INDIAN BANK Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) The writ petition has been filed seeking for a Writ of Certiorari to call for the records of the first respondent in proceedings dated 30.04.2003 in T.R.No.2/CR.II/02-03 and the consequential notice dated 06.10.2006 in T.R.1/24/97/CR-II/05-06 issued by the 1st respondent and to quash the same.

(2.) It is the admitted position that the petitioner had extended financial facilities to the second respondent and that as security for the said financial facilities, the second respondent had created an equitable mortgage dated 01.09.1989 over the property of the second respondent ad measuring 5320 sq.mtrs. situated in Gandhi Nagar, Sub Registration District of Vijayawada. It appears that the second respondent did not discharge his dues to the Income Tax Department to the extent of Rs.2,51,89,428, excluding interest, and, therefore, the Tax Recovery Officer, Vijayawada issued a notice of demand dated 28.01.1994 and an order of attachment dated 23.03.1994. The petitioner, mean while, filed a Debt Recovery Application No.63 of 1995 before the Debt Recovery Tribunal, Bangalore and also filed a claim petition before the Tax Recovery Officer, Vijayawada and claimed that the equitable mortgage of the petitioner had priority over the attachment of the first respondent. Accordingly, the Debt Recovery Tribunal by order dated 14.09.1995 allowed O.A.No.63 of 1995 and declared that the petitioner was entitled to claim a sum of Rs.2,63,24,578/- from the second respondent and recover the same by the sale of the mortgaged property at Vijayawada. This order was challenged by the first respondent before the High Court of Karnataka in W.P.No.35143 of 1996. By order dated 02.08.1999, the writ petition was disposed of stating that the Tax Recovery Officer should determine as to whether the bank had prior mortgage or whether the Income Tax Department had the prior charge. Based on the aforesaid order, the first respondent passed the order dated 30.04.2003 whereby it was held that the equitable mortgage of the petitioner would be the first charge over the immovable property from 01.09.1999 until the attachment by the Income Tax Department on 28.01.1994 and that, thereafter, the first respondent would have the priority.

(3.) Thereafter, it appears that the second respondent made an offer to the petitioner for one time settlement of his dues and the petitioner/Bank by a reply dated 05.01.2006 agreed to receive a sum of Rs.240 lakhs in full and final settlement subject to the terms and conditions of the said communication. Subsequent thereto, it appears that the second respondent settled the dues of the petitioner in multiple instalments as per details set out by the petitioner in its letter dated 02.11.2006. In toto, it appears that the petitioner has received a sum of Rs.290.23 lakhs in full and final settlement.