K.V. SASIDHARAN PILLAI V. UNION OF INDIA

WP(C)/17019/2014

AI Insights

The case involves a group of petitioners, employees and a contractor of M/s. United Tropical Veneers (Pvt) Ltd, challenging the SARFAESI notice and recovery certificate issued by the DRT to recover dues owed to the Indian Overseas Bank. The petitioners sought to purchase the property free of liabilities. The court had previously appointed an Advocate Commissioner to assess and sell the property due to conflicting claims from the State and the Bank over the property for tax and mortgage dues, respectively. The court's decision aimed to balance these claims while allowing the Company to benefit from the AMNESTY Scheme to settle its tax liabilities.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 722325 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 20-03-2018
• Assessment Year: misc
• Other Referred Cases: W.P.(C)No. 7216/2010, W.P.(C)No.21806/2008
• Laws Referred To: SARFAESI Act, Revenue Recovery Act, Kerala General Sales Tax Act, Recovery of Debts due to Banks and Financial Institutions Act, 1993
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: N NAGRESH; P K R MENON; JOSE JOSEPH
• Assessee Lawyers: P HARIDAS; P C SHIJIN
• Keywords: Amnesty Scheme; Property auction; Recovery Certificate; Revenue recovery; Sales tax arrears; SARFAESI Notice; Mortgage rights
• Section: 26B; 31(b)

