varsha wp-3577-2025.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 3577 OF 2025 Sharad Ashok Agarwal .. Petitioner V/S. State of Maharashtra and Others .. Respondents ------------------- Mr. Abhinav Bhatkar a/w. Ms. Vaibhavi Sawant, for the Petitioner. Smt. S.D. Vyas, Addl.G.P. a/w. Smt. M.S. Bane, AGP for the Respondent Nos. 1 to 3- State. Mr. Ketan Joshi a/w. Mr. Kanak Upadhyay, for Respondent No. 6. -------------------- CORAM : MANISH PITALE & SHREERAM V. SHIRSAT, JJ. DATE : 14th OCTOBER 2026. ORDER: (PER SHREERAM V. SHIRSAT, J). 1. The petitioner has approached this Court for quashing and setting aside the impugned notices dated 13th January, 2017 and 10th January, 2023 issued by respondent Nos. 2 and 3, i.e. the Department of Goods and Services Tax (GST) and inter alia is also seeking directions to respondent No. 6, the Chairman, Indrayani Industrial Co- operative Estate Limited to transfer the rights of the secured asset in favour of the petitioner and to complete all necessary formalities. 2. The learned counsel for the petitioner opened his arguments by submitting that the case of the petitioner is squarely covered by the judgment of the Full Bench in the case of Jalgaon Janta Sahakari Bank 1 of 21 VARSHA DEEPAK GAIKWAD Digitally signed by VARSHA DEEPAK GAIKWAD Date: 2026.10.14 18:40:38 +0530 varsha wp-3577-2025.doc Ltd. v. Joint Commissioner of Sales Tax and Anr.1 and urged that the petition deserves to be allowed. 3. Before adverting to the rival submissions, it would be appropriate to enumerate briefly the facts leading to the filing of the present petition. 4. The petitioner is the auction purchaser who had purchased the secured asset in an auction conducted by respondent No. 4 under the provisions of the SARFAESI Act. The learned counsel for the petitioner submitted that the borrower, i.e. respondent No. 5, had availed credit facilities from the Union Bank of India i.e. respondent No. 4. The respondent No. 5 had mortgaged the land and building admeasuring 1683 sq. mtrs, situated on Plot Nos. 95, 103, and 104, Gat No. 452 (Part), Village Takwe Bk., Indrayani Industrial Estate, Taluka Maval, District Pune – 412106 with the Respondent No 4. The learned counsel for the petitioner further submitted that the said mortgage over the secured asset was registered under Section 26B of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) on 22nd June, 2012. 5. The learned counsel further submitted that respondent No. 5 committed default in repayment, as a result of which respondent No. 4 proceeded under the SARFAESI Act and obtained an order on 13/2/2020 from the learned Metropolitan Magistrate, Pune, for 1 2022 SCC OnLine Bom 1767. 2 of 21 varsha wp-3577-2025.doc possession of the property and thereafter declared the secured asset for public e-auction, specifying ownership as ‘freehold’. The learned counsel for the petitioner further submitted that the petitioner was declared the highest successful bidder in the said public auction held on 29th January, 2025. Pursuant to the same, the bank issued a sale intimation letter in favour of the petitioner, and on 31st January, 2025, the bank sent confirmation letter regarding the payment of 25% earnest money deposit. The learned counsel further submitted that the petitioner deposited the full consideration amount with respondent No. 4 and the sale certificate for the secured asset was issued to the petitioner on 10th February, 2025. He further submitted that the secured asset was handed over to the petitioner free from all encumbrances. 6. The learned counsel further submitted that after receiving the sale certificate from the respondent No. 4 bank, the petitioner issued a notice dated 12th February, 2025, to respondent No. 6, requesting to transfer the lease rights in respect of the secured asset in favour of the petitioner. The learned counsel further submitted that respondent No. 6, vide reply dated 15th February, 2025, denied transferring the lease rights in favour of the petitioner, stating that on 13th January, 2017, respondent No. 5 had received a letter from respondent Nos. 2 and 3 that respondent No. 5 owes Rs. 9,15,86,419/- towards Sales Tax and that respondent No. 2 had the first charge on the secured asset. He further submitted that respondent No. 6 also received a notice on 10th January, 2023, stating that respondent No. 5 owes Rs.12,17,02,580/- only and prohibited respondent No. 6 from transferring any lease rights to any other party without the consent of respondent Nos. 2 and 3 of 21 varsha wp-3577-2025.doc 3. 