Petitioner, relying on SC in Punjab National Bank Vs. Union of India, sought registration of sale certificate by Canara Bank, claiming secured creditor status over State excise dues.
Directed respondents to register sale certificate dated 19.05.2021 issued by Canara Bank.
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IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
CWP No.7915 of 2021 Decided on: 18.05.2023
KULDEEP SINGH
……..PETITIONER
Versus
STATE OF H.P. AND ORS.
…….RESPONDENTS
Coram
HON’BLE MR. JUSTICE TARLOK SINGH CHAUHAN, ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE SATYEN VAIDYA, JUDGE WHETHER APPROVED FOR REPORTING?
Tarlok Singh Chauhan, A.C.J. (oral)
The moot question in this petition is as to whether the different departments of State including Excise & Revenue will have priority over the secured creditor’s debt?
as, ‘Punjab National Bank Vs. Union of India & Ors. ’
decided on 24.02.2022. It will be apt to reproduce the relevant paras of the judgment, which read as under:
“37. Secondly coming to the issue of priority of secured creditor’s debt over that of the Excise Department, the High court in the impugned judgment has held that “In view of the matter, the question of first charge or second charge over the properties would not arise.” In this context, we are of the opinion that the High Court has misinterpreted the issue to state that the question of first charge or second charge over the properties, would not arise. Xxxxxx 3842.
………………... 43. In view of the above, we are of the firm opinion that the arguments of the learned counsel for the Appellant, on the second issue, hold merit. Evidently, prior to insertion of Section 11E in the Central Excise Act, 1944, w.e.f.08.04.2011, there was no provision in the Act of 1944 interalia, providing for First Charge on the property of the Assessee or any person under the Act of 1944. Therefore, in the event like in the present case, where the land building, plant machinery, etc. have been mortgaged/hypothecated to a secured creditor, having regard to the provision contained in Section 2(zc) to (zf) of SARFAESI Act, 2002, read with provisions contained in Section 13 of the SARFAESI ACT,2002, the Secured Creditor will have a First Charge on the Secured Assets. Moreover, Section 35 of the SARFAESI Act, 2002 inter alia, provides that the provisions of the SARFAESI Act, shall have overriding effect on all other laws. It is further pertinent to note that even the provisions contained in Section 11E of the Central Excise Act, 1944 are subject to the provisions contained in the SARFAESI Act, 2002.xxxxx 4446.…………………. 47. To conclude, the Commissioner of Customs and Central Excise could not have invoked the powers under Rule 173 Q(2) of the Central Excise
Rules, 1944 on 26.03.2007 and 29.03.2007 for confiscation of land, buildings etc., when on such date, the said Rule 173Q(2) was not in the Stature books, having been omitted by a notification dated 12.05.2000. Secondly, the dues of the secured creditor, i.e. the Appellantbank, will have priority over the dues of the Central Excise Department, as even after insertion of Section 11E in the Central Excise Act, 1944 w.e.f. 08.04.2011, and the provisions contained in the SARFAESI Act, 2002 will have an overriding effect on the provisions of the Central Excise Act of 1944. xxxx”
hereinabove, this Court is left with no other option, but to allow this petition, by directing the respondents to register the sale certificate, dated 19.05.2021, issued by the Canara Bank, whereby the property in question has been sold to the petitioner. Ordered accordingly.
(Tarlok Singh Chauhan) Acting Chief Justice
(Satyen Vaidya) Judge
May 18, 2023 (himani)
1 issue framed by the court
Whether secured creditor has priority over State excise department dues on mortgaged properties
Colour shows how this judgement treated each authority
Punjab National Bank Vs. Union of India & Ors.Relied on¶14
(2022) 7 Supreme Court Cases 260
5 provisions across 4 enactments
Kuldeep Singh
State of H.P.
Tarlok Singh Chauhan
Satyen Vaidya
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
