Secured creditors have priority over State debts under Section 26E of the SARFAESI Act, 2002, invalidating conflicting State charges on mortgaged assets.

JUDGMENT :

Vaibhavi D. Nanavati, J.

1. Issue Rule, returnable forthwith. Ms. Pooja K. Ashar, learned AGP waives service of notice of rule for and on behalf of the respondent Nos.1 to 3 and Ms. Sejal K. Mandavia, learned advocate waives service of notice of rule for and on behalf of the respondent No.4.

2. Heard Mr. Harnish V. Darji, learned advocate appearing for the petitioner, Ms. Pooja K. Ashar, learned AGP appearing for the respondent Nos.1 to 3 and Ms. Sejal K. Mandavia, learned advocate appearing for the respondent No.4.

3. The petitioner herein is a Banking Company within the meaning of Section 2 (1)(c) of the SARFAESI Act, 2002 and is engaged in banking activities including providing loan facilities to its customers and securing such loans by way of charges/mortgage over the property/properties offered by the customers/borrowers.

3.1 The original borrower, Kalyan Tiles, A Partnership Firm, had approached the petitioner bank for the procurement of finance by way of Loan against property being A/c. No. 50200024303142 to the tune of Rs. 1,75,00,000/-. At the time of procuring the aforesaid financial assistance from the petitioner-Bank, the borrowers-opponents herein have executed requisite documents in favour of the petitioner-Bank. The borrower availed financial assistance vide A/c. No.50200024303142 to tune of Rs. 1,75,00,000/- by way of above referred financial facility and thereby created valid charge/ mortgage in favour of the petitioner- Bank over being all those part and parcel of Industrial Land and Building with Construction of "KALYAN TILES", Village Charwada, Halwad Road, Near SISCON Ceramic & Somnath Cotex, Taluka Halwad, District: Surendrnagar, and situated on the land admeasuring 23480 Square Meters at Revenue Survey No. 51 Paikee of Village : Charwada, Taluka Halwad, District: Surendrnagar, owned by Kalyan Tiles & Others, original borrowers, by depositing the original title deeds of the subject property. Thus, the property as mentioned herein above is the “secured asset” within the meaning of Section 2 (1)(c) of the SARFAESI Act, 2002.

3.2 It is the case of the petitioner that the opponents failed to repay the loan amount as per the terms and conditions agreed between the parties and the loan account has been classified as Non-Performing Asset (NPA) on 01.10.2019. That, on 15.11.2019, the outstanding amount was of Rs.1,40,76,037.61, which includes the principal amount as well as the interest amount. Due continuous and intentional default on the part of the borrower, the petitioner – Bank was constrained to exercise powers conferred under Section 13 (2) of the SARFAESI Act, 2002, by issuing notice to the borrowers on 26.11.2019. Subsequently, the petitioner herein approached the District Magistrate under Section 14 of the SARFAESI Act, 2002, to take and handover the possession of the secured assets wherein, by order dated 30.04.2021, the Mamlatdar and the Executive Magistrate, Halvad, was ordered to take possession of the secured assets and hand over the same to the petitioner – Bank. The Executive Magistrate, Halvad, executed the said order dated 30.04.2021 and took the possession of the secured assets and handed over the same to the petitioner – Bank on 06.05.2021; duly produced at Annexure – C.

3.3 The Talati-cum-Mantri – respondent No.4 herein had registered the charge of the State Tax Officer, Unit No.81, Dhangdhra,