Gujarat High Court
Amidhara Developers Pvt Ltd vs State Of Gujarat & 3 on 14 October, 2015
Author: K.J.Thaker
Bench: K.J.Thaker
C/SCA/16243/2013 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 16243 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE K.J.THAKER
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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AMIDHARA DEVELOPERS PVT LTD....Petitioner(s)
Versus
STATE OF GUJARAT & 3....Respondent(s)
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Appearance:
MR SHALIN MEHTA SR. ADVOCATE WITH MR NIRAL R MEHTA,
ADVOCATE for the Petitioner(s) No. 1
MR J.K. SHAH AGP for the Respondent(s) No. 1 - 3
MS DHARMISHTA RAVAL, ADVOCATE for the Respondent(s) No. 4
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CORAM: HONOURABLE MR.JUSTICE K.J.THAKER
Date : 14/10/2015
ORAL JUDGMENT
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1. Rule. Mr. J.K. Shah learned AGP waives service of rule on behalf of respondents no. 1 to3 and Ms. Dharmishta Raval learned advocate waives service of rule on behalf of respondent no. 3.
2. By way of this petition, the petitioner has prayed for the following reliefs:
a) Issue a writ of mandamus or a writ in the nature 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 Page 2 of 25 HC-NIC Page 2 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT 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-
district Morbi admeasuring about 11acres 28 gunthas equivalent to 47347 square meters and enter the name of the petitioner in the revenue record.
3. Heard Mr. Shalin Mehta learned senior advocate with Mr. Niral R. Mehta learned advocate for the petitioner, Mr. J.K. Shah learned AGP for respondents no. 1 to 3 and Ms. Dharmishta Raval learned advocate for respondent no. 4.
4. The facts of the present case are that the Ornate Ceramic Ltd., a partnership firm, availed of various loans to the tune of Rs.
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16,25,00,000/- from State Bank of India, against which as security, property being survey no. 322 paiki and survey no. 324 paiki of village Shakat Shanala, taluka - district Morbi admeasuring about 11 acres and 28 gunthas equivalent to 47347 square meters along with the construction thereon was mortgaged and plant and machinery hypothicated with the State Bank of India and various other property was mortgaged for security along with the aforesaid property. The Ornate Ceramic Ltd. thereafter could not make the timely payment of the loan and thereby defaulted. Therefore, on 8.12.2008, the State Bank of India, initiated proceedings under section 13(2) of the SARFAESI Act being secured creditor by issuing notice and instructing Ornate Ceramic Ltd to make the payment within stipulated time. Since Ornate Ceramic Ltd. could not make repayment within the notice period, the State Bank of India took measures under section 13(4) of the SARFAESI Act and thereafter put the property along with construction and plant and machinery in auction by issuing a public notice in "Time of India" and "Divya Bhaskar" on 19.6.2010. On 22.7.2010 during the auction, the petitioner was declared as successful auction purchaser by bidding Rs. 8,04,00,000/- towards the land along with the construction and Rs. 6,00,00,000/- towards plant machinery totalling to Rs. 14,04,00,000/- and the said amount was accepted by the State Bank of India.
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5. Therefore, the petitioner has paid the entire amount to the state Bank of India, against which, sale certificate in terms of Annexure-V under Rule 9(6) of the rules under the SARFAESI Act dated 27.8.2010 came to be issued, which was registered with the office of the Sub-Registrar, Morbi and possession was handed over to the petitioner.
6. On 3.5.2011, entry no. 5798 came to be mutated in the record of rights upon an application made by Sales Tax Officer for entering their 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 Page 5 of 25 HC-NIC Page 5 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT 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, revenue entry No. 5798 ha also been made in respect to the order of the Sales Tax Department for attachment of the land purchased by the petitioner. After the registration of sale certificate under the SARFAESI Act, the petitioner approached respondent no. 2 for entering the name of the petitioner in the revenue record. The said application was registered in the record of rights under entry no. 5450. Dispute came to be raised by the Sales Tax Department against entering the name of the petitioner in the revenue record, which was registered as Dispute case No. 48 of 2011. The petitioner, thereafter, made an application under entry no. 6319 for entering the name of the State Bank of India in the revenue record. The petitioner also made simultaneous application under entry no. 6335 for entering the name of the petitioner in the revenue record as an auction purchaser under SARFAESI Act from State Bank of India by way of registered sale certificate. The Sales Tax Department again raised objections for certifying the aforesaid entries. That the Mamlatdar, Morbi, Page 6 of 25 HC-NIC Page 6 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT by order dated 11.3.2013, certified the entry to be made in favour of the State Bank of India being No. 6319 on the basis of the registered mortgage deed. However, the Mamlatdar, Morbi under Dispute Case No. 7 of 2012 rejected the application of the petitioner for entering their name into revenue record by order dated 11.3.2013, and thereby, cancelled the entry no. 6335. The Mamlatdar, Morbi, mutated in the revenue record the charge of Sales Tax Department by holding that dues of the government are having priority over the dues of secured creditors and therefore unless the dues of the Sales Tax Department are satisfied, the Sales Tax Department is deemed to have charge over the land. The Mamlatdar, Morbi also rejected the application of the petitioner for entering name of the petitioner in the revenue record, which is contrary to the lad settled by the Full Bench of this court in the case of Baroda City Cooperative Bank Ltd. vs. State of Gujarat, reported in 2002(2) GLH 525. Therefore, the petitioner is constrained to approach this Court by way of present petition.
