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Auction notice, dated 07.02.2007, issued by the Assistant Commercial Tax Officer, Thiruppathur, Karaikudi has been challenged inter alia on the ground that the Central Bank of India, Karaikudi Branch, the petitioner herein has sanctioned loan to the second respondent to construct a factory and purchase of new and second hand machineries besides meeting out their working capital requirements. According to the petitioner, loan was sanctioned on various dates and as on 17.05.2001, the outstanding amount due and payable by the second respondent was Rs.1,83,48,089.95. It is the further contention that as the second respondent has failed to adhere to the terms and conditions of the sanction and neglected to repay the amounts due under various facilities leaving a huge outstanding amount with overdue interest, the petitioner was constrained to move the Debts Recovery Tribunal II at Chennai in O.A.No.1277 of 2001 for recovery of the said amount along with pendenti lite and future interest at the rate of 16.50% per annum with quarterly rest till the date of realisation of full. According to them, as on the date of filing of the writ petition a sum of Rs.3,00,00,000/- was pending. While that be so, the office of the Assistant Commercial Tax Officer, has passed the impugned order dated 07.02.2007 stating that a sum of Rs.1,43,52,703/- along with 2% penal interest representing the arrears of tax and pendenti lite has to be paid by the second respondent and that to recover the same, by way of public auction would be conducted on 03.03.2007 for sale of the property in S.No.626/1, Thirupathur Taluk, Thekkur Village. According to the petitioner, the second respondent had already mortgaged the said property to the bank and therefore, it has the first charge over the property. It is the further contention of the bank that the Assistant Commercial Tax Officer, the first respondent herein can proceed against the property of the borrower only after satisfying the security debt of the writ petitioner bank. It is also the contention of the petitioner that the Commercial Tax Authority has not initiated any assessment proceeding prior to the mortgage and therefore, the first respondent cannot claim any charge over the property unless a valid assessment has been made for the relevant period of time. In support of the contention that bank debts will have charge, over crown debt, learned counsel for the petitioner relied upon the decisions of the Division Bench of this Court in Indian Bank, rep. by Authorised Officer, Vellore Circle Office, Vs. Commercial Tax Officer, Office of CTO, Navalpur, Ranipet and Others reported in 2009(6) MLJ 659 and in M.Nagarajan Vs. The Deputy Commercial Tax Officer and State of Tamil nadu rep.by Secretary, Commercial Taxes Department reported in 2009 25 VST 175 (Mad).

4.Heard the learned counsel for the parties and perused the materials available on record.

5.The issue as to whether the bank debt will property over crown debt, is no longer res integra, in view of the decisions of this Court stated supra in Indian Bank, rep. by Authorised Officer, Vellore Circle Office, Vs. Commercial Tax Officer, Office of CTO, Navalpur, Ranipet and Others reported in 2009(6) MLJ 659, rendered after considering the decisions of the Full Bench of this Court in UTI Bank Ltd., Vs. Deputy Commissioner of Central Excise, Chennai-2 and another reported in 2007(1) LW 50 and another decision reported in Union of India and others Vs. SICOM Ltd., and other reported in JT (2009) 1 SC 87 in M.Nagarajan Vs. The Deputy Commercial Tax Officer and State of Tamil nadu rep.by Secretary, Commercial Taxes Department reported in 2009 25 VST 175 (Mad) and at paragraph Nos.16, 17, 18 and 19 of this Court held as follows:

"26.In the light of the above discussion, we conclude, "(i)Generally, the dues to Government, i.e., tax, duties, etc., (Crown's debts) get priority over ordinary debts.

(ii)Only when there is a specific provision in the statute claiming "first charge" over the property, the Crown's debt is entitled to have priority over the claim of others.

(iii)Since there is no specific provision claiming "first charge" in the Central Excise Act and the Customs Act, the claim of the Central Excise Department cannot have precedence over the claim of secured creditor, viz., the petitioner Bank.

"15.Having regard to the judicial pronouncements rendered by Courts and noticed above, we may sum up the law as under:

(i)Arrears of tax due to the State can claim priority over the unsecured debts.

(ii)The common law doctrine about priory of Crown debts/State debts is recognised law in force within the meaning of Article 372(1) of the Constitution of India.

(iii)The doctrine will not apply if first charge by way of priority is not claimed under the statute.

(iv)The doctrine of first charge/priority of the State over the property will prevail over the private debts, which is unsecured debt, but such doctrine of first charge/priority over the property cannot prevail over secured debts of a person. If the statute permits to have first charge/priority over the property having regard to the plain meaning of Article 372 of the Constitution of India, then only the State can claim priority over an unsecured debt".