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TMI Blog2015 (10) TMI 2856X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities have not answered. On this pivotal issue, the entire petition and the fate would lie. It is yet open for the State authorities to claim the money from Ornet Ceramic as it has been rightly pointed out by Revenue that the charge was on the land, therefore, authorities felt that they were secured, yet, they have been writing letter to the Bank that even after auctioning the said property, there was a surplus amount of Rs. 77 lacs. Pursuant to that, the Sales Tax officers have did nothing. The present petition requires to be allowed with a rider that the Sales Tax Department would be at liberty to claim the amount from the Ornet Ceramic Ltd. as the assessment which is now produced on record by way of affidavit was done after 8 months of the auction. If they are entitled, they may recover from Ornet Ceramic Ltd, the original company, which is liable to pay the sales tax dues and the petitioner cannot be saddled with the liabilities even as per the sale deed executed with the Bank, at page 193-194 of this petition, which is executed between the present petitioner and State Bank of India. Further, there is also an averments that every thing will be borne free from all encumbra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of mandamus or any other appropriate writ, order or direction directing respondent no. 2 to cancel the charge of Sales tax department on the land bearing survey No. 322 paiki and survey No. 324 paiki of village Shakat Shanala, taluka-district Morbi admeasuring about 11 acres 28 gunthas equivalent to 47347 square meters together with the construction thereon. b) Issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction directing the respondent authorities to enter name of the petitioner in the revenue record for the land bearing survey no. 322 paiki and survey no. 324 paiki of village Shakat Shanala, taluka-district Morbi admeasuring about 11 acres 28 gunthas equivalent to 47347 square meters. bb) Your Lordship will be pleased to quash and set aside all the impugned entries in respect of charge and attachment in respect of alleged dues of Government of Gujarat. c) by way of interim relief, pending hearing and final disposal of the present petition, direct the respondents to cancel the charge of the sales Tax Department over the land bearing survey no. 322 paiki and survey no. 324 paiki of village Shakat Shanala, taluka-distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir charge in the land purchased by the petitioner towards the sales tax dues from Ornate Ceramic Ltd. The petitioner objected the said entry by objections dated 5.10.2011. On the basis of the objections raised by the petitioner, a dispute case was registered by Mamlatdar, Morbi being Dispute case No. 71/2011. The Mamlatdar by order dated 7.3.2012 has dismissed the application of the petitioner and thereby cancelled the entry No. 5450 on the ground that since the entry in respect of the rights of State Bank of India, was not made in the revenue record, the name of the petitioner cannot be mutated. The Mamlatdar, Morbi, by an order dated 11.3.2013, rejected the objections of the petitioner and certified entry No. 5798, whereby, charge of the Sales Tax Department came to be mentioned in the revenue record over the land purchased by the petitioner. It is required to be mentioned at this stage that security by way of mortgage is prior to sales tax dues. At this juncture, it is required to mention that prior to auction by the State Bank of India, two revenue entries being No. 5243 and 5020 were made in the revenue records, wherein, the charge of Sales Tax Officer was mentioned. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the secured creditor is contrary to the settled position of law. He has further submitted that the Sales Tax Department could not be having priority over the secured creditor and doctrine of priority of crown debts will prevail over the private dues i.e. unsecured creditors. He submitted that the respondent revenue authorities are acting illegally by not entering the name of the petitioner in the revenue records by refusing to mutate necessary entry with regard to registered auction purchase of secured asset in the revenue records. It is further submitted that the revenue authority has not considered that the petitioner has paid amount of Rs. 14,04,00,000/- to the secured creditor for the purchase of the secured asset under auction under the SARFAESI Act. The Sale Certificate issued by State Bank of India, secured creditor, in favour of the petitioner towards the sale of the secured assets mentions that the schedule property was made free from all encumbrances, and therefore, the petitioner is not liable for any payment of other dues. Mr. Mehta learned senior advocate has submitted that the respondents authorities have not considered that Ornate Ceramic ltd. is an operational compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attachment are null and void and they have been posted without authority, powers and jurisdiction. 11. It is further submitted that occupancy right are always transferable with or without encumbrances, therefore, petitioner s name ought to have been mutated as occupier on the questioned land. This contention is raised without prejudice to other contentions raised in the petition. It is also submitted that authority constitutes under the Land Revenue Code is bound to follow the law laid down by this Court. In the present case, authority has failed to follow the statutory duty to follow the land laid down by this Court. 