# In the matter of Jalgaon Janta Sahakari Bank Ltd. Versus Joint Commissioner of Sales Tax Nodal 9, Mumbai & Anr.

> HC judgment dated 2022-08-30. Citation: TCN-2022-HC-00026. This is a batch of writ petitions before the High Court of Judicature at Bombay concerning the…

- **Court:** HC
- **Order date:** 30 Aug 2022
- **Citation:** TCN-2022-HC-00026
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/jalgaon-janta-sahakari-bank-ltd-versus-joint-commissioner-of-sales-tax-nodal-9-m-db328337

## Summary

### Background

This is a batch of writ petitions before the High Court of Judicature at Bombay concerning the priority of dues between secured creditors (banks and financial institutions) and the taxing/revenue departments of the Central/State Governments, particularly in the context of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the Recovery of Debts and Bankruptcy Act, 1993 (RDDB Act). The core issue revolves around who has the legal right to claim priority for liquidation of dues from a borrower/dealer upon enforcement of security interest and sale of secured assets.

## Facts

Several banks and financial institutions have filed writ petitions against the State of Maharashtra and its tax authorities, contesting the attachment and proposed sale of properties mortgaged to them by defaulting borrowers. The banks claim priority over the tax dues based on the SARFAESI Act and RDDB Act, while the state government asserts its statutory first charge on the properties under various state tax laws. The key facts include: (1) Various loans were advanced by banks to different borrowers, secured by mortgages of immovable properties. (2) The borrowers defaulted on their loan repayments, leading to the accounts being classified as Non-Performing Assets (NPAs). (3) The banks initiated recovery proceedings under the SARFAESI Act and RDDB Act. (4) The State

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## Issues and analysis

### Issue 1: Whether a secured creditor (as defined in the SARFAESI Act and the RDDB Act) have a prior right …

**Ratio:** The court holds that the dues of a secured creditor (subject to CERSAI registration and

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**Reasoning:** The court analyzes the provisions of the SARFAESI Act, RDDB Act, and various state tax

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**Interpretation:** The court interprets the relevant legal provisions to mean that the SARFAESI

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**Application:** The court applies the legal principles to the specific facts of the writ

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## Parties

- **Judges:** DIPANKAR…; M. S. K…; +1 more
- **Appellants:** Jalgaon Janta…
- **Respondents:** Joint Commissioner…
- **Other parties:** Kohi…
- **Advocates:** Rajiv N…; Mehek Cho…; +10 more

## Timeline

- **1960-01-01 — Bombay High Court…**: Reference to rule 8 of Chapter I of the Bombay High Court Appellate Side Rules, 1960,…
- **1993-01-01 — Enactment of the Recovery of Debts Due to Banks…**: The Parliament enacted the Recovery of Debts Due to Banks and Financial Institutions Act,…

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