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TMI Blog2022 (9) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... akes the plaintiff a secured creditor and therefore, the right of the plaintiff would prevail over that of the Income Tax Department. Consequently, the plaintiff company would be entitled to the amounts under the said FDR. The only surviving issue as noted in the order dated 6th May, 2019, is decided in favour of the plaintiff and against the defendants. The suit is decreed in the aforesaid terms. Defendant no.1 Bank states that the original amount has throughout been kept in an interest bearing fixed deposit. The defendant no.1 Bank is directed to release the aforesaid amount along with accrued interest in favour of the plaintiff company within six weeks from today. If the aforesaid amount is not released within six weeks, the defendant no.1 bank would be liable to pay interest @ 8% per annum on the said amount after the expiry of the aforesaid period of six weeks. - HON'BLE MR. JUSTICE AMIT BANSAL Plaintiff Through: Mr. Anupam Srivastava, Mr. Dhairya Gupta and Mr. Vashu Misra, Advocates. Defendants Through: Ms. Akanksha Das, Advocate BOI. Mr. Sanjay Kumar and Ms. E. Kadiayan, Advocates for R-3. AMIT BANSAL, J. (Oral) 1. The present suit has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the Income Tax Department under Section 226(3) of the Income Tax Act, 1961, to the defendant no.1 Bank. On 18th September, 2013, the defendant no.1 Bank wrote to the plaintiff company and informed the plaintiff company that the Bank will be in a position to make payment to the plaintiff company only after it obtains a No objection Certificate (NOC) from the Income Tax Department. 7. Accordingly, the present suit was filed seeking recovery of a sum of Rs.79,92,509/- along with the interest accrued till the realization of the payment. 8. In the written statement filed on behalf of the defendant no.1 Bank, it has been pleaded that the defendant no.1 Bank did not release the amount deposited in the said FDR to the plaintiff on account of the notice dated 5 th February, 2013 issued by the Income Tax Department to the defendant no.1 Bank, in terms of which the Income Tax Department demanded a sum of Rs. 59,38,320/- from the said FDR towards Income Tax dues of the defendant no.2 company. 9. An affidavit dated 29th April, 2019 has been filed on behalf of the defendant no.3 in which, it has been stated that there was an outstanding tax/interest demand against defendant no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff will have a priority over the Income Tax Department, who is an unsecured creditor. 13. In view of the above, the only issue, which requires adjudication in the present case is, whether the plaintiff or the defendant no.3 has a preferred lien in respect of the amount deposited in the said FDR lying with the defendant no.1 Bank. 14. The counsels for the defendants nos. 1 and 3 have reiterated the submissions made in their written statements. 15. I have heard the counsels for the parties. 16. Counsel for plaintiff has relied on the judgment of the Supreme Court in Bombay Stock Exchange v. V.S. Kandalgaonkar, (2015) 2 Supreme Court Cases 1. The relevant paragraphs of the said judgment are set out below: 25. ... Re: (3) 26. It is settled law that Government debts have precedence only over unsecured creditors. This was held in Dena Bank v. Bhikabhai Prabhudas Parekh Co. MANU/SC/0317/2000 : 2000 (5) SCC 694 as follows: 10. However, the Crown's preferential right to recovery of debts over other creditors is confined to ordinary or unsecured creditors. The common law of England or the principles of equity and good conscience (as applicable to Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s lexical meaning is right to retain . The word 'lien' is now variously described and used under different context such as 'contractual lien', 'equitable lien', 'specific lien', 'general lien', 'partners lien', etc. etc. in Halsbury's Laws of England, Fourth Edition, Volume 28 at page 221, para 502 it is stated: In its primary or legal sense lien means a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until the present and accrued claims are satisfied .. XXX XXX XXX 24. The first thing to be noticed is that the Income Tax Act does not provide for any paramountcy of dues by way of income tax. This is why the Court in Dena Bank's case (supra) held that Government dues only have priority over unsecured debts and in so holding the Court referred to a judgment in Giles v. Grover (1832) (131) English Reports 563 in which it has been held that the Crown has no precedence over a pledgee of goods. In the present case, the common law of England qua Crown debts became applicable by virtue of Article 372 of the Constitution which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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