bipin prithiani 1 6-wp-1544.26.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1544 OF 2026 UV Asset Reconstruction Company Limited … Petitioner Versus Union of India & Ors. … Respondents WITH INTERIM APPLICATION NO. 1827 OF 2026 IN WRIT PETITION NO. 1544 OF 2026 ****** Mr. Amir Arsiwala a/w Ms. Sana Wasim i/by MZM Legal LLP for Petitioner. Mr. Abhishek R. Mishra i/by Mr. Ram Ochani for Respondent Nos.2 and 3. ****** CORAM : MANISH PITALE AND SHREERAM V. SHIRSAT, JJ. DATE : 18th AUGUST 2026 P.C. : . Heard learned counsel for the parties. 2. The petitioner-Asset Reconstruction Company (ARC) is a secured creditor. It is constrained to approach this Court to seek appropriate directions against the respondents for taking physical possession of the subject property, which is the secured asset. The petitioner-ARC seeks appropriate directions, so that possession of the subject property can be taken in order to proceed further as per the provisions of the Securitisation and Reconstruction of bipin prithiani 2 6-wp-1544.26.doc Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act), for conducting auction sale of the subject property to satisfy the dues of the petitioner-ARC. 3. It is brought to our notice that the security interest of the petitioner-ARC was registered with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) on 16th January 2021. On account of default committed by the borrower, the loan account was declared a Non-Performing Asset on 26th May 2022 and the petitioner-ARC proceeded to take symbolic possession of the subject property under Section 13(4) of the Securitisation Act on 14th November 2022. 4. The petitioner-ARC further proceeded to approach the jurisdictional Magistrate under Section 14 of the Securitisation Act, for an order to take physical possession of the subject property. By an order dated 19th June 2024, the Magistrate allowed the application and passed an order for physical possession of the subject property being made over to the petitioner. 5. In the interregnum, on 23rd May 2023, the respondent No.2 i.e. Superintendent of the Office of the Central Goods and Services Tax (CGST) sealed the subject property, exercising power under Section 67 of the Central Goods and Services Tax Act, 2017 (CGST Act). The said provision pertains to the power of the concerned authority of inspection, search and seizure. The said action of sealing the subject property was undertaken on the basis bipin prithiani 3 6-wp-1544.26.doc that the extent of liability of the borrower was to be determined and in that context, the operation of search and seizure was to be undertaken. It is an admitted position that since 23rd May 2023, the subject property is lying in seal and it is control of the respondent No.2. 6. The learned counsel appearing for the petitioner-ARC relies upon Full Bench judgment of this Court in the case of Jalgaon Janta Sahakari Bank Ltd. & Anr. vs. Joint Commissioner of Sales Tax & Anr., 2022 SCC OnLine Bom 1767, to contend that the dues of a secured creditor like the petitioner have priority over the dues of Central Government, State Government or even local authority and therefore, the respondent Nos.2 and 3 cannot be permitted to prevent the petitioner from taking further steps under the Securitisation Act. Reliance is placed on Section 26-E of the Securitisation Act, added by way of amendment w.e.f. 24th January 2020, to contend that since the petitioner has CERSAI registration of its security interest and the respondents have not even determined their dues, much less having the same registered with CERSAI, the ratio of the Full Bench judgment of this Court ought to apply with full force and the writ petition ought to be allowed in terms of the prayers made therein. 7. The learned counsel appearing for respondents, on the other hand, relies upon Section 82 of the CGST Act, to contend that the amounts payable under CGST would have first charge in respect of the subject property and that therefore, this Court may not bipin prithiani 4 6-wp-1544.26.doc allow the writ petition. It is submitted that in any case, the respondents cannot be prevented from exercising power under Section 67 of the CGST Act, for carrying out the procedure of inspection, search and seizure. On this ground, it is submitted that this Court may pass appropriate orders in the matter. 