The Division Bench of the Madras High Court comprising Justices D. Krishnakumar and R. Vijayakumar was hearing a petition and held that the rights of secured creditors to realise secured debts have priority over other debts and government dues, including taxes.
In the present case, the High Court Division Bench was hearing a writ petition seeking the issuance of a Writ of Certiorarified Mandamus to quash an order by the 1st respondent and to direct them to register a sale certificate issued by the petitioner/Bank in favor of the 2nd respondent for certain properties.
The petitioner/Bank had taken possession of the mortgaged properties and conducted a sale, declaring the 2nd respondent as the successful bidder. However, the 1st respondent refused to register the sale certificate due to tax arrears owed by the borrowers.
The High Court held that the rights of secured creditors have priority over other debts and government dues, including taxes, and ordered the 1st respondent to register the sale certificate. The High Court also imposed a cost on the 1st respondent for their refusal to register the certificate.