TaxTMI 
TaxTMI 
2009 (2) TMI 451
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....a, Ravindra K. Adsure, Chinmoy Khaladkar, Ms. Malvika Trivedi, T. Mahipal, Ranjith K.C., V.B. Joshi, Kailash Pandey, V.K. Sidharthan, Ms. Nina Gupta, Ms. Akanksha, Ms. Neha S. Verma, Ms. Swigin George, Ms. Bina Gupta, Ramesh Singh, A.V. Rangam, Buddy A. Ranganadhan, K. Rajeev and Harshad V. Hameed, Advocates with them) for the respondents. G.S. SINGHVI J. 1. Leave granted in S.L.P. (C) No. 24767 of 2005. 2. Whether section 38C of the Bombay Sales Tax Act, 1959 (for short, "the Bombay Act") and section 26B of the Kerala General Sales Tax Act, 1963 (for short, "the Kerala Act") and similar provision contained in other State legislations by which first charge has been created on the property of the dealer or such other person, who is liable to pay sales tax, etc., are inconsistent with the provisions contained in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, "the DRT Act") for recovery of "debt" and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the Securitisation Act") for enforcement of "security interest" and whether by virtue of non obstante clauses containe....
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....ed in favour of the State. The learned single judge of the Kerala High Court negatived the bank's challenge by observing that the proceedings under the Kerala Act had been initiated before the issue of certificate by the Tribunal and that even if the Tribunal has got exclusive jurisdiction to recover the amount due to the bank, the Tehsildar was not obliged to approach it for recovery of the State dues. The learned single judge referred to section 46 of the Kerala Revenue Recovery Act, 1968, which provides that within 14 days from the date of attachment of any immovable property any person other than the defaulter can lodge objection to the attachment of the whole or any portion of such property on the ground that such property was not liable for the arrears of public revenue, and held that as the bank had claimed first charge or prior charge over the attached property, it can file appropriate objections under section 46 of the Kerala Revenue Recovery Act, 1968 and make a prayer that public revenue can be recovered after paying its dues. The learned single judge further observed that in terms of section 47 of the Kerala Revenue Recovery Act, 1968 the petitioner can obtain relea....
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....y over unsecured dues, but being a secured creditor, the bank has first and exclusive charge over the properties of the company and has priority over the sales tax dues of the State. The Division Bench of the High Court analysed the provisions of the Securitisation Act, the State Act and observed See page 39 of [2006] 148 STC.: "...if any Central Act provides for first charge, the charge created under section 38C of the Bombay Sales Tax Act is overridden. Conversely, if the Central Act does not provide for first charge in respect of the liability under the said Act, the first charge created under section 38C of the Bombay Sales Tax Act shall hold the field..." The Division Bench then noted that section 13 of the Securitisation Act does not create first charge in favour of the banks; that it merely provides the machinery for realisation by a secured creditor of the security interest without intervention of the court or Tribunal; that it overrides the provisions contained in section 69 or 69A of the Transfer of Property Act which empowers the mortgagee to sell or concur in selling the mortgaged property or any part thereof in default of payment of the mortgage money witho....
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....peedy recovery of debts due to banks or financial institutions or for enforcement of security interest by the secured creditors and overriding effect has been given to these legislations vis-a-vis other laws, the provisions contained therein will have primacy over State legislations which have been enacted under article 246(2) read with entry 54 in List II in the Seventh Schedule and under which first charge has been created in favour of the State in respect of the dues of sales tax, etc. Shri Dushyant Dave relied upon the judgments in State of West Bengal v. Kesoram Industries Ltd. [2004] 10 SCC 201 and Government of A.P. v. J.B. Educational Society [2005] 3 SCC 212, and argued that even though the Central and State legislations have not been enacted with reference to a particular entry in List III in the Seventh Schedule, article 254 will get attracted, and the Kerala and Bombay High Courts committed an error by refusing to accept the submission that banks, financial institutions and secured creditors have priority in the matter of recovery of debts or enforcement of security interest vis-a-vis the State's right to recover the dues of sales tax, etc. Shri Bishwajeet Bhattacha....
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....editors but there is no provision in the two enactments by which first charge has been created in favour of banks, etc., and, therefore, the provisions contained in State legislations creating first charge in respect of the dues of sales tax, etc., cannot be treated as inconsistent with Central legislations. Shri Dwivedi further submitted that levy and collection of tax, etc., is sovereign function as well as necessity of the State and as such the State has exclusive plenary power to legislate on that subject and in the absence of any provision in the DRT Act or Securitisation Act creating first charge in favour of the banks, etc., in lieu of their dues, these legislations cannot be given overriding effect qua the provisions contained in the State legislations and right of the State to recover the dues of sales tax, etc., cannot be frustrated merely because a bank or financial institution or secured creditor has initiated action for recovery of debt, etc., by filing application under section 19 of the DRT Act or by resorting to the procedure contained in section 13 of the Securitisation Act. In support of this argument, learned senior counsel invoked the doctrine of sub silentio. ....
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....ament, whether passed before or after the law made by the Legislature of such State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State: Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State." 9. Article 254 was interpreted by the Constitution Bench in Zaverbhai Amaidas v. State of Bombay [1955] SCR 799 in the context of challenge to Bombay Act No. 36 of 1947 on the ground that the same is repugnant to section 7(1) of the Essential Supplies (Temporary Powers) ....
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....re those enacted in the Evidence Act. They are to be raised only in the trial of offences under section 4(1) of the Act. They are therefore purely ancillary to the exercise of the legislative power in respect of entry 31 in List II. So also, the provisions relating to search, seizure and arrest in sections 28 to 32 are only with reference to offences committed or suspected to have been committed under the Act. They have no operation generally or to offences which fall outside the Act. Neither the presumptions in section 4(2) nor the provisions contained in sections 28 to 32 have any operation apart from offences created by the Act, and must, in our opinion, be held to be wholly ancillary to the legislation under entry 31 in List II. The Madras Prohibition Act is thus in its entirety a law within the exclusive competence of the Provincial Legislature, and the question of repugnancy under section 107(1) does not arise." 10. In Hoechst Pharmaceuticals Ltd. v. State of Bihar [1983] 4 SCC 45 See [1984] 55 STC 1 (SC)., this court considered the question whether there is any conflict between the Drugs (Price Control) Order, 1979 made under section 3 of the Essential Commodities Act, 19....
