TMI Blog2022 (4) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent in point of time and recovery notice by the Department was issued on 01.08.2018 and the attachment order was passed thereafter on 10.08.2018. The respondent bank lodged its creation of security before the Central Registry of Securitisation Asset Reconstruction and Security Interest of India as is evidenced from the search result at Annexure-'AB' and 'AC' with respect to the properties which is the subject matter of present petition. The search result indicates the date of search as 31.07.2018 which would imply that lodging of creation of interest as regards the property by the bank was prior to 31.07.2018 while the recovery notice by the State was only subsequent to 01.08.2018 and the attachment order was on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vadi Village, Harihar Taluk, Davangere District. The impugned orders are at Annexure-'A' and 'A1'. 2. The petitioner has also sought for issuance of writ of mandamus seeking declaration that action of respondent nos.2 and 3 in passing declaratory orders restraining respondent no.6 from alienating the schedule property as being illegal and without authority of law. The petitioner has sought issuance of writ of mandamus directing the respondent nos.2 and 3 to consider the representation dated 21.12.2021 of respondent no.4 Bank and to remove the entries relating to the attachment order to enable the petitioner to transfer the Katha with respect to the schedule property. 3. The petitioner has also sought for issuance of wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value and in light of provisions of Section 26E of the SARFAESI Act, the secured creditor would have over-riding charge even as regards dues by the State. It is pointed out that amendment to Section 26E having come into force in 2020 and the State not having enforced its order of attachment is now subject to the rigor of Section 26E of the SARFAESI Act which provides for priority of the secured creditors even over the States dues also. 7. The learned counsel for the State however would point out that the charge under SARFAESI Act was not notified and accordingly, the State was not aware even on the date of attachment regarding the proceedings initiated under the SARFAESI Act and charge not being known to the State would be subject to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government or State Government or local authority. Explanation .--For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code.] The said provision was inserted by Act No.44/2016 with effect from 01.09.2016. This clearly provides that after the registration of secured interest, debts of the secured creditors shall be paid in priority over all other debts and all revenues, taxes cesses and other rates payable to the Central Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior in point of time or not. 15. In the present case, it is clear that the charge that would have a priority is that of the bank as it is prior in point of time and also in light of Section 26E of the SARFAESI Act. 16. It must be noted that as on date, the State not having enforced its attachment under the provisions of KVAT Act, Section 26E would be applicable and accordingly, the rights of secured creditors would rank higher and would over-ride the charge of the State that has been created subsequently. Accordingly, the legal position being clear as also the fact that the charge created under the SARFAESI Act was prior in point of time, claim of the State by virtue of its attachment order would have to give way to the charge of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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