INDUSTRIAL DEVELOPMENT BANK OF INDIA LTD Vs. DEPUTY COMMISSIONER (ARREARS RECOVERY CELL), CENTRAL EXCISE AND CUSTOMS

JUDGEMENT

(1.) The question of considerable significance that would arise in these writ petitions is whether the department of Customs, Central Excise and Service Tax, Government of India (GoI) (hereafter the Dept. , ) is entitled to claim that the central excise and customs duty arrears (excise/customs arrears, for brevity) have priority and precedence over the claims made by public sector Banks, either under the decree/recovery certificate granted by the Debts Recovery Tribunal (DRT) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for brevity 'the DRT Act') or while enforcing the security interest under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity the SARFAESI Act). Other common incidental issues would also arise and therefore, it is expedient to dispose of these by a common order.

(2.) In 1999, IDBI instituted O. A. No. 497 of 2000 before the DRT, Hyderabad, under Section 19(1) of the DRT Act. It was decreed on 12.4.2005 for Rs. 3.86 Crores with interest. Pursuant to the consequential recovery certificate issued under Section 19(22) the Recovery Officer (RO) served demand notice dated 26.4.2005 to the borrower and others for recovery of Rs. 15,72,42,842/-. In the meanwhile the first respondent, namely, the Deputy Commissioner (Arrears Recovery Cell), in the Dept. , issued auction notice on 04.8.2005 for recovery of excise dues to sell two items of immovable properties including land mortgaged to IDBI, under Section 142(1)(c)(ii) of the Customs Act, 1962 (for brevity 'the Customs Act'), as made applicable for recovering central excise arrears due from the third respondent. The auction was scheduled on 10.8.2005. Assailing the same, 1 Initially IDBI was established under the IDBI Act, 1964 which stands repealed by Industrial Development Bank (Transfer of Undertaking of Repeal) Act, 2003. IDBI filed instant writ petition seeking invalidation of the auction notice.

(3.) This Court as interim measure, on 10.8.2005, restrained the first respondent from confirming the sale in favour of the highest bidder but allowed the auction sale. The first respondent moved an application being WVMP No. 979 of 2006 for vacating the interim order and also filed counter affidavit. This Court passed an ex parte order on 24.8.2006 vacating the interim order. The petitioner moved WPMP No. 23044 of 2006 to set aside the ex parte order, which is also listed along with the main writ petition. In the mean while, the first respondent conducted auction. One Sri A. Krishna Murthy, who became highest bidder by offering Rs. 30,50,000/-and in whose favour the auction was confirmed by the authorized officer of the Dept. , filed WPMP No. 34810 of 2005 to implead him as eighth respondent in the writ petition. There is no serious objection for his impleadment. Accordingly the application is ordered by this Court.