Axis Bank LTD. vs. State Of Maharashtra Trho. Government Pleader
Original PDF →Facts
Axis Bank Limited, the petitioner and a secured creditor, filed a writ petition challenging the State of Maharashtra's action to attach a secured asset for recovery of State Goods and Services Tax dues. The petitioner's security interest was registered with CERSAI on April 10, 2018. The earliest notice of attachment issued by the State was dated June 27, 2023, followed by another on August 23, 2024. The petitioner argued that its prior registration granted it priority over the State's claim, citing a Full Bench judgment of the Bombay High Court. The State contended that a cut-off date of January 24, 2020, introduced by an amendment to the Securitisation Act, needed to be considered, and the attachment's priority would depend on whether it preceded this date.
Held
The Court held that the petitioner bank, as a secured creditor, has priority over the dues claimed by the respondent State. The Court found that the petitioner's CERSAI registration dated April 10, 2018, was significantly earlier than the State's first notice of attachment dated June 27, 2023. This factual position squarely covered the case under the Full Bench judgment of this Court in Janta Sahakari Bank Ltd. The Full Bench judgment emphasized that the dues of a secured creditor have priority over all other dues, including those of the Central or State Government, especially when the security interest is registered prior to the attachment. The Court noted that even if the cut-off date of January 24, 2020, was considered, the petitioner's registration was prior to it, and the attachment notice was much later. Therefore, the Court directed the respondent State to remove its lien/charges on the secured asset. The Court did not expressly leave any issue undecided.
Key Issues
1. Whether the petitioner bank's prior registration of its security interest with CERSAI on April 10, 2018, grants it priority over the State's claim for Goods and Services Tax dues, which were sought to be attached through notices dated June 27, 2023, and August 23, 2024, considering the principles laid down in the Full Bench judgment of this Court in Janta Sahakari Bank Ltd. vs. Joint Commissioner of Sales Tax. Petitioner's contention: The petitioner argued that its CERSAI registration predates the State's attachment notices, and as per the Full Bench judgment, its secured creditor dues have priority over all other dues, including those of the State Government. They relied on the Full Bench judgment, specifically citing paragraphs 85 and 154. Revenue/State's contention: The State argued that an amendment to the Securitisation Act, effective from January 24, 2020, introduced a cut-off date. They contended that the priority of attachment needed to be examined in light of this date, suggesting that attachments prior to January 24, 2020, might be treated differently.
Sections Cited
Section 31B, Section 26E
AI-generated summary — verify with the full judgment below
904_WP640_26.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURI ICTION WRIT PETITION NO.640 OF 2026 Axis Bank Limited … … Respondents Mr. Alok D. Mishra for Petitioner. Mr. Sagar Kotecha, Officer of Axis Bank Limited. Mr. S. D. Vyas, Additional GP a/w. Ms. G. R. Raghuwanshi, AGP for Respondent No.1-State. CORAM : MANISH PITALE & SHREERAM V. SHIRSAT, JJ. DATE : FEBRUARY 18, 2026 P.C. : . Heard Mr. Mishra, learned counsel for the petitioner (secured creditor) and Ms. Vyas, learned Additional Government Pleader for respondent No.1-State. Respondent No.2 society has been served. 1/4 MINAL SANDIP PARAB SANDIP PARAB Date: 2026.02.18 17:41:55 +0530
904_WP640_26.doc 23.08.2024, copy of which is annexed to the petition. It was submitted 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, Parliament advisedly 2/4
904_WP640_26.doc 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 section 31B 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.”
The said judgement further observes in paragraphs 148 to 154 that even if the Central or State authorities are seeking to recover their dues, they will have to ensure that the attachment orders are also appropriately registered. In any case, in paragraph 154 of the said judgement, the cut- off date of 24.01.2020 is taken note of. In the light of the admitted position on facts in the present case that the CERSAI registration of the petitioner bank was of the year 2018 and the first notice of attachment was issued by the respondent No.1 in the year 2023, the case of the petitioner is squarely covered as per the said Full Bench judgement.
We are of the opinion that the dues of the petitioner bank, as a secured creditor, have priority over the dues claimed by the respondent No.1 in the facts and circumstances of the present case. Therefore, the petitioner has clearly made out a case in its favour for the writ petition being allowed.
In view of the above, the 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 the Respondent No.1 to remove its lien / charges, on the said flat recorded with the respondent No.2 or any other authority.” 3/4
904_WP640_26.doc
Consequential action shall be taken by the respondents at the earliest.
Pending applications, if any, stand disposed of. (SHREERAM V. SHIRSAT, J.) (MANISH PITALE, J.) 4/4 Minal Parab
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.