SOUTH INDIAN BANK LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) Question that has come up for consideration in this case is whether a decree obtained by a bank before the introduction of Section 26B of the Kerala General Sales Tax Act, 1963 would override the first charge created in favour of the State.

(2.) The South Indian Bank Ltd. instituted a suit, O.S.720 of 1992 before Sub Court, Trichur for realisation of amounts due to the bank. Loans were secured by equitable mortgage of immovable properties created by deposit of title deeds by respondents 3 to 5. Suit was decreed on 30.1.1995 for an amount of Rs. 3,51,36,073,18 inclusive of costs with future interest at 23.25% from the date of suit till realisation by sale of items 1 to 12 in the plaint A schedule immovable properties and also the movables described in plaint B to F schedule. Bank also filed OA. 1081 of 1998 before the Debts Recovery Tribunal, Ghennai for recovery of the amounts as per the decree by sale of immovable properties mortgaged in favour of the bank. Noticing that the second respondent Tahsildar initiated proceedings for sale of some of the items of properties mortgaged in favour of the bank for recovery of arrears of sales tax due from respondents 3 to 5 bank has approached this Court with the present Writ Petition seeking a declaration that the bank who is a secured creditor has a first charge over the immovable properties which has been described in Ext.P3 proceedings initiated by the Tahsildar.

(3.) Counter affidavit was filed in the Writ Petition by the Tahsildar stating that the defaulters are in arrears of sales tax to the tune of Rs. 85,45,276/- excluding the future interest after the revenue recovery certificate. Defaulters had failed to clear the arrears even after the receipt of statutory notice and consequently the property measuring an extent of 16.56 acres in Chalissery Village was attached on 25.06.93. Further it is also stated that the State was not a party in O.S. No. 720/92 of Sub Court, Thrissur and was unaware of the pendency of those proceedings and therefore the decree would not bind the State.