2015 (10) TMI 451 - HC - VAT and Sales Tax

Attachment of account of the petitioner to recovery the dues of the third party - Territorial jurisdiction of high court - Held that - Even if this Court were to have territorial jurisdiction, and qua which I entertain serious doubts, the appropriate High Court to entertain the challenge if at all maintainable, by the petitioner Company is the High Court of Madras within whose territorial jurisdiction the respondent no.1 with whose action the petitioner Company is aggrieved, is situated - Attachment appears to have been effected as far back as prior to 26th July, 2013. It appears that the respondent no.2 Bank, perhaps at the behest of the petitioner Company, had sought certain clarifications from the respondent no.1 and which were rendered by the respondent no.1 vide letter dated 26th July, 2013 which is impugned in this writ petition. Petitioner Company in the petition has chosen not to disclose the same and has emphasised on M/s Maharaja Appliances Limited whose dues are sought to be recovered from the petitioner Company being an entirely different legal entity. However the petitioner in the petition, in Ground (xii) has given an inkling of the relationship by pleading that at the time when the French Company took over the shareholding of M/s Maharaja Whiteline Industries Private Limited, it had obtained an undertaking dated 15th November, 2011 from M/s Maharaja Appliances Limited that M/s Maharaja Whiteline Industries Private Limited will not be liable for any dues of M/s Maharaja Appliances Limited. In my view, the occasion for the petitioner Company taking such undertaking would have arisen, only on account of the possibility existing therefor. I have rather enquired from the counsel for the petitioner Company of the exact relationship. - Petition disposed of.

Summary

Issues involved:
Challenge to attachment by Commercial Taxes Department, Territorial jurisdiction of the High Court, Liability of the petitioner Company for sales tax arrears, Forum conveniens determination.

Analysis:
The judgment involves a challenge to the attachment of a sum of Rs. 24,39,330/- by the Commercial Taxes Department towards sales tax arrears. The petitioner Company argues that it is a separate legal entity from the company owing the arrears. The issue of territorial jurisdiction arises as the petitioner justifies invoking the High Court's jurisdiction based on the location of its bank account. However, the Court expresses doubts and suggests that the appropriate forum would be the High Court of Madras, where the respondent department is situated.

The Court notes that the petitioner Company has an office in Chennai and had previously represented to the respondent department. It emphasizes that the matter has a local flavor and that Chennai would be a more suitable forum for adjudication. The Court also considers the delay in approaching the Court after pursuing remedies departmentally and highlights the relationship between the companies involved, indicating that liability needs to be determined by the respondent department or the High Court of Madras.

Referring to precedent, the Court asserts that even if it has territorial jurisdiction, it can refuse to exercise it if another High Court is deemed more appropriate. Consequently, the Court refuses to entertain the petition, granting the petitioner liberty to approach the appropriate forum. The Court also issues a direction to the bank not to remit the attached amount until a specified date, subject to the petitioner maintaining a minimum balance in its account.

In conclusion, the judgment addresses the issues of attachment challenge, territorial jurisdiction, liability determination, and forum conveniens, ultimately directing the petitioner to seek redressal in the High Court of Madras and providing temporary protection regarding the attached amount.