Secured creditors' debts take precedence over state tax claims, as established by Section 26E of the SARFAESI Act.

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 and 2 and Mr. Bhaskar Sharma, learned advocate waives service of notice of rule for and on behalf of the respondent No.3.

2. Heard Ms. Pragati Bansal, learned advocate appearing for Thakkar and Pahwa Advocates for the petitioner, Ms. Pooja K. Ashar, learned AGP appearing for the respondent Nos.1 and 2, and Mr. Bhaskar Sharma, learned advocate appearing for the respondent No.3.

3. By way of present petition, the petitioner herein seeks to challenge the decision of the respondent No.2 – Mamlatdar dated 15.07.2023 whereby, the respondent No.2 closed the application of the petitioner for removal of attachment over the subject properties from the revenue records by cancelling M.E. No.2258 dated 22.11.2021 and M.E. No.1934 dated 22.10.2020, on the basis of opinion dated 30.05.2023 given by respondent No.1. The petitioner challenges the attachment of sales tax authority on the subject properties on the ground that the petitioner herein is a bonafide purchaser of the subject properties in public auction held by the respondent No.3 – Bank under the SARFAESI Act, 2002 and that, the respondent No.3 was secured creditor, the doctrine of priority of debts crown cannot prevail over the secured debt. To substantiate the aforesaid, reliance is placed on the ratio laid down in case of Bank of Baroda Through its Assistant General Manager Prem Narayan Sharma Vs. State of Gujarat reported in (2020) 4 GLR 2498, 2020(1) GLR 625 and 2010 (2) GLH 525.

4. Briefly stated that one M/s. SLS Tubes Private Limited, subsequently, named as M/s. Hellios Tubes Alloys Private Limited, availed financial assistance from the respondent No.3 – Bank by mortgaging the following properties being land bearing;

(i) Block/Survey No.77 paiki (Block/Survey No.137 after promulgation) at South side NA land admeasuring 3875 sq. meters of Dhanot, Kalol, District : Gandhinagar.

(ii) Block/Survey No.55 paiki 3 (Block/Survey No.394 after promulgation at North side NA land admeasuring 1000 sq. meters of Bileshwarpura, Kalol, District : Gandhinagar; and

(iii) Block/Survey No.68 paiki 5 (Block/Survey No.391 after promulgation) at North side NA land admeasuring 1015 sq. meters of Bileshwarpura, Kalol, District : Gandhinagar.

4.1 The borrower company executed instrument relating to deposit of title deeds dated 29.03.2012 with respect to the subject properties and created equitable mortgaged in favour of the respondent No.3 – Bank. The respondent No.3 – Bank initiated recovery proceedings under the provisions of SARFAESI Act, 2002 against M/s. Hellios Tubes Alloys Private Limited, situated at Bileshwarpura, District: Mehsana. The respondent No.3 – Bank issued public notice on 20.06.2021 in the daily newspapers “Financial Express” and “Divya Bhaskar” inviting bids from the interest persons to submit their bids for purchase of subject properties through public auction. As per the said notice, the reserved price of the subject properties was fixed at Rs.4.21 Crores and the auction was conducted on 14.07.2021. The respondent No.1 did not raise any objection before the respondent No.3 – Bank against the sale of subject properties through public auction.

4.2 Pursuant to the aforesaid, the petitioner herein registered as Buyer Registration No.244591 for participating in auction process on 13.07.2021 and deposited 10% of the reserve price to the tune of Rs.42,10,000/-. The petitioner was d