High Court of Judicature at Bombay Hears Writ Petitions Challenging Attachment Order over SARFAESI Secured Asset — Final Verdict Not Mentioned in Provided Text. Petitions sought quashing of Assistant Commissioner of State Tax's attachment dated 22 April 2022 and direction to cooperative society to issue no-objection certificate relying on Section 26E of SARFAESI Act, 2002 priority.

Writ petitions under Article 226 of the Constitution of India challenging an attachment order passed by the Assistant Commissioner of State Tax over a secured asset and seeking directions for issuance of no-objection certificate by a cooperative housing society.

Punjab National Bank sought quashing of the attachment order dated 22 April 2022; auction purchasers sought quashing of the same attachment and a direction to Abhilasha Premises Co-operative Society Ltd. to issue a no objection certificate for transfer of the secured asset without requiring payment of State Tax Department dues or its NOC.

The attachment and encumbrance registered by the State Tax Authority prevented completion of the e-auction sale and registration of the secured asset; the society refused to issue NOC citing tax and society dues.

Chief Metropolitan Magistrate, Mumbai, order dated 23 January 2013 under Section 14 of the SARFAESI Act for physical possession; e-auction confirmation dated 10 March 2022; attachment order dated 22 April 2022; no prior judicial decision on merits was mentioned in the provided excerpt.

Whether the attachment order dated 22 April 2022 by Assistant Commissioner of State Tax over the secured asset is legally valid in view of the secured creditor's prior security interest and priority under Section 26E of the SARFAESI Act, 2002. Whether the cooperative housing society is obligated to issue a no objection certificate to auction purchasers for transfer and registration of the secured asset without insisting on payment of State Tax Department dues or its NOC. Whether the State Tax Department's encumbrance can defeat the rights of a secured creditor under the SARFAESI Act after registration of security interest with CERSAI and sale by e-auction.

Petitioner Bank argued that borrowers availed credit facilities, created an equitable mortgage over the secured asset, loan accounts became NPA, SARFAESI proceedings were initiated, security interest was registered with CERSAI on 30 March 2012, e-auction was conducted and confirmed, and the State Tax Authority's attachment order is contrary to priority under Section 26E of the SARFAESI Act. Auction purchasers argued that they were the highest bidders in the e-auction, paid 25% EMD, sought extension of time, but the society refused NOC citing pending society dues and sales tax claim; they were willing to pay society dues but sought NOC without requiring payment of State Tax Department dues; they relied on Section 26E of the SARFAESI Act. State Tax Authority opposed the writ petition by filing an affidavit in reply; specific submissions in the reply were not detailed in the provided excerpt. Cooperative society informed about pending society dues of Rs.23,21,452 and claimed sales tax department dues of Rs.4,24,89,312; no formal submissions were detailed in the excerpt.

Petitioner-Punjab National Bank has filed the Writ Petition (L) No. 20484 of 2022, inter alia, praying for a writ of Certiorari for quashing and setting aside the attachment order dated 22nd April, 2022 passed by the Assistant Commissioner of State Tax. The said mortgage was extended/ revised/renewed to secure credit limits granted to Respondent Nos.2 to 11. The Petitioner Bank confirmed the auction purchasers as highest bidder. On 28th March, 2022, the society informed the Petitioner Bank about the pending society dues of Rs.23,21,452/- and also informed about the claim of Sale Tax Department of Rs.4,24,89,312/-. On 8th April, 2022, the Petitioner Bank addressed a letter to the Society, reiterating that the Petitioner Bank has priority over the said Secured Asset being the Secured Creditor under Section 26E of the SARFAESI Act and requested the Society to issue No Objection Letter to the auction purchasers for registration of the said Secured Asset.

Between 2004 and 2009, borrowers availed credit facilities of Rs.3944.85 lacs from Punjab National Bank and created an equitable mortgage over Flat No.182, 18th Floor, Abhilasha Premises Co-operative Housing Society Ltd., Cuffe Parade, Mumbai. Loan accounts turned irregular in 2010 and were classified as non-performing assets. On 31 August 2011, the bank issued a demand notice under Section 13(2) of the SARFAESI Act for Rs.21,40,92,734.30. Possession notice was issued on 26 November 2011, symbolic possession taken on 21 March 2012, and security interest registered with CERSAI on 30 March 2012. Chief Metropolitan Magistrate passed an order under Section 14 on 23 January 2013; physical possession was taken on 19 September 2019. E-auction notice was published on 19 February 2022 at reserve price of Rs.7.54 crore; auction was conducted on 10 March 2022 and auction purchasers were confirmed as highest bidders. Auction purchasers paid 25% EMD and sought extension till 30 April 2022, which was granted. On 22 April 2022, the Assistant Commissioner of State Tax passed the attachment order. Society intimated on 4 May 2022 that NOC would be subject to clearance of society dues and sales tax dues. Bank filed WPL No.20484/2022 on 28 June 2022; additional affidavit was filed on 4 November 2022; State Tax Authority filed reply on 6 January 2023. Both writ petitions were heard together on 2 March 2023 and judgment was pronounced on 24 March 2023; the final operative part was not included in the provided excerpt.

• Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: 13(2), 14, 26E