Wa/947/2025 Of The Additional Commissioner Of Income Tax v. Sea Pride Management And Consulting Services Pvt Ltd

APHC010415812025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) TUESDAY, THE SECOND DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FIVE PRESENT [3529] THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO THE HONOURABLE SRI JUSTICE T.C.D.SEKHAR WRIT APPEAL Nos.906 & 947 of 2025 WRIT APPEAL NO: 906/2025 Writ Appeal under clause 15 of the Letters Patent prays to a. set-aside the order passed by the Honble High Court in W.P.No. 11680 of 2025 dated 09.05.2025 b. and pass such Between: 1. MR. JIYYANA VENKATARAYUDU,, S/O J. VENKATA RAO, R/O D.NO.2-112, MAIN ROAD, NEARZP HIGH SCHOOL, THIMMAPURAM, KAKINADA, EAST GODAVARI DISTRICT -533 005D.NO.2-112, MAIN ROAD, NEARZP HIGH SCHOOL, THIMMAPURAM, KAKINADA, EAST GODAVARI DISTRICT -533 005 ...APPELLANT AND 1. M/S SEA PRIDE MANAGEMENT AND CONSULTING SERVICES PVT LTD, A COMPANY INCORPORATED UNDER PROVISIONS OF COMPANIES ACT, 2013 HAVING ITS REGISTERED OFFICE AT D.NO.18, 46TH STREET, NAGANALLUR, CHENNAI, TAMIL NADU, REP BY ITS DIRECTOR, ASISH CHAPPALTD, A COMPANY INCORPORATED UNDER PROVISIONS OF COMPANIES ACT, 2013 HAVING ITS REGISTERED OFFICE AT D.NO.18, 46TH STREET, NAGANALLUR, CHENNAI, TAMIL NADU, REP BY ITS DIRECTOR, ASISH CHAPPA 2. THE STATE OF ANDHRA PRADESH, REP BY SPECIAL CHIEF SECRETARY DEPARTMENT OF REVENUE (STAMPS AND REGISTRATION), SECRETARIAT BUILDINGS, VELAGAPUDI, GUNTURSECRETARY DEPARTMENT OF REVENUE (STAMPS AND REGISTRATION), SECRETARIAT BUILDINGS, VELAGAPUDI, GUNTUR 3. THE COMMISSIONER AND INSPECTOR GENERAL OF REGISTRATION AND STAMPS, VIJAYAWADAREGISTRATION AND STAMPS, VIJAYAWADA 4. THE DISTRICT COLLECTOR, KAKINADA, 5. THE DISTRICT REGISTRAR, KAKINADA 6. THE SUBREGISTRAR, SAMALKOTA, KAKINADA 7. THE UNION BANK OF INDIA, ASSETS RECOVERY BRANCH, D.NO.26-15-150, ANDHRA BANK BUILDING CHANGALRAOPETA, VISAKHAPATNAM, REP BY ITS AUTHORIZED OFFICER,D.NO.26-15-150, ANDHRA BANK BUILDING CHANGALRAOPETA, VISAKHAPATNAM, REP BY ITS AUTHORIZED OFFICER, 8. ADDITIONAL COMMISSIONER OF INCOME TAX, KAKINADA RANGA, SRI DEEPTHI TOWERS, MAIN ROAD, RAMA RAO PETA, KAINADA TOWN, EAST GODAVARI DISTRICT- 533 001RANGA, SRI DEEPTHI TOWERS, MAIN ROAD, RAMA RAO PETA, KAINADA TOWN, EAST GODAVARI DISTRICT- 533 001 ...RESPONDENT(S): IA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased may be pleased to dispense with the filing of the Certified Copy of WP No. 1168 of 2025 on the file of the Hon’ble High Cout of Ap, and pass such IA NO: 2 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased may be pleased to stay of operation of the order passed by the learned Single Judge in W.P.No. 11680 of 2025 dated 09.05.2025 and pass such Counsel for the Appellant: 1.VENKAT CHALASANI Counsel for the Respondent(S): 1.GP FOR REVENUE 2.KALAKOTI SUNIL KUMAR 3.GP FOR REGISTRATION AND STAMPS WRIT APPEAL NO: 947/2025 Writ Appeal under clause 15 of the Letters Patent to set aside the Final Order dated 09.05.2025 passed in W.P. No. 11680 of 2025 on the file of this Hon'ble Court, and to pass Between: 1. THE ADDITIONAL COMMISSIONER OF INCOME TAX, KAKINADA RANGE, SRI DEEPTHI TOWERS, MAIN ROAD, RAMA RAO PETA, KAKINADA TOWN, EAST GODAVARI DISTRICT, ANDHRA PRADESH - 533001.RANGE, SRI DEEPTHI TOWERS, MAIN ROAD, RAMA RAO PETA, KAKINADA TOWN, EAST GODAVARI DISTRICT, ANDHRA PRADESH - 533001. ...APPELLANT AND Counsel for the Appellant: 1.VENKAT CHALASANI Counsel for the Respondent(S): 1.GP FOR REVENUE 2.KALAKOTI SUNIL KUMAR 3.GP FOR REGISTRATION AND STAMPS WRIT APPEAL NO: 947/2025 Writ Appeal under clause 15 of the Letters Patent to set aside the Final Order dated 09.05.2025 passed in W.P. No. 11680 of 2025 on the file of this Hon'ble Court, and to pass Between: 1. THE ADDITIONAL COMMISSIONER OF INCOME TAX, KAKINADA RANGE, SRI DEEPTHI TOWERS, MAIN ROAD, RAMA RAO PETA, KAKINADA TOWN, EAST GODAVARI DISTRICT, ANDHRA PRADESH - 533001.RANGE, SRI DEEPTHI TOWERS, MAIN ROAD, RAMA RAO PETA, KAKINADA TOWN, EAST GODAVARI DISTRICT, ANDHRA PRADESH - 533001. ...APPELLANT AND 1. SEA PRIDE MANAGEMENT AND CONSULTING SERVICES PVT LTD, REP. BY ITS DIRECTOR ASISH CHAPPA, HAVING REGISTERED OFFICE AT D. NO. 18, 46TH STREET, NANGANALLUR, CHENNAI, TAMIL NADU - 600061.REP. BY ITS DIRECTOR ASISH CHAPPA, HAVING REGISTERED OFFICE AT D. NO. 18, 46TH STREET, NANGANALLUR, CHENNAI, TAMIL NADU - 600061. 