TMI Blog2014 (8) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... ank that in view of Section 11 the land, plant and machinery and also any property in the name of respondent no.2-company should not be brought/sold/leased/transferred by the petitioner without the permission of the Assistant Commissioner of Central Excise, Division Allahabad. Held that:- petitioner, who has granted loan to respondent no.2-company is a secured creditor under Section 2(2d) of the said Act and that recovery of the loan granted could be recovered as the first charge in preference to recovery of other dues - On the other hand, Section 11 of the Central Excise Act and Section 142 of the Customs Act, 1962 only provides for recovery of sums due to the government. We do not find that these provisions indicate that the Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed on 2nd August, 2007. The machineries was also placed in favour of the petitioner bank. Respondent nos.3, 4, 5 and 6 also executed deed of guarantee in favour of the petitioner bank. From the documents so executed the land, building, fixed assets have been mortgaged/charged/hypothecated with the petitioner bank for the purpose of availing credit facilities. Respondent no.2-company defaulted in the payment of the loan amount and, accordingly, the petitioner initiated recovery proceedings by issuing a demand notice dated 30th May, 2008 under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Thereafter, the petitioner filed Original Application No.50 of 2010 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 20th July, 2010, has filed the present writ petition for its quashing. We have heard Sri Satish Chaturvedi, the learned counsel for the petitioner-bank, Sri Shailendra Jaiswal holding brief of Sri Vinod Kant Srivastava, the learned counsel for the Central Excise department-respondent no.1 and Sri B.C. Rai, the learned counsel appearing for respondent nos.2 to 6. The learned counsel for the petitioner submitted that the petitioner is a secured creditor and has a first preferential claim to recover its dues and that the respondent no.1 has no authority of law to restrain the petitioner from not recovering its dues. The learned counsel for the petitioner submitted that the petitioner, being the secured creditor, has the first charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referential right for recovery of its debts over mortgaged or pledged of goods or a secured creditor. Considering the said decision, a Division Bench of this Court in State Bank of India Vs. State of U.P. and another, 2003 (1) UPLBEC 328 held that since there was no statutory provision giving priority to the State Government dues over the debts owed to the State Bank, who is a secured creditor, the recovery certificate issued for recovery of sales tax dues were found to be illegal and was quashed. The Court further directed that the bank was entitled to auction and sell the property of the defaulter in order to recover its debts as a secured creditor. In The Bank of Bihar Vs. State of Bihar and others, AIR 1971 SC 1210 the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in respect of its dues over the recovery of the dues of the Central Excise department. Before proceeding further, it would be essential to refer certain provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: Chapter I of the SARFAESI Act 2. Definitions: 2(zd) secured creditor' means any bank or financial institution or any consortium or group of banks or financial institutions and includes- (i) debenture trustee appointed by any bank or financial institution; or (ii) securitisation company or reconstruction company, whether acting as such or managing a trust set up by such securitisation company or reconstruction company for the securitisation or rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) Where any action has been taken against a borrower under the provisions of sub-section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests. From the aforesaid, it is clear that the petitioner, who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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