KARNATAKA STATE INDUSTRIAL INVESTMENT DEVELOPMENT CORPORATION LTD. Vs. COMMISSIONER OF INCOME-TAX, MANGALORE

JUDGEMENT

(1.) Petitioner, a State owned Corporation and a Financial Institution governed by The State Financial Corporations Act, 1951 (for short, 'the SFC Act') sanctioned a term loan of Rs..l ,25,00,000/- to M/s. Veekay Developers Pvt. Ltd. to establish a Luxury Hotel at Sy. No. 32-2A, Bangra Kulur Village, Man-galore City, on 13.09.1995, which term loan was transferred to V.K. Clubs and Homes Pvt. Ltd. By way of security, the borrower - M/s. V.K. Clubs and Homes Pvt. Ltd., created an equitable mortgage by deposit of title deeds, the portions of land and building i.e., measuring about 4390 Sq. feet on the ground floor; 2100 Sq. feet on the first floor; 3515 Sq. feet and 1020 Sq. feet on the third floor; about 18,435 Sq. feet on the 4th, 5th and 6th floors of the Commercial building, together with common facilities thereof, situate at Sy. No.32/2A of Bangra Kulur Village, Mangalore. By way of further security, the said borrower created equitable mortgage over free hold rights in three shops measuring about, 325 Sq. feet; 115 Sq. feet and; 535 Sq. feet, respectively, in all, measuring 975 Sq. feet, with common facilities, in the building on land bearing Sy. No. 32/2A, Bangra Kulur Village, Mangalore. The additional loan of Rs. 86,00,000/- when sanctioned, Rs. 76.33 lakhs was released during the year 1998, for which, the building measuring 2110 Sq. feet on the first floor of the building on Sy. No. 32/2A of Bangra Kulur Village, was ofered as security by way of equitable mortgage by deposit of title, under the agreement dated 28.04.1998.

(2.) The borrower, having failed to repay the amount due together with interest led the petitioner to invoke Section 29 of the SFC Act and took over possession of the properties, mortgaged and furnished as security. Though the petitioner took possession of the mortgaged properties, nevertheless, the borrower committed default in the payment of the amounts due.

(3.) On 05.12.2000, the Tax Recovery Officer, Mangalore Range - second respondent passed an order attaching the immovable propenies, including, properties morticed of the petitioner invoking Rule 48 of II Schedule to the Income tax Act, 1961 (for short. the Act'), to recover Rs. 80,03,276/-to wards income tax dues, from Sri Vivian Kamath D'Souza, M/s. Veekay Developers Pvt. Ltd., M/s. Shalimar Constructions and M/s. Canara Builders. Following that order, the second respondent on 23.12.2000, issued a public notice in Udayavani news paper informing about the attachment of the immovable properties calling upon anybody who had any claim or right to the said properties, to furnish necessary documents in support of the claim.