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2024 Supreme(Guj) 1736
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
VAIBHAVI D. NANAVATI, J.
Kuberbhai Madhabhai Kher – Petitioner
Versus
Department Of State Tax & Ors. – Respondents
R/Special Civil Application No. 20230 Of 2023
Decided On : 06-08-2024
Important Points
Subject
Civil Law - Property Rights
Act Referred
COMPANIES ACT: S.4(a)
CONSTITUTION OF INDIA: Art.372, Art.372(1), Art.226
Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions Amendment Act: S.1
GUJARAT LAND REVENUE CODE: S.137
Recovery of Debts and Bankruptcy Act: S.31, S.34
SECURITIES CONTRACTS REGULATION ACT: S.43, S.8, S.9
SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT: S.26, S.37, S.35, S.2
VALUE ADDED TAX ACT: S.48, S.46
Headnote
(B) Legal Interpretation - The SARFAESI Act supersedes other laws regarding secured debts post-registration, giving creditors priority over State dues to recover dues effectively. (Paras 8, 10)
(C) Case law - Relied upon previous judgments highlighting the priority of secured creditors over State claims in similar contexts. (Paras 10, 12)
For the Petitioner: Mr. B.C. Thakkar, Mr Randhir Rajpurohit, Ms Noopur K. Dalal.
For the Respondents: Ms Pooja K. Ashar, AGP., Mr Manish S. Shah.
| Table of Content |
|---|
| 1. rule issued and notices waived (Para 1 , 2) |
| 2. petitioner seeks quashing of mortgage on property (Para 3 , 4) |
| 3. prioritization of secured creditors established (Para 5) |
| 4. state's charge justly contested (Para 6) |
| 5. purchase of property confirmed as per sarfaesi procedures (Para 7) |
| 6. secured creditor's priority over state dues asserted (Para 8 , 9 , 10 , 11) |
| 7. legal precedence of sarfaesi act over state claims (Para 12 , 13 , 14 , 15) |
| 8. secured creditors prioritized by provisions of law (Para 16) |
| 9. court directs action to finalize petitioner's ownership (Para 17) |
| 10. petition granted in favor of petitioner (Para 18 , 19) |
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 Mr. Manish S. Shah, learned advocate waives service of notice for and on behalf of the respondent No.4.
2. Heard Mr. B.C. Thakkar, learned advocate with Ms. Noopur K. Dalal, learned advocate appearing for the petitioner, Ms. Pooja K. Ashar, learned AGP appearing for the respondent Nos.1 to 3 and Mr. Manish S. Shah, learned advocate appearing for the respondent No.4.
3. By way of present petition, the petitioner herein has prayed for quashing of the impugned charge or mortgage on the property being non-agriculture land with factory, land and building bearing survey No. R.S. No.423/paiki 6, Vaghel Road, PO. Harij, Taluka-Harij, District: Patan, admeasuring about 4755 Sq. Mtrs. in the name of Tirupati Cotton Ginning Partners and the property being non-agriculture land with factory, land and building bearing Survey No. at R.S. No.423/paiki1/P, Vaghel Road, PO.Harij, Taluka-Harij, District : Patan, admeasuring about 6171 Sq. Mtrs. in the name of Bhagwanbhai Parsottambhai Patel, in the registration, Sub-Registrar Office at Harij, Patan, by the Department of State/Central Sales Tax.
4. The petitioner herein purchased the aforesaid property by way of E-Auction sale process undertaken by the respondent No.4 – Bank under the provisions of the SARFAESI Act, 2002. The respondent No.4 is a Scheduled Public Sector Bank registered with the Reserve Bank of India and protected under the SARFAESI Act, 2002, in case of any charge created on any of the property against loan provided.
4.1 The property-in-question being sold through E-Auction sale by the respondent No.4 – Bank, wherein, the petitioner bidded for the said property by depositing Earnest Money Deposit (EMD) of Rs.8,74,000/- on e-B kray and deposited Rs.78,76,000/- in the no lien account of the Bank on 07.04.2023; duly produced at Annexure – C and Annexure – D respectively. Upon receipt of the bid, EMD and lien amount submitted by the petitioner, the respondent No.4 – Bank sent an E-mail to the petitioner accepting the Bid submitted by the petitioner for the purchase of the property on 24.03.2023 and further, instructed the petitioner to deposit the remaining Bid amount by 08.04.2023. The said amount was also deposited by the petitioner herein in terms of the auction. The sale certificate came to be issued by the respondent No.4 – Bank on 11.04.2023 and sale deed for the purchase of the property also came to be executed by Sale Deed No.968/2023 on 01.07.2023 at Sub-Registrar, Harij, Patan. When the petitioner approached the Sub-Registrar, Harij, Patan, for releasing the registered sale deed of the said property, the petitioner was informed that the Department of Sales Tax, Office of Commissioner of State Tax, had registered a charge against the said property before the Sub-Registrar, Harij, Patan. Subsequently, Talati of Harij also informed the petitioner through communication dated 18.07.2023.
4.2 The petitioner issued notice through Advocate on 10.08.2023 to the respondent Department of Sales Tax to cancel/withdraw the charge and mortgaged created by the said Department along with the extract of provision of Section 2 6E of the SARFAESI Act, 2002. The said notice was n
