IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 29703 of 2004(J)
1. STATE BANK OF TRAVANCORE, PERUMANOOR
... Petitioner
Vs
1. THE TAHSILDAR (REVENUE RECOVERY)
... Respondent
2. GOPALAN NAIR, PROPRIETOR,
3. DEBT RECOVERY TRIBUNAL, ERNAKULAM
For Petitioner :SRI.M.PATHROSE MATTHAI (SR.)
For Respondent :SRI.THOMAS MATHEW NELLIMOOTTIL
The Hon'ble MR. Justice K.BALAKRISHNAN NAIR
The Hon'ble MRS. Justice M.C.HARI RANI
Dated :05/09/2008
O R D E R
K. BALAKRISHNAN NAIR & M.C. HARI RANI,JJ
==============================
W.P.(C)NO. 29703 OF 2004
============================
DATED THIS THE 5TH DAY OF SEPTEMBER 2008
JUDGMENT
Balakrishnan Nair,J.
The petitioner is the State Bank of Travancore. This writ
petition is filed by it challenging Ext.P5 notice issued by the first
respondent, Revenue Recovery Tahsildar proposing to sell an
item of property mentioned in the schedule to that notice in
public auction under the provisions of the Revenue Recovery Act
to recover the sales tax dues to the State. The petitioner
submits that the said property was already mortgaged to the
Bank as early as on 21-9-1994 as a security for a loan availed of
by the second respondent. Since the second respondent loanee
has defaulted, the Bank moved the Debt Recovery Tribunal and
obtained a decree for an amount of Rs.35,63,277,85 with future
interest at the rate of 9% per annum till realization. When the
recovery officer of the Debt Recovery Tribunal took steps to sell
WPC. 29703/2004 -2-
the property by issuing the sale proclamation, the first
respondent recovery Tahsildar issued Ext.P5 notice. The State
claims sales tax dues from 1994, which at present, will come to
about rupees one crore and twenty four lakhs. On the strength
of Section 26 B of the K.G.S.T.Act the State claims precedence
over other creditors. The point raised by the State is covered in
its favour by the Divison Bench of this court in Sherry Jacob v.
Canara Bank, 2004(3)K.L.T.1089. We are inclined to follow
that decision. But the learned counsel for the petitioner points
out that the said decision has been taken in appeal before the
Supreme Court and the matter is pending there. So ultimately if
the Apex court holds in favour of the Bank, appropriate
safeguards may be provided in the judgment enabling the
petitioner to pursue its claim against the State. The learned
Special Government Pleader for the revenue submitted that the
sale took place in February 2008 for an amount of
Rs.80,36,666/-. But in view of the interim order of this Court in
this writ petition, the sale has not been confirmed. It is not clear
WPC. 29703/2004 -3-
from the materials on record whether the Bank has been served
with notice regarding the above-said sale as per the direction of
this Court in another case and a circular issued by the State
Government pursuant to that judgment. The Bank is entitled to
get notice regarding the sale, so that it can also participate in it
and ensure that the property is sold at reasonable price.
2. After going through the decision of this Court in Sherry
Jacob’s case (supra), we are inclined to follow the same.
Accordingly, the writ petition is liable to be dismissed. But it is
made clear that if the Apex court holds in favour of the Bank
reversing the decision of this Court in Sherry Jacob’s case
(supra), this judgment will not stand in the way of the petitioner
proceeding against the State to recover the amount due to it
subject to a maximum of the amount received by the State
pursuant to the revenue sale. In view of this judgment, the
competent authority will take up the question of confirmation of
the sale. While the matter is considered, notice should be
issued to the Bank and it shall be afforded an opportunity of
WPC. 29703/2004 -4-
being heard. If the Bank feels that the sale has not been made
at the market rate, it can raise its objection and if it is over-
ruled, it can pursue its remedy against it. Subject to the above
rights reserved in favour of the petitioner, the writ petition is
dismissed.
Sd/-
K. BALAKRISHNAN NAIR,
JUDGE
Sd/-
M.C. HARI RANI
JUDGE
ks. TRUE COPY