, for taking physical possession of the property in question, pursuant to which, the learned Chief Metropolitan Magistrate, Mumbai passed an or
The SARFAESI Act takes precedence over the MPID Act for properties mortgaged before MPID attachment, ensuring secured creditors' rights are upheld.
The SARFAESI Act prevails over the MPID Act, protecting properties mortgaged prior to the attachment under the MPID Act.
The auction purchaser's title prevails over subsequent attachments, as the attachment occurred after the auction sale, reaffirming the priority of security interests under Section 26(E) of the SARFAE....
The main legal point established in the judgment is that the charge created under the SARFAESI Act takes priority over the State's dues, as per Section 26E of the Act.
The confirmation of sale under SARFAESI Act extinguishes prior attachments on the property, rendering them ineffective.
The main legal point established in the judgment is that the claim of the secured creditor under the SARFAESI Act has priority over other debts and attachments, and attachments made by other parties ....
The actions of the state in attaching property already mortgaged to a secured creditor are illegal and violate the prioritization established under the SARFAESI Act.
The main legal point established in the judgment is that the SARFAESI Act gives priority to secured creditors over all other debts, and in case of conflict between a Central Act and a State Act, the ....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