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....ches upon the legislative competence of Parliament to enact a law, the question one has to ask is whether the legislation relates to any of the entries in List I or III. If it does, no further question need be asked and Parliament's legislative competence must be upheld. Where there are three Lists containing a large number of entries, there is bound to be some overlapping among them. In such a situation the doctrine of pith and substance has to be applied to determine as to which entry does a given piece of legislation relate. Once it is so determined, any incidental trenching on the field reserved to the other Legislature is of no consequence. The court has to look at the substance of the matter. The doctrine of pith and substance is sometimes expressed in terms of ascertaining the true character of legislation. The name given by the Legislature to the legislation is immaterial. Regard must be had to the enactment as a whole, to its main objects and to the scope and effect of its provisions. Incidental and superficial encroachments are to be disregarded. (6) The doctrine of occupied field applies only when there is a clash between the Union and the State Lists within....
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....lf enacting a law repugnant to the State law with respect to the 'same matter'. Even though the subsequent law made by Parliament does not expressly repeal a State law, even then, the State law will become void as soon as the subsequent law of Parliament creating repugnancy is made. A State law would be repugnant to the Union law when there is direct conflict between the two laws. Such repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand together." 12. In State of West Bengal v. Kesoram Industries Ltd. [2004] 10 SCC 201, the majority of the Constitution Bench recognised the possibility of overlapping of legislations enacted under different entries in Lists I and II in the Seventh Schedule and observed: "While reading the three Lists, List I has priority over Lists III and II and List III has priority over List II. However, still, the predominance of the Union List would not prevent the State Legislature from dealing with any matter within List II though it may incidentally affect any item in List I. In spite of the fields of legislation having been demarcated, the question of repugnancy between law made b....
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.... applying the doctrine of pith and substance, can an incidental trenching upon another field of legislation be ignored? Once it is so determined if the impugned legislation substantially falls within the power expressly conferred upon the Legislature which enacted it, an incidental encroaching in/trenching on the field assigned to another Legislature is to be ignored." 13. In Government of A.P. v. J.B. Educational Society [2005] 3 SCC 212, the court was called upon to decide whether there was any conflict between the provisions of All India Council for Technical Education Act, 1987 and the A. P. Education Act, 1982 and whether the State legislation was liable to be declared void and inoperative on the ground that the State Legislature was not competent to enact law in the field occupied by the Central legislation. A two-judge Bench analysed the provisions of the two enactments and held: "Parliament has exclusive power to legislate with respect to any of the matters enumerated in List I, notwithstanding anything contained in clauses (2) and (3) of article 246. The non obstante clause under article 246(1) indicates the predominance or supremacy of the law made by the Unio....
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.... under entry 45 in List I in the Seventh Schedule whereas Bombay and Kerala Acts have been enacted by the concerned State Legislatures under entry 54 in List II in the Seventh Schedule. To put it differently, two sets of legislations have been enacted with reference to entries in different Lists in the Seventh Schedule. Therefore, article 254 cannot be invoked per se for striking down State legislations on the ground that the same are in conflict with the Central legislations. That apart, as will be seen hereafter, there is no ostensible overlapping between the two sets of legislations. Therefore, even if the observations contained in Kesoram Industries' case [2004] 10 SCC 201 are treated as law declared under article 141 of the Constitution, the State legislations cannot be struck down on the ground that the same are in conflict with Central legislations. 16. Before proceeding further we may notice the background in which the DRT and Securitisation Acts were enacted, and schemes of the two legislations. After independence, the Government of India decided to give impetus to the industrial development of the country. Central and State Governments encouraged banks and other fi....
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....sons entitled thereto in accordance with the priorities in the law." 17. After considering the reports of two Committees and taking cognizance of the fact that as on September 30, 1990 more than 15 lakhs cases filed by public sector banks and 304 cases filed by financial institutions were pending in various courts for recovery of debts, etc., amounting to Rs. 6,000 crores, the Central Government introduced "The Recovery of Debts Due to Banks and Financial Institutions Bill, 1993" in Lok Sabha on May 13, 1993. It, however, appears that before the Bill could be passed, Lok Sabha was adjourned. Therefore, the President of India in exercise of the powers conferred by article 123(1) of the Constitution, promulgated "The Recovery of Debts Due to Banks and Financial Institutions Ordinance, 1993", which was replaced by the DRT Act. The new legislation facilitated creation of specialised forums, i.e., the Debts Recovery Tribunals and Debts Recovery Appellate Tribunals for expeditious adjudication of disputes relating to recovery of the debts due to banks and financial institutions. Simultaneously, the jurisdiction of the civil courts was barred and all pending matters were transferred to....
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....g on, and legally recoverable on, the date of the application". After the amendment of 2004, "debt" means "any liability (inclusive of interest) which is alleged as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application". The provisions contained in Chapter II envisage establishment of the Debts Recovery Tribunals and the Debts Recovery Appellate Tribunals, qualifications of Presiding Officers and Members, term of their office, staff of the Tribunals, salaries, allowances, etc. Section 17(1) of the DRT Act declares that a Tribunal shall have the jurisdiction, powers and authority to entertain and decide applications made by banks and financial institutions for recovery of debts due to them. Under section 17(2), the App....
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....can be enforced by the Tribunal which can order the property to be sold and the sale proceeds distributed amongst the secured creditors in accordance with the provisions of section 529A of the Companies Act, 1956 and pay the balance/surplus, if any, to the debtor-company. Section 20(1) lays down that any person aggrieved by an order made, or deemed to have been made, by a Tribunal may prefer an appeal to the Appellate Tribunal. Sub-section (2) of section 20 declares that no appeal shall lie from an order made by the Tribunal with the consent of the parties. Sub-section (3) prescribes the period of limitation, i.e., 45 days. Proviso to this sub-section empowers the Tribunal to entertain an appeal after the expiry of 45 days if it is satisfied that there was sufficient cause for not filing the appeal within the prescribed period. Sub-sections (4) to (6) contain the procedure to be followed by the Appellate Tribunal for disposal of an appeal. Section 21 lays down that the Appellate Tribunal shall not entertain an appeal unless the person preferring appeal deposits 75 per cent of the amount determined by the Tribunal under section 19. Section 22 lays down that the Tribunal and the Appe....
