TMI Blog2018 (2) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Division Bench of the High Court of Gujarat in the case of Tax Recovery Officer Vs. Industrial Finance Corporation of India [2012 (8) TMI 541 - Gujarat High Court ] as held that transfer of property which was for a valuable consideration and which was without notice of the pendency of the proceedings under the Sales-tax Act and therefore, the transfer falls under the exception created by the proviso to Section 33-A of the Madhyapradesh General Sales Tax Act, 1958. Thus, by applying the law laid down in the above mentioned documents question No.(ii) has to be answered in favour of the petitioner bank and against the respondents. Writ Petition is allowed and the attachment shall stand lifted and the 1st respondent shall intimate the Sub-Registrar, T. Nagar to delete the entries in the books maintained by him within a period of three weeks from the date of receipt of a copy of this order. - W.P.No.25867 of 2017 - - - Dated:- 25-1-2018 - T. S. Sivagnanam, J. For Petitioner : Mr. P. Raghvnathan for T.S.Gopalan Co. For Respondents : Mr. A. N. Jeya Pradhap Standing Counsel ORDER The petitioner is Canara Bank a Nationalised Bank represented by its Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rections and did not effect any payment. The property was brought for sale on various dates, but, there were no bidders and the petitioner bank came to know that there were no bidders 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 respondent attached the property and attachment was registered as document No.18 of 2016. The petitioner would submit that they being secured creditors and the mortgage having been created in their favour by registered instrument was of the year 2014 and the attachment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights of a third party purchaser of the mortgaged property in question. 2. We are of the view that if there was at all any doubt, the same stands resolved by view of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, Section 41 of the same seeking to introduce Section 31B in the Principal Act, which reads as under:- 31B. Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. Explanation:- For the purpose of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code. 3. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 Recovery Officer, has not disputed the fact that no notice of pendency of any income-tax proceeding was served on the 1st respondent-financial institution on or before the equitable mortgage made by the 2nd respondent-borrower Company in favour of the 1st respondent-financial institution. It is not the case of the petitioner-revenue that no adequate consideration was made before creating the charge by equitable mortgage by the 2nd respondent in favour of the 1st respondent-financial institution. 26. It was contended on behalf of the petitioner-revenue that the 1st respondent-financial institution before allowing the loan in favour of the 2nd respondent-borrower Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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