Ajay Satishrao Jadhav vs The State Of Maharashtra And Ors
- Court
- Bombay High Court
25-WP(L)-15997-2024+.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION/
CIVIL APPELLATE JURISDICTION
(Sr. No. 25)
WRIT PETITION (L) NO. 15997 OF 2024
Union bank Of India . Petitioner
Vs.
The Deputy Commissioner Of State Tax . Respondent
WITH
WRIT PETITION (L) NO. 21078 OF 2024
Union bank Of India . Petitioner
Vs.
Superintendent Of The Central Excise . Respondent
WITH
WRIT PETITION (L) NO. 31148 OF 2024
Union bank Of India . Petitioner
Vs.
DY commissioner of the sales tax E 303 . Respondent
nodal 13
WITH
WRIT PETITION (L) NO. 31453 OF 2024
Union bank Of India . Petitioner
Vs.
The Deputy Commissioner Of State Tax . Respondent
WITH
INTERIM APPLICATION (L) NO. 39495 OF 2025
IN
WRIT PETITION (L) NO. 31453 OF 2024
Geeta C. Chandra Petitioner
Vs.
Deputy Commissioner Of State Tax Respondent
WITH
WRIT PETITION NO. 8103 OF 2025 (Sr. No. 26)
Ajay Satishrao Jadhav Petitioner
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Vs.
The State of Maharashtra & Ors Respondents
WITH
WRIT PETITION NO. 3350 OF 2026
Mangesh Vasant Patwardhan & Ors Petitioners
Vs.
The State of Maharashtra & Ors Respondents
WITH
WRIT PETITION NO. 13658 OF 2024
Janseva Sahakari bank Ltd Thr Its Petitioners
Authorised Officer
Vs.
The State of Maharashtra & Ors Respondents
------------------
Mr. Malhar Zatakia, a/w Mr. Deepak Saxena (through VC), a/w Mr. Shyam
Sarangi, a/w Mr. Ayman Khan and Ms. Roshni Dumpala, i/b Legal Prism for
the Petitioners in WP(L)/15997/2024, WP(L)/21078/2024,
WP(L)/31148/2024 and WP(L)/31453/2024.
Mr. Anshul Anjarekar, i/b Raval Shah & Co. for the Intervener in
IA(L)/39495/2025.
Ms. Anjali Helekar, G.P. a/w Ms. Jyoti Chavan, Addl G. P. and Ms. Nazia
Sheikh, AGP for Respondent/State in WP(L)/15997/2024.
Ms. Anjali Helekar, G. P. a/w Ms. Jyoti Chavan, Addl G. P. and Mr. Amar
Mishra, AGP for Respondent/State in WP(L)/21078/2024.
Ms. Anjali Helekar, G. P. a/w Mr. Mohit Jadhav, Addl G. P. and Mr. Himanshu
Takke, AGPs, for Respondent/State in WP(L)/31148/2024.
Ms. Anjali Helekar, G. P. a/w Mr. Vishal Thadhani, Addl G. P. and Mr. Amar
Mishra, AGPs, for Respondent/State in WP(L)/31453/2024.
Mr. Raghunath Gawde, for Respondent No. 5 in WP(L)/15997/2024.
Mr. Nikhil Rajani, i/b M/s V. Deshpande & Co., for Petitioner in
WP/8103/2025.
Mr. Sarthak Diwan, for Petitioner in WP/3350/2026.
None for the Petitioner in WP/13658/2024.
Mr. Dheer Sampat (through VC), i/b M. V. Kini & Co. for Respondent No. 3
in WP/8103/2025.
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Mr. Malhar Zatakia, a/w Mr. Deepak Saxena (through VC), a/w Mr Shyam
Sarangi, a/w Mr. Ayman Khan and Ms. Roshni Dumpala, i/b Legal Prism for
Respondent No. 6 in WP/8103/2025.
Ms. S. D. Vyas, Addl. G. P. for the Respondent/State in WP/8103/2025.
Ms. G. R. Raghuwanshi, AGP for the Respondent/State in WP/3350/2026.
Mr. R. S. Pawar, AGP for the Respondent/State in 13658/2024.
--------------------
CORAM : MANISH PITALE &
SHREERAM V. SHIRSAT, JJ.
th
DATE : 13 JULY 2026.
