Gujarat High Court
Chintan Bharatbhai Patel vs State Of Gujarat on 2 January, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/22131/2022 ORDER DATED: 02/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 22131 of 2022
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CHINTAN BHARATBHAI PATEL
Versus
STATE OF GUJARAT & ORS.
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Appearance:
ARPIT R SINGHVI(9524) for the Petitioner(s) No. 1
MR SP MAJMUDAR(3456) for the Petitioner(s) No. 1
MR RAJ TANNA, AGP for the Respondent(s) No. 1,3
MR RITURAJ M MEENA(3224) for the Respondent(s) No. 6
NOTICE SERVED BY DS for the Respondent(s) No. 2,4,5
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 02/01/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Arpit Singhvi for the petitioner and learned Assistant Government Pleader Mr. Raj Tanna for respondent Nos. 1 and 3.
2. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the order of attachment passed by the Page 1 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025 NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined respondent-authority under the provision of the Gujarat Sales Tax Act, 1961 and the consequential entries made in the revenue record.
3. Brief facts of the case are as under:
3.1 The petitioner along with four other persons, purchased a land situated at Revenue Survey No. 440 paiki 1 admeasuring 7571 sq.mtrs from the Court Commissioner/Receiver appointed by the Debts Recovery Tribunal. The petitioner purchased the said property in an auction held by Dena Bank under the The Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 ['Securitization Act' for short]. The said land was originally converted into non-Page 2 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025
NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined agriculture land by order dated 08.09.2010. The petitioner after purchase of the same, had applied for revised non-
agriculture permission. The Collector, Patan dismissed the said application of the petitioner vide order dated 27.07.2022 by stating that there is a charge of Sales Tax Department over the property in question and therefore, the revised N.A permission cannot be granted.
3.2 It is the case of the petitioner that there is mutation of Entry No. 6127 dated 17.09.2013 which reflects the outstanding dues of Sales Tax Department over the said land and the said entry was based on order dated 26.08.2013 of the Commercial Tax Recovery Officer.
Page 3 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined 3.3 It is further the case of the petitioner that Entry No. 6492 of 04.04.2015 was also mutated in the revenue records on 04.04.2015 stating further charge of Sales Tax Department over the land in question and the said entry was mutated with regard to outstanding dues of VAT for a period from 01.12.2012 to 31.12.2012.
3.4 Since the rights of the petitioner over the property in question got frustrated by the aforesaid entries of charge mutated in the revenue record, the petitioner approached this Court by way of present petition with the aforesaid prayers.
4. Learned advocate for the petitioner submitted that the petitioner has Page 4 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025 NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined purchased the property in question from the Court Commissioner/receiver appointed by the Debts Recovery Tribunal under the Securitisation Act. It was submitted that the petitioner was the auction purchaser of the property and sale deed was executed in favour of the petitioner on 26.02.2019 and at that point of time, there was no order of attachment passed by respondent-
Sales Tax Department. It was submitted that the petitioner after purchasing the property applied for passing the mutation entry in the revenue record which was rejected by the Collector on the ground that there was charge of Sales Tax Department over the property in question.
4.1 It was submitted that the respondent-Bank had registered the charge on 11.10.2010 whereas, the Sales Tax Page 5 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025 NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined Department has registered the charge subsequently in the year 2018 and therefore, in view of the decision of this Court in case of Kalupur Commercial Co-
operative Bank Limited vs. State of Gujarat rendered in Special Civil Application No. 17891 of 2018, the respondent-authorities be directed to remove the charge from the revenue record by quashing and setting aside the impugned order of attachment passed by the respondent-Sales Tax Department.
5. On the other hand, learned Assistant Government Pleader Mr.Raj Tanna for the respondent No.1 submitted that it is not in dispute that the respondent-Authorities have registered the charge subsequent to that of the charge created by the petitioner-Bank.