7. The learned counsel further submitted that the petitioner communicated with the respondent No. 4 bank seeking clarification regarding the status of GST dues and also for assistance in transferring the secured asset in favour of the petitioner. However, despite the petitioner corresponding with the bank, the bank failed to provide any response to the communication. The learned counsel further submitted that as per the legal position, the first charge over the mortgaged property lies with the secured creditor, i.e , respondent No. 4, under Section 26E of the SARFAESI Act, which has a statutory overriding effect over any other government dues. 8. The learned counsel further submitted that, in view thereof, the petitioner has no other option but to approach this Court challenging the legality and validity of the impugned notices issued by respondent Nos. 2 and 3. 9. The learned counsel for the petitioner has relied on the following judgments in support of his contention: (1) Union Bank of India vs. The Deputy Commissioner of State Tax .2 (2) Canara Bank vs. Deputy Commissioner, Sales Tax Office, Satara and Others. 3 (3) J.M. Financial Asset Reconstruction Co. Ltd. vs. State of Maharashtra and Others.4 (4) Indian Overseas Bank vs. Deputy Commissioner of 2 2024 SCC OnLine Bom 3990. 3 WPL No. 15997 of 2024 Dt.13-07-2026. 4 WP No. 7610 of 2023 Dt. 12-03-2026. 4 of 21 varsha wp-3577-2025.doc State Tax and Others .5 (5) M/s. Neon Laboratories vs. The Dy. Commissioner of Sales Tax, Palghar and Others.6 (6) Purushottam Prabhakar Chavan vs. Deputy Commissioner of Sales Tax (GST) and Others. 7 10. The respondent No. 4 has filed an affidavit-in-reply on 2nd July, 2025. It is contended by respondent No. 4 that the CERSAI charge was registered on 22nd June, 2012. It is further contended that the auction sale was conducted on 29th January, 2025, and the e-auction sale website as well as the paper publication in respect of the auction sale notice had explicitly disclosed the existence of GST dues. It is further contended that as per Clause 27 of the terms and conditions of the sale of immovable secured assets dated 8th January, 2025, it was brought to the notice of the intending potential bidders that they should make their own independent inquiry regarding the encumbrances, title of the property put to auction, and the claims/rights/dues affecting the property prior to submitting their bids, and the authorized officer/secured creditor shall not be responsible in any way for any third-party claims/rights/dues. It is further contended that the respondent bank, being the secured creditor of respondent No. 5, holds priority over the claims of the Sales Tax Department in realizing its security. 11. The respondent Nos. 1 to 3, i.e the GST Department has also 5 WP No. 11733 of 2023 Dt. 21-03-2024. 6 WPL No. 21301 of 2024 Dt. 06-07-2026. 7 WP No. 3477 of 2024 Dt. 03-05-2024. 5 of 21 varsha wp-3577-2025.doc filed an affidavit-in-reply and additional affidavit in reply. The Respondent No 1 to 3 has also placed on record several correspondences/letters issued by the department to indicate the steps taken for claiming the charge over the property which included the copy of Form 4 dated 17.1.2017 with respect to the order of attachment of immovable property. It was submitted by the learned counsel appearing for respondent Nos. 1 to 3 that the first charge was recorded over the subject property much prior to the auction notice issued by the bank and that the bank was aware of the fact that the first charge was by the Sales Tax Department and that, on the date of the auction, the subject property was an encumbered property. The learned counsel further submitted that the notices dated 13th January, 2017, and 10th January, 2023, which were issued under Sections 32 and 37 of the MVAT Act, intimating outstanding dues against the dealer and the first charge created by the Department, were published on the website at www.mstcecommerce.com, wherein notice condition No. 22 expressly provided that there are dues of MVAT and the property is attached by the concerned Department. The learned counsel for respondent Nos. 1 to 3 further submitted that the contention of the petitioner regarding registration with CERSAI is not applicable in the case in hand since the charge was created prior to 2016 by the Sales Tax Department and the amendment was brought into force in the year 2020. He further submitted that the petitioner is liable to pay the outstanding dues to the Sales Tax Department to obtain a free title to the subject property. 12. The learned counsel for Respondent No 1 to 3 further submitted that the bank was informed about the dues of respondent No. 5 and 6 of 21 varsha wp-3577-2025.doc the assessment orders passed against respondent No. 5. The learned counsel for respondent Nos. 1 to 3 further submitted that the bank was communicated with the amendment made in Section 37 of the MVAT Act on 1st January, 2025. He further submitted that Section 37 of the MVAT Act provides, with a non-obstante clause, about the "liability under this Act to be the first charge". He further submitted that the Sales Tax Department has the first charge under Section 37 of the MVAT Act, which gets crystallized as per Section 37(2) on the expiry of the period as per Section 32. He further submitted that the impugned property has been attached as per Sections 32(5) and 34 of the MVAT Act read with the provisions of Sections 178 to 181 of the MLRC, and that as per the provisions of Sections 37 to 38 of the MVAT Act, it has precedence of secured credit in favour of sales tax dues. He further submitted that the auction was conducted by the secured creditor bank with full knowledge that the property was being sold on an "as is where is" basis and that the auction notice itself specifically recorded that there were dues of the Sales Tax Department. The learned counsel for respondent Nos. 1 to 3 therefore submitted that there is no merit in the petition and the petition be dismissed. 