f} IN THE HIGH csoum' OF KARNATAKA AT a;.sm.;:;;a~;; DATED THIS THE 26TH DAY-'§¢§08x: BEFORE 1 4' % % THE HON'BLE MR. A S__BQ_Fi+\NI€A" W.P. NO. 104»41,!05 2.Q4'.74_,:QS- , 22713j~o_5 and '1csa93;o5 % % THE Ursioraéé' % ~~ ' REP BY THE C0MM:;ssIo.N'z3R' 01¢ 1c11s*i'0Ms c R BU[ELDIP+*€}., QU 1) % BANGAL_OR_E~-OV1 _ '. ~ PETITIONER (By Sri: R VEE%REIs:vDIeA' 'S,HA.i§Mh, ACGSC) AND;m V, , 1 «MINERALS Arm EXPORTS LTD '- T.P'Lo'1* NQ sage, 1 E't?IiViiviA%'§£\NDRA INDUSTRIAL ARA ANEKA; ., BANGALORE 3 2 KARNATAK STATE PWANCIAL CORPROATION A s 4_ RECOVERY DEPARTMENT , 'pKsF<:: BHAVAN, ' NO 1/ 1, THIMMAEAH ROAD NEAR CANTONMENT RAILWAY STATION BANGALORE RESPONDENTS
(By Sri: S G PANDIT, ADV. FOR R2)
A
i
I
THIS WRIT PETITION IS FILED UNDER AREr’tC:LEs’V:2’2*6
227 OF THE OORETITUTIOE OF EEOTA, “RRAEERT TO; » ‘
RESTRAIN THE R2 TO PROCEED WITH’ THE .-*’.UC’I’IL’.l’€ AS._i?’.ER..
THE ADVERTISEMENT PUBLISHED Es: EOOROREOI ‘E*’:E{EEv;~;E’EsA’
PAPER DTD. 7/2/05 VIDE ANX. A;’A:.IN1’I’HE E.LTERNATE–~.ToV
DIRECT THE R2 To 1R\.rOLvE T.LzE__ ‘PE’I’%’I’!O1’~i_E * {N ‘-
PROCESS OF THE SALE OF THE«–..ASSE’l’S OR THE’ R:…ANr> TO
PAY TO THE PETETIONER TEE DUTEES ‘TOE iii’ RRORT THE
SALE PROCEEDS OF THE ASSETS OR THE R1; _
‘.=.’..-=9. Re. M-“-
BETWEEN ”
RARRATARA ST}’xTig21A’EFiE€Ai€Ci?TL CO.E*PO’I-2″A’i*i(3N
No.1/1,TH1M A;1AR~R,OAE,;._ ” ‘
B 2 A A ‘
REP. BY. ITS _GENER;:?-EL _MA_NA_NGEI-3,.
AR DEt;’ARTME§?T_f _ .
PETITIONER
£Ey Sri: O. «PANE)i*f’fA~!3 V;!.: ‘
AND f’ ‘V
. , 1 OF 1NEt’AWEi1NIsTRY OF FINANCE
V _ DEPARTMENT OF REVENUE
‘ AR_}$’:’3,_ E-Y +.If_I’.’~;-f… SECRETARY
V ‘ DEPUTY COMMISSIONER OF CUSTOMS
ct;sTO–Ms DIVISION.
N029/2, BASAWESHVARA BLDG.,
OREEOENT ROAD,
” * BANGALORE 56 0001
‘JOINT COMMISSIONER OF CUSTOMS
CUSTOMS DIVISIN.
2912 BASAWESHWARA E3UILD!NG
CRESCENT ROAD,
BANGALORE 560 001
X
‘1»
4 {W8 NATURAL STONE EXPORTS LTD
NO.197, 2ND FLOOR
v MAIN, em (moss
GANDHINAGAR, : ‘
BANGALORE 560 009 .. — .
REREBY ITS V
wzm’ PET!T!QN 13 P’.I~LED–.U’E*»’ ‘
‘I’ BE A .
