Registered mortgage requirement governs recovery against third-party property for arrack licence arrears

Recovery against a petitioner's property cannot be enforced for another person's arrack licence arrears unless there is a validly registered mortgage or other clear security in favour of the authorities. The record showed that the alleged security was not registered as required by the confirmation order, the prescribed annexures were not produced, and it remained unclear whether the property was offered as surety, mortgage, or in connection with the petitioner's own auction participation. In the absence of a clear legal basis, proceedings against the petitioner and her property were unsustainable.

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Issues: Whether the recovery notice could be enforced against the petitioner or her property in the absence of a validly registered mortgage / security in relation to the arrack licence granted to the third respondent.

Analysis: The petitioner's property was said to have been offered as security, but the required mortgage was not registered in favour of the authorities as contemplated by the confirmation order. The record also showed that the petitioner had not produced the prescribed annexures, and there was uncertainty as to whether her property had been offered as a surety, as a mortgage, or in connection with her own participation in the auction. In the absence of a valid registered mortgage, the authorities had no clear legal basis to proceed against the petitioner or her property for the arrears attributable to the third respondent.

Conclusion: The recovery proceedings against the petitioner and her property were not sustainable; the issue is decided in favour of the petitioner.

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