Venkat Subramanium (Sr Manager) 19 October 2011

Sale auction proceed

Hello,

We have a Property and the same is Mortagaged to a Bank as colateral for certain loan availed by our company. Due to default with the Bank, the Bank has taken symbolic possession of the Property under SARFESI. Further , the Income Tax department too have also attached the property on account of some claim / dues on the company. Income Tax attachment is prior to the SARFESI action by the bank. The question is

a) Whether any court can grant stay on the sale aution initiated by the Bank under SARFESI, due to the Income tax attachement?

b) In case the sale aution is completed, who has the first claim on the proceeds whether it is the Bank to whom the property is specifically mortgaged or the Income Tax department since it is the exchequer?

c) Is there any solution to settle with the Banks and avoid the Sale Aution

Thanks in Advance for anticipated response.

Reply Follow

2 Replies

M. A. Khan (advocate) 19 October 2011

Once property is mortgaged with bank means an interest is created in favour of bank and bank is secured creditors. therefore bank claim will be settled first than IT dept. process of bank cannot be stayed even attachment by IT dept. only option for u to file appeal before DRT.

RAJU O.F., (Advocate) 29 October 2011

Income Tax Dept. is not secured creditor; whereas bank is secured creditor entitled to enforce security interest on the property. The only way to stop further proceedings is to file Securitisation Application u/Sec.17 of the SARFAESI Act, before jurisdiction DRT, within 45 days of the Possession Notice u/S 13(4).