13. We have considered the rival submissions, and before we proceed to consider the same and dispose of the writ petition, it would be necessary to refer to the relevant paragraphs of the Full Bench judgment of this Court in the case of Jalgaon Janta Sahakari Bank (supra). In the said judgment, this Court held as follows: “85. Priority means precedence or going before (Black’s Law Dictionary). In the present context, it would mean the right to 7 of 21 varsha wp-3577-2025.doc 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.” 88] Bare perusal of the 2016 Amending Act would show that the dues of the Central/State Governments were in the specific contemplation of Parliament while it amended the RDDB Act and the SARFAESI Act, both of which make specific reference to debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority and ordains that the dues of a secured creditor will have "priority", i. e., take precedence. Significantly, the statute goes quite far and it is not only revenues, taxes, cesses and other rates payable to the State Government or any local authority but also those payable to the Central Government that would have to stand in the queue after the secured creditor for payment of its dues. 89] The effect of using the word "priority" in section 26E of the SARFAESI Act, according to us, is this. The rights accorded to "first charge" holders by Central as well as State legislation having been known to Parliament, in such a situation, what 8 of 21 varsha wp-3577-2025.doc Parliament intended by exercising its legislative power by introducing amendments in the SARFAESI Act, more particularly by incorporating section 26E therein, was to explicitly make the valuable right of the "first charge" holder subordinate to the dues of a second creditor. The rights of such of the first charge holders accorded by several legislations enacted by the State, having regard to the language in which section 26E is couched, would rank subordinate to the right of the secured creditor as defined in section 2(1)(zd) subject, of course, to compliance with the other provisions of the statute. Acceptance of the contra-arguments of learned counsel for the State/respondents would undo what Parliament has chosen to do." 14. This Court, in the case of M/s. Neon Laboratories (supra), has observed as under: 9. In the light of the said chronology of events, we have considered the rival submissions. The full Bench of this Court in the aforementioned judgment in the case of Jalgaon Janta Sahakari Bank Ltd. & Anr. vs. Joint Commissioner of Sales Tax & Anr. (supra) categorically held that the dues of a secured creditor shall have priority over all other dues, including dues of revenues, taxes, cesses and other rates payable to the Central Government or State Government or local Authorities. The full Bench considered the amendment brought about in the Securitisation Act w.e.f. 24th January 2020 and thereupon, reached the aforesaid conclusion. 10. As regards cases where the CERSAI registration of the secured creditor as well as the attachment orders and dues claimed by the State Authorities, were prior to the said amendment coming into 9 of 21 varsha wp-3577-2025.doc effect, it was held that only issuing attachment orders would not suffice. But, the said Authorities were required to follow the procedure contained in the Maharashtra Land Revenue Code, 1966 (MLRC), which included proclamation of sale by public auction, entailing the proclamation to be made public, specifically as per the procedure prescribed in the Rules framed under the MLRC. 11. In paragraph 81 of the said full Bench judgment, this Court referred to multiple legislations in the State of Maharashtra using the words ‘first charge’ with regard to the Government dues. Thereupon, the full Bench judgment contains the following observations : “82. Each of the aforesaid several legislations operate in their particular field. Pertinently, wherever the Legislature of the State intended the particular provision to be the dominant legislation or subordinate or subservient to any other legislation, it has expressed such an intention in no uncertain terms. Section 169(1) of the MLR Code is the dominant legislation providing that the arrears of land revenue due on account of land shall be a paramount charge on the land and on