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..... 19. In exercise of the power conferred upon it under section 36 of the DRT Act, the Central Government has framed the Debts Recovery Tribunal (Procedure) Rules, 1993. These Rules regulate the procedure for filing application in the prescribed form, scrutiny thereof, fee for application, contents of application, documents to be filed with the application, filing of reply and documents by the respondent, date and place of hearing of the application, the manner of recording the order, publication of order and communication thereof to the parties. By an amendment made in 1997, rule 5A was added to enable a party to apply for review of the order made by the Tribunal on the ground of some mistake or error apparent on the face of the record. For regulating the procedure of the Appellate Tribunal, the Central Government has framed the Debts Recovery Appellate Tribunal (Procedure) Rules, 1994. The provisions contained in these Rules are similar to those contained in the Rules regulating the procedure of the Tribunal. Scheme of the Securitisation Act and Rules made thereunder. 20. Section 2(b) defines "asset reconstruction" to mean acquisition by any securitisation company or reco....
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....2(zc) defines "secured asset" to mean the property on which security interest is created. Section 2(zd) defines "secured creditor" to mean any bank or financial institution or any consortium or group of banks or financial institutions and includes (i) debenture trustee appointed by any bank or financial institutions, or (ii) securitisation company or reconstruction company, whether acting as such or managing a trust set up by such securitisation company or reconstruction company for the securitisation or reconstruction, as the case may be, or (iii) any other trustee holding securities on behalf of a bank or financial institution, in whose favour security interest is created for due repayment by any borrower of any financial assistance. Section 2(ze) defines a "secured debt" to mean a debt which is secured by any security interest. Section 2(zf) defines "security interest" to mean right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation and assignment. Chapter II which contains sections 3 to 12 deals with regulation of securitisation and reconstruction of financial assets of banks an....
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....ed debt. If the management of whole or part of the business is severable, then the secured creditor can take over management only of such business of the borrower which is relatable to security. The secured creditor can appoint any person to manage the secured asset, the possession of which has been taken over. The secured creditor can also, by notice in writing, call upon a person who has acquired any of the secured assets from the borrower to pay the money, which may be sufficient to discharge the liability of the borrower. Sub-section (7) of section 13 lays down that where any action has been taken against a borrower under sub-section (4), all costs, charges and expenses properly incurred by the secured creditor or any expenses incidental thereto can be recovered from the borrower. The money which is received by the secured creditor is required to be held by him in trust and applied, in the first instance, for such costs, charges and expenses and then in discharge of dues of the secured creditor. Residue of the money is payable to the person entitled thereto according to his rights and interest. Sub-section (8) imposes a restriction on the sale or transfer of the secured asset i....
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....conferred on the secured creditor under or by this section, it shall be entitled to proceed against the guarantors or sell the pledged assets without resorting to the measures specified in clauses (a) to (d) of sub-section (4) in relation to the secured assets. Sub-section (12) lays down that rights available to the secured creditor under the Act may be exercised by one or more of its officers authorised in this behalf. Sub- section (13) lays down that after receipt of notice under sub-section (2), the borrower shall not transfer by way of sale, lease or otherwise (other than in the ordinary course of his business) any of his secured assets referred to in the notice without prior written consent of the secured creditor. Section 14 represents semblance of court's intervention by way of assistance to a secured creditor in taking possession of the secured asset. The secured creditor can, for the purpose of taking possession or control of any secured asset, request in writing to the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction the secured asset or other document relating thereto is situated or found to take possession thereof. If such request i....
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....l court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Tribunal or Appellate Tribunal is empowered to determine. It further lays down that no injunction shall be granted by any court or other authority in respect of any action taken or to be taken under the Securitisation Act or DRT Act. Section 35 of the Securitisation Act is substantially similar to section 34(1) of the DRT Act. It declares that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Section 37, which is similar to section 34(2) of the DRT Act lays down that the provisions of this Act or the Rules made thereunder shall be in addition to, and not in derogation of the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or any other law for the time being in force. 21. In exercise of powers vested in it under section 38(1) and (2)(b) read with section 13(4), (10) and (12) of the....
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....Tribunals. The Securitisation Act has also brought into existence a new dispensation for registration and regulation of securitisation companies or reconstruction companies, facilitating securitisation of financial assets of banks and financial institutions, easy transferability of financial assets by the securitisation company or reconstruction company to acquire financial assets of banks and financial institutions by issue of debentures or bonds or any other security in the nature of debenture, empowering the securitisation companies or reconstruction companies to raise funds by issue of security receipts to qualified institutional buyers, facilitating reconstruction of financial assets acquired by exercising power of enforcement of securities or change of management, declaration of any securitisation company or reconstruction company as a public financial institution for the purpose of section 4A of the Companies Act, defining "security interest" as any type of security including mortgage and charge on immovable properties given for due payment of any financial assistance given by any bank or financial institution, classification of borrowers account as non-performing asset and ....
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....e first charge.-Notwithstanding anything contained in any contract to the contrary but subject to any provision regarding first charge in any Central Act for the time being in force, any amount of tax, penalty, interest or any other sum, payable by a dealer or any other person under this Act shall be the first charge on the property of the dealer, or, as the case may be, person." Kerala General Sales Tax Act, 1963 "26B. Tax payable to be first charge on the property.-Notwithstanding anything to the contrary contained in any other law for the time being in force, any amount of tax, penalty, interest and any other amount, if any, payable by a dealer or any another person under this Act, shall be the first charge on the property of the dealer, or such person." Section 14A of the Workmen's Compensation Act, 1923, section 11 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short, "the EPF Act"), section 74(1) of the Estate Duty Act, 1953, section 25(2) of the Mines and Minerals (Development and Regulation) Act, 1957, section 30 of the Gift Tax Act, 1958 and section 529A of the Companies Act, 1956 are some of the Central le....