ORAL JUDGMENT (PER MANISH PITALE J.)
1. Heard learned counsel for the parties.
2. There are seven writ petitions for consideration before this Court
concerning a common issue with regard to the priority of the dues of secured
creditors over and above statutory dues as claimed by various departments of
the Respondent State. During the course of hearing, we realised that there
was no appearance on behalf of the Petitioner in Writ Petition No. 13658 of
2024, i.e. Janseva Sahakari bank Ltd. Therefore, the said Writ Petition No.
13658 of 2024 is de-tagged from these petitions and it shall be heard
separately. The said writ petition shall be taken up for further consideration
th
on 24 August 2026, ‘High on Board.’
3.
That leaves six writ petitions for consideration in this bunch of writ
petitions, which concern the aforementioned common issue.
4. Four writ petitions are filed by the Union bank of India (secured
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creditor) and two writ petitions are filed by auction purchasers. The
Petitioners are aggrieved by attachment orders issued by various
departments of the Respondent State, letters of intimation to societies,
wherein the secured assets are located and also the recording of a
boja/encumbrance in the revenue record pertaining to the subject properties.
5. The Petitioners claim that in the light of the position of law clarified
by a Full Bench of this Court in the case of Jalgaon Janta Sahakari bank Ltd
& Anr. v. Joint Commissioner of Sales Tax & Anr. [2022 SCC OnLine Bom
1767] and subsequent orders passed by various Division Benches of this
Court, the objections sought to be raised on behalf of the Respondent State
through various departments are unsustainable and that the writ petitions
deserve to be allowed in terms of the prayers made therein.
6. The Full Bench of this Court in the aforesaid judgment in the case of
Jalgaon Janta (supra) considered the effect of amendment dated
24/01/2020 brought about in the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest, 2002, (SARFAESI Act).
Various questions arose for consideration, including questions concerning
objections raised by various departments of the Respondent State with
regard to the priority of dues. After considering the contentions raised on
behalf of the Respondent State, the Full Bench in the aforesaid judgment of
this Court came to the conclusion that the dues of secured creditors under
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the provisions of the SARFAESI Act would have priority. Various aspects were
considered, which in our opinion, answer the objections that are raised on
behalf of the State in these petitions also.
7. A perusal of the reply affidavits and additional affidavits filed on
behalf of the Respondent State through various departments in these writ
petitions shows that the objections pertain to the use of the expression
“notwithstanding anything to the contrary contained in any law” as found in
the Maharashtra Goods and Services Tax Act, 2017 (MGST Act), an
amendment brought about in the Maharashtra Value Added Tax Act (MVAT
Act) in Section 37 and an objection with regard to situations where the
attachment orders issued by the Respondent State pertain to a period prior to
24/01/2020, i.e. the date on which the aforesaid amendment was brought
about in the SARFAESI Act. It is claimed on behalf of the Respondent State
that even if the Full Bench judgment in the case of Jalgaon Janta (supra) is
taken into consideration, the petitions ought not to be allowed.
8. We have considered the objections raised on behalf of the Respondent
State through various departments. We find that the objections can be
answered on the basis of the aforesaid Full Bench judgment itself. The
subsequent judgments rendered by various Division Benches of this Court
have further clarified the ratio of the Full Bench judgment and therefore, it
would be appropriate to refer to the relevant portions of the aforementioned
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judgments.
9. As regards the objection raised on behalf of the Respondent State by
relying upon Section 82 of the MGST Act, reference to paragraphs 25
onwards of the Full Bench judgment would be appropriate. As a matter of
fact, Section 82 of the MGST Act was specifically quoted in paragraph 25 of
the Full Bench judgment of this Court and thereupon, the contention was
dealt with in paragraphs 81 onwards of the said Full Bench Judgment. Prior
thereto, in paragraph 44, a question was framed as follows:
“(a) Having regard to the statutory provisions under
consideration, does a secured creditor (as defined in the
SARFAESI Act and the RDDB Act) have a prior right over the
relevant Department of the Government (under the BST
Act/MVAT Act/MGST Act) to appropriate the amount realized by
the sale of a secured asset ?”
