Madras High Court
The Assistant General Manager vs The Tax Recovery Officer on 4 October, 2024
Author: Krishnan Ramasamy
Bench: Krishnan Ramasamy
W.P.No.68 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04.10.2024
CORAM
THE HONOURABLE Mr.JUSTICE KRISHNAN RAMASAMY
W.P.No.68 of 2020
&
W.M.P.No.77 of 2020
The Assistant General Manager,
Andhra Bank, No.17, Mill Road,
Coimbatore – 641 001. .. Petitioner
Vs
1. The Tax Recovery Officer,
Income Tax Department, Trichy Road,
Coimbatore.
2. The Managing Director,
M/s.PGC Corporation Ltd.,
No.5, Prem Gardens, Rajaji Nagar,
PN Road, Tiruppur – 641 602.
3. The Sub Registrar,
O/o.the Sub Regisrar, Thottipalayam,
Tiruppur.
[R3 impleaed vider Order dated 21.03.2023,
made in W.P.No.68 of 2020 by ASMJ] .. Respondents
Writ Petition filed under Article 226 of the Constitution of India praying
for issuance of a Writ of declaration declaring that the petitioner bank is having
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W.P.No.68 of 2020
first priority right of lien over the loan account dues payable by the second
respondent for a sum of Rs.53,43,935.67 and the first respondent has no right
whatsoever to claim any amount from the petitioner and the action of the first
respondent in trying to recover the dues belongs to the second respondent with
the petitioner is against law, illegal and void abinitio.
For Petitioner : Mr.N.Umapath
For respondents : Dr.B.Ramaswamy, JSC – R1
Government Advocate [T] – R1
ORDER
This writ petition has been filed to declare that the petitioner bank is having first priority right of lien over the loan account dues payable by the second respondent for a sum of Rs.53,43,935.67 and the first respondent has no right whatsoever to claim any amount from the petitioner and the action of the first respondent in trying to recover the tax dues from the second respondent is against law, illegal and void abinitio.
2. According to the petitioner, a sum of Rs.10,00,00,000/- was extended to the second respondent as a loan and the same was classified as a non-performing asset on 30.06.2014 and subsequently Rs.3,74,00,000/- was https://www.mhc.tn.gov.in/judis 2/7 W.P.No.68 of 2020 recovered from the second respondent through assignment of debt and the remaining amount of Rs.9,86,32,244.32 was written off and the loan account was officially closed on 30.06.2016. While so, the second respondent has issued a notice dated 18.09.2019 stating that a sum of Rs.3,81,64,000/- is due and payable by the second respondent on account of income tax demand raised under section 201 and 201 1[1A] of the Income Tax Act for the financial year 2008-09 to 2013-14 which are recoverable from and out of the current account of the second respondent, which is lying with the petitioner.
3. The learned counsel for the petitioner submits that they have assigned a sum of Rs.3,74,00,000/- through assignment of debt and the balance amount was written off. Since the balance amount is available, as per the provisions of the bank under the General lien, the petitioner bank is entitled to appropriate the amount towards its loan account.
4. According to the learned Senior Standing Counsel appearing for the respondent, on the date of assignment, there is no lien attached to the bank account of the second respondent and the amount was lying from the year 2006 to the credit of the second respondent and till the attachment made by the first respondent, the petitioner has not taken any steps to recover the amount. https://www.mhc.tn.gov.in/judis 3/7 W.P.No.68 of 2020 Therefore, it is very clear that it is free from any lien and the petitioner cannot claim any amount from and out of the current account of the second respondent.
5. I have given due consideration to the submissions made by the learned counsel for the petitioner as well as the learned Senior Standing Counsel appearing for the first respondent.
6. According to the petitioner, a sum of Rs.9,86,32,244.32 is lying in the current account of the second respondent from the year 2016. The first respondent issued a notice dated 18.11.2019 to initate recovery proceedings for a sum of Rs.53,43,935/- towards recovery of tax dues from the second respondent. It is to be noted that merely some amount is lying to the credit of the second respondent account with the petitioner bank, it does not mean that the said amount belongs to the petitioner based on lien and they can recover the said amount towards their liablity. Even towards the entire laibility, a sum of Rs.3,74,00,000/- was recovered through assignment of debt and the balance amount was written off. While so, now they cannot contend that for the balance amount, they are entitled to recover their balance from the account of the second respondent. On the date of attachment by the first respondent, viz., on 18.09.2019, the petitioner is unable to establish anything about the lien over the https://www.mhc.tn.gov.in/judis 4/7 W.P.No.68 of 2020 said current account of the second respondent. Further, even if at all there is any lien over the said account, admittedly, they have not execised such lien from the year 2007 and in the absence of any such acts, they cannot now say, that too, after the attachment made by the Income Tax Department, that they are entilted to recover the balance as first priority holder than the Income Tax Department. Hence, I do not find any merits in this writ petition.
7. Accordingly, this writ petition is dismissed. While dismissing this petition, this Court directs the petitioner to transfer a sum of Rs.53,43,935/-, which is the tax amount that has to be paid by the 2nd respondent from the current account maintained by them with the petitioner to the first respondent, within a period of 3 days from the date of receipt of copy of this order. In the event of failure on the part of the petitioner in transferring the amount as stated above, the entire period shall be considered as a default period for launching prosecution under Section 226(3) of the Income Tax Act against the petitioner. No costs. Consequently, the connected miscellaneous petition is also closed.
04.10.2024 vrc Note : Issure Order Copy on 18.10.2024 Index : Yes/No Neutral Citation : Yes/No https://www.mhc.tn.gov.in/judis 5/7 W.P.No.68 of 2020 To
1. The Tax Recovery Officer, Income Tax Department, Trichy Road, Coimbatore.
2. The Managing Director, M/s.PGC Corporation Ltd., No.5, Prem Gardens, Rajaji Nagar, PN Road, Tiruppur – 641 602.
3. The Sub Registrar, O/o.the Sub Regisrar, Thottipalayam, Tiruppur.
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