TaxTMI 
TaxTMI 
2005 (1) TMI 635
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....frastructure Corporation Ltd.). As the said M/s. Sree Lekha Industries committed default, the account maintained by them was declared by the respondent-Bank as non-performing asset on August 22, 2001. In exercise of powers conferred under section 13(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the SERFAESI Act"), possession notice was issued by the respondent-Bank on July 20, 2002 and physical possession was taken of the mortgaged properties by first respondent-Bank on October 9, 2002. Auction was conducted pursuant to notice dated February 14, 2004 said to have been published in the local newspapers stating that the date of auction would be March 20, 2004. Second petitioner participated in the auction through first petitioner and rights of the property in question were knocked down in favour of first petitioner on March 20, 2004 being the highest bidder by bidding an amount of Rs. 24,00,000. First respondent-Bank also communicated on July 23, 2004 to second respondent-Corporation that the leasehold rights of the said property have been knocked down in favour of the petitioners herein and....
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....at the same prevails over the mortgage of the financial institutions including first respondent-Bank. It is further stated in the counter-affidavit of the fourth respondent that second respondent-Corporation was informed not to transfer the property in question unless a tax clearance certificate is received from the third respondent. However, second respondent-Corporation informed that the property had already been sold by first respondent-Bank in auction to the petitioners, and advised the sales tax department to approach the bank which is holding the sale proceeds of the property relating to the said dealer M/s. Sree Lekha Industries. On this aspect, the case of the respondent-tax authorities is that by virtue of section 18 of the APGST Act, the petitioners are obliged to pay the entire arrears of sales tax due by the aforesaid M/s. Sree Lekha Industries. 4.. The petitioners' case is that they are bona fide purchasers for value at a public auction and have no notice of the aforesaid tax dues and, therefore, they have no liability to pay any tax dues of the aforesaid defaulter M/s. Sree Lekha Industries. It is the duty of the respondent-Bank to discharge all statutory dues of M/s....
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.... business of the dealer. The ownership of the business has not been transferred to the petitioners. They are purchasers of the property at a public auction conducted by the respondent-Bank under the provisions of the SERFAESI Act. Therefore, section 18 of the APGST Act which deals with the recovery of tax where a business of a dealer is transferred would have no application. 9.. Mr. Deepak Bhattacharjee, learned counsel for the respondent-Bank, relying upon section 35 of the SERFAESI Act, contended that by virtue of section 35, the provisions of that Act have been given overriding effect over the other laws notwithstanding anything inconsistent therewith contained in any other law. Reliance was placed by Mr. Deepak Bhattacharejee upon section 13 of the SERFAESI Act and more particularly to sub-section (7) thereof. It lays down the procedure with regard to the application of the moneys realised by the secured creditors (Bank). It would be appropriate to extract sub-section (7) of section 13 of the SERFAESI Act, which reads as under: "Where any action has been taken against a borrower under the provisions of sub-section (4), all costs, charges and expenses which, in the opinion of....
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....National Iron & Steel Rolling Corporation [1995] 96 STC 612, as creating a first charge by operation of law and that charge, it was held, will have precedence over an existing mortgage. It would be appropriate to extract the relevant conclusions of the Supreme Court in that case, which are as under: "In the present case, the section creates a first charge on the property, thus clearly giving priority to the statutory charge over all other charges on the property including a mortgage. The submission, therefore, that the statutory first charge created by section 11-AAAA of the Rajasthan Sales Tax Act can operate only over the equity of redemption, cannot be accepted. The charge operates on the entire property of the dealer including the interest of the mortgagee therein. Looked at a little differently, the statute has created a first charge on the property of the dealer. What is meant by a 'first charge'? Does it have precedence over an earlier mortgage? Now, as set out in Dattareya Shanker Mote's case (1974) 2 SCC 799, a charge is a wider term than a mortgage. It would cover within its ambit a mortgage also. Therefore, when a first charge is created by operation of law over any pro....