10. Having framed the said question, this Court in the Full Bench
Judgment referred to the aspect of “first charge” mentioned in multiple State
Legislations and thereupon, observed as follows:
“82. Each of the aforesaid several legislations operate in their particular
field. Pertinently, wherever the Legislature of the State intended the
particular provision to be the dominant legislation or subordinate or
subservient to any other legislation, it has expressed such an intention
in no uncertain terms. Section 169(1) of the MLR Code is the dominant
legislation providing that the arrears of land revenue due on account of
land shall be a paramount charge on the land and on every part thereof
and shall have precedence over any other debt, demand or claim
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whatsoever, whether in respect of mortgage, judgment-decree,
execution or attachment, or otherwise howsoever, against any land for
the holder thereof. The municipal laws and the MRTP Act, however,
despite creation of first charge on property taxes due to the
Corporations and sums due to a planning authority, respectively, are
expressly made subordinate to the paramount charge on a land if in
respect of such land, land revenue is in arrears. Viewed from this angle,
there is no magic in the words “first charge”. Even a “first charge”, by
express statutory intendment, can be made subordinate or subservient
to a paramount charge such as arrears of land revenue. We, therefore,
are unable to accept the argument of the State/respondents that since
neither the SARFAESI Act nor the RDDB Act uses the words “first
charge” but the word “priority”, such “priority” cannot have precedence
over “first charge” created by the State legislations.
83. However, notwithstanding that section 169(1) of the MLR Code is
the dominant legislation and does not expressly say that it would be
subordinate or subservient to any Central Act creating “first charge”,
nothing really turns on it. The express language of section 26E of the
SARFAESI Act and section 31B of the RDDB Act, wherever applicable, is
sufficient to off- set the “paramount charge” created by sub-section (1)
of section 169. Similarly, even if there were no express intendment in
the relevant provisions of the BST Act (section 38C) and the MVAT Act
(section 37) to the effect that such provisions would be subordinate to
any Central Act creating “first charge”, the same would obviously have
to be read, invoked and exercised subject to section 26E of the
SARFAESI Act and section 31B of the RDDB Act, wherever applicable.
84. The fact that the BST Act and the MVAT Act, which are under
consideration, expressly make it subordinate or subservient to any
Central legislation creating first charge cannot be ignored. The 2016
Amending Act being of recent origin, the first query that arises in this
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regard is : did Parliament not know that there is a plethora of legislation
in the country, both Central and State, that speaks of creation of “first
charge” in favour of a Department of the Central/State Government ?
The reply cannot but be in the affirmative. The next query that would
obviously follow is : whether the word “priority” appearing in section
26E of the SARFAESI Act, i. e., “… paid in priority over all other debts
and all revenues, taxes, cesses and other rates payable to the Central
Government or State Government or local authority” (italics for
emphasis by us), was used without a purpose ? This reply has to be in
the negative.
85. Priority means precedence or going before (Black's Law Dictionary).
In the present context, it would mean the right to enforce a claim in
preference to others. In view of the splurge of “first charge” used in
multiple legislation, Parliament advisedly used the word “priority over
all other dues” in the SARFAESI Act to obviate any confusion as to inter
se distribution of proceeds received from sale of properties of the
borrower/dealer. If a secured asset has been disposed of by sale by
taking recourse to the Security Interest (Enforcement) Rules, 2002 it
would appear to be reasonable to hold, particularly having regard to the
non obstante clauses in sections 31B and section 26E, that the dues of
the secured creditor shall have “priority” over all other including all
revenues, taxes, cesses and other rates payable to the Central
Government or State Government or local authority.”
11. We are of the opinion that in the light of the said findings rendered in
the Full Bench Judgment of this Court, the objection raised on behalf of the
Respondent State by relying upon expressions such as “notwithstanding
anything to the contrary contained in any law,” cannot be simply relied upon
to deny relief to the Petitioners in these petitions. In the above quoted
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paragraph 85 of the Full Bench Judgment, it is categorically laid down that
the dues of the secured creditor shall have priority over all others, including
all revenues, taxes, cesses and other rates payable to the Central Government
or State Government or local authority.
