Priority of Charge Over Secured Creditors – City Union Bank Limited vs TRO

City Union Bank Limited Vs Tax Recovery Officer (Madras High Court)

Madras High Court clarifies charge priority in City Union Bank vs. Tax Recovery Officer case. First charge holder’s dues have precedence over tax recovery.

Introduction: The Madras High Court recently addressed the priority of charge over secured creditors in a case involving City Union Bank Limited and the Tax Recovery Officer. The petitioner sought to challenge an attachment order and sought direction for removal of the first respondent’s name from Encumbrance Certificate (EC) related to certain properties.

Background:

i. The petitioner, City Union Bank Limited, claimed that the guarantors of the third respondent had mortgaged various properties with the bank to avail credit facilities.

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