Canara Bank Vs State of Karnataka (Karnataka High Court)
Karnataka High Court held that the charge created earlier in time would have precedence. Thus, since charge under the SARFAESI Act was created before the charge under the GST Act, the SARFAESI Act charge would take precedence.
Facts-
The petitioner contends that Respondents No. 4 and 5 had availed a mortgage loan from the petitioner bank for their partnership concern. As regards which the residential flat it was provided as security for the loan. The loan became a nonperforming asset on 1.12.2020.
Pursuant thereto, a notice u/s. (2) of Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act) was issued on 16.11.2022, calling upon Respondents No. 4 and 5 to clear the outstanding loan amount of Rs.42,09,855/- as of 31.10.2022.
Since Respondents No. 4 and 5 did not repay the loan, a notice u/s. 13(4) of the SARFAESI Act was issued on 24.05.2024. A further notice was issued on 3.08.2024 to the guarantor. Possession of the property along with the keys was taken on 17.09.2024.
At this stage, it came to light that Respondents No. 4 and 5 also owed certain amounts to the Commercial Taxes Department as GST to the tune of Rs.1,38,25,684/-. Respondent No.1 recovered Rs.80,54,200/- by sale of various assets but also created a charge/encumbrance on the aforesaid apartment.