7. Learned senior advocate Mr. Shalin Mehta has submitted that the action on the part of respondent authorities to create a charge in favour of Sales Tax Department over a land purchased by the petitioner in auction under the SARFAESI Act from the secured creditor is Page 7 of 25 HC-NIC Page 7 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT 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 company having other activities operational from different places, however, Sales Tax Department has not thought it fit to put their charge over other premises which is in occupation and possession of Ornate Ceramic Ltd., sales tax dues of which Sales Tax Department is claiming. Mr. Page 8 of 25 HC-NIC Page 8 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT Mehta further submitted that the respondent authorities have not considered that the amount for which the property in question has been purchased by the petitioner from the State Bank of India exceeded the total secured dues of the bank.
8. By way of amendment, the petitioner has amended the petition and submitted that section 135(c) of the Gujarat Land Revenue Code makes provisions for mutation of record of right. The entry of Succession, Survivorship inheritances, purchase, mortgages, gift or lease can be posted in the record of right. The explanation-1 provides to section 135(c) reads as under:
Explanation No.1: "The rights mentioned above includes a mortgage without possession, but do not include an easement or a charge not amounting to a mortgage of the kind specified in section 100 of the Transfer of Property Act, 1882(IV of 1882)."
9. Mr. Shalin Mehta learned senior counsel has submitted that in view of the explanation, no entry can be posted or no mutation can be effected in respect of charge. In view of the statutory provisions, the mutation entries regarding charge of the alleged tax dues of the State could not have been posted and the action of posting such entry is without authority, Page 9 of 25 HC-NIC Page 9 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT powers and jurisdiction.
10. Mr. Shalin Mehta further submitted that the mutation entry posted and certified in respect of attachment by Assistant Commissioner, Commercial Tax, is unauthorised. It is submitted, according to the information of petitioners, no such order is passed and legally also Assistant Commissioner Commercial Tax has no authority to attach the property under Gujarat Sales Tax Act, Central Sales Tax Act and Value Added Tax. It is further submitted that in any view of the matter, no procedure under Land Revenue Code is followed for the attachment of the questioned land. It is submitted that after the petitioner's acquisition the ownership of the questioned property, the Sales Tax Commissioner could not have legally attached the property for recovery of the dues from the previous owner. Thus, all the impugned entries which are posted subsequent to the Sale Certificate regarding 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 Page 10 of 25 HC-NIC Page 10 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT 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 in the case of Baroda City Cooperative Bank Ltd. vs. State of Gujarat, reported in 2002(2) GLH 525 and held that the State Government cannot recover dues under section 137 of the Gujarat Land Revenue Code.
13. Per contra, learned AGP Mr. J.K. Shah submitted that the Commercial Tax Department (earlier known as Sales Tax Department) has outstanding dues in excess of rs. 12 crores under the Gujarat Sales Tax At, Gujarat Value Added Tax Act and Central Sales Tax Act, for the assessment years 2004-05 to 2008-09. As per section 48 of Page 11 of 25 HC-NIC Page 11 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT the Value Added Tax Act, 2003, the dues of the State Government will have the first charge over the dues of secured creditor including a bank. It is submitted that the dues under the Gujarat Value Added Tax Act will be covered by section 48 of the Gujarat Value Added Tax Act and the dues under the CST Act after 1.4.2006 will b covered by section 48 of the Gujarat Value Added Tax Act read with section 9(2) of the CST Act. It is further submitted that the dues under the Gujarat Sales Tax Act and the dues under the CST Act for the period before 1.4.2006 will also enjoy the first charge in favour of the State Government under Section 48 of the Gujarat Value Added Tax Act. It is also submitted that the charge created under Section 48 of the Gujarat Value Added Tax Act will have a retrospective effect. Mr. Shah learned AGP submitted that the Sales Tax Officer registered the charge against the said property by mutation entry no. 5020 dated 31.3.2009 and the entry no. 5243 dated 7.1.2010 were prior to auction executed by the bank. The bank was intimated about the said charge of the State Government in the property. Subsequently, Sales Tax Department registered a further charge by entry no. 5798. The Sales Tax Department has from time to time registered its charge with increase in the amount of due outstanding against Ornate Ceramic Ltd. Mr. Shah learned AGP submitted that during the proceedings in the Dispute Case No. 48/2011 before the Mamlatdar, the State Bank of Page 12 of 25 HC-NIC Page 12 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT India filed a reply dated 26.11.2011. In the said reply, the Bank has clarified that it has sold the