227 OF’ T E coNs’rITU’I’i~o_N OF 1N%Dm..,F’wITH PRA ER ‘P0;
QUASH THE 29.11.2004 VIBE
ANX-C PASS D BY THE R2 AND jAD:DE.:x1Du’M, DATED 17 5.2004
VIBE 1=.t~.~.,s..~’..9:.1:*.- BY -_ V
W.P. NO. 22*ri53j%2ev’as
UNION’-Qr«’.mDiA–“,–~.._ ‘ V ‘ –
REP BY ‘ziHE4’c0MtviisLsi0siEA:a QF CENTRAL
EXCISE, MYSORE’CO’MM,ISS[ONERATE
S16; 32, VINAYA MARGA ‘ ~
SIDDI-‘IARTHA L.AY’c~;u”r
570 ….. PETITIONER
(Esy, _V:RVAX(E.E§R–E_NDRA SHARMA, ACGSC}
A’N.I’) ‘:«
i~o ‘4
1 5.! ‘SUN ENGINEERING WORKS
PLOT NO.10, KRS ROAD
* 4_ METAGALLI POST
MYSORE – 5’70 016
KARNATAKA STATE FINANCIAL CORPORATION
RECOVERY ~ I DEPARTMENT
KSFC BHAVAN
NO.1/1. THIMMAIAH ROAD
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NEAR CONTONMENT RAILWAY S’I’A’I’iON
BANGALORE – 560062 ‘
{By Cw. PANDIT, ADV. FOR R2)
THIS WRIT PETITION IS F11..I;:Q”u:4£)§.§R AEEICLES 2§6–.
227 OF THE CONS’l’I’I’U’I’ION .C’F._ INDIA, WITH S£i”?I”-EAYERQ TO;
DIRECT 1:32 TO PAY TD ‘1’!-IE PE’i’ITl@_NER ‘rg;E’AMoui»1T”oE*’THE ” ‘
CENTRAL EXCISE DUTIES ALQNG WITH “ENTEI-§ES’I’ As
ADJUDICATED AND PA\.{.A..B-I.-E BY. no: AS
THEY ARE IN POSSESSION or» THE___AMOLJNI’ REALIZED BY
SELLING THE ASSETS OF’ 531.’ 2
ma. no. 108:9&:_(fi~1)0Ei;’_A
BETWEEN :; V _
UNIONSOESiN”D1A’ ?:_;;._ ,
REP 83:’ fiivns
cRBu:Ln:m S
‘SROAD,.’BnivG Lam:-.:S ?F.-.””E”i’i’i-.”)fi’E’:%
1, ” S. vafitziis WEAR wr um
– _ , Nc>’a75.. F51′ FLOOR, 1’» STAGE
‘ ruplizmaaan. BANGALORE
2 .. KARNATAKA STATE FINANCIAL CORPORATION-
F£E’COVERY.- I DEPAE’l’MEN’l’
‘ KSFC BHAVAN; N0 1/ 1. “l’HIMMAIAH- ROAD
NEAR CAN’l’ONMEN’!’ RAILWAY STATION
BANGALORE
3 STATE BANK or mum
RECOVERY AND REHABlI.’l’I’A’l”l0N BRANCH
1
1,3
4FLO0R,RESIDENCYPLAZA o-
RESIDENCY ROAD,BA…G_AL.’.RE
(By Sri: BIPIN HEGDE, gov. . -12 P2
Sri: x mwznsn, ADV. won R3) *
ms wan’ PETITION 1s»m.Eo U149}-33 Aie;’ricL3..sVo2é6 a.
