Union bank of India Vs Deputy Commissioner of State Tax (Bombay High Court)
The Bombay High Court heard a batch of seven writ petitions involving a common issue concerning the priority of secured creditors’ dues vis-à-vis statutory dues claimed by various departments of the State Government. During the hearing, one writ petition (Writ Petition No. 13658 of 2024 filed by Janseva Sahakari Bank Ltd.) was de-tagged due to the absence of the petitioner and directed to be heard separately. The remaining six petitions comprised four petitions filed by Union Bank of India as a secured creditor and two petitions filed by auction purchasers. The petitioners challenged attachment orders, intimation letters issued to housing societies, and entries of boja/encumbrances in revenue records affecting secured assets.
The petitioners contended that the controversy stood concluded by the Full Bench judgment of the Bombay High Court in Jalgaon Janta Sahakari Bank Ltd. & Anr. v. Joint Commissioner of Sales Tax & Anr., which held that secured creditors enjoy priority under Section 26E of the SARFAESI Act. They argued that subsequent Division Bench decisions had consistently followed the Full Bench ruling and that the objections raised by various State departments were therefore untenable.
The State resisted the petitions principally on three grounds. First, it relied upon Section 82 of the Maharashtra Goods and Services Tax Act, 2017, particularly the expression “notwithstanding anything to the contrary contained in any law.” Secondly, it relied upon the amendment to Section 37 of the Maharashtra Value Added Tax Act creating a first charge in favour of the State. Thirdly, it contended that several attachment orders had been issued before the amendment introducing Section 26E into the SARFAESI Act on 24 January 2020, thereby preserving the State’s priority.