asset to the petitioner on "as is where is basis". Further, even in the mortgage deed it was clarified that the assets are sold on as is where is basis, at page nos. 136, 189 and 190 of the petition. Mr. Shah submitted that accordingly, the controversy under this petition will be whether 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 Page 13 of 25 HC-NIC Page 13 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT 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 bank and that no person should deal with the said property of the company. It is submitted that on 8.8.2009, the Bank has took symbolic possession of the property of the Company under sec. 13[4] of the SARFAESI Act. Thereafter, the State Bank of India issued a public advertisement for auctioning the property on 19.6.2010. In the said advertisement, it is specifically stated that the properties is being sold "as is where is" and "as is whatever is"
basis and at clause 9 under the head encumbrances mention was made regarding dues of sales tax department and Central Excise dues. Hence, in the public advertisement, it was made known that sales tax and excise dues remained outstanding and that there are encumbrances of the said two departments. It is submitted that in the terms and conditions subject to which the property was auctioned at clause 11 it was specifically mentioned that Bank will not be held responsible for any charge or lien or dues of government or statutory body. It is further submitted that the respondent had filed an affidavit in the proceedings before the Mamlatdar in Dispute Case No. 48/2011, wherein, it is categorically stated that at the time of opening of tender in the presence of the intending purchasers, the bank has informed the purchaser (including the Page 14 of 25 HC-NIC Page 14 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT petitioner) that there are dues of the Government and notices has been received from the said departments and that as the property is being sold on "as is where is" basis, the liabilities will have to be paid by the successful purchaser. Thereafter, the physical possession of the property was handed over on 11.8.2009 to the petitioner and a sale certificate was issued wherein the encumbrances of the department were made known. The petitioner has signed the sale certificate and possession receipt on 11.8.2009. Ms. Raval learned advocate further submitted that the Sales Tax Department has in the year 2011, 2012 and 2013 issued assessment orders for the year 2004 to 2009 and have appeared to have got the entries mutated in the record in their name in the year 2009 onwards. The action of the bank under SARFAESI Act has been initiated prior to the determination of the dues of the State Government e.g. the assessment orders appear to have been made only from the year 2011 onwards, whereas, the possession of the property was already taken on 8.8.2009. Hence, Ms. Raval learned advocate submitted that the 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.
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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 on record. This shows loose approach of the authority trying to recover the dues which were provisionally assessed by the authorities before 2010 i.e. before the property was put to an auction. It is true that the Sales Tax Department had written to the Bank that they have charge over the property, and therefore, the property should not be permitted to be auctioned. On these counts, the State authorities have not answered. On this pivotal issue, the entire Page 16 of 25 HC-NIC Page 16 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT 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 Mr. Shah learned AGP 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. An endeavour was made by Mr. Mehta learned senior advocate that they are not supposed to pay a single paise. It goes without saying that the petitioners are not bound to pay any amount, as the registered deed at page 186- 187 shows that all the dues to be paid by Ornet Ceramic Ltd. That the property is auctioned and sold with clear title, and therefore also, the petitioner as a bonafide purchaser could not have been saddled with the liability to pay the sales tax dues on the property.
17. In view of the above reasons and factual scenario, 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 Page 17 of 25 HC-NIC Page 17 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT 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 encumbrances,and therefore also, the stand taken by the Bank and the sales Tax Department cannot be sustained. Para-2, 3 and 5 of the affidavit filed by the Bank before the Mamlatdar, Morbi, reads as follows:
2) The Opponent no. 2 - State Bank of India submit that 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 Page 18 of 25 HC-NIC Page 18 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT 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 bidders, regarding the dues of the other govt. & semi govt. dues and the notices received from the different Govt. Department for the factory of Ornate Ceramics. The Dues of Sales Tax Department, Morbi has been also informed to all the bidders as well as the successful purchaser & present Opponent No. 1 M/s. Amidhara Developers that all these liabilities should be paid by the successful purchaser 'AS IS WHEREIS AND AS IS WHATEVER THERE IS BASIS.'
