By TIOL News Service

CHENNAI, DEC 21, 2017: THE issue before the Bench is - Whether secured creditors have precedence over all the dues, payable to both Central Government and the State Government as per the provisions of SARFAESI Act and RD & BFI Act. And the HC verdict is YES.

Facts of the case

The assessee-bank is aggrieved by the notice issued by the Income Tax Department, for recovery of income tax, payable by the second respondent (Surana Corporation Ltd.), for the AY 2005-06 to 2013-14. The notice stated that, the second respondent was liable to pay income tax of Rs.69.81 Crores, for such AYs, and since certain monies of the second respondent were lying in the hands of the assessee, the Department had issued the notice u/s 226 (3) of the Act, to the assessee. The validity of the notice was challenged in a writ petition.

After hearing the parties, the High Court held that,

++ in the light of the decision of the Full Bench of this Court, in the case of The Indian Overseas Bank, the argument advanced by the assessee is accepted. There is no dispute to the fact that the assessee is a secured creditor, and in such circumstances, they have precedence over all the dues, payable to the Central Government and the State Government.

(See 2017-TIOL-2623-HC-MAD-IT)