SPEEDCRAFTS PRIVATE LIMITED Vs. STATE OF BIHAR

JUDGEMENT

(1.) This writ application has been filed under Articles 226 and 227 of the Constitution of India in which the petitioner prays for issuance of a writ of certiorari quashing the orders contained in annexures 1, 2, 3 and 4. Annexure 1 is the order dated 27th January, 1975, passed by the certificate officer (respondent No. 6) rejecting the objection of the petitioner and holding that the certificate dues in the certificate proceeding which has been initiated for realisation of the arrears of sales tax, will be realised from the property which has been transferred to the petitioner by the Bihar State Financial Corporation, Patna (respondent No. 7). Annexure 2 is the appellate order passed by the Collector, Patna (respondent No. 3), dated 7th February, 1978, by which he has rejected the appeal on the ground that the appeal was not maintainable as 40 per cent of the certificate dues have not been deposited. Annexure 3 is the order of the Commissioner, Patna Division (respondent No. 4), dated 10th March, 1980, in which he has found the order of the certificate officer on all the points to be correct. However, he held that the appeal before the Collector was maintainable and 40 per cent of the certificate dues was not required to be deposited. Annexure 4 is the order passed by the Member, Board of Revenue (respondent No. 2), dated 16th July, 1981, by which the contentions of the petitioner have been rejected and the judgment of the authorities below have been affirmed.

(2.) In order to appreciate the points raised in this writ application, it will be necessary to state the salient facts which are not in dispute. The property in the hands of the petitioner originally belonged to the Hindustan Bicycle Manufacturing and Industrial Corporation Limited ("H.B.C" for short). It appears that sales tax for different periods were not paid by the said H.B.C, and accordingly, for realisation of the sales tax for the period 1947-48 to 1957-58, several certificate cases were initiated on requisitions filed by the Assistant Commissioner of Commercial Taxes. It has not been disputed before this Court that the notice under Section 7 of the Bihar and Orissa Public Demands Recovery Act ("P. D. Act" for short) was served on the H.B.C, sometime before 9th April, 1956. It is also not disputed that on 14th July, 1958, the said H.B.C. sold the property in question under a registered deed to the v Hindustan Vehicles Limited ("H.V.L." for short). On 5th September, 1959, the H.V.L. took a loan of Rs. 10,00,000 (ten lacs) from respondent No. 7, an authority constituted under Section 3 of the State Financial Corporations Act, 1951 (63 of 1951), hereinafter called "the Act", and mortgaged the said property to respondent No. 7 as security for the said loan. It is said that it was an English mortgage and was made on 5th January, 1959. Some certificate cases were also filed by the sales tax department against the H.V.L. for realisation of sales tax dues for the period after the aforesaid transfer by the H.B.C. to the H.V.L. The H.V.L. is said to have made default in payment of the corporation dues, and therefore, on 27th November, 1971, in purported exercise of the powers conferred under Section 29 of the Act, respondent No. 7 sold the property to the petitioner under a registered deed in which in Clause 6 it was mentioned that the said property, which is being conveyed, is free from all charges, liabilities, encumbrances and claims and the Financial Corporation (respondent No. 7) shall keep the purchaser indemnified against the same. This property was purchased for a consideration of Rs. 15.20 lakhs. This sale is said to have been conducted by the Financial Corporation (respondent No. 7) by inviting tenders and the petitioner being the highest tenderer, the property was sold to it.

(3.) It will be relevant to state here that after the transfer by the H.B.C to the H.V.L., fresh notices were served upon the latter, which on receiving them filed objections before the certificate officer. The said objections were allowed by the certificate officer. The requisitioning officer thereafter filed appeals. Those appeals were allowed on 18th September, 1970, by the Collector and the certificate cases were allowed to proceed for realisation of the certificate dues against the H.V.L. It was further held that the H.V.L. was the transferee under Section 20 of the Bihar Sales Tax Act, 1947, from the H.B.C., on 14th July, 1958, and therefore, the certificate dues are realisable from the property transferred to H.V.L.