Page 6 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined
6. In case of Partners of Siddheshwar Tax Fab & Ors vs. State of Gujarat and ors rendered in Special Civil Application No.2527 of 2023, this Court held as under:
"36. From the above, it is clear that the Judgment in case of Rainbow Papers Ltd. (Supra) is confined to the facts of the said case only and therefore, it would not be required to relook the decision of the Kalupur Commercial Cooperative Bank (Supra) considering the decision of the Rainbow Papers Ltd. (Supra) of the Apex Court, as the facts of the present case are in the realm of the provisions of the RDB Act decision and of SARFAESI the Apex Act, whereas Court in case the of Rainbow Papers Ltd. (Supra) was in realm of IBC Code confined to the facts of the said case as observed in the subsequent decision of the Apex Court.
37. It is also pointed out by the learned AGP that Papers the Ltd.
Decision (Supra) of was the Page 7 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025 NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined Rainbow considered in review, which is disposed of by the Apex Court as per para 26 and 27 extracted herein above. In such circumstances, we are of the decision opinion of the that Hon'ble the Apex subsequent Court, in case of Rainbow Papers Ltd. (Supra) would not be applicable with regard to the applicability of provision of Section 26E of the SARFAESI Act as well as provisions of Section 31B of RDB Act vis-a-visSection 48 of the vat Act as analysed and discussed by this Court in Kalupur Commercial Cooperative Bank (supra)
38. In view of the above analysis and facts, we would also like to refer to the subsequent decision of the Coordinate Bench in case of Odhavji Mohanbhai Gadhiya Vs. State of Gujarat (supra), wherein it is observed by this Court, that it is a settled legal position that VAT and Sales Tax dues has no precedence over the dues of the Bank for recovery of which the bank exercises powers under the SARFAESI Act and dues in nature of sales tax and VAT payable by the original owner cannot claim priority over the dues of the secured creditor and the principle that the state debt or crown debt has no prior claim Page 8 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025 NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined or the dues payable to the secured creditors is no longer resintegra,wherein the Coordinate Bench of this Court has also referred to the decision of the Hon'ble Apex Court in case of Bank of Bihar Vs. State of Bihar reported in (1972) 3 SCC 196 which is followed in the decision of the Dena Bank (Supra) and the law laid down is that preferential right of the Crown to recover the debt over the creditors is limited to the class of unsecured creditors and the common law principles of of England equity or and the good conscience would not allow the Crown to have preferential right for recovery of debt over the mortgagee or pledge of goods of secured creditors.
39. In view of the above settle legal position, the charge in respect of the property in question created for sales tax dues or VAT dues is of no availand has no efficacy in law in view of the provisions of SARFAESI Act and the RDB Act. The property in question was sold by respondent no.6-Bank under the provisions of SARFAESI Act and the petitioners were successful purchasers and the sale certificate is issued and sale deed is also executed by which Page 9 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025 NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined the petitioners have become absolute owners of the property and therefore considering the existing position of law, the charge created by the respondent State over the property in question in the year 2018, cannot be sustained and is accordingly quashed and set aside and as a consequence the mutation entries in revenue records also stands deleted. The petition accordingly succeeds in the aforesaid terms. Rule is made absolute to the aforesaid extent. No order as to costs."
7. In view of the above, the impugned order of attachment is quashed and set aside.
The respondent-authorities are directed to remove the charge over the property in question as it is not in dispute that the respondent-Bank has created the charge prior in point of time and hence, as per the settled legal position, the charge created by the Sale Tax Department subsequently in the Year 2017-18 would not Page 10 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025 NEUTRAL CITATION C/SCA/22131/2022 ORDER DATED: 02/01/2025 undefined survive and accordingly, mutation entry in the revenue record stands deleted. The petition is accordingly disposed of.
Notice is discharged.
(BHARGAV D. KARIA, J) (D.N.RAY,J) JYOTI V. JANI Page 11 of 11 Uploaded by JYOTI V. JANI(HC00213) on Thu Jan 09 2025 Downloaded on : Thu Jan 09 21:16:24 IST 2025