227 on ml-.2 GQ!~!8T!’!’U’I’!ON osroomsosa. -W93 Pfi~’\’r”ER T0;
DIRECT Tl-IE R2 AND 3 TO PAY’-.’l’O_’I’HE opmnoncn THE
A-MQUN!’ av sf: s.-33.2 as ‘z”‘:-EE 0″‘ “HE
R1, mwnnns THE CUS?I’0MS.’DU.ES;~«..DIRf3CT THE R2 AND 3
PAY THE !!!’!’ERE-9′!’ 0!.’ THE 8333 §i5€GU?U11-Ffififi THE ‘EH3 07*’
REALIZATION or THE same air THEM. o
bl
These vqxiaé; Paatitionaj’ on ibr Pmhm1na1y’ ‘
h”-‘*§;’ fin day. j§.”-vou1ft”i’nm’ic the following :
Th-” rank of parties am diifbrent in
as such they are refcned to by their
so of clarity.
.o s In W.P.No.20474/O5, the Karnatalca sum:
‘ Corporation (ibr short the ‘KSF’C’) is before this
seeking for issue of writ of to qum.._…..h the
” Attachlncmt _1rd._.r .-lat…-d 29. 1 1.2% bem””‘iu§
‘L
VI’!
‘
0
Ne.c..Ne.vm/43/205/2001 EOUV, which’ is
Annnxurre-C to the petition
17.6.2004, which is impugned at _
and alas the %”‘-.rrris-iaireri ‘respectively are
to pay the of excise dues and
custxanra f along with interest as
adjudicarttzgjl {he respective respondents in
the In W.P.No. 10898_/O5, a similar
% ” ‘ehee:ieh.reeie’yy-arse sought against the State .F.i:_-I_.l: -1′ !nJ.:’.a
of _f th.-5-3. macs the .a%t’um'”‘ ruu–“‘:.Tix’
have; Vbt_=..-_.r; in the m’-fl’-‘urive fifififiirs with regard to
quantiim “f -“(rant payable by the defaullnrva to both
of india as well a the KSFC, each of the factual
demure need not he advcrted to ‘m these petition einee
” eeeenaeny what is required to determine in these petitions is
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with Iegaltl to the position of law relating to pmo:
eueh claim and the limited facts leading-thelfitot” ‘T
4. In this Iegamd. it
India that their dues in the _-..!:.VI.,-ca 911d
M: -W-M -‘-“~’-*2?-p… as Wei} as the
State ea.-eat -f advanced by
them to created over the
pmpertyflepf have precedence over
such ciaims, A’
5 51. _ 01hthVes’e.’:1iv.a’i1 eontentions, I have heard Sri S.G.
V. for KSFC, Sri Vee1e1_1c_!::_a. Et’-h_a.fl.I.1.a.,
t.1t-famed Qt.-.1;t_n.=I_l Government Standing Gotta”!
. *..1**-ii:-:c’i ,c:_t*m1n*’i who aiso represents the K
2-;p}.=.-:4-fig. for ‘tl=.e Uni.-‘.=n ef India and 8:11 nipin Hegde,
6. Having heard the respective learned counsel, 1 have
‘4 perused the writ papers.
.1
Union than under the (_1uet._ms_a A-_.t __I1_ t.|1_. -ientra..
7. In a matter of this nature, before
the limited facts involved in the 1ea’pe”*ctive be V
appropriate to understand the ._
the Pleoedence of a D31, LI’ ovrffjfillch 513111;: 0 ; “.’sinot_l;-:
0 cg u1e.f?u’nion of India white
I-
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ciaiming that have ‘ouch dues have
placed Supreme Court
in the VQEIIKHABHAI PRABHUDAS
PARElitH £5: – (2000) 5 sec 694. The
foe ofindia by placing reliance on
the to contend that the dues to the
no
onwnsolaw as crown d”e’s ‘””‘w th
Bum” W __e to the Ccntrai Government. Thezefore, the
‘ Union. tlndia would have precedence over all claims.
