Janaseva Sahakari Bank Ltd. Vs State of Maharashtra (Bombay High Court)
The petitioner is a bank. It lent money to a borrower. The borrower mortgaged its property. The bank registered security interest with CERSAI. The loan was declared as NPA. The bank issued notice under section 13(2) of the SARFESAI Act. It filed securitization application. In the mean time, the sales tax and GST authorities initiated recovery action under section 79(1) of GST Act against the borrower. The sales tax authorities sought to attach the said properties by creating mutation entries in the land revenue records under the Maharashtra Land Revenue Code. The petitioner bank sought to auction the said properties, which was objected to by the Sales Tax Authorities claiming they have “first charge” over the said assets. Hence, petition came to be filed.
The Hon’ble Bombay High Court allowed the petition. It held:
(i) in terms of amended section 26E of the SARFESAI Act, the petitioner bank register its security interest with CERSAI; whereas the sales tax authorities did not register any such claim;
(ii) the secured creditor would have priority over the Sales tax department;
(iii) section 37 of the VAT Act being State Acts could not override the Central Legislation;
(iv) relies upon Full Bench judgment in the case of Janta Sahkari Bank case and Indian bank case;
(v) set aside the mutation entry in the land revenue records.
The matter was argued by Ld. Counsel Bharat Raichandani along with Associate Aman Mishra
