9911796707
TMI Blog2002 (2) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... any purchased the fixed assets of the defaulting Company, in the sale by the Financial Corporation. On the attachment being effected, the petitioner approached, this Court with this writ petition praying for the issue of writ of certiorari to quash the order of attachment dated 9-9-1999 under Annexure-1 and for other incidental reliefs. According to the petitioner company, it was incorporated on 18-12-1998 and the dues for which the attachment was effected, was incurred even prior to its incorporation, that the transfer in favour of the petitioner in terms of Section 29 of the State Financial Corporations Act, 1951 enabled it to take the stand that it was not liable for any of the prior dues of the defaulter company, that in view of Section 468 of the State Financial Corporations Act, the provisions of Section 11 of the Central Excise Act or Rule 230(2) of the Central Excise Rules, cannot prevail and going by the relevant provisions of the State Financial Corporations Act, the petitioner-company had no liability for the excise duty alleged to be outstanding from the defaulter. The petitioner, therefore, submits that even if the claim for Central Excise Duty outstanding against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y over the claim of the mortgagee bank. In Isha Marbles. v. Bihar State Electricity Board and Another, (l995) 2 SCC 648 with reference to the Electricity (Supply) Act, and the State Financial Corporations Act, the Supreme Court held that the State Electricity Board cannot insist on a purchaser from the Financial Corporation paying the charges kept in arrears by the defaulter undertaking and which was outstanding at the time of the take over by the Financial Corporation under Section 29 of the Act and make it a condition for the grant of a fresh connection applied for by the purchaser. But in the judgment, their Lordship also stated that a sale by the Financial Corporation in terms of Section 29 of the Act, in enforcement of the mortgage, cannot effect the right of the Board to recover its dues. Ultimately, it was held that the Board was not entitled to disconnect the supply to the purchaser, but by reason of an amendment of the Bihar Orissa Public Demands and Recovery Act, electricity dues could be recovered by the Board by bringing the property of the consumer concerned to sale, in Certificate Proceedings. What was actually laid down was that the subsequent purchaser would not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eable with duty and not paid. Sub-rule (1) provides that the duty leviable on any goods owing from or by any person carrying on trade or business, could be recovered from plant, machinery and all movables belonging to that person, whether it be in the custody of possession of the person carrying on the trade or business, or in the custody or possession of any agent or other person in trust or for the use of the person carrying on such trade or business by detaining them for the purpose of exacting such duty. We are here concerned with Rule 230(2) of the Rules. It may be proper to quote that rule here : "Rule 230(2) of the Central Excise Rules Where any such person transfers or otherwise disposes of his business, in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in the business or trade or part thereof by any other person or persons, all excisable goods, materials, preparations, plants, machinery, vessels, utensils, implements and articles in the custody or possession of the person or persons succeeding may also be detained for the purpose of exacting duty due from the producer manufacturer or dealer up to the time of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the High Court of Andhra Pradesh in Sitani Textiles and Fabrics (P) Ltd. v. Asstt. Commissioner of Customs and Central Excise, Hyderabad - 1999 (106) E.L.T. 296 (A.P.). Therein, a Division Bench of Andhra Pradesh High Court held that State Financial Corporations Act, 1951 was a special enactment and it prevailed over Rule 230(2) of the Central Excise Rules and hence the order of detention in purported exercise of that power, of the plant and machinery of a defaulting assessee sold by the Financial institution to another party in auction, was not sustainable. Their Lordships essentially relied on the decision of the Supreme Court in Bank of Bihar v. State of Bihar and Others - AIR 1971 SC 1210. Their Lordships held that a mortgage is a transfer of an interest in immovable property. The owner of the bundle of rights transfers some of those rights to the mortagagee and the remainder is still with him. The transfer of interest under the mortagage is less than ownership which continues with the mortgagor. The characteristic of a mortagage is that it transfers an interest in immovable property. Therefore, the mortgagee has an interest which is less than ownership and therefore a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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