8. Before we consider the rival submissions, we take note of a judgment of the Calcutta High Court brought to our notice by the learned counsel appearing for the petitioner-ARC, in the case of CFM Asset Reconstruction Pvt. Ltd. vs. Assistant Commissioner, CGST & C.EX & Ors., 2025 SCC OnLine Cal 10651. In a similar situation, a learned single Judge of a Calcutta High Court directed the CGST authority, who was in possession of the subject property, which was a secured asset, to handover possession directly to the secured creditor, in order to facilitate appropriate action to be taken under the provisions of the Securitisation Act. The aforesaid Court further issued direction to the secured creditor to maintain an account of the proceeds in pursuance of further action that would be taken under the Securitisation Act and to share the same with the CGST authority. 9. Having considered the rival submissions, it would be appropriate to first refer to the relevant portion of the judgment of the Full Bench judgment of this Court in the case of Jalgaon Janta Sahakari Bank Ltd. & Anr. vs. Joint Commissioner of Sales Tax & Anr. (supra). In paragraph 85 of the said judgment, the Full Bench judgment of this Court held as follows : bipin prithiani 5 6-wp-1544.26.doc “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 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.” 10. Apart from the above quoted paragraph, in various portions of the Full Bench judgment, the aspect of first charge noted in various enactments was taken into consideration. After having considered such provisions, including the provisions of the CGST Act, the Full Bench categorically held that the security interest registered with CERSAI of a secured creditor would have priority over and above all revenues, taxes and cesses payable to the Central Government or State Government or local authority. 11. In the face of the authoritative pronouncement of the Full Bench in the said case, we are unable to agree with the submission made on behalf of respondents that Section 82 of the CGST Act would come in the way of the petitioner-ARC (secured creditor) in asserting its rights over the subject property, which is a secured asset, for enforcing its security interest in terms of the provisions of the Securitisation Act. Therefore, the submission made on behalf of respondents are rejected. bipin prithiani 6 6-wp-1544.26.doc 12. We are also inclined to issue appropriate directions as suggested by the learned counsel for the petitioner-ARC on the same lines as indicated by the Calcutta High Court in the said judgment of CFM Asset Reconstruction Pvt. Ltd. vs. Assistant Commissioner, CGST & C.EX & Ors. (supra). We find that since the respondent No.2 is in possession and it has sealed the subject property, it would be appropriate that directions are issued to the respondent No.2 to handover possession of the subject property to the petitioner within a time bound manner. Appropriate direction can also be issued to the petitioner for cooperating with the respondents for them to carry out the exercise of inspection, search and seizure in the subject property. 13. At this stage, the learned counsel for the petitioner-ARC, on instructions, makes a statement that the petitioner would undertake to cooperate with the respondents for them to carry out the aforesaid exercise within a time bound manner. 14. In view of the above, the writ petition is allowed in the following terms : (a) The respondents shall handover possession of the subject property to the petitioner-ARC, immediately upon the petitioner producing copy of this order before the respondent No.2. For the said purpose, the petitioner is authorized to break open the lock on the premises and to take physical possession of the subject property. bipin prithiani 7 6-wp-1544.26.doc (b) The undertaking given by the petitioner to cooperate with the respondents for them to carry out the exercise of inspection, search and seizure under Section 67 of the CGST Act, is recorded as an undertaking given to this Court. It is clarified that the respondents shall complete the aforesaid exercise within a period of one week of the physical possession being taken over by the petitioner-ARC. (c) Needless to say, the petitioner-ARC would then be at liberty to take further steps in accordance with law, under the Securitisation Act. 15. Pending applications, if any, also stand disposed of. 16. Parties to act on an authenticated copy of this order. (SHREERAM V. SHIRSAT, J.) (MANISH PITALE, J.) BIPIN DHARMENDER PRITHIANI Digitally signed by BIPIN DHARMENDER PRITHIANI Date: 2026.08.19 10:14:34 +0530