Akash (Director) 30 July 2014

Takeover by bank under sarfaesi act

Dear Sirs,

I seek your kind Legal Advice for the below matter ,

If bank ( Secured Creditor ) has charge over all assists of the company , and the company is going thru financial distress .

This company has also availed EPCG licence ( The Export Promotion Capital Goods ) and has failed to fulfil the obligation of export .

Now if the bank takes over the companies assists under sarfaesi , then in that case how will the customs react to the same . are there any similar cases to refer .

Regards

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2 Replies

RAJU O.F., (Advocate) 30 July 2014

Even if bank has taken over the secured assets of the borrower under SARFAESI Act, the borrower would be liable for all other liabilities other than the sale value of such assets.

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c.p.s. ramachary (1500) 04 August 2014

Full Bench of Madras High Court in UTI Bank Ltd. Vs. Dy. Commissioner of Central Excise [2007]135 Comp Cas 329 (Madras) ruled that, Customs or Central Excise cannot claim priority over the secured asset kept by them under bondage according to the Customs Act. The bank can take possession of the secured assets without any hesitation. If Customs Department reacts as assumed by you, the course of action left over to the bank is to move High Court under Art.226 of Constitution for necessary direction to the Customs Department.