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....anation.-In this sub-section and in section 17, 'insurance fund' means any fund established by an employer under any scheme for providing benefits in the nature of life insurance to employees, whether linked to their deposits in provident fund or not, without payment by the employees of any separate contribution or premium in that behalf. 11(2) Without prejudice to the provisions of sub-section (1), if any amount is due from an employer, whether in respect of the employee's contribution deducted from the wages of the employee or the employer's contribution, the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law, for the time being in force, be paid in priority to all other debts." Estate Duty Act, 1953 "74. Estate duty a first charge on property liable thereto.-(1) Subject to the provisions of section 19, the estate duty payable in respect of property, movable or immovable, passing on the death of the deceased, shall be a first charge on the immovable property so passing (including agricultural land) in whomsoever, it may vest on his death ....
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....: State Financial Corporations Act, 1951 "46B. Effect of Act on other laws.-The provisions of this Act and of any Rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern." 25. As a prelude to the consideration of question relating to conflict between Central and State legislations and priority, if any, given to the dues of banks, financial institutions and other secured creditors under the DRT Act and Securitisation Act, it will be useful to notice some rules of interpretation of statutes, one of which is the rule of contextual interpretation. This rule requires that the court should examine every word of a statute in its context. In doing so, the court has to keep in view Preamble of the statute, other provisions thereof, pari materia statutes, ....
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....he context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With those glasses, we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place. It is by looking at the definition as a whole in the setting of t....
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.... 369, Dominion of India v. Shrinbai A. Irani AIR 1954 SC 596, Union of India v. G.M. Kokil [1984] Supp. SCC 196 and Chandavarkar Sita Ratna Rao v. Ashalata S. Guram [1986] 4 SCC 447 and observed: "...the non obstante clause is appended to a provision with a view to give the enacting part of the provision an overriding effect in case of a conflict. But the non-obstante clause need not necessarily and always be co-extensive with the operative part so as to have the effect of cutting down the clear terms of an enactment and if the words of the enactment are clear and are capable of a clear interpretation on a plain and grammatical construction of the words the non obstante clause cannot cut down the construction and restrict the scope of its operation. In such cases the non obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the Legislature by way of abundant caution and not by way of limiting the ambit and scope of the Special Rules." 31. In A.G. Varadarajulu v. State of Tamil Nadu [1998] 4 SCC 231, this court relied on Aswini Kumar Ghose's case AIR 1952 SC 369. The court while interpreti....
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.... noted is that there is no provision in either of these enactments by which first charge has been created in favour of banks, financial institutions or secured creditors qua the property of the borrower. Under section 13(1) of the Securitisation Act, limited primacy has been given to the right of a secured creditor to enforce security interest vis-a-vis section 69 or section 69A of the Transfer of Property Act. In terms of that sub-section, secured creditor can enforce security interest without intervention of the court or Tribunal and if the borrower has created any mortgage of the secured asset, the mortgagee or any person acting on his behalf cannot sell the mortgaged property or appoint a receiver of the income of the mortgaged property or any part thereof in a manner which may defeat the right of the secured creditor to enforce security interest. This provision was enacted in the backdrop of Chapter VIII of Narasimham Committee's 2nd Report in which specific reference was made to the provisions relating to mortgages under the Transfer of Property Act. In an apparent bid to overcome the likely difficulty faced by the secured creditor which may include a bank or a financial ....
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.... effect by virtue of any other law. In other words, if there is no provision in the other enactments which are inconsistent with the DRT Act or Securitisation Act, the provisions contained in those Acts cannot override other legislations. Section 38C of the Bombay Act and section 26B of the Kerala Act also contain non obstante clauses and give statutory recognition to the priority of State's charge over other debts, which was recognised by Indian High Courts even before 1950. In other words, these sections and similar provisions contained in other State legislations not only create first charge on the property of the dealer or any other person liable to pay sales tax, etc., but also give them overriding effect over other laws. In Builders Supply Corporation v. Union of India [1965] 2 SCR 289 See [1965] 56 ITR 91 (SC)., the Constitution Bench considered the question whether tax payable to the Union of India has priority over other debts. After making a reference to the judgments of the Bombay High Court in Bank of India v. John Bowman AIR 1955 Bom 305, Madras High Court in Kaka Mohamed Ghouse Sahib & Co. v. United Commercial Syndicate [1963] 49 ITR 824 and Manickam Chettiar v. I....
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....State debts rests on the well-recognised principle that the State is entitled to raise money by taxation because, unless adequate revenue is received by the State, it would not be able to function as a sovereign Government at all. It is essential that as a sovereign, the State should be able to discharge its primary governmental functions and in order to be able to discharge such functions efficiently, it must be in possession of necessary funds and this consideration emphasises the necessity and the wisdom of conceding to the State, the right to claim priority in respect of its tax dues (see Builders Supply Corporation See [1965] 56 ITR 91 (SC); AIR 1965 SC 1061.). In the same case the Constitution Bench has noticed a consensus of judicial opinion that the arrears of tax due to the State can claim priority over private debts and that this rule of common law amounts to law in force in the territory of British India at the relevant time within the meaning of article 372(1) of the Constitution of India and therefore continues to be in force thereafter. On the very principle on which the rule is founded, the priority would be available only to such debts as are incurred by the subject....
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....he insertion of section 33C in the State Act and the subsequent loans taken in 1979 do not alter the position in favour of the State. The High Court then proceeded to hold that the charge created in favour of the bank remains valid and operative till repayment of the loan. This court reversed the judgments of the trial court and High Court and held See at page 3 of [2002] 126 STC.: "Section 33C creates a statutory first charge that prevails over any charge that may be in existence. Therefore, the charge thereby created in favour of the State in respect of the sales tax dues of the second respondent prevailed over the charge created in favour of the bank in respect of the loan taken by the second respondent. There is no question of retrospectivity here, as, on the date when it was introduced, section 33C operated in respect of all charges that were then in force and gave sales tax dues precedence over them..." 37. Section 529A of the Companies Act and section 11(2) of the EPF Act both of which are Central legislations also contain non obstante clauses giving statutory recognition to the priority of workers' dues over other debts. In Allahabad Bank v. Canara Bank [200....