12. Mr. Shalin Mehta learned senior advocate further submitted that section 35 of the SARFAESI At gives overriding effect to any other provisions inconsistent with the SARFAESI Act. It, therefore, can be construed that the debts of a secured creditor and provisions of recovery of such debt under section 13 of the SARFAESI Act prevail under State Legislature and thereby having overriding effect of the sales tax dues. It is further submitted by Mr. Shalin Mehta learned senior advocate that section 137 of the Gujarat Land Revenue Code has been declared void by this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the State should recover the outstanding dues of Ornate Ceramic Private Limited from the bank or from the petitioner, and therefore, it is essential to join the State Bank of India as party respondent. Therefore, the State Bank of India has been joined as party respondent no. 4 in this petition and it has also filed its reply. 14. Ms. Dharmishta Raval learned advocate appearing for respondent no. 4- State Bank of India, has submitted that the Bank had granted loan to Ornate Ceramic Ltd. which had mortgaged the property of the firm to the Bank on 4.9.2006, therefore, the charge of the respondent over the said property of Ornate Ceramic was created in the year 2006. Thereafter, on 8.12.2008, the respondent bank issued a notice to Ornate Ceramic under section 13(2) of the SARFAESI Act calling upon Ornate Ceramic to make the payment of the amount defaulted and if within 60 days Ornate Ceramic Ltd. did not make payment then the respondent bank would amongst others take possession of the secured assets i.e. the property mortgaged to the State Bank of India. The public was also informed through a public advertisement that section 13(2) action has been initiated by the respondent ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition deserves to be dismissed so far as respondent no. 4 Bank is concerned. 15. I have heard the learned advocates appearing for the parties and considered the rival submissions made on behalf of the respective parties. 16. Considering the submissions and the documents on record, this petition requires to be allowed on the ground that the Bank has filed affidavit before the Mamlatdar, Morbi. The Bank has written a letter to the State authorities, wherein, it is very categorically stated that there was surplus amount of Ornet Ceramic Ltd. lying with the Bank and requested the State Authorities to obtain the appropriate Court order to get its share in the surplus amount lying with it. The said letter is at page 294 of the petition. The second aspect would go against the State authorities, because before the Mamlatdar, Morbi, Ornet Ceramic Ltd. has shown has shown its willingness to pay all the dues of the Sales Tax Department. It is to be noted that the Sales Tax Department has not yet calculated the dues. A specific question is asked whether the assessment of the Sales Tax dues is calculated and what steps have they taken against the Ornet Ceramic Ltd. The answer is not produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the bank has sold the secured property of Factory land Building with Entire Plant Machinery of M/s. Oranet Ceramics ltd. situated at No. 322/p 324/p village Shakat Shanala, Rajpur road, Tal.Morbi, Dist. Rajkot to the successful bidder M/s. Amidhara Developers Pvt. Ltd. through the Public Auction dated 22.7.2010 in the highest bid amount of Rs. 14,04,00,000/-. The successful purchaser has submitted the tender form to the Bank with the initial offer of Rs. 13,68,00,000/- as a joint offer for Lot No. 1 2 land Building and Plant Machinery. (Its Copy is enclosed herewith for the ready reference of the Hon ble Court). In the offer letter condition No. 11 of the Terms Conditions clearly provides that The State Bank of India will not be held responsible for any charges, lien, encumbrance, property tax or any other dues to the Govt., Statutory or anybody else in respect of property under sale. The purchaser M/s. Amidhara Developers Pvt. Ltd. has accepted the condition. 3) The opponent no. 2 State Bank of India submit that at the time of opening the tender, in presence of all the intending purchases/bidders on the day of Public Auction dated 22.7.2010, the bank has informed all the bidde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact with regard to the charge of the sales tax department in their auction notice. 11. In backdrop of the above said undisputable facts, I say and submit that on 8.8.2009, the day on which respondent no. 4 bank took over the possession of the properties in question, entry no. 5020 or entry no. 5243 whereby respondent no. 3 had sought to create lien over the property were not certified. It is settled legal position an uncertified revenue entry does not confer any right on the Sales Tax Department. Indisputably, action of taking over possession by the respondent bank is prior in time to creation of any charge over the property. 19. Therefore, can it be said that the charge was on the property and the petitioner purchased the property with open eye, as contended by the State. The answer would be no. The documentary evidence go to show that though the Sales Tax Department was aware that the property was put to auction, but they did nothing. They even did not frame the assessment order, nor objected to auction of property as far as the pendency of dues of the Sales Tax Department are concerned,was against Ornet Ceramic Ltd., who had consented to pay the same till 2013 or even today the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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