5) The secured property of the bank has been sold on "AS IS WHEREIS AND AS IS WHATEVER THERE IS BASIS". So all the Govt. & Semi Govt. dues of different Govt. department including Vanijya Vera (sales Tax) department, Morbi over the factory premises of Ornate Ceramics has to be paid only by the Page 19 of 25 HC-NIC Page 19 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT successful purchaser i.e. M/s. Amidhara Developers, Rajkot only. A copy of Sales Tax Letter/ Notice had also been given to the successful purchaser on the date of public auction. The bank has also informed by various letters/correspondence to the applicant Vanijya Vera (Sales Tax) Department, Morbi for the same, that the dues of Vanijya Vera (Sales Tax) Department, Morbi has to be cleared by the present Opponent no. 1 M/s. Amidhara Developers, Rajkot."
18. In view of above, it is clear that the Bank's affidavit before the Mamlatdar, at Morbi is self contradictory. Para-5 of the said affidavit is nothing else but an eye-wash, just because the property was sold out on "as is where is and as is what ever there is basis" but the details of affidavit and contract, read as it is, would permit this court to accept the submissions of Mr. Shalin Mehta learned senior advocate for the petitioner. Para-9 and 12 of the affidavit-in- rejoinder, filed by the petitioner, read as under:
"9. The deponent has also produced a copy of affidavit-in-reply dated 26.11.2011 filed by the chief Manager, SBI, respondent no. 4 herein, alleging that at the time of opening of the tender, the bank informed the bidders Page 20 of 25 HC-NIC Page 20 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT regarding the dues of government and semi-government authorities. It is pertinent to bring to the notice of this Hon'ble Court that the petitioner was required to give his offer with earnest money deposit. The notice for public auction says that notices for the pending assessment of sales tax are received. At this juncture, it may be pointed out that the sales tax department vide it's letter dated 21.6.2010 has specifically alleged that the bank has suppressed the 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."Page 21 of 25
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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 department except claiming charge on property for dues has done nothing, the petitioner was, therefore, constrained to file this petition as though the entry no. 5798 came to be mutated in the record of right only after they had purchased the property. The order of Mamlatdar, Morbi is nothing else but perverse, and therefore, name of the petitioner has to be mutated in the revenue entry as they have purchased the property free from all encumbrances. The charge of Sales Tax Department cannot be mutated, which is contrary to the decision of this Court in the case of Baroda City Cooperative Bank Ltd. v. State of Gujarat, reported in 2002(2) GLH 525. This petition under Article 226of the Constitution has to be accepted and it is held that the orders are bad in eye of law. The mutation entry is totally unauthorised.
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20. This court has to strike the balance by
protecting the rights of the Sales Tax Department and they can recover the same from Ornet Ceramic ltd. or from its other properties which are yet not sold and they may call for the list of the properties from the Bank also which are mortgaged with the Bank by Ornet Ceramic Ltd., save and except, the property sold to the petitioner in auction and subject matter of this petition.
21. Section 135(c) of the Gujarat Land Revenue Code makes provisions for mutation of record of right. The entry of Succession, Survivorship inheritances, purchase, mortgages, gift or lease can be posted in the record of right. The explanation-1 provides to section 135(c) reads as under:
Explanation No.1: "The rights mentioned above includes a mortgage without possession, but do not include an easement or a charge not amounting to a mortgage of the kind specified in section 100 of the Transfer of Property Act, 1882(IV of 1882)."
22. In view of the above explanation, no entry can be posted or no mutation can be effected in respect of charge. In view of the statutory provisions, the mutation entries regarding charge of the alleged tax dues of the State could not Page 23 of 25 HC-NIC Page 23 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT have been posted and the action of posting such entry is without authority, powers and jurisdiction., and therefore, mutation entry posted and certified in respect of attachment by Assistant Commissioner, Commercial Tax, is unauthorised, and Assistant Commissioner Commercial Tax has no authority to attach the property under Gujarat Sales Tax Act, Central Sales Tax Act and Value Added Tax. Even no procedure under the Land Revenue Code is followed for the attachment of the questioned land and the Sales Tax Commissioner could not have legally attached the property for recovery of the dues from the previous owner. Thus, all the impugned entries which are posted subsequent to the Sale Certificate regarding attachment are null and void and they have been posted without authority, powers and jurisdiction. In that view of the matter, the present petition deserves to be allowed.
23. In the result, this petition is allowed. The prayers 8(a),(b)& (bb) are granted. However, it is open for the Sales Tax Department to recover their sales tax dues from Ornet Ceramic ltd. or from its other properties which are yet not sold out and they may call for the list of the properties the Bank also which are mortgaged with the Bank by Ornet Ceramic Ltd., save and except, the property sold out to the petitioner in auction. Rule made absolute to the aforesaid Page 24 of 25 HC-NIC Page 24 of 25 Created On Sat Oct 17 01:57:46 IST 2015 C/SCA/16243/2013 JUDGMENT extent only. No order as to costs.
(K.J.THAKER, J) mandora Page 25 of 25 HC-NIC Page 25 of 25 Created On Sat Oct 17 01:57:46 IST 2015