PUNJAB NATIONAL BANK MADRAS Vs. CHALLAPALLI SUGARS LTD

JUDGEMENT

(1.) Short but an interesting question of law that emerges for adjudication in this appeal is : Whether the right to recover the money lent under a contract by a nationalised bank to a sugar factory is subject to the provisions of Section 19 (4) of the Andhra Pradesh Sugarcane (Regulation of supply and Purchases) Act, 1961 (Act XLV of 1961) hereinafter referred to as "the Act and Rule 39-A made thereunder though not engrafted therein.

(2.) To decide this point, shortly stated the facts not in dispute are : The appallant, Punjab National Bank, its branch at Madras, hereinafter referred to "the Bank" entered into an agreement with the Challapalli Sugars Limited, the first respondent, hereineftar called "the factory", to extend several monetary facilities including grant of key-loan on the factory pledging the sugar produced or to be produced by it as security for due discharge thereof. Pursuant thereto, the factory, executed pledge-documents and the bank lent several sums. As and when the sugar was produced by the factory, it was stocked in the godowns kept under the custody of the bank. The sugar thus stored stands first charge for the bank to realise the amounts lent. It is not necessary to state the antecedent legal proceedings but suffice to start with the action initiated by the Revenue Divisional Officer, Machilipatnam, the 3rd respondent, by serving a notice dated September 1, 1982 by affixure on the godown intimating that attachment of sugar stored in the godowns would ensue for recovery of Rs. 1,06,80,579- 86 Ps. due and payable by the factory under various heads, followed by attachment and seizure by breaking open the locks, counting the sugar bags stocked in the godown under a panchanama and keeping them under his lock and seal. The bank estimated the stock to be 54,849 quintals and its value at Rs. 1,75,10,000/-. The details of the amount due as mentioned in the notice are: Rs. 8400, 387-75Ps. towards the sugar cane price payable to the cultivators for the crushing season 1981-82 and intended to be recovered as arrears of land revenue ; Rs. 8, 83,152-06 Ps. towards purchase tax for the year 1981-82 and P.s. 18,97,040-03 Ps. towards arrears of purchase tax for the year 1974-75.

(3.) Assailing the above action, the bank has filed writ Petition No. 6081/82 for a mandmus to direct the respondents 2 and 3 viz , the Government of Andhra Pradesh and the Revenue Divisional Officer to desist from recovering the dues by the seizure and sale of the sugar pledged to the bank. Our learned brother, Jeevan Reddy, J. Partly allowed the writ petition holding that the arrears of purchase-tax of Rs 18,97, 040-03 Ps. for the year 1974-75 does not take precedence over the bank's claim though recoverable as arrears of land revenue. He disallowed the relief to the extent of purchase tax of Rs. 8, 83,152-08 Ps. for the year 1981-1982 & Rs. 84,00,387-75 Ps. towards sugarcane price payable to the cultivators. The bank is not assailing in this writ appeal with regard to the right of the State Government to recover, Rs. 8,83, 152-08 Ps. towards the purchase-tax for the year 1981 -82 in view of the first charge statutorily created under Section 21 (3) of the Act. The Government did not file any appeal to the extent allowed. Out learned brother gave the following directions to the third respondent :