9911796707
TMI Blog2008 (8) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... has been attached and sealed. The facts leading to the controversy may be noticed as follows. M/s Prominent Cement Limited (hereinafter referred to as borrower-company), a Company incorporated under the Companies Act, engaged in the manufacture of cement, had obtained financial assistance from M.P. Financial Corporation-respondent No. 3. The property of borrower-company was mortgaged as security for the repayment of the loan. The borrower-company never repaid the loan and became a defaulter and was ultimately registered under the Sick Industrial Companies Act, 1985 with Board for Industrial and Financial Reconstruction (BIFR) on March 11, 1998. It appears that the aforesaid borrower-company was also defaulter in payment of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. On the aforesaid attachment order, an objection was raised by M.P. Financial Corporation through a communication dated January 18, 2002, bringing the detailed facts to the notice of the Tax Department and maintaining that since the property in question of the borrower-company was already mortgaged and the matter was before BIFR, therefore the attachment of the property of the said borrower-company could not be effected. On the objection raised by MPFC, the Commercial Tax Department did not take any further steps. The petitioner has averred that after it had purchased the property and wanted to shift the machinery from the Industrial Unit to its other Unit at Indore, it was served with a notice dated January 30, 2002 whereby it was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o an agreement with M/s Pappu Iron Stores only and at no stage had any agreement with the present petitioner-Firm and therefore the petitioner-Firm could not be treated to be protected under section 29 of the Act. It has also been maintained that the sale in favour of a purchaser by the Corporation was to be subjected to tax liability towards of borrower-company in preference over outstanding dues towards the MPFC. I have heard Shri G.M. Chaphekar, learned senior counsel for the petitioner, Shri Anand Pathak, learned Dy. Government counsel for the respondents No. 1 and 2 and Shri Shekhar Bhargava, learned senior counsel for respondent No. 3-M.P. Financial Corporation and with their assistance have also gone through the record of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany. An offer was made by M/s Pappu Iron Stores, New Delhi, but during the negotiation with the said Firm, the aforesaid Firm communicated to M.P. Financial Corporation that the offer made by it be substituted in favour of the petitioner-Firm. The aforesaid request made by M/s Pappu Iron Stores was accepted by M. P. Financial Corporation and therefore, the aforesaid offer of ₹ 41,30,000/- initially made by M/s Pappu Iron Stores was treated as an offer made by the petitioner-Firm. Thus, the sale of the property in favour of the petitioner-Firm is nevertheless a sale by the Corporation to the petitioner-Firm under section 29 of the Act and therefore under section 29(2) of the said Act, the title acquired by the purchaser is to be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of the said Company towards the Commercial Tax could not be fastened upon the property of the said Company in preference over the mortgage liability. As a matter of fact, the said property was not even available for creation of any charge by the Tax Department. Even otherwise, as per section 46B of the Act, the provisions of the said Act shall operate notwithstanding provisions of any other law and therefore shall be deemed to have an overriding effect. The reliance by the learned counsel for the respondent upon the judgment of Dena Bank (supra) is wholly misplaced. In para 10 of the aforesaid judgment, it has been held by the Apex Court that Crown's preferential right to recovery of the debts over other creditors is confin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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