every part thereof and shall have precedence over any other debt, demand or claim whatsoever, whether in respect of mortgage, judgment- decree, execution or attachment, or otherwise howsoever, against any land for the holder thereof. The municipal laws and the MRTP Act, however, despite creation of first charge on property taxes due to the Corporations and sums due to a planning authority, respectively, are expressly made subordinate to the paramount charge on a land if in respect of such land, land revenue is in arrears. Viewed from this angle, there is no magic in the words “first charge”. Even a “first charge”, by express statutory intendment, can be made subordinate or subservient to a paramount charge such as arrears of land revenue. We, therefore, are unable to accept the argument of the State/respondents that since neither the SARFAESI Act nor the RDDB Act uses the words “first charge” but the word “priority”, such “priority” cannot 10 of 21 varsha wp-3577-2025.doc have precedence over “first charge” created by the State legislations. 83. However, notwithstanding that section 169(1) of the MLR Code is the dominant legislation and does not expressly say that it would be subordinate or subservient to any Central Act creating “first charge”, nothing really turns on it. The express language of section 26E of the SARFAESI Act and section 31B of the RDDB Act, wherever applicable, is sufficient to off- set the “paramount charge” created by sub-section (1) of section 169. Similarly, even if there were no express intendment in the relevant provisions of the BST Act (section 38C) and the MVAT Act (section 37) to the effect that such provisions would be subordinate to any Central Act creating “first charge”, the same would obviously have to be read, invoked and exercised subject to section 26E of the SARFAESI Act and section 31B of the RDDB Act, wherever applicable. 84. The fact that the BST Act and the MVAT Act, which are under consideration, expressly make it subordinate or subservient to any Central legislation creating first charge cannot be ignored. The 2016 Amending Act being of recent origin, the first query that arises in this regard is : did Parliament not know that there is a plethora of legislation in the country, both Central and State, that speaks of creation of “first charge” in favour of a Department of the Central/State Government ? The reply cannot but be in the affirmative. The next query that would obviously follow is : whether the word “priority” appearing in section 26E of the SARFAESI Act, i. e., “… paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority” (italics for emphasis by us), was used without a purpose ? This reply has to be in the negative. 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 11 of 21 varsha wp-3577-2025.doc splurge of “first charge” used in multiple legislation, 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 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.” 12. As regards the aforementioned aspect of necessity to follow the procedure laid down in the MLRC and the Rules framed thereunder, the following observations were made in the said judgment : “151. However, there could be attachments orders which might have been issued much prior to giving effect to the 2011 Rules, as amended. In respect of such orders of attachment, we consider it appropriate to express our views. 152. The procedure to be followed in terms of the CPC when an immovable property is put up for auction sale to satisfy a decree of the court is to be found in Order 21, rules 54 and 66 of the CPC. It is mandatory for the court executing the decree, to comply with the following stages before such property is sold in execution of a particular decree : (a) attachment of the immovable property; (b) proclamation of sale by public auction; (c) sale by public auction. At each stage of the execution of the decree, when a property is sold, it is mandatory that notice shall be served upon the person whose property is being sold in execution 12 of 21 varsha wp-3577-2025.doc of the decree, and any property which is sold, without notice to the person whose property is being sold, is a nullity and all actions pursuant thereto are liable to be struck down/quashed. However, the proceedings before us do not concern execution of any decree. 