MOHANACHANDRAN NAIR BALAKRISHNA PILLAI Vs. STATE OF KERALA

JUDGEMENT

(1.) For the realisation of amounts due from M/s.St.Antony 's Motors India Ltd. and St.Antony 's Bi-wheelers Pvt. Ltd., the additional 3rd respondent invoked the provisions of the Security Interest (Enforcement) Rules, 2002 and brought to sale two properties in Vijayapuram Village situated in several survey numbers. The petitioner purchased the properties that were brought to sale and the sale certificates dtd. 4/1/2022 regarding 28.98 Ares of land and 44.606 Ares of land respectively are produced and marked as Exts.P1 and P2. The encumbrance certificates with respect to the properties noted an attachment over the property by the Additional District Judge, effected on 30/1/2017 on an application made by M/s Sundaram Finance Ltd. as entry No.13, and a revenue recovery request by the Tahsildar, Kottayam on 25/8/2017. Ext.P3 is the encumbrance certificate dtd. 20/1/2022. The sale deeds pertaining to Exts.P1 and P2 sale certificates were executed and true copies of the same are produced as Exts.P4 and P5. When presented for registration, the 2nd respondent issued a notice on 16/3/2022 declining registration on the ground that there are encumbrances that need to be set right prior to registration of the sale deeds. Ext.P6 is the letter refusing registration.

(2.) According to the petitioner, the properties covered by Ext.P4 sale deed were mortgaged to the additional 3rd respondent on 11/9/2010 and the properties covered by Ext.P5 sale deed were mortgaged to the Bank on 22/7/2004. The above facts are evidenced by Ext.P8 certificate dtd. 5/4/2022 issued by the additional 3rd respondent. The counsel for the petitioner submits that the adverse entries in Ext.P3 are made much after the mortgage was created in favour of the additional 3rd respondent and the assessment order based on which the revenue recovery proceedings were initiated was dtd. 23/1/2012, much after the mortgage. It is contended that the revenue recovery proceedings which were initiated in 2017 cannot in any way affect the mortgage rights held by the additional 3rd respondent, which has been sold in an auction conducted as per the provisions of the Statute.

(3.) The Special Government Pleader (Taxes) appearing for respondents 1, 2, and 4 submits that the date of the assessment orders is immaterial and that going by Sec. 6 of the Kerala Value Added Tax Act, the charge to tax comes to the fore when the sale takes place. It is submitted that once the return is filed, the amount has become due. Reliance is placed on the decision in Hamsa v. Assistant Commissioner [2008 (3) KLT 180] and Cochin Condiments Pvt. Ltd. v. District Collector and Ors [2008 SCC Online Kerala 219]. It is further submitted that under Sec. 21, what is required is the self-assessment and hence no contention of a better charge can be raised, merely because an assessment order was issued much after the period for which the tax is charged. The judgment in Medineutrina Pvt.Ltd. (Company) v. District Industries Centre (DIC) and Ors. [AIR 2021 Bombay 135] is relied on to state the effect of Sec. 26E of the Securitisation Act. In reply, the counsel for the petitioner submits that the contention of the State that there were amounts in arrears towards tax cannot in any way affect the registration of the property, particularly when the demand for such arrears by the State is like a covenant which runs with the land and the registration will not in any way affect the rights of the State. It is submitted that as far as Ext.P5 sale deed is concerned, the properties involved therein were mortgaged on 22/7/2004, and hence arrears of tax for the period 2005-2006 based on the assessment order dtd. 23/1/2012 cannot in any way affect the said document or create a charge better than the mortgage. Regarding Ext.P4 document, the petitioner submits that since the mortgage was created on 11/9/2010, after the tax became due, he may be permitted to move the Government for payment of the arrears of tax and thereafter move for registration of the document.