12. As regards the objection raised on behalf of the Respondent State that
the attachment orders were issued prior to the amendment dated
24/01/2020 being brought about in the SARFAESI Act, the Full Bench in the
aforesaid judgment specifically considered such a factual situation and held
that even if that be so, the Respondent State would have to demonstrate on
facts that after issuing the attachment order, it had taken all necessary steps
under the Maharashtra Land Revenue Code, including issuance of
proclamation and other steps contemplated therein. The relevant portion of
the judgment of the Full Bench in the case of Jalgaon Janta (supra) in this
context reads as follows:
“151. However, there could be attachments orders which might
have been issued much prior to giving effect to the 2011 Rules,
as amended. In respect of such orders of attachment, we consider
it appropriate to express our views.
152. The procedure to be followed in terms of the CPC when an
immovable property is put up for auction sale to satisfy a decree
of the court is to be found in Order 21, rules 54 and 66 of the
CPC. It is mandatory for the court executing the decree, to
comply with the following stages before such property is sold in
execution of a particular decree :
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(a) attachment of the immovable property;
(b) proclamation of sale by public auction;
c) sale by public auction.
At each stage of the execution of the decree, when a property is
sold, it is mandatory that notice shall be served upon the person
whose property is being sold in execution of the decree, and any
property which is sold, without notice to the person whose
property is being sold, is a nullity and all actions pursuant
thereto are liable to be struck down/quashed. However, the
proceedings before us do not concern execution of any decree.
153. In these proceedings we are as much concerned with
proclamation itself as much with attachment. Insofar as recovery
pursuant to the MLR Code is concerned, not only the provisions
contained therein but also the provisions contained in the 1967
Rules are to be complied with. Simply ordering an attachment is
not enough; a proclamation has to be issued in the prescribed
form and such proclamation must be made public by beating of
drum and such other mode as specified in section 192 of the MLR
Code and rule 11(2) of the 1967 Rules before the property
attached is sold.
154. We are of the considered opinion, on facts and in the
circumstances, that unless attachment of the defaulter's
immovable property is ordered in the manner ordained by the
MLR Code and as prescribed by the MRLR Rules and due
proclamation thereof is made, even the creation of charge on
such immovable property may not be of any real significance, not
to speak of demonstrating with reference to evidence that the
transferee had actual or constructive notice of such charge. If
there has been an attachment and a proclamation thereof has
been made according to law prior to January 24, 2020 or
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September 1, 2016, i. e., the dates on which Chapter IV-A of the
SARFAESI Act and section 31B of the RDDB Act, respectively,
were enforced, the Department may claim that its dues be paid
first notwithstanding the secured dues of the secured creditors;
but in the absence of an order of attachment being made public
in a manner known to law, i. e., by a proclamation, once Chapter
IVA of the SARFAESI Act or section 31B, as the case may be, has
been enforced, the dues of the secured creditor surely would
have “priority”. In other words, if the immovable property of the
defaulter is shown to have been attached in accordance with law
prior to Chapter IVA of the SARFAESI Act, or for that matter
section 31B of the RDDB Act, being enforced, and such
attachment is followed by a proclamation according to law, the
“priority” accorded by section 26E of the former and section 31B
of the latter would not get attracted.
Answer to question (g)”
13. In the reply affidavits filed in these writ petitions, the Respondent
State has failed to demonstrate that it complied with the aforementioned
specific statutory requirements as noted in the above quoted portion of the
Full Bench Judgment and therefore, the objection pertaining to the
attachment orders being prior to the amendment being brought about in the
SARFAESI Act, also deserves to be rejected.
14. As regards the contention raised on behalf of the Respondent State by
relying upon the amendment of Section 37 of the MVAT Act, such a specific
contention was considered and rejected by a Division Bench of this Court in
the case of bank of Baroda v. Assistant Commissioner of Sales Tax & Anr.
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th
(judgment and order dated 11 September 2025 passed in Writ Petition (L)
No. 3959 of 2025) . After taking note of the law laid down by the Full Bench
of this Court in the case of Jalgaon Janta (supra) and upon specifically
referring to the amendment of Section 37 of the MVAT Act, the Division
Bench of this Court in the said judgment held as follows:
“13. Relevant in the context of the present case and as is the
emphasis of the learned AGP in support of his contention
that the State dues will have priority over other dues, it will
be advantageous to extract amended Section 37 of the MVAT
Act for convenience. Section 37 reads thus :-
“37. Liability under this Act to be the first charge -
(1) Notwithstanding anything contained in any law
for the time being in force, or any contract to the
contrary, any amount of tax, penalty, interest, sum
forfeited, fine or any other sum, payable by a dealer
or any other person under this Act, shall be first
charge on the property of the dealer or, as the case
may be, person.
