9911796707
TMI Blog2024 (7) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure-b to dated: 20.02.2015 to enable the petitioner to sell the property to realize its dues. (iii) Issue a direction/mandamus to the Sub-Registrar, Mangaluru Taluk, Mangaluru, regarding cancellation of the direction given by Respondent No.2 prohibiting from allowing any sale/transfer/alienation/modification in respect of the Schedule Property. (iv) Issue any other direction or order as deemed just in the circumstances and the probabilities of the case and the same may kindly be considered in the interest of justice and equity." 2. The material on record discloses that for the purpose of availing two housing loans in sums of Rs.1,70,00,000/- and Rs.1,24,00,000/-, from the petitioner - Bank, the 3rd respondent mortgaged the schedule property along with the other property on 20.02.2015 by way of registered Memorandum of Title Deeds and letter handing over title deeds of the properties. Since the 3rd respondent defaulted in repayment of loan, the loan accounts were classified as 'NPA' by the petitioner - Bank. It is contended that when the petitioner - Bank was contemplated initiation of proceedings under the SARFAESI Act, 2002, it learnt that the 2nd respondent had seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the schedule property which had been mortgaged in favour of the petitioner -Bank much prior / earlier to Section 37A being inserted in FEMA and coming into force for the purpose of the present case. (iii) That by virtue of Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 (for short 'the RDBI Act'), which applies to proceedings under the SARFAESI Act, the rights of the secured creditors viz., petitioner - Bank to realise secured debts due and payable to them by sale of assets, over which security interest is created shall prevail and shall be paid in priority over all other debts / dues including Government dues viz., revenues, taxes, cesses and rates due to the respondents 1 and 2. (iv) That the impugned seizure order dated 31.03.2022 passed under Section 37A (1) of the FEMA is illegal, arbitrary and without jurisdiction or authority of law and the same deserves to be quashed. In support of his submissions, learned Senior counsel relied upon the following judgments:- (i) SBICAP Ventures Ltd, Vs. Joint Director, Directorate of Enforcement (Bengaluru Zonal Office) and others-W.P.No.1360/2023 dated 20.03.2023(Bombay); (ii) Solidaire India Ltd., Vs Fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the SARFAESI Act would prevail over the provisions of other earlier enactments, under which, amounts are allegedly due to the Central Government; it is well settled that if there are two special Acts / enactments, it is the later enactment that shall prevail; in the instant case, it cannot be gainsaid that the FEMA (a special law / Act) is an earlier enactment, while the SARFAESI Act (a special law / Act) is a later / subsequent enactment which would prevail over FEMA in the light of the principles laid down by the Apex Court in several judgments including Solidaire India's case supra, wherein it was held as under:- 7. Coming to the second question, there is no doubt that the 1985 Act is a special Act. Section 32 (1) of the said Act reads as follows: "32. Effect of the Act on other laws.-(1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Articles of Associati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under FEMA are clearly without jurisdiction or authority of law, inasmuch as since the schedule property had already been mortgaged in favour of the petitioner - Bank by the 3rd respondent, prior to the impugned order, the 2nd respondent was neither entitled to nor empowered to pass the impugned order of seizure / attachment of the property which had already stood mortgaged in favour of the petitioner prior to the impugned order; in other words, since the schedule property had already been mortgaged by the 3rd respondent in favour of the petitioner - Bank, by virtue of Section 26E of the SARFAESI Act which overrides and prevails over alleged dues of 3rd respondent under FEMA, the 2nd respondent was not entitled or empowered to invoke 37A of FEMA because of the overriding effect contained in 26E of the SARFAESI Act. Under these circumstances, I am of the view that the impugned order passed by the 2nd respondent is illegal and arbitrary in addition to being without jurisdiction or authority of law and the same deserves to be quashed. 15. A perusal of the material on record will indicate that the schedule property had been mortgaged in favour of the petitioner - Bank on 20.02.2015; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the following issues : "(a) As to whether the Financial Institution, which is a secured creditor, or the Department of the Government concerned, would have the 'priority of charge' over the mortgaged property in question, with regard to the tax and other dues. (b) As to the status and the 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 purposes of this section, it is hereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der FEMA are not specifically covered by either Section 26E of the SARFAESI Act or by Section 31B of the RDBI Act is concerned, in the light of the express language employed in both the provisions which contemplate debts, government dues, revenues, taxes, cesses and rates due to the Central Government etc., the alleged dues under FEMA being payable to the respondents 1 and 2 who represent the Central Government, the same are covered by the aforesaid provisions and as such, the said contention urged by the respondents 1 and 2 cannot be accepted. 20. Insofar as the contention as regards availability of equally efficacious and alternative remedy by way of an appeal under Section 37A (5) of the FEMA is concerned, in the light of the findings recorded by me hereinbefore that the impugned order is without jurisdiction or authority of law and the same is not only illegal and arbitrary but also contrary to the provisions contained in the SARFAESI Act and RDBI Act and consequently, mere availability of a remedy by way of an appeal cannot be construed or treated as denuding this Court of its jurisdiction under Article 226 of the Constitution of India and the said contention of the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