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....r of Property Act and observed: "With regard to the argument based on section 100 of the Transfer of Property Act, the matter is no longer res integra. In State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling Corporation [1995] 2 SCC 19 See [1995] 96 STC 612 (SC); [1995] 82 Comp Cas 551 (SC)., this question came up specifically for consideration of the Supreme Court and the answer given by the Supreme Court is unmistakably against the first respondent. That was a case where the State Bank of Bikaner claimed priority over sales tax arrears due to the State on the ground that it was a secured creditor. Section 11AAAA of the Rajasthan Sales Tax Act declares that any amount of tax, penalty, interest and any other sum, if any, payable by a dealer, or any other person under the Act, shall be the first charge on the property of the dealer, or such person. On behalf of the State Bank of Bikaner, section 100 of the Transfer of Property Act was relied upon to contend that, since there was a mortgage in favour of the bank, the bank would have precedence over the claim of sales tax dues, which was only by way of a charge. After analysis of section 100 of the Transfer of Prop....
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....f, declaring that the amount due as contribution to the Employees Provident Fund has first charge on the assets of the establishment and that, notwithstanding anything contained in any other law for the time being in force, it shall be paid in priority against all other debts. In fact, the second facet of section 11(2) of the EPF and MP Acts goes one step further than what is provided in section 46B of the SFC Act. The reason for this is obvious. While the State Financial Corporation would have to be helped to recover the debts due to it from a defaulting debtor, the provident fund payable to workers is of greater moment, since it is a matter of terminal social security benefit made available by statute to the working class. Taking into consideration that EPF and MP Acts is a social benefit legislation, and the evil consequences of provident fund dues being defeated by prior claims of secured or unsecured creditors, the Legislature took care to declare that irrespective of when a debt is created, the dues under the EPF and MP Acts would always remain first charge and shall be paid first out of the assets of the establishment. We are also not impressed by the contention of the first....
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....text in which these legislations were enacted and the purpose sought to be achieved by their enactment, it becomes clear that the two legislations, are intended to create a new dispensation for expeditious recovery of dues of banks, financial institutions and secured creditors and adjudication of the grievance made by any aggrieved person qua the procedure adopted by the banks, financial institutions and other secured creditors, but the provisions contained therein cannot be read as creating first charge in favour of banks, etc. If Parliament intended to give priority to the dues of banks, financial institutions and other secured creditors over the first charge created under State legislations then provisions similar to those contained in section 14A of the Workmen's Compensation Act, 1923, section 11(2) of the EPF Act, section 74(1) of the Estate Duty Act, 1953, section 25(2) of the Mines and Minerals (Development and Regulation) Act, 1957, section 30 of the Gift-tax Act, and section 529A of the Companies Act, 1956 would have been incorporated in the DRT Act and the Securitisation Act. Undisputedly, the two enactments do not contain provision similar to Workmen's Compensat....
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....ds "sales effected by the secured creditor outside the winding up", the court referred to Maxwell on Interpretation of Statutes, the judgment of the Privy Council in P. Murugiah v. Jainudeen C.L. [1954] 3 WLR 682 and observed: "It is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them. It is also well-recognised rule of construction that the Legislature does not intend to make a substantial alteration in the law beyond what it explicitly declares either in express words or by clear implication and that the general words of the Act are not to be so construed as to alter the previous policy of the law, unless no sense or meaning can be applied to those words consistently with the intention of preserving the existing policy untouched." 40. In Shyamlal Mohanlal Choksi's case AIR 1965 SC 1251, the Constitution Bench considered whether section 94 of the Code of Criminal Procedure, 1898 applies to accused person under trial and held that it does not. The court referred to article 20(3) of the Constitution which declares that the accused cannot be compelled to incriminate himself ....
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.... and considered provisions'. (Francis Bennion's Statutory Interpretation, Butterworths, 1984, para 133). As stated by Lord Devlin in National Assistance Board v. Wilkinson See [1952] 2 QB 648; [1952] 2 All ER 255.: (QB p. 661) 'It is a well established principle of construction that a statute is not to be taken as effecting a fundamental alteration in the general law unless it uses words that point unmistakably to that conclusion.' Statutes relating to remedies and procedure must receive a liberal construction 'especially so as to secure a more effective, a speedier, a simpler, and a less expensive administration of law'. See Crawford's Statutory Construction, para 254. The object of the amendment was to provide an appropriate remedy to expedite proceedings in court. That object must be borne in mind by adopting a purposive construction of the amended provisions. The legislative intention being the speedy disposal of cases with a view to relieving the litigants and the courts alike of the burden of mounting arrears, the word 'parties' must be so construed as to yield a beneficent result, so as to eliminate the mischief the Legis....
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....'There are no local conditions which make it less desirable for the client to have the full benefit of an advocate's experience and judgment. One reason, indeed, for refusing to imply such a power would be a lack of confidence in the integrity or judgment of the Indian advocate. No such considerations have been or indeed could be advanced, and their Lordships mention them but to dismiss them'." 42. We may now advert to the judgments of this court in Allahabad Bank's case [2000] 4 SCC 406 See [2000] 101 Comp Cas 64 (SC)., A.P. State Financial Corporation v. Official Liqsuidator [2000] 7 SCC 291See [2000] 102 Comp Cas 1 (SC)., ICICI Bank Ltd. v. SIDCO Leathers Ltd. [2006] 10 SCC 452 See [2006] 131 Comp Cas 451 (SC)., Transcore v. Union of India [2008] 1 SCC 125 See [2007] 135 Comp Cas 1 (SC). on which reliance has been placed by learned counsel for the appellants and also a recent judgment in Union of India v. SICOM Limited [2009] 2 SCC 121 See [2009] 147 Comp Cas 531 (SC).. In Allahabad Bank's case [2000] 4 SCC 406 See [2009] 101 Comp Cas 64 (SC)., a two-judge Bench was called upon to consider the question whether an application can be filed under the Companie....