(2) The first charge as mentioned in sub-section (1)
shall be deemed to have been created on the expiry
of the period specified in sub-section (4) of section
32 for the payment of tax, penalty, interest, sum
forfeited, fine or any other amount.
14.In our opinion, the issue involved in the present case is
squarely covered by the decision of the Full Bench of this
Court in Jalgaon Janta Sahakari bank Ltd. & Anr. (supra).
The Full Bench has conclusively settled the legal position
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regarding priority of claims between secured creditors and
State revenue authorities. It has been authoritatively held
that “In view of the introduction of Section 26E of the
SARFAESI Act and Section 31B of the Recovery of Debts Due
to banks and Financial Institutions Act, 1993 (“RDDB Act”,
for short), secured creditors have statutory priority in
realization of dues from the sale of secured assets, over and
above all other debts including government revenues, taxes,
cesses and rates, subject only to compliance with the
statutory conditions, such as registration under the
SARFAESI Act.
15.The Full Bench rejected the contention that the phrase
“priority in payment” under Section 26E falls short of
creating a first charge. It ruled that, “Statutory priority given
to secured creditors under the SARFAESI and RDDB Acts
shall override any charge created under State laws, including
Sections 37 and 38C of the MVAT Act and Bombay Sales Tax
Act (“BST Act”, for short) respectively, in view of their
express subordination to Central enactments.”
16.The bank has registered its security interest with CERSAI
on 30th June 2012, which is very much prior to the
attachment order dated 18th March 2020 of the department.
Therefore, in view of the legal position settled by the Full
Bench, the bank has priority to realize its dues.
17.The unamended Section 37 of the MVAT Act made the
MVAT Act expressly subordinate or subservient to any central
legislation creating first charge and by way of amendment,
the State of Maharashtra has in essence only removed such
subordination or subservience to the central legislation. The
Full Bench discussed and dealt with similar provisions and
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scenario at length in paragraphs 81 to 92. The Full Bench in
paragraph 82 and 83 observed thus :-
“82. Each of the aforesaid several legislations
operate in their particular field. Pertinently,
wherever the legislature of the State intended the
particular provision to be the dominant legislation or
subordinate or subservient to any other legislation, it
has expressed such an intention in no uncertain
terms. Section 169(1) of the MLR Code is the
dominant legislation providing that the arrears of
land revenue due on account of land shall be a
paramount charge on the land and on every part
thereof and shall have precedence over any other
debt, demand or claim whatsoever, whether in
respect of mortgage, judgment-decree, execution or
attachment, or otherwise howsoever, against any
land for the holder thereof. The municipal laws and
the MRTP Act, however, despite creation of first
charge on property taxes due to the Corporations
and sums due to a planning authority, respectively,
are expressly made subordinate to the paramount
charge on a land if in respect of such land, land
revenue is in arrears. Viewed from this angle, there
is no magic in the words ‘first charge’. Even a ‘first
charge’, by express statutory intendment, can be
made subordinate or subservient to a paramount
charge such as arrears of land revenue. We,
therefore, are unable to accept the argument of the
State/respondents that since neither the SARFAESI
Act nor the RDDB Act uses the words ‘first charge’
but the word ‘priority’, such ‘priority’ cannot have
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precedence over ‘first charge’ created by the State
legislations.
83.However, notwithstanding that section 169(1)
of the MLR Code is the dominant legislation and
does not expressly say that it would be
subordinate or subservient to any Central Act
creating ‘first charge’, nothing really turns on it.
The express language of section 26E of the
SARFAESI Act and section 31B of the RDDB Act,
wherever applicable, is sufficient to off-set the
‘paramount charge’ created by sub-section (1) of
section 169. Similarly, even if there were no
express intendment in the relevant provisions of
the BST Act (section 38C) and the MVAT Act
(section 37) to the effect that such provisions
would be subordinate to any Central Act creating
‘first charge’, the same would obviously have to
be read, invoked and exercised subject to section
26E of the SARFAESI Act and section 31B of the
RDDB Act, wherever applicable.”
