SREEDEVI MANGALAN Vs. DISTRICT COLLECTOR

JUDGEMENT

(1.) The petitioner purchased properties having an extent of 4.05 Ares situated in Mangadu Village, Kollam District, in ReSurvey No.642/13-2 in Block No.15 and 7.70 Ares with building No.KP IV/620 in Survey No. 642/14 in Resurvey Block No.15) for a sum of Rs.90,25,000.00, in an auction conducted under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), for the realisation of amounts due to the 4th respondent. Ext.P1 is the sale certificate. The said property had been mortgaged by one Renjith Vilaseedharan with the 4th respondent at their Thiruvananthapuram Branch by deposit of title deeds on 15/7/2015. When the petitioner approached the 5th respondent for registering the sale certificate, she was informed that the property had been attached on 5/2/2021 in revenue recovery proceedings initiated for arrears of sales tax and hence the certificate cannot be registered. Ext.P3 is the encumbrance certificate issued by the Kilikollur SRO on 5/7/2021, which does not disclose any attachment. Ext.P4 is the judgment of this court, which according to the petitioner has been rendered in similar circumstances. The contention of the petitioner is that the revenue recovery proceedings were initiated much after the equitable mortgage was created and that the mortgagee has a prior charge over the property. Reliance is placed on the decisions of this Court in Kuriachan Chacko Vs. State of Kerala & Ors. [2012 (3) KHC 549], Housing Development Finance and Anr. Vs. Sub Registry Officer & Ors. [2011 KHC 851], and Madhan S Vs. Sub Registrar, Kollam & Ors. [2014 (1) KLT 406] in support of the contention. The writ petition is filed praying for a direction to the 5th respondent to register the sale deed as per Ext.P1 and to give direction to the 3rd respondent to mutate the property and to receive the basic tax. There is also a prayer for a direction to the 5th respondent to remove the adverse entries in the relevant registers regarding revenue recovery proceedings against the secured assets initiated after the mortgage.

(2.) The 6th respondent has filed a statement wherein it is stated that the property belonged to registered dealers under the Kerala Value Added Tax Act,2003 and Central Sales Tax Act,1956, who had arrears of tax under both the Acts, totalling an amount of Rs.2,80,07,850.00 along with interest. It is submitted that the dealer M/s. Navami Exports was a firm that had three partners, Sri D Vilaseedharan, Sri. Sujith and Sri. Renjith (additional 7th respondent). It is stated that the firm had huge arrears of tax from 2006-07 to 2016-17. Under Sec. 28 of the KVAT Act,2003, the partners of a firm are jointly and severally liable to pay any arrears of tax, fee, or any such amounts payable by the firm. It is stated that the Assessment for the year 2006-07 of the dealer firm under the two Acts was completed on 30/12/2010 as evidenced by Exts.R6(b) and R6(c). It is stated that revenue recovery steps had been initiated on 10/6/2011, which was before the creation of the mortgage by the 7th respondent. It is submitted that the mortgage was created when penalty proceedings for the years 2010-11 to 2016-17 and 2012-13 to 2015-16 were pending before the 6th respondent and the Intelligence Officer, Kollam. It is contended that the equitable mortgage, created on 1/7/2015 when the State had a charge over the properties, is void and non-est by operation of Sec. 37 read with Sec. 38 of Kerala Value Added Tax Act,2003. The E-auction in favor of the petitioner is hence contended to be void as against claim in respect of tax or any sum payable under the Kerala Value Added Tax Act, 2003. It is submitted that the petitioner cannot thus have a grievance against revenue recovery proceedings initiated against the property in accordance with law.

(3.) The 2nd respondent has filed a counter affidavit. It is submitted that the requisition for initiation of revenue recovery proceedings for realising an amount of Rs.2,87,78,789.00 plus interest and collection charges had been received, and the proceedings have been set into motion. It is stated that the properties were attached on 15/12/2018 and 25/1/2021. The sale was conducted after the attachment by the revenue authorities. Properties, including the subject property, were e-auctioned only after the attachment by revenue authorities to realise the arrears against sales tax and Kerala Cashew Workers Relief and Welfare Fund (KCWRWF) dues. It is stated that KCWEWF has not been impleaded as a party to the writ petition. It is contended that the