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.... Act at the stage of adjudication for the money due to the banks or financial institutions and at the stage of execution for recovery of monies under the RDB Act, the Tribunal and the Recovery Officers are conferred exclusive jurisdiction in their respective spheres. (2) Whether for initiation of various proceedings by the banks and financial institutions under the RDB Act, leave of the company court is necessary under section 537 before a winding-up order is passed against the company or before a provisional liquidator is appointed under section 446(1) and whether the company court can pass orders of stay of proceedings before the Tribunal, in exercise of powers under section 442. (3) Whether after a winding-up order is passed under section 446(1) of the Companies Act or a provisional liquidator is appointed, whether the company court can stay proceedings under the RDB Act, transfer them to itself and also decide questions of liability, execution, and priority under section 446(2) and (3) read with sections 529, 529A and 530, etc., of the Companies Act or whether these questions are all within the exclusive jurisdiction of the Tribunal. (4) Whether, in c....
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....we hold that at the stage of adjudication under section 17 and execution of the certificate under section 25, etc., the provisions of the RDB Act, 1993, confer exclusive jurisdiction in the Tribunal and the recovery officer in respect of debts payable to banks and financial institutions and there can be no interference by the company court under section 442 read with section 537 or under section 446 of the Companies Act, 1956. In respect of the monies realised under the RDB Act, the question of priorities among the banks and financial institutions and other creditors can be decided only by the Tribunal under the RDB Act and in accordance with section 19(19) read with section 529A of the Companies Act and in no other manner. The provisions of the RDB Act, 1993, are to the above extent inconsistent with the provisions of the Companies Act, 1956, and the latter Act has to yield to the provisions of the former. This position holds good during the pendency of the winding-up petition against the debtor-company and also after a winding-up order is passed. No leave of the company court is necessary for initiating or continuing the proceedings under the RDB Act, 1993. Points 2 and 3 are dec....
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.... clause (b) of section 529A(1). The said provision refers to clause (c) of the proviso to section 529(1) and it is necessary to under- stand the scope of the said provision." 43. Similar view was expressed in A.P. State Financial Corporation v. Official Liquidator [2000] 7 SCC 291 See [2000] 102 Comp Cas 1 (SC). A learned single judge of the High Court allowed the applications filed by the appellant under section 446(1) of the Companies Act read with sections 29 and 46 of the SFC Act subject to the condition that the appellant would undertake to discharge its liability due to workers under section 529A of the Companies Act. While dismissing the appeal of the Corporation, this court held that non obstante clause contained in section 529A of the Companies Act being a subsequent enactment prevails over section 29 of the SFC Act. 44. The judgment in Allahabad Bank's case [2000] 4 SCC 406 was distinguished by a two-judge Bench judgment in ICICI Bank Ltd. v. SIDCO Leathers Ltd. [2006] 10 SCC 452. In that case the appellant and Punjab National Bank had advanced loans to respondent No. 1 for setting up a plant for manufacture of leather boards and for providing working capital fu....
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....406 See [2000] 101 Comp Cas 64 (SC). it was categorically held that the adjudication officer would have such powers to distribute the sale proceeds to the banks and financial institutions, being secured creditors, in accordance with inter se agreement/arrangement between them and to the other persons entitled thereto in accordance with the priority in law. Section 529A of the Companies Act no doubt contains a non obstante clause but in construing the provisions thereof, it is necessary to determine the purport and object for which the same was enacted. In terms of section 529 of the Companies Act, as it stood prior to its amendment, the dues of the workmen were not treated pari passu with the secured creditors as a result whereof innumerable instances came to the notice of the court that the workers may not get anything after discharging the debts of the secured creditors. It is only with a view to bring the workmen's dues pari passu with the secured creditors, that section 529A was enacted. The non obstante nature of a provision although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy. Only because ....
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.... securitisation company/asset reconstruction company. In cases where the borrower has bought an asset with the finance of the bank/FI, the latter is treated as a lender and on assignment the securitisation company/ asset reconstruction company steps into the shoes of the lender bank/ FI and it can recover the lent amounts from the borrower. ... Therefore, when section 13(4) talks about taking possession of the secured assets or management of the business of the borrower, it is because a right is created by the borrower in favour of the bank/FI when he takes a loan secured by pledge, hypothecation, mortgage or charge. For example, when a company takes a loan and pledges its financial asset, it is the duty of that company to see that the margin between what the company borrows and the extent to which the loan is covered by the value of the financial asset hypothecated is retained. If the borrower company does not repay, becomes a defaulter and does not keep up the value of the financial asset which depletes, then the borrower fails in its obligation which results in a mismatch between the asset and the liability in the books of the bank/FI. Therefore, sections 5 and....
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.... status quo ante. Therefore, it cannot be said that if possession is taken before confirmation of sale, the rights of the borrower to get the dispute adjudicated upon are defeated by the authorised officer taking possession. The NPA Act provides for recovery of possession by non-adjudicatory process; therefore to say that the rights of the borrower would be defeated without adjudication would be erroneous. Rule 8 of the Security Interest (Enforcement) Rules, 2002 ("2002 Rules") deals with the stage anterior to the issuance of sale certificate and delivery of possession under rule 9. Till the time of issuance of sale certificate, the authorised officer is like a court receiver under order 40, rule 1 CPC. The court receiver can take symbolic possession and in appropriate cases where the court receiver finds that a third-party interest is likely to be created overnight, he can take actual possession even prior to the decree. The authorised officer under rule 8 has greater powers than even a court receiver as security interest in the property is already created in favour of the banks/FIs. That interest needs to be protected. Therefore, rule 8 provides that till issuance of the....
