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2020 (1) TMI 1613 - HC - Indian LawsRecovery of loan - Recovery of tax dues / revenue payable - 'priority' and 'first charge' - Secured Creditor - preference/priority in getting the debts - Auction of property - Applicability of provisions of Section 26E of the SARFAESI Act introduced with effect from 01.09.2016 - Notification was issued later - the primary contention raised by the Appellant is that the above provision has not come into effect. The next contention is that it cannot have retrospective effect, having allegedly brought into effect only from 01.09.2016; whereas the 'Revenue Recovery Certificate' was issued by the District Collector much prior to that date i.e. on 20.08.2015. HELD THAT:- the provision (Section 26E) may not be applicable in the case of payment already effected pursuant to such steps by the State Government on request of other creditors as that clock cannot put back to 'zero' to start afresh. Unlike this, even in a case where the Bank has not taken any steps under the SARFAESI Act in respect of the security interest created much earlier and even if, the State has initiated the recovery proceedings invoking the machinery under the RR Act, later, if steps are taken by the Bank, projecting their claim, then the 'payment' cannot be effected to any others ignoring the 'priority' by the secured creditor. This being the position, the contention raised by the Appellant that Section 26E of the SARFAESI Act is prospective and hence, not applicable to the case in hand, since the 'Revenue Recovery Certificate' was issued prior to introduction of Section 26E does not hold any water and it stands repelled. Applicability of amended provisions - effective date - The Central Government consciously issued a notification bringing the above provisions declaring the priority rights by way of notification dated 01.09.2016 bearing No. S.O. 2831 (E), in the statute book and as such, priority of the secured creditors are declared and notified insofar as RDB Act is concerned. Whether non-issuance of notification in respect of Section 26E of the SARFAESI Act, as dealt with Section 18 of the Amendment Act 44 of 2016, was a conscious decision or whether it was an inadvertent omission, lingered in our minds, which persuaded us to probe further. Ultimately, it has been noted that the Central Government has now issued a notification bearing No. S.O. 4619/E dated 26.12.2019 , published in the Gazette of India dated 26.12.2019 to the effect that Sections 17 to 19 of the SARFAESI Act (Act 44 of 2016) will come into force from 24.01.2020. Thus, it is explicitly clear that Section 26E of the SARFAESI Act was never brought into force on 01.09.2016 and it is being brought into force only with effect from 24.01.2020 In the above circumstances, we find that the ruling rendered by the learned Single Judge, observing in paragraph-7 that Section 26E of the SARFAESI Act has already come into effect from '01.09.2016' is a factual mistake. This being the position, the finding given with reference to the said provision and the further declaration/observation in 'paragraph-9' are declared as not correct or sustainable and hence, it is set aside.
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