CANARA BANK Vs. ASSISTANT COMMISSIONER COMMERCIAL TAXES

JUDGEMENT

(1.) THIS petition is for the issue of a writ of mandamus directing the first respondent, the Assistant Commissioner (Commercial Taxes), Zone III, Madras-1, to forbear from selling the properties of the second respondent herein in pursuance of the notice of sale of movable property in Form No. 3, Reference No. 6281 of 1981-C dated 25th April, 1981.

(2.) IT is, inter alia, contended in the affidavit filed in support of the writ petition and sworn to by the manager of the petitioner-bank, that the second respondent-firm had been enjoying certain facilities from the petitioner-bank. On July 11, 1974, the second respondent was granted an open case credit facility to the tune of Rs. 50,000 on hypothecation of its stock-in-trade, etc., in favour of the bank, thereby creating a charge over the said goods in favour of the petitioner-bank. The said hypothecation is still in force. The second respondent had left certain arrears of sales tax due to the Government for the assessment years 1978-79 to 1980-81. The first respondent issued a distraint order on December 8, 1980, demanding immediate payment of a sum of Rs. 78,739 being the arrears of sales tax, surcharge and advance tax for the said assessment years due from the second respondent-company. Non-payment of the said arrears by the second respondent resulted in the first respondent effecting attachment of the movable properties of the second respondent which had earlier been by hypothecated by the second respondent in favour of the petitioner-bank, as early as on July 11, 1974. On coming to know of the attachment of the hypothecated movables, the petitioner addressed the Deputy Commercial Tax Officer, Sowcarpet Circle, to release the attachment as properties had been hypothecated to the bank earlier. Not only did the officer not send any reply to the said letter,but the first respondent issued in Form No.3, a notice of sale of movable property on April 25, 1981. According to the petitioner-bank, the first respondent is not entitled to sell the foods as the petitioner-bank has a first charge over the same by virtue of the hypothecation in its favour.