TaxTMI 
TaxTMI 
2007 (8) TMI 651
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....hority had taken possession of stock of sugar lying pledged to the appellant bank and under its control, forcibly and without reference to the appellant-bank. The appellant--bank had got itself impleaded in the writ petition. Considering that the sugar stock was liable to lose its value by being stored indefinitely, the court had directed sale of the sugar. The sale fetched a price of Rs.1,53.50,400/-. Out of the same, a sum of Rs.10,60,800/- was paid towards excise duty and the balance was held under orders of court. 2. The writ petition filed by the first respondent challenging the recovery proceedings, both at the instance of the Labour Commissioner and the Cane Commissioner was dismissed by the learned Single Judge. The decision of the learned Single Judge was challenged in appeal. In the appeal filed by the company, the impugned interim order was made directing that a sum of Rs.43,00,000/- be made available to the Labour Commissioner for disbursement to the employees of the company, a sum of Rs.60,00,000/- be made available to the Cane Commissioner for disbursal to the sugarcane cultivators who had supplied sugarcane and a sum of Rs.20,00,000/- be paid to the appellant--bank,....
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....ided for and going by some of the decisions of this Court, the workmen's dues could not be ignored and under the circumstances, there is no reason to interfere with the interim order passed by the Division Bench of the High Court. Additional Solicitor General also submitted that the question whether sales tax dues or the dues under a certificate issued by the Debt Recovery Tribunal had priority, had been referred to a larger Bench for a decision. It was submitted that the decision in State of M.P. vs. Jaura Sugar Mills Ltd. And others (1997 (9) SCC 207) will apply here. On behalf of the State it was submitted that the decision in State of M.P.'s case (supra) held the field and the order of the Division Bench was supportable in the light of that decision. 6. The right of the lender, or pledgee, is to retain the chattle until a proper tender of the amount due is made.(See The Law of Mortgages by Edward F. Cousins) Under Section 173 of the Contract Act, a pawnee has the right to retain the goods pledged for payment of the debt including interest on the debt and all necessary expenses incurred by the pawnee in respect of the possession or for the preservation of the goods pledged. The....
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....ed against the pawnor of goods and execution has issued thereon, the sheriff cannot seize the goods pawned unless he satisfied the claim of the panwee". (based mainly on Rogers vs. Kennay (1846 (9) Q.B. 592). "On the bankruptcy of the pawnor the pawnee is a secured creditor in the bankruptcy with respect to things pledged before the date of the receiving order and without notice of a prior available act of bankruptcy". (Halsbury's Laws of England 3rd Edn. Vol.29 p.222) It has not been shown how the law in India is in any way different from the English law relating to the rights of the pawnee vis-`-vis other unsecured creditors of the pawnor. In our judgment the High Court is in error in considering that the rights of the pawnee who had parted with money in favour of the pawnor on the security of the goods can be defeated by the goods being lawfully seized by the Government and the money being made available to other creditors of the pawnor without the claim of the pawnee being fully satisfied. The pawnee has special property and a lien which is not of ordinary nature on the goods and so long as his claim is not satisfied no other creditor of the pawnor has any right to take away t....
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....al general property interest in the pledge, the condition being that he can pass on that general property only in the event of the pledge being brought to sale by public auction in accordance with the Act and the Rules framed thereunder." 10. The Act there referred was the Karnataka Sales Tax Act and the question that fell for decision was whether the pawnee, the pawnbroker, on sale could be considered to be a dealer, liable to pay sales tax under the Sales Tax Act. 11. In Dena Bank vs. Bhikhabhai Prabhudas Parekh & Co. and others (2000 (5) SCC 694) the position was reiterated in the following words: "However, the Crown's preferential right to recovery of debt over other creditors is confined to ordinary or unsecured creditors. The common law of England or the principles of equity and good conscience (as applicable to India) do not accord the Crown a preferential right for recovery of its debts over a mortgagee or pledgee of goods or a secured creditor. It is only in cases where the Crown's right and that of the subject meet at one and the same time that the Crown is in general preferred. Where the right of the subject....
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....iar circumstances obtaining in the case and was not to be taken as a precedent. Hence, even apart from the distinction, no value as a precedent can be attached to that decision. 15. In State of M.P. vs. Jaura Sugar Mills Ltd. And others (supra) dealing with the Madhya Pradesh Sugar Cane (Regulation and Supply) Act, it was only held that the Cane Commissioner having power to compel the cane growers to supply cane to the factory, has incidental power and is duty bound to ensure payment of the price of the sugarcane supplied by the sugarcane growers. With respect, this decision does not enable us to adjudge the rights of a pawnee on the sale of the pawned goods or alter the status of the Cane Commissioner or the cane grower from only that of an unsecured creditor as recognised in Bank of Bihar (supra). 16. The decision in Textile Labour Association and another vs. Official Liquidator and another (2004 (9) SCC 741) was a case of liquidation and was a case to which Section 529 and 529A of the Companies Act were attracted. The said decision is also of no help in the case on hand since a liquidation has not intervened in the present case. 17. The decision in Rajasthan State Financial C....