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TMI Blog2010 (8) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... oner, loan was sanctioned on various dates and as on May 17, 2001, the outstanding amount due and payable by the second respondent was Rs. 1,83,48,089.95. It is the further contention that as the second respondent has failed to adhere to the terms and conditions of the sanction and neglected to repay the amounts due under various facilities leaving a huge outstanding amount with overdue interest, the petitioner was constrained to move the Debts Recovery Tribunal II at Chennai in O.A. No. 1277 of 2001 for recovery of the said amount along with pendenti lite and future interest at the rate of 16.50 per cent per annum with quarterly rest till the date of realisation of full. According to them, as on the date of filing of the writ petition a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 25 VST 187; [2009] 6 MLJ 659 and in M. Nagarajan v. Deputy Commercial Tax Officer and State of Tamil Nadu rep. by Secretary, Commercial Taxes Department reported in [2009] 25 VST 175 (Mad). The learned counsel for the petitioner also brought to the notice of this court that both the decisions of this court stated supra, have been confirmed on appeal by the honourable Supreme Court in S.L.P. Nos. 1838 and 1908 of 2010, respectively, dated February 11, 2010. Though the writ petition is pending for nearly three years, the respondents have not chosen to file any counter-affidavit. However, learned counsel for the State submitted that in the absence of proceedings against the property under SARFAESI Act, it is always open to the Assistant Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Security interest is defined under section 2(zf), as right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31. Security agreement is already existing between the bank and borrower, as defined under section 2(zb) which means an agreement, instrument or any other document or arrangement under which security interest is created in favour of the secured creditor including the creation of mortgage by deposit of title deeds with the secured creditor. 17.. If the status of the State is looked into, it will be evident that it can claim priority of debt over others in regard to the arrears of tax due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein it has been held as follows: "26. In the light of the above discussion, we conclude, '(i) Generally, the dues to Government, i.e., tax, duties, etc., (Crown's debts) get priority over ordinary debts. (ii) Only when there is a specific provision in the statute claiming "first charge" over the property, the Crown's debt is entitled to have priority over the claim of others. (iii) Since there is no specific provision claiming "first charge" in the Central Excise Act and the Customs Act, the claim of the Central Excise Department cannot have precedence over the claim of secured creditor, viz., the petitioner-bank. (iv) In the absence of such specific provision in the Central Excise Act as well as in Customs Act, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010 made in S.L.P. Nos. 1838 and 1908 of 2010 both the Division Bench judgments cited supra were taken on appeal and that the honourable Supreme Court has dismissed the S.L.Ps.
In view of the legal pronouncements of the Division Bench of this court and confirmed by the honourable Supreme Court, the bank is a "secured creditor" within the meaning under section 2(d) of the SARFAESI Act, 2002. The assets are secured assets with the bank and that the bank being a secured creditor, has the first charge/priority over the property. In such circumstances, the auction notice is liable to be set aside. Accordingly it is set aside. The writ petition is allowed. No costs. Consequently, connected miscellaneous petitions are closed. X X X X Extracts X X X X X X X X Extracts X X X X
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