TMI Blog2019 (5) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... r would be inoperative. The Apex Court in its judgment titled as UCO Bank and anr. vs. Dipak Debbarma and ors., [ 2017 (1) TMI 742 - SUPREME COURT ] has held that in case of repugnancy or inconsistency between the provisions of Central and State enactment, the Central law would prevail. The proceedings under the SARFAESI Act would, without a doubt, hold primacy over the MPID Act. Whether the recovery of a secured debt would take precedence over a crown debt - HELD THAT:- The Supreme Court, time and again in its various pronouncements, has reiterated that the right of a secured creditor to recover its debts, will always be a prior right, even over the right of recovery of a crown debt or any other debt - Reliance placed in the case of M/s Rana Girders Ltd. vs. Union of India [ 2013 (8) TMI 540 - SUPREME COURT ] - thus it is evident that debt which is secured under the provisions of a Statute becomes the first charge over the property in question and has to give way to a crown debt, which is in the nature of an unsecured debt. A reading of Section 31-B of Recovery of Debts and Bankruptcy Act, 1993, which starts with a non-obstante clause, makes it amply clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the writ petitions is the same. The brief facts of the case are being extracted from CWP No.12188 of 2018. 2. The instant writ petition has been filed under Articles 226/227 of the Constitution of India inter alia for quashing the order dated 14.03.2018 (Annexure P-12) passed by the Sub Registrar, UT, Chandigarh respondent No.2 and order dated 16.04.2018 (Annexure P-16) passed by the Deputy Commissioner-cum-Registrar, UT, Chandigarh-respondent No.1. 3. From the record, it is apparent that the earlier owner of the property in question i.e. M/s Rahul Sales Ltd., through its Directors, Late Onkar Anand, Rahul Anand and Renu Anand had availed of a loan facility in the amount of ₹ 13.15 crores from respondent No.3 Punjab National Bank against security by way of equitable mortgage of House No.1037, Plot No.3, Street No.E, Sector 27-B, Chandigarh on 17.12.2013. The respondent-bank had got the details of the secured asset registered with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India on 31.03.2014. The said loan account subsequently became irregular as the borrowers could not maintain financial disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure P-16) passed by respondents No.2 and 1 respectively refusing to register the Sale Certificate dated 31.07.2017 (Annexure P-9) in favour of the petitioners/auction purchasers were not only illegal and arbitrary but also more specifically violated the provisions of 1908 Act as well as the SARFAESI Act. Learned counsel further urged that the embargo sought to be enforced by respondent No.4 -Sr. Inspector of Police, Economic Offences Wing, Mumbai and respondent No.5 -Govt. of Maharashtra against the property in question by issuance of an attachment order was liable to be set aside as the provisions of the SARFAESI Act would have precedence over other laws when recovery of a secured debt is sought. Learned counsel for the petitioners urged that their rights could not be curtailed because of attachment under the MPID Act since they had made full and final payment of the bid amount. The petitioners also drew our attention to the fact that the attachment of property in question vide impugned Notification dated 22.06.2015 had still not become absolute (as per the provisions of MPID Act) as the designated Court had yet to pass an order under Section 7(6) of MPID Act. Learned counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant to refer to the provisions of Article 254 of the Constitution of India. Article 254 of the Constitution of India explicitly lays down that in case of repugnancy or inconsistency between Central Legislation and State Legislation, the former would prevail. For facility of reference, Article 254 is reproduced as under: 254 Inconsistency between laws made by Parliament and laws made by the Legislatures of States - ( 1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2), the law made by Parliament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. ( 2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 67 of the aforesaid opinion which may be usefully noticed is in the following terms: 67. Article 254 of the Constitution makes provision first, as to what would happen in the case of conflict between a Central and State law with regard to the subjects enumerated in the Concurrent List, and secondly, for resolving such conflict. Article 254(1) enunciates the normal rule that in the event of a conflict between a Union and a State law in the concurrent field, the former prevails over the latter. Clause (1) lays down that if a State law relating to a concurrent subject is repugnant to a Union law relating to that subject, then, whether the Union law is prior or later in time, the Union law will prevail and the State law shall, to the extent of such repugnancy, be void. To the general rule laid down in clause (1), clause (2) engrafts an exception viz., that if the President assents to a State law which has been reserved for his consideration, it will prevail notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a concurrent subject. In such a case, the Central Act, will give way to the State Act only to the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht, even over the right of recovery of a crown debt or any other debt. We are fortified in our view by the judgments of the Supreme Court in Dena Bank vs. Bhikhabhai Prabhudas Parekh, 2000(5) SCC 694, Union of India vs. SICOM Ltd., 2009(2) SCC 121 and M/s Rana Girders Ltd. vs. Union of India, 2013(10) SCC 746 . The relevant extract from M/s Rana Girders Ltd.'s case is reproduced as under: 18. Insofar as dues of the Government in the form of tax or excise etc. are concerned, the Court in SICOM Ltd.'s case (supra) was of the