Bombay High Court
AXIS BANK LTDversusSTATE OF MAHARASHTRA THRU. G P AND ANR
- Decided
- Disposal
- Disposed Off
Holding
The dues of the secured creditor, Axis Bank, have priority over the tax department’s claim, and the impugned letter is quashed.
Summary
Axis Bank Limited, a secured creditor, filed a writ petition after the Deputy Commissioner of CGST directed the housing society not to issue a No‑Objection Certificate for flats that constitute the bank's secured assets. The bank had registered its security interest with CERSAI on 20‑12‑2020, whereas the tax department’s charge was not registered. The bank relied on the Full Bench decision in Jalgaon Janta Sahakari Bank Ltd. v. Joint Commissioner of Sales Tax, which held that, under the amended Securitisation Act and Section 26E, a duly registered secured creditor’s dues have priority over all other claims, including tax dues. The court accepted this reasoning, finding that the tax department’s provisional attachment under Section 83 of the CGST Act could not override the bank’s priority. Consequently, the impugned letter directing the society to withhold the NOC was quashed and the writ petition was allowed.
Issues considered
- Whether a secured creditor whose security interest is registered with CERSAI has priority over a tax department’s provisional attachment under the CGST Act.
- Whether the letter issued by the Deputy Commissioner directing the society not to issue an NOC is legally valid.
Legislation cited
Subjects
- secured creditor
- priority of dues
- CERSAI registration
- Securitisation Act
- Section 26E
- CGST Act
- Section 83
- provisional attachment
- NOC
- writ of mandamus
Judgment
907_WP2107_26.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.2107 OF 2026
Axis Bank Limited through its Power of Attorney
Holder Vishal Yadav … Petitioner
Vs.
Deputy Commissioner of CGST & Central Excise
and another … Respondents
Mr. Charles D’souza a/w. Ms. Juilee Modak i/b. Mr. Alok Mishra for Petitioner.
Mr. J. B. Mishra a/w. Mr. Abhishek R. Mishra for Respondents.
CORAM : MANISH PITALE &
SHREERAM V. SHIRSAT, JJ.
DATE : OCTOBER 06, 2026
P.C. :
. Heard learned counsel for the parties.
2. The petitioner (secured creditor) is constrained to approach this
Court in the light of a letter issued by the respondent No.1 authority to
the respondent No.2 i.e. the society in which the subject flats (secured
assets) are located. As per the said letter, the society has been directed
not to issue No Objection Certificate (NOC) in respect of the subject
flats until further instructions by the respondent No.1.
3. Mr. D’souza, learned counsel for the petitioner relies upon the law
laid down by this Court in the Full Bench judgement in the case of
Jalgaon Janta Sahakari Bank Limited Vs. Joint Commissioner of Sales
Tax, 2022 SCC OnLine Bom 1767, to contend that the dues of the
petitioner bank as the secured creditor have priority over any charge or
statutory dues that may be claimed by respondent No.1. The learned
counsel for the petitioner bank specifically relies on registration of the
security interest of the petitioner with the Central Registry of
MINAL
SANDIP
PARAB
Digitally signed by
MINAL SANDIP PARAB
Date: 2026.10.06
18:20:16 +0530
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907_WP2107_26.doc
Securitisation Asset Reconstruction and Security Interest of India
(CERSAI) dated 20.12.2020, to claim that with the aforesaid CERSAI
registration and the provisions of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002
(Securitisation Act), being amended with effect from 24.01.2020, the
dues of the petitioner bank have first priority.
4. It is further submitted that even if the contents of the reply
affidavit filed on behalf of the respondent No.1 are taken into
consideration, it is evident that the charge, if any, of the respondent No.1
is not registered with CERSAI and therefore, in terms of the aforesaid
position of law, the writ petition ought to be allowed and the impugned
letter issued by respondent No.1 deserves to be quashed.
5. Mr. Mishra, learned counsel appearing for respondent No.1 relies
upon the contents of the reply affidavit and he submits that the subject
property was provisionally attached under Section 83 of the Central
Goods and Services Tax Act, 2017 (CGST Act, 2017) as per order issued
on 15.02.2022 and subsequently renewed, after the impugned letter was
already issued to the respondent No.2 society. It is submitted that in such
a situation, this Court may consider passing appropriate orders in the
present writ petition.
