Important points:
Absence of notifying the said provision does not belittle its effect as far as priority as provided under the said provision is concerned. By the very making of law, i.e., the Amending Act of 2016, incorporating Section 26E into the SARFAESI Act, a repugnancy has arisen as against the State laws creating first charge for statutory charges. Repugnancy arises the moment a law is made and not merely at its commencement.

ORDER :

Bechu Kurian Thomas, J.

The piquant question posed in this application is whether a secured creditor can claim priority for sale and payment over statutory charge holders, due under State enactment.

2. Registration of a sale carried out under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act' for short) was denied by the Sub Registrar, Kottarakkara after noticing entry of a statutory charge relating to value added tax in the tax receipt produced along with the sale certificate for registration. This denial of registration has called upon this Court to decide the issue as to whether the secured creditor under the SARFAESI Act has predominance over the statutory charge due to Government, created under other state enactments.

3. Though the entire factual situation arising in the case may not have much relevance for deciding the issue that arises for consideration, still, a nutshell of facts are referred to.

4. The Travancore Devaswom Board (hereinafter referred to as 'the Board' for short), was granted permission by this Court to bid in a proposed auction to be conducted by the 4th respondent by order dated 15.03.2019 in DBA No.2 of 2019. Consequent to the permission so granted, the Board bid at the auction for a consideration of Rs.8,20,06,000/-(Rupees Eight crores twenty lakhs and six thousand only) and the sale was confirmed in favour of the Board. After payment of the entire consideration, a sale certificate was drafted. Officials of the Board along with the Bank officers approached the Sub Registrar, Kottarakkara, to register the sale deed. A further amount of Rs.65,60,480/-(Rupees Sixty five lakhs sixty thousand four hundred and eighty only) was spent towards purchase of stamp papers and the sale certificate was drawn as evidenced by Annexure-A4. However, when the sale certificate was attempted to be registered, the Registering Officer noticed an endorsement in the tax receipt as follows “revenue recovery for sales tax D5/3605/16”. On the basis of the said endorsement on the tax receipt, Annexure-A7 memo was issued by the Sub Registrar stating that the sale certificate can be presented for registration only after the endorsement in the tax receipt relating to the sale tax revenue recovery is deleted. It is in the above factual scenario that this application is filed seeking a direction to the Sub Registrar to register the original of Annexure-A4 sale certificate and also to direct the Village Officer to effect mutation in respect of the property that was the subject of sale.

5. A statement has been filed by the Federal Bank pointing out that three loans were taken by the defaulter between 2012 and 2014 and as many as six items of properties were mortgaged. It is stated that after issuing statutory notices, three of the properties were brought for sale several times without any success. However, on the sixth occasion of sale, the Board became the successful bidder. Even though the liability towards the bank from the defaulter totalled to Rs.22,36,48,135.33/-as on the date of sale, the bank could realise only Rs.8,20,06,000/-(Rupees Eight crores twenty lakhs six thousand only) from the auction purchaser and the auction was conducted in an 'as is where is' condition. The bank further asserted that as per Section 26E of the SARFAESI Act and Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 renamed as the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as 'the RDB Act'' for short) the secured creditor has been given priority over all other debts and Government dues and hence, the sale conducted by the bank under the SARFAESI Act takes precedence over all other statutory dues.

6. We heard Sri.G.Santhosh Kumar, learned Standing Counsel for the Board, Sri.T.K.Anandakrishnan, learned Government Pleader and Sri.A.Antony, learned Standing Counsel for the Federal Bank.

7. The ques