TMI Blog2017 (12) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... , is entitled to exercise their rights under Section 35 of the SARFAESI Act, and the question of issuing notice under Section 226 (3) of the Income Tax Act does not arise. See case of Assistant Commissioner (CT) Anna Salai-III Assessment Circle Vs. The Indian Overseas Bank [2016 (12) TMI 373 - MADRAS HIGH COURT] Thus as there is no dispute to the fact that the petitioner is a secured creditor, and in such circumstances, they have precedence over all the dues, payable to the Central Government and the State Government. The impugned notice cannot be enforced against the petitioner/Bank, and it is held to be not sustainable in law. - Decided against revenue - Writ Petition No. 14421 of 2017, W.M.P. No. 15631 of 2017 - - - Dated:- 30-11-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BFI Act), the secured creditor shall have precedence over all dues, over the Central and the State Government. It is further contended that, the petitioner, being a secured creditor, is entitled to exercise their rights under Section 35 of the SARFAESI Act, and the question of issuing notice under Section 226 (3) of the Income Tax Act does not arise. In support of the said contention, the learned counsel for the petitioner/Bank referred to the following decisions:- i) UTI Bank Ltd., Vs. Deputy Commissioner of Central Excise, reported in Manu/TN/0188/2007. ii) Stock Exchange Vs. V. S. Kandalgaonkar, reported in Manu/SC/0876/2014. iii) Dena Bank Vs. Bhikabhai Prabhudas Parekh Co. reported in Manu/SC/0317/2000. iv) ICIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At this juncture, it would be useful to refer to the relevant portion of the decision of the Hon'ble Full Bench, which is extracted as hereunder:- ''a) As to whether the Financial Institution, which is a secured creditor, or the department of the government concerned, would have the 'Priority of Charge' over the mortgaged property in question, with regard to the tax and other dues. b) As to the status and the rights of a third party purchaser of the mortgaged property in question.'' 3. The Full Bench after taking note of the Enforcement of Security interest and Recovery of Debts and Laws and Miscellaneous Provisions (Amendment) Act, 2016, held that there is no doubt that the rights of the a secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, no doubt that the rights of a secured creditor to realise secured debts due and payable by sale of assets over which security interest is created, would have priority over all debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority. This section introduced in the Central Act is with ''notwithstanding'' clause and has come into force from 01.09.2016. 4. The law having now come into force, naturally it would govern the rights of the parties in respect of even a lis pending. 5. The aforesaid would, thus, answer question (a) in favour of the financial institution, which is a secured creditor having the benefit of the mortgaged propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Full Bench referred supra. That apart the interpretation given by the Income Tax Department to the Assignment Agreement dated 07.12.2017, stating that it should be treated as a sale transaction is not tenable. This is so because, the terms and conditions of the agreement clearly shows it is an assignment of security interest created in favour of the Indian Bank and by that the Indian Bank had transferred in favour of the petitioner, the loans disbursed under the financing documents together with all its rights, title and interest in the financing documents and any underlying Security Interests, Pledges and/or guarantees in respect of such loans. 6. Therefore the petitioner being the successor would step into the shoes of the financing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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