2003 (3) TMI 140 - HC - Central Excise

Court Orders Possession Transfer in Writ Petition, Rejects Interest Claims

The court granted the writ petition, directing possession transfer within four weeks, subject to sales order conditions. The Rule Nisi was made absolute ... Mandamus for delivery of possession after statutory sale - statutory sale under Section 29 of the State Financial Corporations Act, 1956 - contractual claim for interest - limits of judicial review under Article 226 in contractual disputes - distraint by revenue authority cannot interdict delivery of possessionMandamus for delivery of possession after statutory sale - statutory sale under Section 29 of the State Financial Corporations Act, 1956 - entitlement to delivery of possession of the unit sold by the 1st respondent pursuant to the statutory sale - HELD THAT: - The Court found that once the sale was confirmed in favour of the petitioner under the statutory procedure, there was no justification for the 1st respondent to withhold possession. The 1st respondent, as the selling authority under the statutory sale, was directed to hand over possession, subject to the petitioner fulfilling the conditions of sale (as to costs). The Court treated the confirmed sale under Section 29 of the Act as determinative of the petitioner's right to possession and exercised its writ jurisdiction to compel delivery of possession accordingly. [Paras 6, 7]The 1st respondent is directed to hand over possession of the unit to the petitioner within four weeks from receipt of the order, subject to the petitioner complying with the sale conditions as to costsContractual claim for interest - limits of judicial review under Article 226 in contractual disputes - claim for payment of interest at 24% per annum on the deposit was not adjudicated as a statutory obligation under writ jurisdiction - HELD THAT: - The Court held that the claim for interest on the amount deposited pursuant to the sale is a contractual matter. No material was produced to show any statutory obligation on the 1st respondent to pay such interest. Accordingly, sitting under Article 226 the Court declined to adjudicate the contractual claim for interest in the writ petition. [Paras 6]The Court did not grant relief for payment of 24% interest and treated the interest claim as a contractual matter not adjudicated in the writDistraint by revenue authority cannot interdict delivery of possession - legality of the 4th respondent's distraint order as a bar to handing over possession - HELD THAT: - The Court observed that the 4th respondent (Central Excise Department) could not lawfully interdict the 1st respondent from delivering possession by passing a distraint order against the 1st respondent. If the 4th respondent considered the auction purchaser liable for dues, it must proceed by the appropriate legal remedies available against the purchaser rather than restrain delivery of possession by the selling authority. [Paras 6]The 4th respondent cannot interdict the handing over of possession by the 1st respondent and must pursue appropriate proceedings if it seeks to recover dues from the petitionerFinal Conclusion: Writ petition allowed insofar as the Court directed delivery of possession of the unit to the petitioner within four weeks subject to compliance with sale conditions; the claim for contractual interest was not adjudicated under Article 226; Rule Nisi made absolute to that extent. Issues:1. Failure to grant 24% interest on the deposit2. Delay in handing over possession of assets3. Legal challenges from State Bank and Central Excise Department4. Dispute over interest paymentAnalysis:1. The petitioner sought a writ of mandamus for not receiving 24% interest on a deposit made with the 1st respondent. The petitioner's bid for a unit was accepted for Rs. 76 lacs, of which Rs. 15,20,000 was paid as a deposit on 31-3-1992. The 1st respondent did not deliver possession, citing issues with the State Bank and Central Excise Department. The petitioner argued that interest should be paid from the deposit date until possession delivery, as per the sale confirmation letter terms.2. Despite the sale confirmation, possession was not handed over to the petitioner due to disputes with the State Bank and Central Excise Department. Legal challenges were faced, including a writ petition by the State Bank claiming an underpriced sale. The court dismissed the bank's petition and directed possession delivery to the petitioner. The Central Excise Department later demanded a significant sum from the petitioner, leading to further legal proceedings.3. The petitioner's counsel contended that the sale being statutory under the State Financial Corporations Act obligated possession delivery post-confirmation. The Central Excise Department's distraint order preventing possession transfer was deemed illegal, as it should pursue the petitioner for dues. The court ruled that the Department could not restrain possession delivery based on arrears without due process against the petitioner.4. The court found that the sale was confirmed, and the possession delay was unjustified. It stated that interest claims were contractual matters beyond its jurisdiction under Article 226. The court allowed the writ petition, directing possession transfer within four weeks, subject to sales order conditions. The Rule Nisi was made absolute by the Hon'ble Dr. Davinder Gupta, the Chief Justice, on March 7, 2003.