153. In these proceedings we are as much concerned with proclamation itself as much with attachment. Insofar as recovery pursuant to the MLR Code is concerned, not only the provisions contained therein but also the provisions contained in the 1967 Rules are to be complied with. Simply ordering an attachment is not enough; a proclamation has to be issued in the prescribed form and such proclamation must be made public by beating of drum and such other mode as specified in section 192 of the MLR Code and rule 11(2) of the 1967 Rules before the property attached is sold. 154. We are of the considered opinion, on facts and in the circumstances, that unless attachment of the defaulter's immovable property is ordered in the manner ordained by the MLR Code and as prescribed by the MRLR Rules and due proclamation thereof is made, even the creation of charge on such immovable property may not be of any real significance, not to speak of demonstrating with reference to evidence that the transferee had actual or constructive notice of such charge. If there has been an attachment and a proclamation thereof has been made according to law prior to January 24, 2020 or September 1, 2016, i. e., the dates on which Chapter IV-A of the SARFAESI Act and section 31B of the RDDB Act, respectively, were enforced, the Department may claim that its dues be paid first notwithstanding the secured dues of the secured creditors; but in the absence of an order of attachment being made public in a manner known to law, i. e., by a proclamation, once Chapter IVA of the SARFAESI Act or section 31B, as the case may be, has been enforced, the dues of the secured creditor surely would have “priority”. In other words, if the immovable property of the defaulter is shown to have been 13 of 21 varsha wp-3577-2025.doc attached in accordance with law prior to Chapter IVA of the SARFAESI Act, or for that matter section 31B of the RDDB Act, being enforced, and such attachment is followed by a proclamation according to law, the “priority” accorded by section 26E of the former and section 31B of the latter would not get attracted.” 13. A perusal of the above quoted findings rendered in the full Bench judgment of this Court would show that the case of the petitioner is fully covered and that the respondent-State Authorities cannot claim priority as regards their dues. As noted hereinabove, the respondent No.5-bank had registration of its security interest with the CERSAI dating back to 8th December 2011. Admittedly, the charge of the respondent No.1 is not registered with the CERSAI. Even if the email placed on record showing the exchange of correspondence between respondent No.1 and the concerned department, is taken into consideration, the attempts on the part of respondent No.1 to have its charge registered with CERSAI, were initiated in the year 2018, much after the security interest of the respondent No.5-bank was duly registered with CERSAI on 8th December 2011. 14. The reply affidavits placed on record on behalf of respondent- State Authorities are bereft of any details about steps that could have been taken by and on behalf of said Authorities to satisfy the procedural requirements under the MLRC and the Rules framed thereunder. In the absence of such procedure being complied with, in terms of the observations made in the above quoted paragraphs of full Bench judgment, the respondent-State Authorities cannot resist the priority of the dues of the respondent No.5-bank over the dues towards sales tax. Hence, the position of law is clearly in favour of the petitioner. 15. As regards the stand taken in the latest affidavit filed on behalf of respondent No.1, by relying upon the amendment in Section 37 of the MVAT Act, we find that an identical contention raised before this Court in the case of Bank of Baroda vs. Assistant Commissioner of Sales Tax & Anr. (supra) was rejected. A perusal of the latest affidavit filed on behalf of respondent No.1 shows that in 14 of 21 varsha wp-3577-2025.doc paragraphs 2 to 11, a specific stand is taken that in the light of the amended Section 37 of the MVAT Act, the charge of the respondent No.1 would have overriding effect over the dues of the respondent No.5-bank. Such a stand was indeed taken before this Court in the said case of Bank of Baroda vs. Assistant Commissioner of Sales Tax & Anr. (supra). While dealing with the said contention, it was held in the said case as follows : “13. Relevant in the context of the present case and as is the emphasis of the learned AGP in support of his contention that the State dues will have priority over other dues, it will be advantageous to extract amended Section 37 of the MVAT Act for convenience. Section 37 reads thus :- “37. Liability under this Act to be the first charge - (1) Notwithstanding anything contained in any law for the time being in force, or any contract to the contrary, any amount of tax, penalty, interest, sum forfeited, fine or any other sum, payable by a dealer or any other person under this Act, shall be first charge on the property of the dealer or, as the case may be, person. (2) The first charge as mentioned in sub-section (1) shall be deemed to have been created on the expiry of the period specified in sub-section (4) of section 32 for the payment of tax, penalty, interest, sum forfeited, fine or any other amount. 