# Jalgaon District Central Coop. Bank Ltd. vs. State of Maharashtra and Ors.

> SC judgment dated 2025-11-20. Citation: TCN-2025-SC-00109. The case involves a dispute over the priority of claims against a defunct Co-operative Sugar…

- **Court:** SC
- **Order date:** 20 Nov 2025
- **Citation:** TCN-2025-SC-00109
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/jalgaon-district-central-coop-bank-ltd-vs-state-of-maharashtra-and-ors-m2fof

## Summary

### Background

The case involves a dispute over the priority of claims against a defunct Co-operative Sugar Manufacturing Society. The appellant, Jalgaon District Central Coop. Bank Ltd., is a secured creditor seeking to recover defaulted loans by selling the mortgaged properties under the SARFAESI Act. Competing claims include dues of the workmen and Provident Fund amounts, which the workmen argue have a first charge.

## Facts

Jalgaon District Central Coop. Bank Ltd. (appellant) is a secured creditor to a Co-operative Society engaged in sugar manufacturing.

The Society mortgaged its properties and hypothecated stock to the Bank as security for a loan.

The factory became defunct in 2000 due to huge losses, and the Society defaulted on the loan.

On 17.03.2001, the appellant-bank approached the Cooperative Court (Dispute No.459 of 2000), where a Receiver was appointed on 11.01.2001.

The Cooperative Court adjudicated the dispute, allowing the appellant-bank to recover Rs.30,24,32,954/-.

In 2002, the Commissioner of Sugar appointed a liquidator for the Society.

In 2006, the appellant-bank issued a notice under Section 13(2) of the SARFAESI Act and took possession of the secured assets.

…

## Issues and analysis

### Issue 1: Whether the priority conferred on secured creditors by Section 26E of the SARFAESI Act overrides …

**Ratio:** A statutory first charge created under a welfare legislation (like Section 11(2) of the

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**Reasoning:** The Court distinguished between a "priority" conferred by a non-obstante clause

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**Interpretation:** The term "first charge" in Section 11(2) of the EPF&MP Act

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**Application:** The sale proceeds from the assets of the Co-operative Society must first be

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## Parties

- **Judges:** B.R. G…; K. VINOD CH…
- **Appellants:** Jalgaon District…
- **Respondents:** Co-operative…; State of Maharasht…; +1 more
- **Other parties:** Commissioner of…
- **Advocates:** Mr.M.Y. De…; Shivaji M.…

## Timeline

- **2000 — Factory C…**: The Co-operative Society's factory…
- **2001-01-11 — Receiver Appo…**: A Receiver was appointed in Dispute No.459…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 13(2) — Declaration of moratorium and public…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-13)

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