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TMI Blog2011 (2) TMI 1367X X X X Extracts X X X X X X X X Extracts X X X X ..... subject property"] from the respondent No.2, Gujarat State Financial Corporation, by way of sale deed executed and registered in that regard. The said unit was originally mortgaged by M/s. Vipulam Enterprises Pvt. Ltd. with the respondent No.2 for securing a term loan. However, since the said Vipulam Enterprises Pvt. Ltd., defaulted in making payment of instalments, the respondent No.2 took over possession of the said unit in 1995 under section 29 of the State Financial Corporations Act, 1951. The respondent No.2 invited public offers for sale of the said unit. Since the offer received from the respondent No.4, Ravi Laminates was the highest, the same was accepted by the respondent No.2, Financial Corporation. The respondent No.4 made part payment to wards consideration of the said unit and after filing declaration commenced manufacturing activities. Subsequently, the petitioner company decided to purchase the said unit where upon, the respondent No.r4e quested the respondent No.2 to execute and register a sale deed of the said unit in favour of the petitioner company. The respondent No.2 accordingly, executed a sale deed in favour of the petitioners on 17th July, 2000, where the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the certificate issued or the same is surrendered whichever is earlie r. Relying upon the same, it was stated that Vipulam Enterpri ses had stopped manufacturing activities and therefore, the registration was automatically invalid whereby, the question of surrendering, cancelling or revoking the registration did not arise. It accordingly requested that the concerned officer be di rected to issue certificate of registration. 5. Subsequently, vide letter dated 12.11.2000, the Superintendent of Central Excise & Customs, direc ted the petitioner company to make payment of the outstanding dues of Vipulam Enterprises Pvt. The case of the petitioners that such demand was never raised against the respondent No.4 during the period when it was undertaking manufacturing activities in the aforesaid unit, that is, since 1995. Being aggrieved, the petitioners have filed the present petition seeking the reliefs noted hereinabove. 6. Vide order dated th26 December, 2000, the Court had issued Rule. On behalf of the petitioners, it had been stated that they would deposit a sum of Rs. 59,460/- under protest with the revenue without prejudice to their rights and contentions which are raised i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding and had also hypothecated the plant and machinery in favour of Gujarat State Financial Corporation and the Financial Corpor ation had registered thmeortgage as required under the provisions of the Transfer of Property Act and as such, it was a secured creditor. It was submitted that it is a settled legal position as held by the Apex Court in the case of Union of India v. Sicom Ltd., [2009 (233) E.L.T. 433 (S.C.)] that the Crown's preferential right to recovery of debt over other creditors is confined to ordinary or unsecured creditors. A debt which is secured or which by reason of the provisions of a statute becomes the first charge over the property having regard to the plain meaning of Article 372 of the Constitution of India must be held to prevail over the Crown debt which is an unsecured one. It was submitted that in the circumstances, dues of the Central Excise Department would not have priority over the dues of the Financial Corporation and as such, the respondents are not entitled to recover the outstanding amount of the defaulter unit from the subject property over which the respondent No.2 had the right of a secured creditor and which it had sold in exercise of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the relevant time, to submit that the licence granted by the revenue under rule 176 of the rules would be for a period not exceeding five years. Inviting attention to the affidavit-in-reply filed on behalf of the respondent No.3 it was submitted that according to the respondents that the defaulter unit had been granted licence on 16.9.1992 and as such the said licence would have expired within a period of five years thereafter and as such, on the date when the petitioners made an application for grant of registration, in terms of the decision of the Bombay High Court the registration certificate would have ceased to be operative. 10.In conclusion, it was submitted that the impugned action of the respondents is bad on all counts and as such, the petition is required to be allowed by setting aside the impugned letter demanding payment of the outstanding amount of defa ulter unit and directing the respondent No.3 to issue registration certificate under the relevant rules in favour of the petitioners. 11. Opposing the petition, Mr. Gaurang Bhatt, learned Standing Counsel, appearing on behalf the respondents placed reliance upon the affidavite- filed on behalf of the respondent No.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be approved by the respondent No.2 and necessary documents came to be executed in favour of the respondent No.4. From the affidavit in-reply of the respondent No.2, it appears that the respondent No.4 paid full sale price on 29.6.2000, pursuant to which, No Due Certificate was issued by the Financial Corporation. The respondent No.4 suggested that the document be executed in the name of the party as suggested by it and accordingly, the sale deed came to be executed in favour of the present petitioners on 18.7.2000. Thus, subject the properties have been purchased by the predecessor of the petitioner s in an auction sale held under section 29 of the State Financial Corporation Act by the respondent No.2, who was a s ecured creditor. The Supreme Court, in the union of India v. Sicom Ltd. [supra] has held that the Crown's preferential right to recovery of debt over other creditor is confined to ordinary or unsecured creditors. A debt which is secured or which by reason of the provisions of a statute becomes the first charge over the property having regard to the plain meaning of Article 372 of the Constitution of India must be held to prevail over the Crown debt which is an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each of such premises. In other words, it is the person who has to obtain separate registration certificate for each of the said premises. It is open to a person who has ceased to carry on the business to apply for deregistration. Would that mean in the absence of the person who has closed or sold the business or premises, applying for deregistration, there is no jurisdiction to grant another person registration of the premises as in the case of a bona fide transferee for value or for that to the owner of the premises whose lessee has defaulted in payment of excise dues. Section 6 and Rule 9 and the notification contemplates that it is the person who mustgisbtee rerde. Neither Section 6 nor Rule 9 and the Notification is a provision for enforcing the claim for dues of the department. That is contained in different provisions. An immovable property by itself cannot be sold unless the owner of the premises is defaulter and that too under a certificate as arrears of land revenue. That sale would be subject to the priority of claims. In case of a lease hold property given for a particular period, there would be no question of sale of the property except the limited interest. In our o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that once the registered person has ceased to carry out operations for which he is registered, he is no longer entitled to continue with the registration. In the circumstances, the stand adopted by the respondent authority that in respect of the same premises, since the earlier registration has not been cancelled, fresh registration cannot be granted to another person is not backed by any statutory provision and as such, cannot be accepted. 16. The contention that the licence had been granted to the defaulter unit in the year 1992, which in terms of the statutory provisions would have expired somewhere in 1997, hence, in the light of the above referred decision of the Bombay High Court, registration certificate would cease to beanodperative as such, there would be no question of cancelling certificate of registration, does not merit acceptance, inasmuch vide notification No.11/92-C.E. (N.T.) dated 14.5.1992 Chapter VIII of the Rules bearing the heading "Licensing" which comprised of Rules 174 to 181 came to be substituted by Chapter VIII bearing the heading "Registration" and comprised of only one rule being rule 174 which provided for "Registration of certain persons". In the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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