The SARFAESI Act gives priority to secured creditors over government dues, overriding conflicting provisions in other laws.

ORDER :

M.S.Ramachandra Rao, J.

The petitioner in this Writ Petition is the State Bank of India.

2. The State Bank of India along with other consortium banks, had granted a loan amounting to Rs.133 crores to the 5th respondent- Company in 2012 for Working Capital, and as security for the said loan, a commercial unit bearing D.No.12-10 with land admeasuring Acs.0.25 gts. in Sy.No.657 of Satamrai Village, Shamshabad Mandal, Ranga Reddy District (for short ‘the subject property’) belonging to the said company was charged to the Bank along with other properties.

3. The said charge was registered with the Central Registry of Securitization Asset Re-construction and Security Interest of India (CERSAI) on 08.04.2000.

4. As the 5th respondent did not repay the loan dues, and committed default in making re-payments to the petitioner, the loan account of the 5th respondent was declared as a Non-Performing Asset on 13.10.2012.

5. Thereafter, proceedings under the SARFAESI Act, 2002 were initiated and the property was put to public auction on 26.10.2020 through an auction notice dt.15.09.2020.

6. M/s.Khargandhi Properties Pvt. Ltd. ( for short ‘the auction purchaser’) was declared highest bidder for Rs.4.66 crores, and their bid was confirmed vide proceedings dt.26.10.2020 and they were asked to pay the balance amount in accordance with the provisions of the said Act.

7. The auction purchaser vide letter dt.28.10.2020 informed the Bank that it came to know that property purchased by it in e-auction from the petitioner-Bank has Income Tax attachments and so, it cannot be registered in view the fact that the property was kept under a prohibitory list under the Registration Act, 1908, and wanted to resile from the auction proceedings.

8. The petitioner-Bank then verified the same and confirmed that the property was in the prohibitory list register maintained by the Sub- Registrar, Shamshabad (2nd respondent) in view of proceedings dt.05.10.2016 issued by the Commercial Tax Officer, Special Commodities Circle, Saroornagar Division, Hyderabad (3rd respondent) and proceedings dt.10.06.2014 of the Dy.Commissioner of Income Tax, Circle-2 (3), Hyderabad (4th respondent).

9. In the letter dt.05.10.2016 addressed to the 2nd respondent by the 3rd respondent it was stated that the 5th respondent had fallen in arrears of sales tax to the tune of Rs.3,05,89,201/-, that it owned the subject property, and requested the 2nd respondent not to permit alienation thereof as it had first charge under the provisions of the TVAT Act, 2005 over the said property.

10. In the letter dt.10.06.2014, addressed by the 4th respondent to the petitioner it was informed that a sum of Rs.572.66 lakhs for the Assessment Year 2011-12 was due from the 5th respondent towards income tax / interest; the petitioner was directed under Section 226(3) of the Income Tax Act, 1961 to pay to the 4th respondent the said amount; and in default, a threat was made to make the Bank an ‘assessee in default’ and to proceed against it for realization of the said dues under Sections 222 to 225 of the Income Tax Act, 1961 stating that the notice shall have the same effect as an attachment of a debt under Section 222 of the said Act.

11. Copy of the above letter was also forwarded to the 2nd respondent and on the basis of these two letters, the 2nd respondent kept the subject property in a prohibitory list prepared under Section 22-A of the Registration Act, 1908.

THE INTERIM ORDER PASSED ON 17.12.2020

12. On 17.12.2020, while granting time to the respondents to file counter-affidavit, an interim direction was given to the 2nd respondent to receive, process and release the sale certificate submitted by the petitioner-Bank and the auction purchaser for registration as per due procedure.

13. But, on 09.06.2021, the Sub-Registrar, Shamshabad issued a letter 118/SHM/2021 dt.09.06.2021 stating that petitioner should pay the stamp duty and registration fee and without such payment, it cannot complain against the 2nd re