14. In our opinion, the issue involved in the present case is squarely covered by the decision of the Full Bench of this Court in Jalgaon Janta Sahakari Bank Ltd. & Anr. (supra). The Full Bench has conclusively settled the legal position regarding priority of claims between secured creditors and State revenue authorities. It has been authoritatively held that “In view of the introduction of Section 26E of the SARFAESI Act and Section 31B of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (“RDDB Act”, for short), secured creditors have statutory priority in realization of dues from the sale of secured assets, over and above all other debts including government revenues, taxes, cesses and rates, subject only to 15 of 21 varsha wp-3577-2025.doc compliance with the statutory conditions, such as registration under the SARFAESI Act. 15. The Full Bench rejected the contention that the phrase “priority in payment” under Section 26E falls short of creating a first charge. It ruled that, “Statutory priority given to secured creditors under the SARFAESI and RDDB Acts shall override any charge created under State laws, including Sections 37 and 38C of the MVAT Act and Bombay Sales Tax Act (“BST Act”, for short) respectively, in view of their express subordination to Central enactments. 16. The Bank has registered its security interest with CERSAI on 30th June 2012, which is very much prior to the attachment order dated 18th March 2020 of the department. Therefore, in view of the legal position settled by the Full Bench, the Bank has priority to realize its dues. 17. The unamended Section 37 of the MVAT Act made the MVAT Act expressly subordinate or subservient to any central legislation creating first charge and by way of amendment, the State of Maharashtra has in essence only removed such subordination or subservience to the central legislation. The Full Bench discussed and dealt with similar provisions and scenario at length in paragraphs 81 to 92. The Full Bench in paragraph 82 and 83 observed thus :- “82. Each of the aforesaid several legislations operate in their particular field. Pertinently, wherever the legislature of the State intended the particular provision to be the dominant legislation or subordinate or subservient to any other legislation, it has expressed such an intention in no uncertain terms. Section 169(1) of the MLR Code is the dominant legislation providing that the arrears of land revenue due on account of land shall be a paramount charge on the land and on every part thereof and shall have precedence over any other debt, demand or claim whatsoever, whether in respect of mortgage, judgment-decree, execution or attachment, or otherwise howsoever, against any land for the holder thereof. 16 of 21 varsha wp-3577-2025.doc The municipal laws and the MRTP Act, however, despite creation of first charge on property taxes due to the Corporations and sums due to a planning authority, respectively, are expressly made subordinate to the paramount charge on a land if in respect of such land, land revenue is in arrears. Viewed from this angle, there is no magic in the words ‘first charge’. Even a ‘first charge’, by express statutory intendment, can be made subordinate or subservient to a paramount charge such as arrears of land revenue. We, therefore, are unable to accept the argument of the State/respondents that since neither the SARFAESI Act nor the RDDB Act uses the words ‘first charge’ but the word ‘priority’, such ‘priority’ cannot have precedence over ‘first charge’ created by the State legislations. 83. However, notwithstanding that section 169(1) of the MLR Code is the dominant legislation and does not expressly say that it would be subordinate or subservient to any Central Act creating ‘first charge’, nothing really turns on it. The express language of section 26E of the SARFAESI Act and section 31B of the RDDB Act, wherever applicable, is sufficient to off-set the ‘paramount charge’ created by sub-section (1) of section 169. Similarly, even if there were no express intendment in the relevant provisions of the BST Act (section 38C) and the MVAT Act (section 37) to the effect that such provisions would be subordinate to any Central Act creating ‘first charge’, the same would obviously have to be read, invoked and exercised subject to section 26E of the SARFAESI Act and section 31B of the RDDB Act, wherever applicable.” 18. We are therefore in agreement with the contention of learned counsel for the Petitioner that where a secured creditor has registered its security interest under the SARFAESI Act, the claim of such secured creditor must prevail. We have no hesitation in holding that the Bank has priority in realization of dues over the dues of the department. The department having even failed to register its charge with CERSAI cannot claim any first charge over the said secured asset.” 16. We find that since an identical contention raised on behalf of 17 of 21 varsha wp-3577-2025.doc the respondent-State Authorities was considered and rejected by a co-ordinate Bench of this Court, the said contention cannot be accepted. 