M NAGARAJAN Vs. DEPUTY COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) THE petitioner has challenged the auction notice Na. Ka. No.A3/626/01 dated 5th Feb., 2007, issued by the respondent for auction sale of the land in question. While the petitioner has questioned the auction sale on the ground that the land has already been sold and transferred in his favour, the stand taken by the respondents is that the respondents having first charge over the property, they have the right to sell the property.

(2.) ONE Jay Flash Ceramics Ltd., (hereinafter referred to as the 'company'), borrowed huge amounts from a consortium headed by the Indian Bank (hereinafter referred to as the 'Bank') in the year 1990 and mortgaged the property measuring 12.92 acres on 1st Aug., 1990 in Ongur village and Kambur village, Tindivanam, in favour of the Bank. The mortgage was created by the company along with its Directors giving personal guarantee. The company, having failed to discharge its liability, the bank proceeded against it for recovery of debt in O.A. No.1568/98 before the Debts Recovery Tribunal (hereinafter referred to as the 'Tribunal') under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the 'DRT Act') and the case was decreed in favour of the Bank on 30th Sept., 2004. Pursuant to the decree, a recovery certificate was issued in DRC No.191/04 and mortgaged properties were brought to sale by public auction notice dated 9th Nov., 2005. ONE, K.O.P. Enterprises carrying on business at Chennai, represented by its proprietor, P.K.Peer Mohammed, was the successful bidder in favour of whom a sale certificate vide Document No.537/06 dated 9th May, 2006, was issued, followed by mutation in his name. Later on, the said Peer Mohammed sold the land in favour of the petitioner vide Document No.279/07 dated 24th Jan., 2007, who also mutated the land in his name. In regard to the same very land, the notice having been issued, the petitioner, a subsequent purchaser, has preferred the writ petition against the auction sale notice.

(3.) LEARNED counsel for the respondents further submitted that in the present case the assessee-company has submitted monthly returns under sub-section (2) of Section 13 and the admitted tax dues payable as per the said return becomes a charge, created on the properties of the assessee. The actual payment stood postponed under the deferral scheme. The monthly return is filed as per Rule 18 of the TNGST Rules and the monthly return under sub-section (2) of Section 13 has to be submitted on or before the 20th day of every succeeding month. On 10th May, 2000, notice was issued upon the assessee calling upon it to remit the sales tax arrears of Rs.1,48,01,177/= due under both the GST Act and the CST Act. Revenue proceeding u/s 24 of the GST Act were initiated on 29th Dec., 2000 by issuance of B-6 notice to Indian Bank, Egmore Branch, SIPCOT and TIIC. Form-30 requisition was issued on 28th Jan., 2001 and advertisement was published in "The Indian Express" on 14th Jan., 2001 by SIPCOT proposing to sell the land, building, plant and machinery owned by the defaulter in public auction. The SIPCOT was informed on 16th July, 2001 of the priority of charge u/s 24 (2). It followed by a notice dated 6th Aug., 2001, by which the defaulter was asked to pay the entire arrears enclosing the notice prior to attachment in Form-4 and Form-1 distraint order. A letter dated 19th Nov., 2001 was issued from SIPCOT informing that the auction sale for recovery will be subject to obtaining a clearance certificate from the sales tax department and on 7th March, 2002, the defaulter was asked for payment of arrears. SIPCOT was informed on 19th Nov., 2002 about the action taken under the Revenue Recovery Act. In reply, SIPCOT informed on 5th Dec., 2002 that possession of the mortgaged assets of the defaulter had already been taken by SIPCOT u/s 29 of the State Financial Corporation Act for recovery of term loan dues and that they are providing security incurring huge expenditure. It requested not to proceed with proposed auction sale by the sales tax department. However, a publication of auction sale notice was made in the District Gazette on 16th Dec., 2002 followed by auction sale notice dated 7th Jan., 2003.