Back
2026 Supreme(Online)(Bom) 4478
IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION
Manish Pitale, Vishal Subhash Shreeram V. Shirsat, JJ
Indian Overseas Bank – Appellant
Versus
State of Maharashtra – Respondent
WRIT PETITION NO. 10120 OF 2022|INTERIM APPLICATION NO. 427 OF 2026
Important Points
Subject
Banking Law - SARFAESI Act
Act Referred
Maharashtra Land Revenue Code, 1966: S.192
Maharashtra Realisation of Land Revenue Rules, 1967: R.14-B, R.11(2)
Constitution of India: Art.226
Headnote
(B) Recovery of Government Dues - MLR Code and Rules - Attachment and Proclamation - For government dues to prevail over a secured creditor, the attachment of the property must be followed by a mandatory public proclamation in the manner prescribed by law (e.g., beating of drums); mere attachment without such proclamation does not grant priority. (Para 17, 18)
(C) CERSAI Registration - Effect of Non-registration - In the absence of registration of the government's claim or attachment order with CERSAI, the claim of the government becomes subservient to the right of a secured creditor who has registered their security interest. (Para 17)
Issues: Whether the government's recovery of dues via auction sale takes priority over the rights of a secured creditor under the SARFAESI Act in the absence of a valid public proclamation and CERSAI registration.
Result: Writ petition allowed; auction sale quashed.
For the Appellants/Petitioners: Cyrus Ardheshir, Nandita Bajpai, Babu, Yogesh Pirthani
For the Respondents: Kavita Solunke, M.S. Bane
JUDGMENT :
(Per Shreeram Shirsat, J.)
1. By this petition, the petitioner, a secured creditor, is seeking to quash the auction sale dated 7th April 2018 conducted by respondent Nos. 3 and 4 with respect to the sale of the parcel of land bearing Survey No. 43/1/B. Inter alia, the petitioner is also seeking directions to respondent Nos. 3 and 4 to restore the rightful control and possession of the parcel of land bearing Survey No. 43/1/B in favour of the Petitioner.
2. Before adverting to the rival submissions, it would be apposite to narrate the description of the parties who have been arrayed as Respondents in the petition and then to enumerate brief facts leading to the filing of this Petition.
3. The Respondent no 1 is the State of Maharashtra. Respondent no 2 is the general manager, District Industries Centre functioning under the Directorate of Industries under the Government of Maharashtra. Respondent no 3 is the Tahsildar, Taluka Khalapur district Raigad, who conducted the auction of the subject land. Respondent no 4 is the Talati, Kumbhavali Village, Taluka, Khalapur, District Raigad and Respondent no 5 is the borrower, who had availed financial facility from the petitioner Bank and had also a mortgaged the subject land with the Petitioner Bank.
4. In the year 2007, the petitioner had sanctioned financial facilities to respondent No. 5, which were secured by way of equitable mortgage by deposit of title deeds of the immovable property. The original title deeds of the immovable properties were deposited with the petitioner, and the charge was registered before the Registrar of Companies on 31st January 2007 as and by way of public notice. As respondent No. 5 defaulted in making repayment of the financial facilities, the account of respondent No. 5 was classified as NPA on 31st December 2010.
Thereafter, the petitioner bank proceeded further under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) and issued notice under Section 13(2) of the Act on 28th September 2012.
5. Thereafter, notice of possession dated 20th December 2012 under Section 13(4) of the SARFAESI Act was also issued. In furtherance of the said measures, the petitioner sold the mortgaged property in favour of M/s. Kaushal Metal and Steel Private Limited and M/s. TGK Special Steel Private Limited by way of auction. The said auction was held on 26th November 2021, and the sale certificate was issued on 22nd February 2022 in respect of the entire parcel of land and the possession was handed over in respect of the same. However, the petitioner bank could not hand over the control with respect to the parcel of land bearing Survey No. 43/1/B.
6. The learned counsel for the petitioner submitted that while executing the documents after issuance of sale certificate in favour of the successful auction purchaser, the petitioner bank found that the survey numbers of the parcel of land were different in the records of the Talathi office (respondent No. 4) as compared with the original title deeds deposited with the petitioner bank. Further inquiry revealed that the new survey numbers were allotted in place of old survey numbers, and
hence the discrepancy was found in the records.
7. It was further submitted that when the petitioner carried out a detailed inspection in the office of the Talathi, Khalapur, it was revealed that the old Survey No. 46/1/2 has been allotted a new Survey No. as 43/1/B with no change in the area measurement, and the said property, of which the original title deed was with the petitioner, had been auctioned by the Tahsildar, Khalapur, and the name of respondent No. 5 was deleted and instead the name of the State of Maharashtra was mutated in that place under the heading of "Clan, Vol. and Other Rights". It was further submitted that the encumbrance was created in the name of respondent No. 2, i.e the Financial Corporation, District Industries C
