2024 (4) TMI 322 - HC - VAT and Sales Tax

Review of the order - Recovery of dues - priority of charges - secured creditor have a prior right over the relevant Department of the Government to appropriate the amount realized by the sale of a secured asset - HELD THAT - Considering the clear findings as recorded by the Court, in which the Court has clearly observed that the situation would be governed by the determination in paragraph 154 therein as there is material to indicate that the action of sale proclamation initiated by the respondents was preceded by notice under Section 178 of the MLR Code, warrant of attachment under Section 267(3), order of attachment in Form 4 and auction proclamation notice in Form 7 under the MRLR Rules. It is thus clear that the entire procedure as known to law has been followed by the respondent/Sales Tax Department as observed and accepted by the Court. More so having already taken a chance to argue the case in the alternative, based on the provisions of Section 31B of the Recovery of Debts And Bankruptcy Act, 1993, the petitioners cannot be permitted to have a second round of arguments on the same issues under the garb of a review petition. The principles on the exercise of the review jurisdiction are well settled. The Supreme Court in THE STATE OF WEST BENGAL VERSUS KAMAL SENGUPTA AND ANOTHER 2008 (6) TMI 578 - SUPREME COURT has clearly held that a review cannot be sought on the ground of discovery of new matter or evidence. Such matter or evidence would be relevant and must be of such a character that if the same has been produced, it might have altered the judgment. It was thus observed that the mere discovery of new or important matter or evidence is not a sufficient ground for review ex debito justitiae. It was further held that parties seeking review also need to show that such additional matter or evidence was not within its knowledge and even after the exercise of due diligence, the same could not be produced before the court earlier. There is no mistake or error apparent on the face of the judgment rendered by this Court. In fact, accepting the argument of petitioner involves the exercise of re-scrutiny and reconsideration of the facts and legal position, which stands already considered and concluded in the judgment under review. In the light of the above discussion, it is opined that the review petition is devoid of any merit. Review petition dismissed.

Summary

Issues involved:
1. Priority of secured creditors' rights over government departments' dues.
2. Prospective application of SARFAESI Act provisions.
3. Registration of security interest with CERSAI.
4. Validity of auction sales conducted without court permission.

Summary:

1. Priority of Secured Creditors' Rights:
The court addressed whether a secured creditor under the SARFAESI Act and RDDB Act has a prior right over government departments' dues under the BST Act/MVAT Act/MGST Act. The court held that the statutory first charge under state legislation could displace the secured creditor's priority unless the security interest is registered with CERSAI as per Section 26E of the SARFAESI Act.

2. Prospective Application of SARFAESI Act Provisions:
The court considered whether the priority in payment of dues to a secured creditor under the SARFAESI Act is prospective. It concluded that without registration of the security interest, the secured creditor cannot claim priority in payment.

3. Registration of Security Interest with CERSAI:
The petitioners argued that their security interest was registered with CERSAI, contrary to the court's earlier findings. The court found that the petitioners failed to demonstrate this registration at the relevant time, and even if they had, it would not alter the judgment due to other substantive observations against the petitioners.

4. Validity of Auction Sales Conducted Without Court Permission:
The court annulled the sale of the secured assets conducted without its permission during the pendency of the writ petition, directing the return of the sale amount deposited by the petitioners with interest. The petitioners' conduct and failure to comply with statutory requirements disentitled them from any relief.

Conclusion:
The review petition was dismissed, as the court found no error apparent on the face of the judgment. The court emphasized that review jurisdiction cannot be exercised for re-scrutiny of facts and legal positions already considered. The interim applications were also disposed of in light of the dismissal of the review petition.