15. In the facts of the present case, the respondent No. 4 had registered the security interest under Section 26B of the SARFAESI Act with CERSAI on 22nd June, 2012. In the reply affidavit, there is no mention of any CERSAI registration on behalf of respondent Nos. 1, 2, and 3 prior to 22nd June 2012. As per Exhibit D to the Affidavit in reply of Respondent No 1 to 3, the attempt on the part of the Respondent Nos 1 to 3 to have its charge registered with CERSAI were initiated only in the year 2025. Further as per additional reply, the Form 4 which is with respect to the attachment of property is of the year 2015 and what is emphasized as a claim and charge is the issuance of the impugned notices dated 13th January, 2017, and 10th January, 2023, issued under Sections 32 and 37 of the MVAT Act by Respondent No 1 to 3. As per the affidavit, respondent Nos. 1 to 3 have recorded the first charge of sales tax regarding the pending dues on 6th June, 2015. In any event, the CERSAI registration of respondent No. 4 is prior in point of time and as per Section 26E, the debts due to any secured creditor shall be paid in priority over all other debts and all revenue, taxes, cesses, and other rates payable to the Central Government or State Government or local authority. Therefore, once the security interest is registered, it will have priority over government dues, including sales tax. 16. Even otherwise, there is no averment in the affidavit-in-reply of respondent Nos. 1 to 3 as to whether any further action beyond recording the first charge, as per the respondent, regarding the 18 of 21 varsha wp-3577-2025.doc pending dues has been undertaken, like the beating of drums or other customary modes, or its copy being affixed on some conspicuous part of the secured asset and also on the notice board of the concerned Talathi office. The affidavit-in-reply is also conspicuously silent about compliance with the specific steps noted in paragraphs 152 to 153 of the Jalgaon Janta Sahakari Bank (supra). 17. We are also of the opinion that the stand taken by the Respondent No 1 to 3 with respect to the amended section 37 of the MVAT, for claiming that the charge of the Respondent No 4 would have an overriding effect over the dues of the Respondent No 1 to 3 is also unsustainable in view of the observations made by this court in the case of Bank of Baroda vs. Assistant Commissioner of Sales Tax and Another.8 18. Therefore, in our view, in the facts of the present case, respondent No. 4 will have priority over the other dues of respondent Nos. 1 to 3. Therefore, the charge shown on the property by respondent Nos. 1 to 3 in respect of the said property ought not to prevail over the charge of the respondent no 4 -bank. Therefore, the petitioner, having purchased the property from respondent No. 4 and having paid the entire amount, is equally entitled to have an encumbrance-free property. 19. It is made clear that the writ petition being allowed does not mean that this Court has held that respondent Nos. 1 to 3 are otherwise not entitled to recover their dues. Respondent Nos. 1 to 3 can proceed in accordance with law; but so far as priority is concerned, 8 WPL/3959 of 2025 dated 11/09/2025 19 of 21 varsha wp-3577-2025.doc as per the position of law noted hereinabove, the dues of respondent No. 4 will have priority over those of the other respondents, and consequently, the same shall be extended to the auction purchaser, in respect of the subject property (secured asset). 20. In view of the above, the writ petition is allowed in the following terms. i) The impugned notices dated 13/01/2017 and 10/01/2017 issued by Respondent Nos. 2 and 3 i.e. Department of Goods and Services Tax are quashed and set aside. ii) Respondent No. 6-Indrayani Industrial Co- operative Estate Limited is directed to forthwith transfer the rights of the secured asset in favour of the petitioner and complete all necessary formalities for the same immediately without any delay. iii) The order of attachment of immovable property issued vide order No. D.C/E-102/RECOVERY/TIN_27260625552V/ PUNE/ B dated 17/01/2017 is also quashed and set aside. 21. All consequential steps shall be taken by respondent Nos. 1, 2, 3, and respondent Nos. 4 and 5 within four weeks from the date of the order. 22. The Respondent No. 4 has already sold the property in question to the Petitioner in auction and the amount has been realized by the Respondent No. 4. If at all there is any surplus amount which has remained, after satisfying its dues, it shall notify respondent Nos.1 to 3 and respondent Nos. 1 to 3 shall be entitled to residual proceeds from 20 of 21 varsha wp-3577-2025.doc the sale of the secured asset, if any. 23. Needless to mention that respondent Nos. 1 to 3 are free to enforce action in accordance with law against any other assets or properties of respondent No. 5 as may be permissible under law. 24. The writ petition is disposed of accordingly. All other pending applications, if any, stand disposed of. (SHREERAM V. SHIRSAT, J.) (MANISH PITALE, J.) 21 of 21