18.We are therefore in agreement with the contention of
learned counsel for the Petitioner that where a secured
creditor has registered its security interest under the
SARFAESI Act, the claim of such secured creditor must
prevail. We have no hesitation in holding that the bank has
priority in realization of dues over the dues of the
department. The department having even failed to register
its charge with CERSAI cannot claim any first charge over
the said secured asset.”
15. The said position of law was recently followed by this Court in an
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order dated 06/07/2026 passed in Writ Petition (L) No. 21301 of 2024 (M/s.
Leon Laboratories v. The Deputy Commissioner of Sales Tax & Ors ). After
relying upon the said judgment of the Division Bench of this Court in the
case of bank of Baroda (supra) , an identical contention was rejected and the
writ petition was allowed.
16. It is pertinent to note that in one of the petitions, an objection was
also raised on behalf of the Respondent State that since the auction
purchaser had purchased the subject property in an auction sale conducted
on as is where is whatever is basis, the auction purchaser cannot be
permitted to turn around and contest the steps taken by the concerned
department of the Respondent State in respect of the property in question.
17. In this context, we are in agreement with the learned counsel
appearing for the Petitioner in Writ Petition No. 8103 of 2025, filed by an
auction purchaser, by inviting attention of this Court to Paragraphs 177 to
184 of the Full Bench judgment of this Court in the case of Jalgaon Janta
(supra). We find that in such situations, where the auction purchaser after
having paid the entire consideration and a sale certificate having been issued
in its favour, is entitled to enjoy the fruits thereof and the Respondent State
cannot claim any boja/encumbrance in the revenue records. The existence of
such a boja/ encumbrance adversely affects the rights of such an auction
purchaser and therefore, the writ petitions filed on behalf of the auction
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purchasers have been entertained and considered by this Court.
18. We also find substance in reliance placed on behalf of the auction
purchaser on the judgment of this Court in the case of Indian Overseas bank
v. Deputy Commissioner of Sales Tax, wherein it was categorically held that
the State cannot be heard to say that even if the secured creditor has taken
steps under the SARFAESI Act and sold the secured asset, the State has the
authority to again chase the said asset in order to realise its dues. The
relevant observations from the judgment in the case of Indian Overseas bank
v.. Deputy Commissioner (supra) are as follows:
“35. As a last ditch-effort, Mrs. Vyas presented us with a
unique proposition. It was her contention that
notwithstanding the fact that the secured creditor has the
first charge and priority for recovery of dues from the sale of
the secured asset, the MVAT Authorities can once again chase
the very same asset in the hands of the purchaser and put it
up for sale towards recovery of their dues.
36. Such a proposition has only to be stated to be rejected.
The creation of the mortgage over the asset would mean that
the charge is over the asset. Once the security interest is
enforced, the asset would no longer be available for further
enforcement. The proposition canvassed by Mrs. Vyas would
render Section 26-E meaningless, because if that were the
legal position, the creation of priority in favour of the
secured creditor would have no meaning. Put differently,
according to the proposition suggested, the secured creditor
would first enforce its charge against the asset and thereafter
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the MVAT Authorities would yet again enforce their charge
against the very same asset to recover their dues. Thereafter
if there are other security interests with an inferior priority,
every single beneficiary of every such security interest would
keep enforcing their security interest against the very same
asset. Such an absurd proposition turns on its head, the very
meaning of having a security interest over an asset in priority
over others. Needless to say, no person in his right mind
would ever bid for an asset against which enforcement of
multiple charges is contemplated. This because he would
have to face the endless queue of subsequent enforcement
actions against the very same asset. To underline the
absurdity, for example, if the secured asset were being sold
when its market value is Rs.5 Crores and the dues of the
MVAT Authorities are Rs.10 Crores, a potential purchaser of
the property would effectively have to be ready to pay Rs.15
Crores for the property worth Rs.5 Crores. This would
indeed be absurd to say the least. We therefore have no
hesitation in rejecting this argument canvassed by Mrs.
Vyas.”
