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TMI Blog2018 (2) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are necessary for the disposal of the writ petition are as hereunder: The petitioner had advanced certain credit facilities to M/s.Rathna Stores Private Limited upto an aggregate limit of Rs. 21,50,00,000/- which credit was secured by way of a guarantee by the second respondent. The second respondent created a mortgage by deposit of title deeds over his property at No.19, Madley Road, & Door No.8, New No.19, Thukkaram 3rd Street, T. Nagar, Chennai 600 017, in favour of the petitioner bank. The mortgage by deposit of title deeds was recorded by a memorandum and registered as Document No.2015 of 2010 dated 21.09.2010 in the office of the Sub-Registrar, T.Nagar. It is stated that subsequently the credit facility was enhanced to Rs. 30,50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dders because M/s. Pothys Private Limited were in possession of the property and they secured an interim order in W.P.No.15785 of 2016. According to the said order, the bank was directed to hand over physical possession of the property to the said Company and further directed the Company to redeliver physical possession to the bank upon sale of the property. Subsequently it appears that the petitioner bank came to know that there were attachments made by the Income Tax Department over the said property. On verification, it was found that by order dated 20.11.2015, the first respondent attached the property and also registered the same on the file of the Sub-Registrar, T.Nagar, as document No.42 of 2015. Similarly on 02.12.2016, the first re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Section 281 (1) of Income Tax Act. 6. So far as the first question is concerned, the issue is no longer res integra and has been considered by the full bench of this court in WP.Nos.6267 of 2006 and 253 of 2011 dated 10.11.2016. Before the full bench, the question which arose for consideration was whether the financial institution, which is a secured creditor or the Department of the Government concerned, would have priority of charge over the mortgaged property in question with regard to the tax and other dues and as to the status and rights of a third party purchaser of the mortgaged property in question. 7. The questions were answered by the full bench in the following manner:- "The writ petitions have been listed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secured creditors in payment of debt shall be subject to the provisions of that Code. 3. There is, thus, 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 instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracted. This question was considered by the Division Bench of the High Court of Gujarat in the case of Tax Recovery Officer Vs. Industrial Finance Corporation of India reported in (2012) 346 ITR Page 11. The question involved in the said writ petition was whether, in view of sub-section (2) of Section (1) Section 281 (1) of the Income-Tax Act, the charge created against the property in question by mortgaging the property by the borrower in favour of the financial institution during pendency of any proceedings under the Income Tax Act is void as against any claim in respect of the tax and other sum payable by the assessee in favour of the revenue. This question was answered in the following terms:- 25. The petitioner-revenue, the Tax Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accepted. 27. Under the proviso to sub-section (1) of Section 281, the charge or transfer shall not be void if made-(i) for adequate consideration and without notice of the pendency of such proceedings, or (ii) without notice of tax or other sum payable by the assessee. Thereis nothing on record to suggest that any notice was given by the revenue to the 1st respondent relating to pendency of such income-tax proceeding or liability of any tax payable by the 2nd respondent assessee in favour of the petitioner revenue cannot take the plea that the 1st respondent had knowledge of the pendency of the proceeding and thereby it is open to the 1st respondent to derive advantage of clause (i) of the proviso to sub-section (1) of Section 281 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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