2018 (4) TMI 1319 - SC - Central Excise

First charge on the (hypothecated) property in auction - recovery of the Central Excise dues - Held that - The claim of the Corporation with regard the first charge on the property was answered by the High Court by holding that the stage for enforcement of the charge would come only when the property is sold for recovery of the Central Excise dues and therefore the issue raised with regard to the first charge on the property is pre-mature. The High Court was perfectly justified in coming to the impugned conclusion - The stage at which the remedy of the Financial Corporation may be invoked as pointed out by the High Court adequately takes care of the grievance of the appellant. Appeal dismissed.

Summary

Issues:
1. Validity of the sale of hypothecated property by Rajasthan Financial Corporation under Section 29 of the State Financial Corporation Act, 1951.
2. Claim of first charge on the property by the Corporation in relation to Central Excise dues.
3. Dismissal of writ petition by the High Court.

Analysis:
The Supreme Court heard arguments from both parties regarding the sale of a property by Rajasthan Financial Corporation to Subramaniam Shastri due to a default by Sabhyata Plastics Pvt Ltd. The Corporation sold the property in a public auction and executed a conditional conveyance deed retaining the first charge on the property until all dues are paid. The issue arose when the Central Excise department attached the property for alleged dues, leading to a writ petition. The High Court dismissed the petition, stating that the auction purchaser, not the Corporation, would be aggrieved by the sale. Additionally, the High Court deemed the Corporation's claim of first charge premature, as enforcement would only occur upon property sale for Central Excise dues recovery.

Upon reviewing the conditional conveyance deed, the Supreme Court upheld the High Court's decision, finding it justified. The Court agreed with the High Court that the Corporation's remedy could only be invoked at the appropriate stage, addressing the appellant's concerns adequately. Consequently, the Supreme Court declined to interfere with the High Court's order and dismissed the appeal, affirming the decision regarding the sale of the hypothecated property and the Corporation's claim of first charge in relation to the Central Excise dues.