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2008 (9) TMI 882 - HC - VAT and Sales TaxWhether the crown's preferential right or a crown debt is subservient to the right of the secured creditor? Whether the sale made under the Securitisation Act is absolute and free of all encumbrances which are known and unknown to the secured creditor? Held that:- In the present case section 13(4) possession notice was issued by the Bank on December 15, 2006. By the time possession notice under section 13(4) was issued. Property was already attached and the order of attachment and notice of sale was served on August 1, 2006 itself. Despite attachment and notice of sale of land for the outstanding sales tax dues having been served upon, in an illegal manner, bank has proceeded under section 13 of the Securitisation Act and sold the property of second respondent firm for recovery of its outstanding dues. The subsequent sale proceedings of the bank is illegal and unauthorised. Since, first respondent has statutory charge which is having priority over all other claims against the property, petitioner-bank cannot successfully challenge the impugned proceedings of the first respondent. Despite, recovery process for the outstanding sales tax dues, the action of the bank in proceeding under the SARFAESI Act is unauthorised and the petitioner bank is not entitled to the reliefs sought for in the writ petition. W.P. dismissed.
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