8. On the contrary, on this legal contention
advanced, Sli S.G. Pandit, leamed counsel for the KSFC not
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I2
. ‘the Bench having benefit of the eelid 911:! _.r, it I’-
only distinguished the said judgment to eonmdd
cimumstanees under which the V
rendered does not indicate the ._
Supreme Court. has in fact fer ” V
flu .3 wall hg _ hr 1′ ;H3rH»nt”.nF nan..”a.e-g-e.m;’5-1 C 3
9. I need not advert
to eeneidee since the leamed
for my notice a judgment of the
Divieioneeeeeh er ‘High Court, wherein almost
all the deeisien-sApn”‘fl1ie legal aspect has been considered by
in
-an I the said cider ta Hl’.:dBI’fs’u’$’1d the
\-1’«w_-0-‘Iv’
J.I…… I”\£__’_.1___. I”k__ ._
t:|u’t”i.!.v'”””‘ -‘.j_r’.’~.’sia.~;’?_’i4?.-‘:d:Ac”j’;u’-3-A 1?” Lu 1.: mun ch of the Bombay High
10. A perusal of the judgment passed by the Bombay
High Court in the case of SICOM LTD. –ve– THE UNION OF
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INDIA (nor) AND omens (W.P.No.4041/O2’liiier:icieti’
18.7.2006), would indicate that flie””Division iof–if’the’;
Bombay High Court after considering: the ,_
provision contained in the Aot ” V
and Customs Act as weh no aiew
a_i’r..-er noticing the of Court in
IEEIM B’i’wiK”s insofar as
the claim of 3; would be only
in IEBPQQF of in a matter where a
pmperfly ie .A of the State Financial
Corporation; the of such financier would take
precedence utlieiidtiea by the Union of India. In
. ‘tliinzegéziii, the pmfiieione of Customs Act __leo oon…i..e. .,.–
to hold any _.v_….t. L… Ur:-.io.. M mam woald have the
re?’ a;,-‘3.” of~re§f.oi.-“*”‘1g th” “mounts no arrears of hand revenue
– “~:in respeot of the other properties which are owned by the
who are due to the Union of India. Considering this
declaration of law, it is no more in doubt that the precedence
1
if
ll
of the claim for Union of India would be only
c1a1m’ ants are un-secured cieditorsvmlde-not it
11. One other aspeet_To£_ the’ “else ‘ ii
requires to be noticed, is that .§’_’.uet_Ln_e
1′ a similar set of -“‘5″*’u'”*!=n+’=”m;=a’ }*-“-‘~*._”i.’3e;%r” this E
w.P.r.’a. 2427e;e5,_ vvt;-zxeigzffime sought for
deciaring by the KSFC as
bad in rtgié emits. 12.2005 has refused
to tile the petitioner therein and the
said onier__ by a Division Bench of this
comfin ew.A;N§.2o?;o6 15;} order dated 3.3.2005.
‘ 1.1.. _.
nu; Be’f’eay High Court, the facts in the present case would
‘e’_1iai(e”‘ix: be briefly noticed to apply the said law declared.
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13. In this regard, it is seen that in W.P.No;’1Q4.i-ii ”
the mortgage of the properties was made. it
favour of the KSFC in the year 1989 endlvinl _
amount due to the Co1po1’ation,V:v’the piovhienell 29 ” it
of the State Financial oorporatieiioaet, gm-Asher: ‘Act’),
as meek-J.. by the on 1′–?_.3.1_m .
15
the same, in ioffi the Customs
Departznenth. is on
18.4.1953: jinx which has taken
place the ext earlier instance, the KSFC
was befonepilthie seeking for a
d]’1BCf£iGIl_ agein-switpl the Cfiuetoms Department to remove the
available in the shed since even
the s_Im__ 11!
customs Eilithu l.laflI.«l. ‘g.u
Hthe sailiwlziitnaehinezies alone. “i”hia Court had disposed of the
petition directing the customs department to
remove the machineries from the shetl seized by the KSFC.
‘4 Therefore, in this case, considering the fact that the property
I
52
had. been mortgaged in favour of the KSFC even-.f1:):iim: ”
dues claimed by the Customs Department.
the -law laid down, the direction _
cannot be granted.
in favimr U, 39,?” vfn .;.-«’}.”.T:.-‘.3.:.f19′:.’v’_ was
under : _TAc__’:e kk [2;2.2oo1 while the
atmchmeretiefieeeeg» in Iespect of
their xiweee __I.I.1 any event, Since the KSFO is
a to the customs departlnent
cannvpttake 1:i1’e,eAede1’1ce’ove1~t-11e same.
