City Union Bank Limited Vs ITO (Madras High Court)
Madras High Court held that City Union Bank Limited being a first charge holder can bring the property for sale and after settling down of all the dues, the remaining sale proceeds of the property can be transferred to second charge holder i.e. income tax department.
Facts- The petitioner bank submits that the third respondent borrowed money from the petitioner bank for which the property of the fifth respondent, who is a guarantor, was provided as security and the Memorandum of Deposit of title deeds dated 06.02.2017 was also registered in favour of the petitioner. The learned counsel submits that when enquired with the second respondent with regard to the encumbrance of the property, the petitioner came to know that there is an attachment by the 1st respondent, Income Tax Department as per the Encumbrance Certificate dated 01.06.2017.
The main grievance of the petitioner is that the petitioner is the first charge holder of the property since the property was mortgaged by way of deposit of title deeds on 06.02.2017, whereas the charge created by the first respondent was on 01.06.2017 and therefore, the petitioner is entitled as a priority mortgagor. It is argued that the petitioner bank is not in a position to bring the property for sale, since the Income Tax Department has passed the impugned order of attachment and unless the said attachment order of the first respondent is not raised.