2. THE STATE OF ANDHRA PRADESH, REP. BY ITS PRINCIPAL SECRETARY, DEPARTMENT OF REVENUE (STAMPS AND REGISTRATION), SECRETARIAT, VELAGAPUDI, AMARAVATI, GUNTUR DISTRICT, A.PSECRETARY, DEPARTMENT OF REVENUE (STAMPS AND REGISTRATION), SECRETARIAT, VELAGAPUDI, AMARAVATI, GUNTUR DISTRICT, A.P 3. THE COMMISSIONER AND INSPECTOR GENERAL OF REGISTRATION AND STAMPS, VIJAYAWADA, ANDHRA PRADESH.REGISTRATION AND STAMPS, VIJAYAWADA, ANDHRA PRADESH. 4. THE DISTRICT COLLECTOR, KAKINADA, ANDHRA PRADESH. 5. THE DISTRICT REGISTRAR, KAKINADA, ANDHRA PRADESH 6. THE SUB REGISTRAR, SAMALKOTA, KAKINADA DISTRICT, A.P. 7. UNION BANK OF INDIA, , ASSETS RECOVERY BRANCH D.NO. 26-15-150, ANDHRA BANK BUILDING, CHANGALRAOPETA, VISAKHAPATNAM - 530001.15-150, ANDHRA BANK BUILDING, CHANGALRAOPETA, VISAKHAPATNAM - 530001. 8. MR JIYYANA VENKATARAYUDU, S/O. J. VENKATA RAO, R/O. D.NO. 2-112, MAIN ROAD, NEAR ZP HIGH SCHOOL, THIMMAPURAM, EAST GODAVARI DISTRICT, ANDHRA PRADESH - 533005D.NO. 2-112, MAIN ROAD, NEAR ZP HIGH SCHOOL, THIMMAPURAM, EAST GODAVARI DISTRICT, ANDHRA PRADESH - 533005 IA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased Pleased to condone the delay of 3 days in filing the Writ Appeal against the Final Order dated 09.05.2025 in W.P. No. 11680 of 2025, and pass IA NO: 2 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased pleased to Suspend the operation and implementation of the Final Order dated 09.05.2025 passed in W.P. No. 11680 of2025, on the file of this pending final adjudication of the accompanying Writ Appeal, and Pass Counsel for the Appellant: 1.ANUP KOUSHIK KARAVADI Counsel for the Respondent(S): 1.GP FOR REVENUE 2.KALAKOTI SUNIL KUMAR 3.V DYUMANI 4.GP FOR REGISTRATION AND STAMPS RRR,J & TCDS,J W.A.Nos.906 & 947 of 2025 The Court made the following Common Judgment: (per Hon’ble Sri Justice R. Raghunandan Rao) As both these Writ Appeals arise out of the same Order, they are being disposed of, by way of this common judgment. 2. Heard Sri Venkat Chalasani, learned counsel for the appellant in W.A.No.906 of 2025, Sri Anup Koushik Karavadi, learned Standing Counsel appearing for the appellant in W.A.No.947 of 2025, Smt. V. Dyumani, learned counsel appearing for the respondents – Bank in both these Appeals, Sri Venkateswarlu Posani, learned Senior Counsel appearing for the 1[st] respondent – Auction Purchaser in both the Writ Appeals and the learned Government Pleader for Registration & Stamps appearing for the respondents in both these Writ Appeals. The 8[[th]] respondent/appellant had mortgaged certain assets including The Court made the following Common Judgment: (per Hon’ble Sri Justice R. Raghunandan Rao) As both these Writ Appeals arise out of the same Order, they are being disposed of, by way of this common judgment. 2. Heard Sri Venkat Chalasani, learned counsel for the appellant in W.A.No.906 of 2025, Sri Anup Koushik Karavadi, learned Standing Counsel appearing for the appellant in W.A.No.947 of 2025, Smt. V. Dyumani, learned counsel appearing for the respondents – Bank in both these Appeals, Sri Venkateswarlu Posani, learned Senior Counsel appearing for the 1[st] respondent – Auction Purchaser in both the Writ Appeals and the learned Government Pleader for Registration & Stamps appearing for the respondents in both these Writ Appeals. The 8[[th]] respondent/appellant had mortgaged certain assets including 3. The 8[[th]] respondent/appellant had mortgaged certain assets including the asset, which is under dispute in the present cases, to the Union Bank of India, which is arrayed as the 6[th] respondent in W.P.No.11680 of 2025. The property, in question, is an extent of 250.85 sq. yards of land along with an R.C.C. building, in the said land, which was given Door No.2-114 of Thimmapuram Village, Samalkota, Kakinada District. 