Case Note & Summary
The matter pertained to competing claims over an immovable property of BPL Engineering Limited (in liquidation), situated at Pashamylaram Village, Sangareddy District, Telangana, measuring 42.99 acres. Omkara Assets Reconstruction Private Limited, as an assignee of a secured creditor (SASF), held a mortgage created on 01.12.1997 and 22.06.1998 in favour of an IDBI Bank-led consortium. BPL defaulted on the loan, leading to the account being classified as a Non-Performing Asset on 30.12.2001. The debt was assigned to SASF on 30.09.2004, and SASF took physical possession of the secured asset on 18.04.2011 under Section 13(4) of the SARFAESI Act. Meanwhile, the Commercial Tax Department of Andhra Pradesh (now Telangana) had issued attachment orders on 25.10.2007 and 24.11.2011 for tax arrears of Rs.1.81 crores and Rs.72.21 crores respectively under the Andhra Pradesh General Sales Tax Act, 1957, the Central Sales Tax Act, 1956, and the Andhra Pradesh Value Added Tax Act, 2005, asserting a statutory first charge. The tax department also issued a sale notice on 16.02.2012, which was challenged by SASF before the High Court of Andhra Pradesh, which granted an interim stay. During the pendency of that writ petition, the High Court of Karnataka ordered the winding up of BPL on 19.11.2012 in Company Petition No.160/2005. The Andhra Pradesh High Court subsequently disposed of the writ petition as infructuous on 23.09.2023, granting liberty to approach the Official Liquidator. SASF assigned its rights to Omkara Assets on 31.08.2024, and Omkara was substituted in the proceedings by order dated 12.12.2024. By order dated 12.09.2024, Omkara was permitted to sell the property outside liquidation, but attempts to auction failed due to the subsisting attachment entries in revenue records. Omkara filed Company Application No.49/2025 to recall the tax department attachments, contending that Section 26E of the SARFAESI Act, introduced in 2016 and enforced in 2020, gives retrospective priority to secured creditors over all other claims. The Commercial Tax Department filed Company Application No.86/2025 seeking recall of the order permitting sale outside liquidation and Company Application No.89/2025 seeking leave to sell the property to recover tax dues, asserting its statutory first charge. The court recorded the submissions of learned Senior Counsel for Omkara that Section 26E of the SARFAESI Act applies retroactively to pending proceedings. The judgment was reserved on 12.06.2026 and pronounced on 02.07.2026; the final decision and reasoning are not included in the provided text.
Issue of Consideration
Whether the attachment orders issued by the Commercial Tax Department for recovery of tax arrears override the priority of a secured creditor under Section 26E of the SARFAESI Act in a winding-up proceeding; whether the order dated 12.09.2024 permitting sale outside liquidation should be recalled; and whether the Commercial Tax Department should be permitted to sell the property to recover tax dues.
Law Points
- Priority of secured creditor under Section 26E SARFAESI Act
- statutory first charge under tax laws
- retroactive application of Section 26E
Case Details
2026 LawText (KAR) (07) 52
Company Application No. 49 of 2025 c/w Company Application Nos. 86 and 89 of 2025 in Company Petition No. 160 of 2005
K G Raghavan (Senior Counsel), Vignesh Shetty, Shrishail Raghavan, Manu Prabhakar Kulkarni
Omkara Assets Reconstruction Private Limited
The Official Liquidator of M/s. BPL Engineering Limited (in Liquidation) and The Deputy Commercial Tax Officer, Patan Cheru Sangareddy Circle
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Company applications in a winding-up proceeding seeking recall of attachment orders and permission to sell property
Remedy Sought
Omkara Assets sought recall of tax department attachment notices; Tax Department sought recall of order permitting Omkara to sell property and sought leave to sell property for tax recovery
Filing Reason
Omkara Assets filed to clear title for property sale; Tax Department filed to assert priority for tax dues
Previous Decisions
Orders dated 12.09.2024 in CA 33, 34, 240/2024 permitting Omkara to sell property outside liquidation; attachment orders by CTD dated 25.10.2007 and 24.11.2011; winding-up order dated 19.11.2012 in COP 160/2005; interim stay by High Court of Andhra Pradesh in writ petition; substitution order dated 12.12.2024 in CA 33/2024
Issues
Whether the attachment orders issued by the Commercial Tax Department for recovery of tax arrears under the Andhra Pradesh General Sales Tax Act, 1957, Central Sales Tax Act, 1956, and Andhra Pradesh Value Added Tax Act, 2005, override the priority of a secured creditor under Section 26E of the SARFAESI Act in a winding-up proceeding.
Whether the order dated 12.09.2024 permitting Omkara Assets to sell the property outside liquidation should be recalled.
Whether the Commercial Tax Department should be granted leave to sell the property to recover outstanding tax arrears.
Submissions/Arguments
Omkara Assets submitted that Section 26E of the SARFAESI Act, introduced by the Amendment Act of 2016 and brought into force in 2020, has retroactive application and governs all pending proceedings, giving the secured creditor priority over other claimants.
The Commercial Tax Department contended that it holds a statutory first charge over the property under the relevant tax enactments, which takes precedence over the claim of the secured creditor.
Judgment Excerpts
C.A. No.49/2025 is filed by Omkara Assets Reconstruction Private Limited ... to recall the attachment notices dated 25.10.2007 and 24.11.2011 issued by the Commercial Tax Department of Andhra Pradesh, now the State of Telangana.
C.A. No.86/2025 is filed by the CTD seeking recall of the order dated 12.09.2024 passed by this Court in C.A. Nos.33/2024, 34/2024 and 240/2024 in C.O.P. No.160/2005 permitting Omkara Assets to sell the property outside the winding-up proceedings.
Learned Senior Counsel appearing for Omkara Assets submitted that, Section 26E of the SARFAESI Act, introduced by the Amendment Act of 2016 and brought into force in 2020, has retroactive application and, therefore, applies to all transactions that have not attained finality and are still pending adjudication.
Procedural History
BPL Engineering Limited wound up by order dated 19.11.2012 in COP 160/2005. Prior to that, IDBI-led consortium had a mortgage, loan default, and NPA classification on 30.12.2001. Debt assigned to SASF on 30.09.2004. CTD issued attachment orders on 25.10.2007 and 24.11.2011. SASF took possession under SARFAESI on 18.04.2011. High Court of Andhra Pradesh granted interim stay against CTD sale notice, later disposed of as infructuous on 23.09.2023 due to winding-up. SASF assigned rights to Omkara on 31.08.2024; substitution ordered on 12.12.2024. Court permitted Omkara to sell property outside liquidation on 12.09.2024. Omkara filed CA 49/2025 to recall attachments; CTD filed CA 86/2025 to recall sale order and CA 89/2025 seeking leave to sell property. Matters reserved for orders on 12.06.2026, pronounced on 02.07.2026.
Acts & Sections
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: Section 13(4), Section 26E, Chapter IVA
- Companies Act, 1956: Section 446(2)(d), Section 529, Section 529-A
- Code of Civil Procedure, 1908: Section 151
- Companies (Court) Rules, 1959: Rule 6, Rule 9
- Andhra Pradesh General Sales Tax Act, 1957:
- Central Sales Tax Act, 1956:
- Andhra Pradesh Value Added Tax Act, 2005:
