Himachal Pradesh High Court
State Of H.P. & Ors vs State Bank Of India & Another on 12 April, 2023
Bench: Sabina, Satyen Vaidya
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
.
LPA No. 156 of 2021 a/w LPAs No. 158, 159, 161, 163, 164, 170, 171, 176, 177, 182, 201 of 2021, 25 of 2022, 23 and 65 of 2023.
Decided on: 12.4.2023
1. LPA No. 156 of 2021 State of H.P. & Ors.
r to .....Appellants.
Versus
State Bank of India & Another. .....Respondents.
2. LPA No. 158 of 2021
State of H.P. & Ors. .....Appellants.
Versus
State Bank of India & Another. .....Respondents.
3. LPA No. 159 of 2021
State of H.P. & Ors. .....Appellants.
Versus
State Bank of India & Another. .....Respondents.
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4. LPA No. 161 of 2021
State of H.P. & Ors. .....Appellants.
.
Versus
Indian Overseas Bank & Ors. .....Respondents.
5. LPA No. 163 of 2021
State of H.P. & Anr. .....Appellants.
r Versus
Dr. Ajit Pal Jain & Ors. .....Respondents.
6. LPA No. 164 of 2021
State of H.P. & Ors. .....Appellants.
Versus
State Bank of India & Ors. .....Respondents.
7. LPA No. 170 of 2021
State of H.P. & Ors. .....Appellants.
Versus
Canara Bank & Another. .....Respondents.
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8. LPA No. 171 of 2021
State of H.P. & Ors. .....Appellants.
.
Versus
Punjab National Bank & Ors. .....Respondents.
9. LPA No. 176 of 2021
State of H.P. & Ors. .....Appellants.
r Versus
Ajay Kumar & Ors. .....Respondents.
10. LPA No. 177 of 2021
State of H.P. & Ors. .....Appellants.
Versus
M/s Aditya Industries & Ors. .....Respondents.
11. LPA No. 182 of 2021
State of H.P. & Ors. .....Appellants.
Versus
Canara Bank & Another. .....Respondents.
12. LPA No. 201 of 2021
State of H.P. & Ors. .....Appellants.
Versus
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Punjab National Bank & Others. .....Respondents.
.
13. LPA No. 35 of 2022
M/s Shivalik Fibres Pvt. Ltd. .....Appellant.
Versus
Dr. Ajit Pal Jain & Ors. .....Respondents.
14. LPA No. 23 of 2023
State of H.P. & Anr.
r .....Appellants.
Versus
Bhagwan Singh & Ors. .....Respondents.
15. LPA No. 65 of 2023
State of H.P. & Ors. .....Appellants.
Versus
Ms/ Infallible Pharma Pvt. Ltd. & Ors. .....Respondents.
Coram The Hon'ble Ms. Justice Sabina, Acting Chief Justice. The Hon'ble Mr. Justice Satyen Vaidya, Judge. Whether approved for reporting?1 1 Whether the reporters of the local papers may be allowed to see the Judgment?
::: Downloaded on - 13/04/2023 20:36:33 :::CIS 5For the appellants : Mr. Mohinder Zharaick, Additional Advocate General in all the LPAs except LPA No. 35 .
of 2022.
Ms. Kavita Kajal, Advocate, on behalf of Mr. Atharv Sharma, Advocate, for the appellant in LPA No. 35 of 2022.
For the respondents : Mr. Anand Sharma, Senior Advocate with Mr. Karan Sharma, Mr. Arvind Sharma, Mr. Sanjay Dalmia, Dr. Rajesh Kumar Parmar with Mr. Ajeet r Singh, Mr. Aman Kumar, Advocate, on behalf of Mr. Tara Singh Chauhan, Mr. Vijay Kumar Arora, Dr. Lalit K. Sharma, Mr. Suneet Goel with Mr. Satish Sharma, Ms. Ambika Kotwal, Mr. Ashwani Kaundal, Advocates, for the respective respondents.
Sabina, Acting Chief Justice (Oral) Vide this order, above mentioned Letters Patent Appeals would be disposed of, as issue involved in all the appeals is the same.
2. Admittedly, the issue involved in the present appeals is as to whether the State (Excise Department) will have priority over the secured creditor's debt.
::: Downloaded on - 13/04/2023 20:36:33 :::CIS 63. Learned counsel for the respondents have submitted that the issue involved in the present appeals is no .
longer res integra and has been settled by the Hon'ble Supreme Court in Civil Appeal No. 2196 of 2012, titled Punjab National Bank vs. Union of India and others, decided on 24th February, 2022.
4. February, 2022 reads as under:-
r to The relevant portion of the order dated 24 th "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 of 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
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 inter alia, 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. ::: Downloaded on - 13/04/2023 20:36:33 :::CIS 7 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
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 Appellant-bank, 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"
::: Downloaded on - 13/04/2023 20:36:33 :::CIS 85. Learned Additional Advocate General has failed to controvert the factual aspect of the submissions made by .
learned counsel for the respondents.
6. Since the question involved in the present appeal is no longer res integra and has been settled by the Hon'ble Supreme Court in Punjab National Bank's case supra, all the
7. to Letters Patent Appeals are dismissed.
Pending miscellaneous application(s), if any, shall also stand disposed of.
( Sabina ) Acting Chief Justice ( Satyen Vaidya ) Judge April 12, 2023 (vs) ::: Downloaded on - 13/04/2023 20:36:33 :::CIS