4. The said property was mortgaged to the bank, on 19.12.2014, as a security for the financial assistance given by the respondent – Bank. It appears that, subsequently, the Income Tax Department had also attached this property, for recovery of the dues from the 8[th] respondent, on 08.09.2018. RRR,J & TCDS,J W.A.Nos.906 & 947 of 2025 5. The respondent – Bank, had registered this property, in the security register that is required to be maintained under Section 26D of the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002), on 25.07.2022. After the said registration, the respondent – bank initiated steps under the provisions of the SARFAESI Act, 2002, (herein referred to as ‘the Act’) to sell the said property. The 1[st]respondent herein, was the successful bidder in the auction conducted for the sale and a sale certificate, dated 18.03.2024 was issued in favour of the 1[st]respondent. Thereafter, the 1[st] respondent, approached the Registration Authorities for registration of the sale certificate, in accordance with Rule 9 (9) of the Security Interest (Enforcement) Rules, 2002. As the said registration was not being done, the 1[st] respondent, approached this Court, by way of W.P.No.11680 of 2025. It also appears that the respondent – bank had also filed W.P.No.9697 of 2024, before this Court, which is still pending. 6. A learned Single Judge of this Court, by a judgment, dated 09.05.2025, in W.P.No.11680 of 2025, had held that, the sale conducted by the respondent – bank under the provisions of the Act, would have precedence over the attachment of the Income Tax Department and directed the Registration Authorities to receive and consider the sale certificate, dated 18.03.2024, for registration, within four (04) weeks from the date of the receipt of the Order of the learned Single Judge. RRR,J & TCDS,J W.A.Nos.906 & 947 of 2025 7. Aggrieved by this Judgment, dated 09.05.2025, the Income Tax Department as well as the 8[th] respondent, in W.P.No.11680 of 2025, have approached this Court, by way of the present set of Writ Appeals. 8. Sri Anup Koushik Karavadi, the learned counsel appearing for the Income Tax Department, would contend that, the Order had been passed without hearing the Income Tax Department and that, the attachment of the Department cannot be defeated in this manner by the respondent – Bank. He would also contend that, the registration of the Security Interest over the said property, in the Security Register, dated 25.07.2022, had been done, after the order of attachment had been issued by the Income Tax Department. RRR,J & TCDS,J W.A.Nos.906 & 947 of 2025 7. Aggrieved by this Judgment, dated 09.05.2025, the Income Tax Department as well as the 8[th] respondent, in W.P.No.11680 of 2025, have approached this Court, by way of the present set of Writ Appeals. 8. Sri Anup Koushik Karavadi, the learned counsel appearing for the Income Tax Department, would contend that, the Order had been passed without hearing the Income Tax Department and that, the attachment of the Department cannot be defeated in this manner by the respondent – Bank. He would also contend that, the registration of the Security Interest over the said property, in the Security Register, dated 25.07.2022, had been done, after the order of attachment had been issued by the Income Tax Department. 