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2022 (9) TMI 251 - HC - Income TaxRecovery proceedings of tax dues - preferential right - secured creditors - Income Tax Department’s preferential right to recovery of debts over other creditors - whether the plaintiff or the defendant no.3 has a preferred lien in respect of the amount deposited in the said FDR lying with the defendant no.1 Bank? - HELD THAT:- Income Tax Department’s preferential right to recovery of debts over other creditors is confined only to ordinary or unsecured creditors. It would not extend to secured creditors. The ratio of the aforesaid judgment is fully applicable to the facts and circumstances of the present case. In the present case, the FDR in question was created on 27th March, 2012 payable to the plaintiff and the lien was confirmed by the defendant no. 1 bank in favour of the plaintiff on the said date. This was much before the notice dated 5th February, 2013 issued on behalf of the Income Tax Department to the defendant no.1 Bank. The lien in favour of the plaintiff makes the plaintiff a secured creditor and therefore, the right of the plaintiff would prevail over that of the Income Tax Department. Consequently, the plaintiff company would be entitled to the amounts under the said FDR. The only surviving issue as noted in the order dated 6th May, 2019, is decided in favour of the plaintiff and against the defendants. The suit is decreed in the aforesaid terms. Defendant no.1 Bank states that the original amount has throughout been kept in an interest bearing fixed deposit. The defendant no.1 Bank is directed to release the aforesaid amount along with accrued interest in favour of the plaintiff company within six weeks from today. If the aforesaid amount is not released within six weeks, the defendant no.1 bank would be liable to pay interest @ 8% per annum on the said amount after the expiry of the aforesaid period of six weeks.
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