Madhya Pradesh High Court
Punjab National Bank vs Principal Secretary The State Of Madhya ... on 8 January, 2013
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W.P. No. 13930 of 2009
Punjab National Bank State of M.P. & ors.
08.01.2013
Shri Rajesh Mehendiratta, Counsel for the petitioner.
Shri Vivek Agrawal, G.A. for the respondents.
The petitioner has sought following reliefs :-
1. Certiorari, quashing the notice dated 27.2.2008 (Annexure P/17) issued by the respondent No.2.
2. Certiorari, quashing the communication dated 27.5.208 (Annexure P/19) issued by the respondent No.2.
3. Mandamus, restraining the respondent No. 1 and 2 from realizing the sale proceeds of the fixed assets of the respondent No.3 Company amounting to Rs.
18,85,000/- from the petitioner Bank.
The case of the petitioner is that the petitioner is a nationalised Bank and has financed respondent No.3. The loan was a secured loan and the properties of respondent No.3 were mortgaged with the petitioner/Bank. The respondent No.2 the Commercial Tax Department had attached the properties of the respondent No.3 towards recovery of arrears of commercial tax and is claiming priority to recover the dues of commercial tax against the petitioner/Bank under Section 53 of the M.P. Vanijyik Kar Adhiniyam, 1994.
It was submitted by Shri Mehendiratta, learned counsel for the Bank that the petitioner/Bank had mortgaged the properties on 6.5.1996 and since then the properties were remained mortgaged by the petitioner/Bank so the petitioner/Bank is having priority to collect its dues from the properties of respondent No.3. It is submitted that the dues of commercial tax were subsequent to the mortgage so the petitioner/Bank is entitled to recover its dues by enforcing the mortgage dated 6.5.1996. It is also submitted that the properties were sold by the Bank for the recovery of the dues.
Shri Agrawal, learned counsel appearing for the
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W.P. No. 13930 of 2009Punjab National Bank State of M.P. & ors.
08.01.2013 respondent No.1 and 2 submitted that the law is well settled. Section 53 of the Commercial Tax Act has been interpreted by the Apex Court in various decision and in the recent decision of Central Bank of India vs. State of Kerala and others [(2009) 4 SCC 94]. The law has been well settled that the State is having priority to recover its tax from the property and the Bank cannot recover the dues on priority basis merely on the ground that the properties were mortgaged prior to recovery proceedings by the State. The Apex Court in Dena Bank vs. Bhikabhai Prabhudas Parekh & Co. [(2000) 5 SCC 694] and State of M.P. vs. State Bank of Indore [(2002) 10 SCC 441], considered the law and held that in view of the statutory provisions as contained in the law, the State is having priority to collect tax from the property in question, inspite of the fact that the properties were mortgaged with the Bank. The Apex Court in Central Bank of India (supra) has reiterated the law, after considering all the earlier judgments of the Apex Court. It is held that keeping in view the background in which the said Central Acts were enacted and the fact that despite its awareness of various judicial pronouncements which had recognised the priority of State dues, Parliament had not incorporated in the said Central legislations a provision giving priority to dues of banks, financial institutions and other secured creditors over State's statutory first charge in the matter of recovery of dues of sale tax. The Apex Court further held that there was no conflict or inconsistency between the provisions of the said Central Acts on the one hand and the provisions of the State enactments on the other. There was no
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W.P. No. 13930 of 2009Punjab National Bank State of M.P. & ors.
08.01.2013 intention to give priority to the dues of the Banks, financial institutions and other secured creditors over the first charge created under the legislation. The Apex Court concluded that the statutory first charge of the sale tax vis-a-vis a decree obtained by the mortgagee, State is entitled to recover its tax under the statutory provision and remaining amount can be adjusted towards the dues of the Bank.
In view of the settled law by the Apex Court now in Central Bank of India (supra), there is no iota of doubt that the State is having priority to recover its dues of tax against respondent No.3 and if any excess amount is found in the sale proceedings, the Bank is entitled to appropriate towards the dies but the first charge is of the State and the State dues are to be paid on the basis of the priority .
In view of the aforesaid, we do not find any merit in this petition. This petition is accordingly dismissed. However, any amount paid by the petitioner/Bank in compliance of order dated 8.1.2010, be given due adjustment to the petitioner/Bank.
No order as to costs.
(Krishn Kumar Lahoti) (M.A. Siddiqui)
Judge Judge
vj
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W.P. No. 13930 of 2009
Punjab National Bank State of M.P. & ors.
08.01.2013