opinion that rights of the Crown to recover the dues would prevail over the right of the subject. The Crown debt means the debts due to the State or the King. Such creditors, however, must be held to mean unsecured creditors. The principle of Crown debt pertains to the common law principle. When Parliament or the State Legislature makes an enactment, the same would prevail over the common law and thus the common law principles which existed on the date of coming into force of the Constitution of India, must yield to a statutory provision. A debt, which is secured or which by reason of the provisions of a statute becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject is complete and perfect before that of the king commences, the rule does not apply, for there is no point of time at which the two rights are at conflict, nor can there be a question which of the two ought to prevail in a case where one, that of the subject, has prevailed already. In Giles vs. Grover, (1832) 9 Bing 128:131 ER 563 it has been held that the Crown has no precedence over a pledgee of goods. In Bank of Bihar v. State of Bihar, (1972) 3 SCC 196 the principle has been recognised by this Court holding that the rights of the pawnee who has parted with money in favour of the pawnor on the security of the goods cannot be extinguished even by lawful seizure of goods by making money available to other creditors of the pawnor without the claim of the pawnee being first fully satisfied. Rashbehary Ghose states in Law of Mortgage (TLL,7th Edn.,p.386) it seems a government debt in India is not entitled to precedence over a prior secured debt. 20.xxx 21.xxx 22.xxx 23. We may notice that in the first instance it was mentioned not only in the public notice but there is a specific clause inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus: 7. Section 31-B of the Act as amended w.e.f. 01.09.2016 (sic.) reads as under: 31B. Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realize 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. 8. A perusal of the above provision leaves no manner of doubt that the rights of a secured creditor to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall have to 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. 9. Hence, it clearly emerges that the revenues, taxes, cesses and rates due to the Central Government, State Government or a Local Authority shall not have precedence or prefere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. Explanation - A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. 20. Further Clause (2) of Article 226 of the Constitution of India provides that the power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. 21. Suffice it to say, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch person is not within those territories. ( 3) xxxxx ( 4) xxxxx 11. On a plain reading of the amended provisions in Clause ( 2), it is clear that now High Court can issue a writ when the person or the authority against whom the writ is issued is located outside its territorial jurisdiction, if the cause of action wholly or partially arises within the court s territorial jurisdiction. Cause of action for the purpose of Article 226(2) of the Constitution, for all intent and purpose must be assigned the same meaning as envisaged under Section 20(c) of the Code of Civil Procedure. The expression cause of action has not been defined either in the Code of Civil Procedure or the Constitution. Cause of action is bundle of facts which is necessary for the plaintiff to prove in the suit before he can succeed. 12. xxxxx 13. In the case of State of Rajasthan and Others vs. M/s Swaika Properties and Another, (1985) 3 SCC 217 , the fact was that the respondent- Company having its registered office in Calcutta owned certain land on the outskirts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on them by the Special Officer, Town Planning Department, Jaipur under Section 52(2) for the grant of an appropriate writ, direction or order under Article 226 of the Constitution for quashing the notification issued by the State Government under Section 52(1)of the Act. If the respondents felt aggrieved by the acquisition of their lands situate at Jaipur and wanted to challenge the validity of the notification issued by the State Government of Rajasthan under Section 52(1)of the Act by a petition under Article 226 of the Constitution, the remedy of the respondents for the grant of such relief had to be sought by filing such a petition before the Rajasthan High Court, Jaipur Bench, where the cause of action wholly or in part arose. 14. xxxxx 15. In Kusum Ingots Alloys Ltd. vs. Union of India and Another, (2004) 6 SCC 254 , this Court elaborately discussed Clause (2) of Article 226 of the Constitution, particularly the meaning of the word cause of action with reference to Section 20(c) and Section 141 of the Code of Civil Procedure and observed:- 9. Although in view of Section 141 of the Code of Civil Proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. This Court observed: 17. It is seen from the above that in order to confer jurisdiction on a High Court to entertain a writ petition or a special civil application as in this case, the High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts do constitute a cause so as to empower the court to decide a dispute which has, at least in part, arisen within its jurisdiction. It is clear from the above judgment that each and every fact pleaded by the respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the court s territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no [pic] bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the court concerned. If we apply this principle then we see that none of the facts pleaded in para 16 of the petition, in our opinion, falls into the category of bundle of facts which would constitute a cause of action ..... X X X X Extracts X X X X X X X X Extracts X X X X
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