Kerala High Court
Bank Of Baroda vs State Of Kerala on 15 December, 2020
Author: A.M.Badar
Bench: A.M.Badar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A.M.BADAR
TUESDAY, THE 15TH DAY OF DECEMBER 2020 / 24TH AGRAHAYANA, 1942
WP(C).No.35082 OF 2019(I)
PETITIONER/S:
BANK OF BARODA, ROSARB,
ERNAKULA, PALLIMUKKU, M.G.ROAD, ERNAKULAM,
REPRESENTED BY ITS CHIEF MANAGER.
BY ADVS.
SRI.K.M.ANEESH
SRI.K.SANTHOSH KUMAR (KALIYANAM)
SRI.ADARSH KUMAR
SRI.BIJU VARGHESE ABRAHAM
SRI.DILEEP CHANDRAN
SRI.SHASHANK DEVAN
RESPONDENT/S:
1 STATE OF KERALA
REPRESENTED BY ITS SECRETARY TO GOVERNMENT,
DEPARTMENT OF TAXES, SECRETARIAT, THIRUVANANTHAPURAM.
2 DISTRICT COLLECTOR,COLLECTORATE,
CIVIL STATION, ALAPPUZHA, PIN-688 001.
3 THAHSILDAR(REVENUE RECOVERY), AMBALAPUZHA,
KIDANGAMPARAMP, ALAPPUZHA-688 013.
SMT. POOJA SURENDRAN, GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
15.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No.35082 OF 2019
2
JUDGMENT
Dated this the 15th day of December 2020 By this petition, the petitioner/secured creditor has prayed for the following reliefs:-
'' i)Issue a writ of Certiorari or other appropriate writ, direction or order and call for the record leading to Exhibits P1 and P3 and to quash the same as illegal and unconstitutional.
ii)Declare that the petitioner is at liberty to proceed against the secured property involved in this case under the provisions of the Recovery of Debts and Bankruptcy Act 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
iii)Declare that the attachment made by the respondents subsequent to creation of equitable mortgage created in favour of the petitioner are non-est and does not affect the marketability of the property and the same would be effaced after the property is sold by the petitioner under the provisions of the Recovery of Debts and Bankruptcy Act 1993 or the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.''
2. Heard the learned counsel for the petitioner and the learned Government Pleader appearing for the State.
3. Learned Standing Counsel appearing for the petitioner argued that for repayment of loan availed by its borrower, property comprised in Re.Sy. Nos.214/1/2, 214/1/3 and 214/03/2 (Old Sy. No.281/11) in Mannanchery village, so also the property comprised in Re. Sy. No.214/2 (Old Sy. No.281/11) in the same village was mortgaged by the borrower. As the loan account became irregular, by following due process of law, it was declared as Non Performing Asset and demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security WP(C).No.35082 OF 2019 3 Interest Act, 2002 (hereinafter referred to as 'the SARFAESI Act') came to be issued on 02.07.2015. The learned Standing Counsel further submitted that as the borrower failed to settle the loan account by repayment of loan, physical possession of the mortgaged property was taken by the petitioner bank on 30.11.2019. Proceedings in respect of the said property are pending before the Debts Recovery Tribunal, Ernakulam as per the provisions of the SARFAESI Act.
4. Learned Standing Counsel appearing for the petitioner further contended that respondents alleged that they are having the 'First Charge' over the secured assets for recovery of sales tax dues and therefore, they have attached the property on 22.02.2019. According to the learned Standing Counsel, the respondents are directing it to provide access to the property, which is in the possession of the petitioner under the SARFAESI Act. This act, according to the petitioner, is totally illegal as the petitioner has 'First Charge' over the property.
5. Learned Government Pleader opposed the writ petition by contending that for recovery of sales tax dues, the property in question needs to be sold out.
WP(C).No.35082 OF 2019 4
6. I have considered the submissions so advanced and also perused the materials placed before me.
7. It is seen from records that subject property was taken possession under the SARFAESI Act by the petitioner as the loan account became Non Performing Asset. On the very same property, the respondent/State is contending that it has first charge for recovery of dues of the sale tax. The 3 rd respondent had issued a communication dated 25.11.2019 to the effect that the property is attached by the State and the petitioner bank should provide access to the property. Similar is the notice at Ext.P3 issued by the District Collector, asking the petitioner to open the gate and door of the property of which the possession is taken by the petitioner under the SARFAESI Act.
8. The question which falls for consideration is whether the State has better right over the secured assets for recovery of its dues. This question is no more res integra. The petitioner has rightly relied on the judgments of this Court in Travancore Devaswom Board V. Local Fund Audit reported in 2020(3) KLT 296 and State Bank of India V. State of Kerala reported in 2019(4) KLT 521. Perusal of the rulings cited by the learned Standing Counsel appearing for the petitioner makes it clear that WP(C).No.35082 OF 2019 5 Section 26E of the SARFAESI Act and Section 31B of the RDB Act create a 'First Charge' by way of a priority to the Banks/Financial Institutions to recover and satisfy their debts, notwithstanding any statutory 'First Charge' in favour of the Revenue.
9. In the light of law laid down by this Court in the above mentioned rulings, the petition deserves to be allowed and the same is allowed by quashing and setting aside Exts.P1 and P3 communications issued by respondents and quashing the attachment of the secured assets by the respondents.
The writ petition is accordingly, allowed.
Sd/-
A.M.BADAR
ajt JUDGE
WP(C).No.35082 OF 2019
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APPENDIX
PETITIONER'S/S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE COMMUNICATION DATED
25.11.2019 ISSUED BY THE 3RD RESPONDENT
ALONG WITH ENGLISH TRANSLATION.
EXHIBIT P2 TRUE COPY OF THE REPLY GIVEN BY THE
PETITIONER DATED 11.12.2019.
EXHIBIT P3 TRUE COPY OF THE COMMUNICATION ISSUED BY
THE 2ND RESPONDENT ALONG WITH ENGLISH
TRANSLATION.
EXHIBIT P4 THE TRUE COPY OF REPLY GIVEN BY THE
PETITIONER TO EXHIBIT P3.