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TMI Blog2023 (12) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... n executed and registered under Document No.3605 /2010. Pending writ petition the respondents have considered the claim of the petitioner and rejected the same vide order dated 18.04.2023. Challenging the same the writ petition in W.P.(MD)No.14488 of 2023 is filed for writ of Certiorarified Mandamus, to quash the impugned order dated 18.04.2023 and to direct the respondents 3 and 4 to lift the attachment effected on 15.02.2019 in respect to the property stated in the affidavit. 2. The brief facts of the case are that the petitioner is engaged in the business of cotton seeds. The petitioner had purchased the immovable properties admeasuring 29 acres and 51 cents situated in Survey Nos.1/3, 1/1, 158/3, 158/2, 158/6, 160/1, 160/2, 160/3, 160/5, 164/2, 157/3B, 157/5, 157/4A and 164/1, in Tirupattur Village, Tiruppattur Town Panchayat, Parankipatti Village, together with buildings and structures thereunder SARFAESI proceedings from M/s.IFCL Limited for the sale price of Rs. 2,46,00,000/- vide sale certificate dated 16.04.2010, sale deed dated 09.07.2010 and registered Document No.3605 of 2010. M/s.IFCL Limited was secured by the erstwhile owner M/s.Pillaiyar Pattiyar Textiles for vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property is attached under Customs Act on 15.02.2019. 3. The contention of the petitioner is that the attachment is effected in a mechanical way unmindful of the fact that the property does not belong to M/s.Pillaiyar Pattiyar Textiles. Hence the petitioner submitted representation dated 24.11.2020 stating the facts that as on the date of attachment the properties belonging to the petitioner company and not belonging to the defaulter, but the respondents failed to consider the petitioner's representation. Hence the petitioner had filed W.P.(MD)No.10114 of 2021 for Mandamus. Pending disposal, the petitioner again submitted a requisition letter, dated 30.01.2023, to the first respondent to lift the attachment. Since there was no response, the petitioner had filed W.P.(MD)No.5967 of 2023, seeking directions to consider the representations dated 30.01.2023. Pending consideration of the said writ petition, the third respondent issued the impugned order dated 18.04.2023, rejecting to lift the attachment, hence the W.P.(MD)No.5967 of 2023 has become infructuous and the same was dismissed on 25.04.2023. Hence, the petitioner has challenged the impugned rejection order dated 18.04.2023 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said property, the petitioner is also liable to pay the dues of the 6th respondent. Notice of attachment was served on the company by affixing the same on the front door of the company on 09.11.2004 and Mahazar was drawn to that effect and also the attachment was sent through RPAD to the address maintained by the respondents. Hence, the 6th respondent has dealt with the property even after notice of attachment. The Sales Tax Department attached the property after the transfer of title and the same was set aside. But the Customs authorities have attached the property prior to the sale, hence, the case of the 4th respondent Customs authority cannot be compared with that of the Sales Tax Department. Hence the 4th respondent prayed to dismiss the writ petition. 5. The respondents 1 to 3 in W.P.(MD)No.14488 of 2023 has submitted that the petitioner has alternate remedy, therefore, the writ petition is not maintainable. Hence, the respondents 1 to 3 in W.P.(MD)No.14488 of 2023 prayed to dismiss the writ petition. 6. Heard Mr.Hari Radhakrishnan, the Learned Counsel appearing for the petitioner, Mr.B.Saravanan, the Learned Additional Government Pleader appearing for the Registration De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 01.09.2022 and the relevant portion is extracted hereunder: "29. Now coming to the question of whether the amendments by way of Section 26E of the SARFAESI Act and Section 31B of the Recovery of Debts and Bankruptcy Act, would be applicable to the Bankers in the present case in view of the fact that Section 31B was inserted with effect from 01.09.2016, while Section 26 E was inserted and notified to come into force on 24.01.2020. The above question need not detain us long for the following reasons: a) Firstly, the Full Bench of this Court in W.P.No.2675 of 2011 etc. batch, dated 10.11.2016 has held that it would govern the rights of the parties even in respect of a pending lis. The relevant portion of the same reads as under: "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. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant Bank and the property of the partners shall also be liable to be proceeded against. No useful purpose would, therefore, be served by allowing the appeal which will only further complicate the controversy." The position here is no different. Apart from the fact that the Full Bench has while considering the applicability of Section 31 B of the Recovery of Debts and Bankruptcy Act has held that it would apply even to lis pending, which would be the position in respect of Section 26E of the SARFAESI Act as well. Even if this Court were to set aside the recovery proceedings for any reason, the Bankers/ Financial Institutions right to claim priority in terms of Section 31 B of the Recovery of Debts and Bankruptcy Act and Section 26 E of the SARFAESI Act would be available and the right to recover under the Income Tax Act, 1961 must yield to the provisions under the SARFAESI Act and the Recovery of Debts and Bankruptcy Act and thus, the above exercise may not serve any useful purpose. Therefore, the above issue appears to be a mere academic exercise and we do not intend to examine the question any further." Therefore, apply the aforesaid judgment, in the present case als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f title deeds is not registered, then at the same breath, it ought to be considered that the attachment is also not registered. Then the bank and the Customs Department are standing on the same footing. 11. Moreover, there is no provisions in the Customs Act granting 1st charge to its dues under its Act. In such circumstances, when both the parties are standing on the same footing and when there are no provisions of 1st charge to Customs Department then it ought to be seen which proceedings is first. A similar issue was considered by the High Court of Andhra Pradesh and Telangana in the case of ICICI Bank Limited Vs. Tax Recovery Officer vide order dated 04.12.2018 reported in [2019] 105 Taxman.com 257. The challenge in the said judgment is an attachment order 14.03.2018, issued by the Tax Recovery Officer under Rule 48 of second schedule. After considering section 281 and rule 48, the Court has elaborately dealt with the issue and has held that there is no provision in the Income Tax Act by which a first charge is created automatically on the properties of the assesses. And also held it is now well settled that wherever the statute does not create a first charge over the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 26 B of the Kerala General Sales Tax Act, 1963, by which a first charge was created on the property of the dealer, are inconsistent with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDB Act) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act); and (ii) whether by virtue of the non-obstante clauses contained in RDDB Act and Securitisation Act, the two Central Legislations will have primacy over State Legislations. Eventually, the Court held (i) that the RDDB Act, 1993 and Securitisation Act, 2002 do not create a first charge in favour of the secured creditor, (ii) that the relevant provisions of the Sales Tax Laws AIR 2007 Madras 118 2009 21 VST 505 (SC) are not inconsistent with the provisions of the Central Legislations, so as to attract the non obstante clause and (iii) that the charge created under the relevant Sales Tax Laws would prevail over the charge created in favour of the Bank. 36. But in a more recent decision in the Stock Exchange V. V.S. Kandalgoankar (2014) 187 Comp. Cas. 143 (SC), a question arose as to whether a lien created by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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