UCO BANK Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) THIS appeal has been directed against the judgment and order dated 21.1.2011 of the Presiding Officer of Debts Recovery Tribunal (DRT), Jaipur passed in Appeal No. 35/2004, Commercial Tax Officer v. UCO Bank & Others, whereby order dated 25.3.2004 of the Recovery Officer (RO) passed on the application of respondent No. 1 was set aside and the RO was directed to make payment of the dues of the Commercial Tax Department, State of Rajasthan out of the proceeds received from the sale of the properties of the CD firm, as was claimed by the respondent No. 1 in the application moved before the RO. The facts giving rise to this appeal, in brief, are that the appellant Bank had advanced certain loan facilities to M/s. Shri Mahesh Metal Works, a partnership firm, of which respondent No. 2 was a partner, on hypothecation and mortgage of certain properties. As me borrower firm failed to repay the loan, the appellant filed a suit for the recovery of the outstanding amount against the said firm, its partners and mortgagers before the District Judge, Ajmer, which was later transferred to the DRT, Jaipur on coming into force of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act) and was registered as O.A. No. 205/1996. During the pendency of the O.A., certain properties of the borrower firm lying at its immovable property were sold by auction for a sum of Rs. 16,42,917/ -. On 31.7.1996 respondent No. 1 filed an application before the DRT claiming first charge of the Commercial Tax Department of the State of Rajasthan over the aforesaid amount under Section 11 -AAAA of the Rajasthan Sales Tax Act, 1954, Section 50 of the Rajasthan Sales Tax Act, 1994 (for short, the RST Act) and Section 9(2) of the Central Sales Tax Act, 1965 (for short, the CST Act) on the ground that an amount of Rs. 50,75,450.08 was outstanding against the borrower firm as per tax assessment orders. The DRT, however, without making any order on that application disposed of the O.A. vide order dated 8.6.2000 and allowed it for the recovery of Rs. 95,52,995/ - along with pendente lite and future interest and cost with the observation that the realised amount of Rs. 16,42,917/ - would be adjusted against the decretal amount. A recovery certificate (RC) was accordingly issued and the RO initiated proceedings of RC No. 154/2000 for the recovery of the awarded amount. The respondent No. 1 again filed a similar application before fee RO on 25.2.2002 in the RC proceedings for the payment of the entire auction money claiming first charge over it The CH Bank disputed the claim of the respondent and the RO dismissed that application vide order dated 25.3.2004. Feeling aggrieved with that order, respondent No. 1 filed appeal (No. 35/2004) under Section 30 of the RDDBFI Act against it before the DRT along with an application for condonation of delay. The DRT allowed the condonation application as well as the appeal and set aside the RO's order with the direction, as stated above. The CH Bank, feeling aggrieved with that order, has filed this appeal.

(2.) I have heard Mr. Rakesh Tiku, learned Senior Advocate along with Mr. Hemant Gupta for the appellant and Mr. Vinay Sharma, who was representing Mr. Milind Kumar, Counsel for the respondent No. 1 and perused the record. Both the parties have also filed their written submissions.

(3.) IT has further been contended that the Bank had taken all the pains for the recovery of its outstanding dues against the borrower firm and the RC was issued as a consequence thereof, whereas respondent No. 1 made no efforts to recover its dues from its dealer and only waited to see for the outcome of the appellant's proceedings and when certain amount was realised by sale of the properties of the borrower firm, which was appropriated by the Bank and no longer remained the property of the firm, then he claimed the priority of charge over that amount, which is not tenable as he had no right to get such amount which had already been appropriated by the Bank. It has also been contended that the DRT had specifically ordered that the realised amount of Rs. 16,42,917/ - would be adjusted towards the payable amount and since it was accordingly appropriated, therefore, it could not be ordered to be refunded to respondent No. 1.