9. The learned counsel appearing for the 8[th] respondent/appellant, would contend that, the judgment of the learned Single Judge had been passed, without an opportunity being given to the 8[th] respondent/appellant to set forth his objections. This Court, had specifically sought the details of the said objections that the 8[th] respondent could have raised before the learned Single Judge. The learned counsel appearing for the 8[th] respondent/appellant in W.A.No.906 of 2025, reiterated the contentions raised by the learned Standing Counsel in the Income Tax Department. In view of the fact that the contentions raised by both the appellants are the same and are questions of law, this Court does not deem it appropriate to remand the matter back to the learned Single Judge and is taking up these Appeals for consideration on merits. RRR,J & TCDS,J W.A.Nos.906 & 947 of 2025 10. The central issue before this Court is whether the claim of the Income Tax Department would have precedence over the claim of respondent – bank or whether the respondent – bank, would be entitled to priority over the claim of the Income Tax Department. the 11. This issue has now been settled by way of legislation. Chapter IV A of the SARFAESI Act, consisting of Section 26B to Section 26E was incorporated in the Act, by way of Act 44 of 2016, with effect from 24.01.2020. Section 22 of the SARFAESI Act, 2002, provides for a record called the Central Register in which the particulars of securitization of financial assets, reconstruction of financial assets and creation of security interest can be entered. The significance of an entry in such a Central Register is that, any security interest, which has been entered in such a Register would have precedence over all other claims, including Government claims. 12. Section 26E of the SARFAESI Act, 2002, stipulates that, notwithstanding anything contained in any other law, registration of security interest would accord priority to the claim of the secured creditor over all the other debts including revenues and taxes payable to the Central Government or State Government or Local Authority. 13. In the present cases, the security interest was registered in the Central Registry, on 25.07.2022. The auction sale, under the SARFAESI Act, 2002, commenced in the year, 2023, and culminated in the sale certificate, dated 18.03.2024. Since, the proceedings were initiated after the registration of the RRR,J & TCDS,J W.A.Nos.906 & 947 of 2025 security interest, all prior claims, including the attachment order of the Income Tax Department, would have to give way to the claim of the respondent – bank. 14. We are fortified in this view by the judgments of this Court, which have also been relied upon by a learned Single Judge. These judgments being the Order of the erstwhile High Court at Hyderabad for the States of Telangana and Andhra Pradesh, in W.P.No.23620 of 2017 and the judgment of this Court, in W.P.No.4063 of 2019, dated 18.02.2021, in the case of State Bank of India & Ors. Vs. Deputy Commercial Tax Officer – II, Visakhapatnam Division & Ors. 15. In these circumstances, we do not find any reason to interfere with the Order of the learned Single Judge. 16. Accordingly, these Writ Appeals are dismissed. There shall be no order as to costs. Tax Department, would have to give way to the claim of the respondent – bank. 14. We are fortified in this view by the judgments of this Court, which have also been relied upon by a learned Single Judge. These judgments being the Order of the erstwhile High Court at Hyderabad for the States of Telangana and Andhra Pradesh, in W.P.No.23620 of 2017 and the judgment of this Court, in W.P.No.4063 of 2019, dated 18.02.2021, in the case of State Bank of India & Ors. Vs. Deputy Commercial Tax Officer – II, Visakhapatnam Division & Ors. 15. In these circumstances, we do not find any reason to interfere with the Order of the learned Single Judge. 16. Accordingly, these Writ Appeals are dismissed. There shall be no order as to costs. As a sequel, pending miscellaneous applications, if any, shall stand closed. ________________________ R. RAGHUNANDAN RAO, J ________________ T.C.D. SEKHAR, J 252 KPV THE HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO AND THE HON’BLE SRI JUSTICE T.C.D. SEKHAR WRIT APPEAL Nos:906 & 947 of 2025 (per Hon’ble Sri Justice R. Raghunandan Rao) 02.09.2025