Statutory tax charge and mortgage claim were balanced by conditional redemption and auction-sale confirmation directions.

Competing claims over the same property were harmonised by recognising the State's statutory sales tax arrears claim alongside the Bank's mortgage-based entitlement. The Court permitted settlement of the tax liability under the Amnesty Scheme, directed release of the specified amount to the revenue authorities, and left the balance to be dealt with according to the Bank's rights. It also granted the Company a conditional opportunity to set aside the auction sale by paying the sale consideration with interest within three months; if payment was made in time, the sale would stand set aside, and if not, the sale would be confirmed in favour of the auction purchaser.

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Issues: (i) Whether the State could appropriate the sale proceeds towards sales tax arrears in preference to the Bank's claim based on mortgage. (ii) Whether the auction sale could be set aside in favour of the Company on payment of the sale consideration with interest within the time granted.

Issue (i): Whether the State could appropriate the sale proceeds towards sales tax arrears in preference to the Bank's claim based on mortgage.

Analysis: The competing claims arose from the State's statutory charge for sales tax arrears and the Bank's mortgage-based claim over the same property. The Court noted the State's right under Section 26B of the Kerala General Sales Tax Act and the Bank's claim referable to Section 31(b) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The dispute was resolved by permitting settlement of the tax liability under the Amnesty Scheme and directing release of the specified amount to the revenue authorities, while the balance was to be dealt with in accordance with the Bank's entitlement.

Conclusion: The State was held entitled to receive the amount due under the Amnesty Scheme, and the competing claims were adjusted accordingly.

Issue (ii): Whether the auction sale could be set aside in favour of the Company on payment of the sale consideration with interest within the time granted.

Analysis: The Court protected the Company's request to avoid confirmation of the sale by allowing it to clear the auction amount together with interest within three months. If the Company complied within time, the sale would stand set aside. If it failed, the sale would be confirmed in favour of the auction purchaser and a sale certificate would follow. The petitioners' actual expenses were also directed to be released.

Conclusion: The sale was conditionally liable to be set aside in favour of the Company on timely payment, failing which the sale would stand confirmed in favour of the auction purchaser.

Final Conclusion: The writ petition was disposed of by balancing the revenue's claim for tax arrears with the Bank's mortgage-based rights and by granting the Company a conditional opportunity to redeem the property by payment within the stipulated period.

Ratio Decidendi: Where statutory revenue claims and mortgage-backed bank claims compete over the same property, the Court may harmonise the rival interests by allowing settlement of the tax liability under the available scheme and by making confirmation of the auction sale conditional upon timely payment of the auction amount with interest.

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