TMI Blog2018 (10) TMI 1884X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, on account of Sales Tax dues. HELD THAT:- The provisions of Section 26E of the SARFAESI Act have overriding effect. Section 37 of the MVAT Act, is expressly made subject to the provisions of any Central Act which create first charge. The fact that the provisions of Section 26E came into force by Act 44 of 2016 do not detract materially from the overriding effect of the provisions of the said Section, especially, in the facts of the case at hand, as the security interest was created in pursuance of the mortgage registered on 05.03.2010. The question of preferential claim of the Petitioner and Respondent No.3 qua the secured assets can be considered and determined after providing opportunity to the Respondent No.3 to put forth its c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endorsement of attachment to the tune of ₹ 13,63,744/as of 10.11.2015, on account of Sales Tax dues. 3. The learned Counsel for the Petitioner submitted that in view of the provisions contained in Section 26E of the SARFAESI Act, the secured creditor has priority over the claims of even statutory creditors. It was further submitted that the issue has been considered by a Full Bench of Madras High Court in Writ Petition 2675 of 2011 along with connected matters, in the matter of The Assistant Commissioner (CT) Vs. The Indian Overseas Bank Anr. 4. In the aforesaid case, the Full Bench of the Madras High Court, after considering the provisions of Section 31B of The Recovery of Debts and Bankruptcy Act, 1993, which are pari mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 6. In contrast, it was sought to be urged on behalf of Respondent No.4 that the Petitioner did not tender the documents to the registering authority for proper adjudication and levy of stamp duty. Mr. Namdeo Madhukar Patil, SubRegistrar, Dindori has sworn an Affidavit to that effect. Upon perusal of the Affidavit, this Court noticed that Respondent No.4 is also placing reliance on the amended Rule 44 of the Maharashtra Registration Rules, 1961. Clause (i) of the said Rule, reads as under: (i) that, if the transaction which is intended by the document, is prohibited by any existing act of Central or State Government, then the true copy of requisite permission or No Objection Certificate from the Competent Authority under the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable to the Central Government or State Government or local authority. Explanation. For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 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. Section 37 of the Maharashtra Value Added Tax Act, 2002 (MVAT Act) reads as under: 37. Liability under this Act to be the first charge [(1)] Notwithstanding anything contained in any contract to the contrary, but subject to any provision regarding creation of first charge in any Central Act f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in contending in normal circumstances in view of the provisions of SARFAESI Act (Unamended) primacy can be extended to the provisions like Section 38C of the Bombay Sales Tax Act or Section 37 of the MVAT Act. Section 13 envisages application of money received by the secured creditor and by adopting any of the measures specified in Section 13 (4) merely regulates distribution of money received by the secured creditor and it does not create first charge in favour of the secured creditor. Though in normal course in view of Section 35 of the SARFAESI Act, 2002 no priority can be claimed by the bank or financial institutions over the State's statutory first charge in the matter of recovery of dues of sales tax etc. However, in respect of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of preferential claim of the Petitioner and Respondent No.3 qua the secured assets can be considered and determined after providing opportunity to the Respondent No.3 to put forth its case. In the meanwhile, however, the registering authority is not justified in refusing to register the instrument, and therefore, we are inclined to pass the following directions: (i) The Petitioner shall tender the Sale Certificate, registration of which is sought, before the Respondent No.4 tomorrow. (ii) Respondent No.4 shall carry out the necessary process of adjudication and determine the stamp duty to be levied on the said instrument by 01.11.2018. (iii) The Registry is directed to list the matter on 02.11.2018. - - TaxTMI - TMIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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