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....the dues claimed by it will have priority over the dues of Customs. A two-judge Bench of this court referred to the non obstante clause contained in section 46B of the SFC Act and provisions of priority contained in section 529A of the Companies Act as also the provisions of the EPF Act and the Employees State Insurance Act, the judgments in Builders Supply Corporation v. Union of India [1965] 2 SCR 289 See [1965] 56 ITR 91 (SC)., Bank of Bihar v. State of Bihar [1972] 3 SCC 196 See [1971] 41 Comp Cas 591 (SC)., Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. [2000] 5 SCC 694 See [2000] 120 STC 610 (SC); [2001] 247 ITR 165 (SC); [2001] 107 Comp Cas 157 (SC)., Central Bank of India v. Siriguppa Sugars & Chemicals Ltd. [2007] 8 SCC 353 See [2007] 139 Comp Cas 149 (SC)., State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling Corporation [1995] 2 SCC 19 See [1995] 96 STC 612 (SC); [1995] 82 Comp Cas 551 (SC)., ICICI Bank Ltd. v. SIDCO Leathers Ltd. [2006] 10 SCC 452 See [2006] 131 Comp Cas 451 (SC). and approved the view taken by the High Court. 47. In none of the aforementioned judgments this court held that by virtue of the provisions contained in the DRT Act or the Securi....
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.... the appellants is that the prior charge created in favour of the bank would prevail over the subsequent mortgage created in favour of the State. Dr. Bishwajit Bhattacharyya, learned Senior Counsel appearing for the Indian Overseas Bank heavily relied on the judgment of a three-judge Bench in Dattatreya Shanker Mote v. Anand Chintaman Datar [1974] 2 SCC 799 and argued that the view expressed in the subsequent judgments in State Bank of Bikaner Jaipur v. National Iron & Steel Rolling Corporation [1995] 2 SCC 19 See [1995] 96 STC 612 (SC); [1995] 82 Comp Cas 551 (SC). and R.M. Arunachalam v. Commissioner of Income-tax, Madras [1997] 7 SCC 698 See [1997] 227 ITR 222 (SC). requires reconsideration because the same are based on misrepresentation of the judgment in Dattatreya's case [1974] 2 SCC 799. He pointed out that section 26B of the Kerala Act was inserted with effect from April 1, 1999 and argued that the same cannot prevail over the prior charge created in favour of the bank in 1973 because the latter could not have had any notice of a charge created in future. Other learned Senior Counsel referred to the provisions of sections 58, 69 and 100 of the Transfer of Property Act a....
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.... belonging to respondent Nos. 1 to 7. The decree was registered on April 7, 1941, but due to inadvertence the charge on Kakakuva Mansion at Poona was not shown in the index of registration. On June 27, 1949, respondent Nos. 1 to 7 mortgaged Kakakuva Mansion to plaintiff-respondent No. 14 for a sum of Rs. 1,00,000. They also created a further charge on September 13, 1949 in favour of plaintiff-respondent No. 14 for Rs. 50,000. On July 7, 1951, a charge was created by a decree in favour of respondent No. 15 for a sum of Rs. 59,521/11. In the meantime, the appellants recovered some amount by execution of the decree. They sold the property at Shukrawar Peth at Poona and the Chawl at Kalyan. Thereafter, they filed a darkhast in the court of the third Joint Civil Judge, Senior Division, Poona for sale of Kakakuva Mansion. Notices were issued under Order 21, Rule 66, CPC to respondent No. 14 and others. Later on, the executing court held that presence of plaintiff-respondent No. 14 was not necessary. The latter challenged that order in First Appeal No. 668 of 1957 filed before the High Court of Bombay. He also filed a civil suit in the court of Joint Civil Judge, Senior Division, Po....
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....times rights in or over the same immovable property, and since charge is not a transfer of an interest in or over the immovable property he gets no security as against mortgagees of the same property unless he can show that the subsequent mortgagee or mortgagees had notice of the existence of his prior charge." 52. In State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling Corporation [1995] 2 SCC 19 See [1995] 96 STC 612 (SC); 82 Comp Cas 551 (SC)., another Bench of three judges considered the effect of section 11AAAA of the Rajasthan Sales Tax Act, 1954 by which first charge was created on the property of the dealer in lieu of the amount of tax, penalty, etc., on an existing mortgage on the property of the dealer. It is borne out from the judgment that the appellant-bank had given cash credit facility to respondent No. 1. For securing repayment, respondent No. 1 mortgaged the factory premises in favour of the bank. In 1986, the appellant filed a suit for recovery of Rs. 3,79,672 with interest. In that suit, Commercial Taxes Officer got himself impleaded as party by asserting that State had a prior claim for recovery of Rs. 1,19,122 as dues of sales tax. The mortgaged p....
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....st in the property by way of a mortgage." The court then considered the argument made on behalf of the bank that its dues will have priority because at the time when the statutory first charge came into existence, there was already a mortgage in respect of the same property and held At page 615 and 616 of [1995] 96 STC.: "...The argument though ingenious, will have to be rejected. Where a mortgage is created in respect of any property, undoubtedly, an interest in the property is carved out in favour of the mortgagee. he mortgagor is entitled to redeem his property on payment of the mortgage dues. This does not, however, mean that the property ceases to be the property of the mortgagor. The title to the property remains with the mortgagor. Therefore, when a statutory first charge is created on the property of the dealer, the property subjected to the first charge is the entire property of the dealer. The interest of the mortgagee is not excluded from the first charge. The first charge, therefore, which is created under section 11AAAA of the Rajasthan Sales Tax Act will operate on the property as a whole and not only on the equity of redemption as urged by Mr. Tarkunde. ....
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....gh Court has, therefore, rightly held that as a result of the charge created under section 74(1) of the Estate Duty Act, it could not be said that title of the assessee to the immovable properties received by him from Smt Umayal Achi was incomplete and imperfect in any way. In the context of the facts, the High Court has found that the assessee had admittedly become the full owner of the assets even before the payment of estate duty and on payment of the same he had not acquired a new right, tangible or intangible, in the assets. It cannot, therefore, be said that the amount proportionate to estate duty paid by the assessee on the properties that were transferred should be treated as 'cost of acquisition of the assets' under sections 48 and 49 read with section 55(2) of the IT Act. Since the title of the assessee to the immovable properties acquired was not incomplete and imperfect in any way, it cannot also be said that as a result of the payment of the estate duty by the assessee, there was an improvement in the title of the assessee and the said payment could be regarded as 'cost of improvement' under section 48 read with section 55(1)(b) of the Act." 54. In o....