V’-,cJ1:s.:I1″”i_23 «r the A’t had been on 17.1.2003.
31″‘ the -procedure for dcterminafion ‘of: the dues; towards
Cientral Excise claims had commenced in -the year 2000, the
‘4 attachment was made in the year 2004. In this case, one
#6 .
other aspect which Icquires to be noticed 1 V’
detcrminafioil of the dues to the
the Department has in fact eifccted {he V’
by their letter dated 11.8.2OO¥iT,_V:””I3; flliéi
counsel for the KSFC would poi11t m__1t”Lhat vgzgyvinagmcr
in wmch the at*.9.chment.””hé=.shee1§’¢:flé駔=ed’is defective since
fhé pfficédure pmvicic for
attachment £iiéf&3§iiIi;era and even that
could be”c_l”o::::1e certificate and
notice the attachment made agaillst.
the KSFC§’cai1not othelwiae due to the law
dccletgtcl bfié-.n..’noticed above and therefore the
‘9.:~f««:1f(i’L”stV.tt.éi:’1111V’i’té’-.IA_1t is V1Vii.”lN-‘S11St.°.ll.’l1. able. In this case also since
– ‘~ofInd1’é1 .c__éImot claim p1ececic11ce over the claim of
16. I11 W.P.No.lO898/O5, the KSFC had initiated
action as far back in the year 1988. Since the attachment by
1
1’2.
15
the customs department is on 27.11.2003, it V’
dispute that the pmperty in qtlestionwas wt
in favour of KSFG. As such the Ksxy*eiis-.
and therefore would have pieeedcnsce iii v_iew_ef ” L’
down.
‘7 LI.-..’.. …
I. ‘.
hd
“fN*”e matter and
in ail these (gases iztvqtiestioxl is mortgaged
in faveu_1f”et’ department nor
the can claim precedence over the
KSFC.
” C.18″.* Howevertvddeiie aspect of the matter which rnequires
be ‘isdjfllat Lespeet of tl_1_. :_._Ist._I_n.s _1_Iai_.–, si_-…..
‘ ” ‘,J’m’me m’ the dues fiyable t.-3warJ.s i.”.1″”:’t..u*-”
“s .-:r”‘h to that extent, the Law declared
indicate that the customs department would have the
right to possess the said machineries and recover the
‘4 amotult by sale of the said machineries. As already noticed
1
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2271a,;o5 and 10893195 -!I;._- «1e_=.w.r-:;_ _
in W.P.No.10441/O5, as per the onier in ‘
the customs deparllnent have been>AdimctctlM i’t§m.t’ttV§«’.i¢hé’-V V’
machinerics from the shed and {if ” ._
machineries are not yet thnA”cuatotfida_’dé:§paz1:hent ” L’
would have the right tD;’IBpOS3§:fl£VVa:’ In
“”5
E.
13
“F
1:-‘
3a
‘Z.
:2
fl
:3
mgpect I _ date-.-£13 are -.10
‘§”‘t’.2-:fiu”n*pfu:’;r:d Vvmamtfifiefiefi siiii
iying in the tithe}. ahead” *3: been
sold by the: éubfion conducted, such
fight ‘§d’€’2″J,llS§3VVA:’Df tnacliincrics shall be worked out
by the Cttgtbms the KSFC mutually.
€’1’3″.= .111 of the same, the petitions in
*-I:
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n-mo. be gram
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SE
d_.r:+’.;-; nm.1′..,.1~;..
V…»
” ” 20. in “w.r=.No.2o474/’05, the attachment made
id} un–susta1na’ 1116 for the masons stated above. Accordingly
.4 the attachment older dated 29.11.2004 and the Addendum
1
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dated 17.6.2004 which are impugned at
are quashed.
In terms of the above, ” ‘
of with no order as to costs.
Sal.’
judge