6. We find that the position of law is in favour of the petitioner bank
(secured creditor), for the reason that in terms of the amendment of the
Securitisation Act, with effect from 24.01.2020 and introduction of
Section 26E therein, upon the security interest of the petitioner bank
being registered with CERSAI, the dues of the petitioner bank have first
priority.
7. The Full Bench judgement of this Court in the case of Jalgaon
Janta Sahakari Bank Limited Vs. Joint Commissioner of Sales Tax
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(supra) considered the effect of the said statutory amendment and held
in paragraph 85 as follows:-
“85. Priority means precedence or going before (Black’s Law
Dictionary). In the present context, it would mean the right to
enforce a claim in preference to others. In view of the splurge
of ‘first charge’ used in multiple legislation, the Parliament
advisedly used the word ‘priority over all other dues’ in the
SARFAESI Act to obviate any confusion as to inter-se
distribution of proceeds received from sale of properties of the
borrower/dealer. If a secured asset has been disposed of by sale
by taking recourse to the Security Interest (Enforcement) Rules,
2002 it would appear to be reasonable to hold, particularly
having regard to the non-obstante clauses in sections 31 B and
section 26E, that the dues of the secured creditor shall have
‘priority’ over all other including all revenues, taxes, cesses and
other rates payable to the Central Government or State
Government or local authority.”
8. Therefore, it is clear that the dues of the petitioner bank as a
secured creditor have priority over all other dues, including all revenue
taxes, cesses and other rates payable to the Central Government or State
Government or local authority. The said Full Bench judgement in other
paragraphs reiterates the said position, including in paragraph 150
thereof, which reads as follows:-
“150. The contention that rules are yet to be framed for
making sub-section (4) of section 20B operational is wholly
incorrect. By a notification dated 24th January 2020 issued by
the Department of Financial Services in the Ministry of
Finance, Govt. of India, published in the Gazette of India of
even date, the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest (Central Registry)
(Amendment) Rules, 2020 were duly notified whereby
amendments were incorporated in the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest (Central Registry) Rules, 2011 (hereafter
‘2011 Rules’, for short). In view of the amendments that have
now been incorporated in the 2011 Rules with effect from the
date Chapter IV-A of the SARFAESI Act was made effective
and enforceable, the relevant department of the State
Government despite attachment orders being issued by the
competent authority can only avoid compliance of sub-section
(4) of section 26B at its own peril. We hold that attachment
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orders issued post 24th January 2020, if not filed with the
Central Registry, any department of the Government to whom
a person owes money on account of unpaid tax has to wait till
the secured creditor by sale of the immovable property being
the secured asset mops up its secured dues.”
9. In view of the said position of law specifically clarified by the
Full Bench judgement of this Court and in the light of the aforesaid
amendments brought about in the Securitisation Act, we find that the
dues of the petitioner bank as the secured creditor have priority over the
dues of respondent No.1, if any. There is no dispute that the security
interest of the petitioner bank is registered with CERSAI with effect
from 20.12.2020. Respondent No.1 has not been able to show that its
charge has been registered with CERSAI and therefore, by operation of
statutory provision i.e. Section 26E of the Securitisation Act, the present
writ petition deserves to be allowed.
10. Although respondent No.2 society was served, there is no
appearance on its behalf. We find that there is no legal basis for the
respondent No.1 to have issued the impugned letter dated 10.02.2022 to
the respondent No.2 society, directing that NOC could not be issued for
the subject flats, which are the secured assets of the petitioner bank. The
impugned letter deserves to be quashed.
11. In view of the above, writ petition is allowed in terms of prayer
clause (a), which reads as follows:-
“(a) This Hon’ble Court be pleased to issue writ of
Mandamus and / or Certiorari and / or any writ in the nature of
Mandamus and / or Certiorari and / or any appropriate writ,
order or direction, to Respondent No.1 to remove its lien /
charges, on the said flat recorded with the Respondent No.2 or
any other authority.”
12. Pending applications, if any, stand disposed of.
(SHREERAM V. SHIRSAT, J.) (MANISH PITALE, J.)
Minal Parab 4/4
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