19. We find that in the light of the position of law clarified by the Full
Bench judgment in the case of Jalgaon Janta (supra) and the Division
Benches of this Court in the subsequent judgments, the writ petitions in this
present batch deserve to be allowed. A reference to the relevant facts of the
individual writ petitions would be appropriate in this backdrop.
20. In Writ Petition (L) No. 15997 of 2024, the security interest of the
Petitioner bank (secured creditor) was registered with the Central Registry of
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Securitisation Asset Reconstruction and Security Interest of India (CERSAI)
as far back as on 13/01/2015. The impugned order of attachment issued by
the department of the Respondent State was dated 19/08/2022 pertaining to
alleged dues for the period 2012-13 to 2017. Even though the Respondent
State by the said letter/order dated 10/08/2022 is claiming dues for the
period between 2013-2017, we find that the said letter/order itself being
subsequent to the amendment dated 24/01/2020 brought about in the
SARFAESI Act, the charge of the concerned department of the State ought to
have been registered with CERSAI. Admittedly the charge is not registered
with CERSAI. In any case, even if it is to be treated as a case of dues prior to
the amendment being brought about in SARFAESI Act, the Respondent State
has failed to demonstrate that it took necessary steps beyond issuance of
such letter/order of attachment. In the reply affidavit filed in the writ
petition, the Respondent State failed to place on record any material to show
that a proclamation etc. as contemplated under the provisions of the relevant
statute was ever issued. Therefore, the writ petition deserves to be allowed
as the dues of the Petitioner bank being secured creditor have priority over
the dues of the Respondent State. In that light, Writ Petition (L) No. 15997 of
2024 is allowed in terms of prayer clause (a) and the impugned letter/order
dated 10/08/2022 is quashed and set aside.
21. In Writ Petition (L) No. 15997 of 2024, it is brought to our notice that
on the basis of the impugned attachment order, the Respondent No. 5 society
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has received three intimation letters from the concerned department of the
Respondent State. Since we have quashed and set aside the impugned order
dated 10/08/2022, all such intimation letters issued by the concerned
department of the Respondent State to Respondent No. 5 Society
consequently also stand set aside.
22. In Writ Petition (L) No. 21078 of 2024, the Petitioner is a bank
(secured creditor), praying for quashing and setting aside of the orders dated
16/11/2015 and 23/06/2016 passed by the Deputy Commissioner of Sales
Tax with regard to the dues of the said department, in the context of a
property which is the secured asset of the Petitioner bank. This writ petition
deserves to be considered with Writ Petition No. 3350 of 2026, wherein the
Petitioner is the auction purchaser of one of the secured assets.
23. In the said case, the security interest of the petitioner bank was
registered with CERSAI on 29/06/2007, while the registration of the charge
of the concerned department of Respondent State is dated 06/01/2025. The
registration in favour of the Petitioner bank is obviously much prior to the
registration of the charge of the concerned department of the State.
24. In any case, the impugned orders dated 16/11/2025 and 23/06/2016
purportedly assert rights in respect of the secured assets for the period
between 2009 to 2014. Even if this is to be treated as a case of dues prior to
the amendment in the SARFAESI Act dated 24/01/2020, there is nothing
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placed on record to show that beyond issuing the impugned orders, the
Respondent State in any manner satisfied the requirement of issuance of
proclamation and other such compliances to justify resistance to the prayers
made in the aforesaid writ petitions.
25. In the light of the above Writ Petition No. 21078 of 2024 is allowed in
terms of prayer clause (a). Hence the impugned orders dated 16/11/2015
and 23/06/2016 are quashed and set aside.
26. Writ Petition No. 3350 of 2026 is also allowed in terms of prayer
clause (a), thereby quashing and setting aside the impugned order dated
23/06/2016. Needless to say the writ petition having been allowed, the
Respondent State authorities shall also take steps to remove any boja/
encumbrance shown in the revenue records with regard to the secured
assets.
27. In Writ Petition (L) No. 31148 of 2024, the record shows that the
CERSAI registration of security interest of the Petitioner bank is dated
14/05/2012. The attachment order of the concerned department of the
Respondent State with regard to its dues is dated 21/02/2018 and a letter
addressed to the society, wherein the secured asset is located is dated
20/02/2018. In the writ petition, the Petitioner has prayed for quashing of
the said letter addressed to the society as well as the attachment order.