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....f banks, financial institutions and secured creditors. Therefore, the impugned orders do not call for any interference. 58. C.A. No. 2811 of 2006-Thane Janata Sahakari Bank Ltd. v. Commissioner of Sales Tax-In this case the bank had taken possession of the mortgaged assets on February 15, 2005 and sold the same. On July 11, 2005, the officers of the Commercial Tax Department informed the bank about outstanding dues of sales tax amounting to Rs. 3,62,82,768. The Assistant Commissioner issued notice under section 39 of the Bombay Act for recovery of Rs. 48,48,614. The High Court negatived the bank's claim of priority and held that section 35 of the Securitisation Act does not have overriding effect over section 33C of the Bombay Act. The view taken by the High Court is unexceptional and calls for no interference. 59. C.A. No. 3549 of 2006-Indian Overseas Bank v. Kerala State- The respondent No. 3 in this appeal, namely, Cheruvathur Brothers, Chalissery, Palakkad District availed of various credit facilities from the appellant-bank and created mortgage in the latter's favour for securing repayment. On February 11, 1994, Deputy Tehsildar (RR), Ottapalam (Kerala) reques....
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....s to respondent No. 2, M/s. Eastern Cashew Company. Respondent No. 3, Mrs. Meena Vasanth gave guarantee and mortgaged immovable property to secure the dues of the bank. On account of the borrower's failure to repay the loan amount, the bank filed O.S. No. 133 of 1986 in the court of sub-judge, Kollam. The same was decreed on March 23, 1993. The judgment of the trial court was challenged by the borrower in A.S. No. 229 of 1994. Notwithstanding this, the bank filed Execution Petition No. 159 of 1994 for execution of the decree. During the execution proceedings, Tehsildar, Kollam issued notice to respondent No. 3 under section 49(2) of the Kerala Revenue Recovery Act for payment of arrears of sales tax amounting to Rs. 1,19,86,461. He also indicated that 41.80 acres of land in revenue survey No. 680/2 will be sold for realisation of sales tax dues. The borrowers challenged the notice by filing writ petitions in the High Court, which were dismissed on October 13, 2005 and it was held that the State authorities were free to take action under the Kerala Act. Thereafter, the bank filed Writ Petition No. 7464 of 2006, questioning the notice issued by the Tehsildar under the Kerala Reve....
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....of the company under the Revenue Recovery Act on the strength of the first charge created over the property by virtue of section 26B of the Kerala General Sales Tax Act. The court held that the statutory first charge would prevail over any charge or right in favour of a mortgage or secured creditors and would get precedence over an existing mortgage right. We are in this case concerned with the question as to whether section 26B of the KGST Act would take away the efficacy of a decree passed by the civil court prior to the introduction of the said section. We are of the view that till the decree is executed through the executing court, title of the mortgaged property remains with the mortgagor. Decree passed by the civil court is the formal expression of an adjudication which conclusively determines the rights of parties, but unless and until the decree is executed the bank would not procure the property and the State's overriding rights would have precedence over that of the bank. When a first charge is created by the operation of law over any property, that charge will have precedence over an existing mortgage and the decree obtained by the bank against the mortgagor....
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....sfied the bank's claim. On February 14, 2003, the petitioner deposited the bid amount. He was in possession of the auctioned property excluding the area of 8.50 cents which was in the possession of the eighth respondent, Sherry Jacob as licensee. At that stage, the State Government filed Writ Petition No. 26523 of 2003 for quashing the sale proceedings and also for issue of a direction to the auction purchaser to hand over the possession of the property to the Revenue Officer for conducting fresh auction for realisation of the arrears of sales tax. The appellant also filed Writ Petition No. 27302 of 2003 for restraining the Revenue Officer from taking action against the auctioned property. During the pendency of the writ petition, the company was wound up. By an order dated November 10, 2004, the Division Bench of the High Court disposed of Writ Petition Nos. 26523 of 2003 and 27302 of 2003 along with Writ Appeal Nos. 1165 of 2003 and 1230 of 2003 filed by the company and licensee against dismissal of the writ petitions filed by them challenging the sale conducted by the Recovery Officer of the Tribunal. The Division Bench referred to section 26B of the Kerala Act, judgments of....
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.... the notice for attachment issued by Tehsildar under section 36 of the Kerala Revenue Recovery Act and as the sale notice issued by him was stayed by the High Court on March 15, 2001, the bank did not commit any illegality by auctioning the first property of the company. She further argued that State can recover its dues by auctioning the second property of the company and the High Court was not justified in nullifying the auction conducted by the Recovery Officer of the Tribunal. The learned counsel appearing for the bank argued that since the State was not a party before the Tribunal, it was not necessary to give notice to the Tehsildar. In our view, the High Court did not commit any illegality by nullifying the auction conducted by the Recovery Officer of the Tribunal, who, as per admitted factual matrix of the case, did not give notice to the Revenue Officer despite the fact that the property had been attached under section 36 of the Kerala Revenue Recovery Act and the bank had challenged the notice issued under section 49(2) of that Act in Writ Petition No. 8845 of 2001 and succeeded in persuading the High Court to stay that notice. 63. C.A. No. 4909 of 2006-Central Bank....
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....tisation Act. By an order dated February 7, 2005, the learned single judge directed the Tehsildar to sell mortgaged property and to permit the bank to coordinate in the sale. That order was modified on September 22, 2005 and the bank was allowed to sell the property subject to certain conditions. The bank applied for modification of order dated September 22, 2005 and prayed that it may be permitted to retain the money realised from sale of the mortgaged property. The learned single judge did not entertain the appellant's prayer but directed that if the sale price is lower than the one mentioned by the Government Pleader then the sale shall be confirmed only after getting further order from the court. Liberty was also given to the borrower/guarantor to pay the arrears. Writ appeal filed by the appellant-bank against the interim order was disposed of by the Division Bench with the following observations: "Since the revenue authorities have already attached the property this court will not be justified in directing respondents 2 and 3 to hand over possession of the property to the bank. All the same it is entirely for the State and its officers to decide whether possessio....