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28. We find that the Respondent State, through its concerned department,
has not been able to demonstrate that beyond issuing the attachment order
dated 21/02/2018, further steps such as issuance of proclamation and other
compliances noted in the aforesaid Full Bench Judgment of this Court, had
been ensured. As a consequence, mere issuance of the impugned attachment
order dated 21/02/2018 and letter/communication to the society dated
20/02/2018 cannot be sustained and the priority of the dues of the
Petitioner bank has been established.
29. In view of the above, Writ Petition (L) No. 31148 of 2024 is allowed
in terms of prayer clause (a) and the impugned letter dated 20/02/2018 as
well as the impugned attachment order dated 21/02/2018 are quashed and
set aside.
30. In Writ Petition (L) No. 31453 of 2024, the Petitioner bank (secured
creditor) is aggrieved by an intimation notice dated 19/10/2023, issued by
the concerned department of the Respondent State and an attachment order
dated 03/06/2024. The documents placed on record show that the security
interest on the Petitioner bank was registered with CERSAI as far back as on
10/08/2011. The impugned intimation notice dated 19/10/2023, letter
dated 30/04/2024 and the attachment order dated 03/06/2024 have been
issued much later. Although the charge of the concerned department of the
Respondent State is said to have been registered with CERSAI on
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20/07/2024, the same is also more than a decade after the CERSAI
registration of the security interest of Petitioner bank on 10/08/2011.
31. In any case, even if the dues of the concerned department of the
Respondent State pertain to the years prior to the amendment being brought
about in the SARFAESI Act, as noted hereinabove, the State was required to
demonstrate that it had complied with all requirements, including issuance
of proclamation etc. Since such requirements have not been satisfied, the
said petition also deserves to be allowed.
32.
In this petition, Interim Application (L) No. 39495 of 2025 has been
filed by the auction purchaser, which essentially supports the prayer made in
the writ petition. Hence, we allow the intervention application. We have
heard the learned counsel appearing for the auction purchaser and we are
satisfied that the writ petition deserves to be allowed in terms of the prayer
made therein.
33. Accordingly, Writ Petition (L) No. 31453 of 2024 is also allowed in
terms of prayer clause (a). Consequently, the impugned intimation notice
dated 19/10/2023, the letter dated 30/04/2024 and the attachment order
dated 03/06/2024 are quashed and set aside.
34. In Writ Petition No. 8103 of 2025, the Petitioner is an auction
purchaser aggrieved by the boja/encumbrance recorded in the revenue
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record pertaining to the subject property, which was purchased by the
Petitioner in an auction sale conducted by the Respondent No. 6 bank
(secured creditor). The documents on record show that the Respondent No.
6 bank had registered its security interest with CERSAI on 27/08/2014. The
charge of the concerned department of the Respondent State, i.e. the
Respondent No. 2 was registered much later with CERSAI on 06/01/2025.
The auction was conducted on 09/03/2025 and the sale certificate was duly
issued in favour of the Petitioner on 16/04/2025.
35. Due to the existence of the boja/encumbrance in the revenue record
pertaining to the subject property, the petitioner is facing prejudice. We find
that in the light of the law laid down in the Full Bench judgment of this
Court, particularly pertaining to the manner in which the rights of the
auction purchaser are to be considered even if the auction sale is conducted
on as is where is,whatever basis, the Petitioner has made out a case in his
favour. The concerned department of the respondent in such circumstances is
not justified in recording boja/encumbrance in respect of the subject
property in the revenue record.
36. The Respondent State has failed to demonstrate that all the necessary
steps, including proclamation and necessary compliances were satisfied to
justify resistance to the prayers made in the present writ petition.
37.
In view of the above, the said writ petition is allowed in terms of
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prayer clause (a) (I, II, and III).
38. In the light of the writ petitions being allowed, the Respondent State
shall take all consequential steps, including removing any Boja/encumbrance
shown against the secured assets in the revenue record.
39. Pending Applications, if any, in the said writ petitions stand disposed
of.
(SHREERAM V. SHIRSAT, J.) (MANISH PITALE, J.)
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