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE TUESDAY, THE 20TH DAY OF MARCH 2018 / 29TH PHALGUNA, 1939 WP(C).No. 17019 of 2014 PETITIONER(S) 1 K.V. SASIDHARAN PILLAI, S/O.LATE K.N.VASUDEVAN PILLAI, KACHIRA HOUSE, PADINJANTTUMCHERRY, KAVIYOOR, THIRUVALLA. 2 K.I.ALEXANDER, S/O.LATE K.C.IDICULA, KONDORY HOUSE, CHAKOBHAGAM, KADAMANKULAM P.O., KALLOOPPARA. 3 M.N.VIJAYAN, S/O.M.N.NARAYANAN NAIR, MELEPARAMBIL HOUSE, PADINJATTUMCHERRY, KAVIYOOR P.O., THIRUVALLA. 4 P.V.BAIJU, S/O.LATE PHILIP D., JAMMATHU KALATHIL HOUSE, NJALIBHAGAN MURIYIL, KAVIYOOR P.O., THIRUVALLA. 5 P.M.BIJU, S/O.P.C.MATHAI, PALLADU HOUSE, NJALIBHAGAM, MURIYIL, KAVIYOOR P.O., THIRUVALLA. 6 ANIL KUMAR V.K., S/O.KARUNAKARAN PILLAI, VAZHAKALAYIL HOUSE, PADINJATTUMCHERRY, KAVIYOOR P.O., THIRUVALLA. 7 VINOD T.A. S/O.KUTTAPPAN NAIR, KEEZHMANCHERRIL PADINJARETHIL, PADINJATTUMCHERRY, ANJILITHANAM P.O., KAVIYOOR P.O., THIRUVALLA. 8 T.K.PRADEEP, S/O.T.G.KUTTAPPAN, KAKKANATTIL HOUSE, PADINJATTUMCHERRY, ANJILITHANAM P.O., KAVIYOOR P.O., THIRUVALLA. 9 RENJITH GOPAL, S/O.GOPALAKRISHNAN K.K., KUZHIYILETHU HOUSE, CHAKOBHAGAM, KALLOOPARA P.O., THIRUVALLA. 10 ABRAHAM MATHEW, S/O.LATE MATHEW ABRAHAM, MUNDAKKEL HOUSE, ERAVIPEROOR, VALLAKULAM EAST P.O. 11 ABRAHAM THOMAS, S/O.LATE P.A.THOMAS, PLACKEEZHU PURAKKEL VADAKETHIL HOUSE, ERAVIPEROOR MURIYIL, ERAVIPEROOR P.O., THIRUVALLA. ..2/- ..2.. WP(C).No. 17019 of 2014 12 P.V.JOSE, S/O.LATE PHILIP.D., JAMMATHU KALATHIL HOUSE, NJALIGHAGAM MURIYIL, KAVIYOOR P.O., THIRUVALLA. 13 K.N.KUTTAN, S/O.LATE K.P.NARAYANA PILLAI, KAILATHU VADAKKETHIL HOUSE, NJALIBHAGAM MURIYIL, KAVIYOOR P.O., THIRUVALLA. 14 T.P.SUNIL, S/O.THANKAPPAN P.K., PUTHENPURAKKAL PARAYIL HOUSE, PADINJATTUMCHERRY, ANJILITHANAM P.O., KAVIYOOR, THIRUVALLA. 15 K.J.ABRAHAM, S/O.LATE OOMMEN JOHN, KONKARA HOUSE, CHALAKUZHI MURI, PERUMTHURUTHY P.O., MUTHOOR, THIRUVALLA. 16 THOMAS MATHEW, S/O.LATE M.P.MATHEW, THYPARAMBIL HOUSE, KUTTOOR P.O., KAVIYOOR, THIRUVALLA. 17 T.C.ABRAHAM, S/O.LATE C.ABRAHAM, THUYPARAMBIL HOUSE, MEENTHALAKKARA, KATTODU, MANJADI P.O., THIRUVALLA. 18 N.A.SAMUEL, S/O.LATE PHILIPOSE ABRAHAM, NACHUMANNIL HOUSE, KATTATHAN, VELLIYARA P.O., RANNI. 19 JAYA P.J., D/O.LATE JANARDHANAN, ELAYADATHU PADINJARETHIL, ANJILITHANAM, PADINJATTUMCHERRY, THIRUVALLA. 20 ALI KUMAR M.M., S/O.MADHAVAN NAIR, MELAMPARAMBIL HOUSE, PADINJATTUMCHERRY, KAVYOOR P.O.,THIRUVALLA. 21 RAVIKUAMR T.K., S/O.T.N.KESAVAN, THATTUPARAMBIL HOUSE, NJALIBHAGAM MURIYIL, KAVIYOOR P.O., THIRUVALLA. 22 P.M.VARGHSE, S/O.LATE SEBASTINE PHILIP, JAMMATHUKALATHIL HOUSE, NJALIBHAGAM MURIYIL, KAVIYOOR P.O., THIRUVALLA. 23 DAVID K.S., S/O.LATE SEBASTINE PHILIP, JAMMATHUKALTHIL HOUSE, NJALIBHAGAM MURIYIL, KAVIYOOR P.O., THIRUVALLA. 24 SUNIL KUMAR K.S., S/O.LATE SUKUMARAN K.K., KANJIRAM KALAYIL HOUSE, NJALIBHAGAM MURIYIL, KAVIYOOR P.O., THIRUVALLA. 25 SUDHEESH S., S/O. V.B.SREEKUMAR, SREEBHAVAN, NJALIBHAGAM MURIYIL, KAVIYOOR P.O., THIRUVALLA. ..3/- ..3.. WP(C).No. 17019 of 2014 26 V.G.LAMBODHARAN, S/O.K.S.GOVINDHAN ACHARI, GOVINDAMANDIRAM, TRICKODITHANAM P.O., THRIKKODITHANAM MURIYIL, CHANGANACHERRY. 27 SANTHAMMA M.V., D/O.LATE VASU.P.K, MELAMPARAMBIL HOUSE, PADINJATTUMCHERRY, KAVIYOOR P.O., THIRUVALLA. 28 LALITHA SATHIYAM, S/O.BHASKARAN, KAKKANATTIL HOUSE, PADINJATTUMCHERRY, KAVIYOOR P.O., THIRUVALLA. 29 T.P.VISWANADHAN PILLAI, S/O.LATE KRISHNAPILLAI, THRIKKAMAPURATHUM HOUSE, PADINJATTUMCHERRY, KAVIYOOR P.O., THIRUVALLA. 30 GEORGE MATHEW, S/O.LATE W.M.GEORGE, WATTACHERIL HOUSE, THIRUMALLAPURAM P.O., ERAVALIPARA, THIRUVALLA. 31 THOMAS GEORGE, S/O.M.A.GEORGE, MANNATHU HOUSE, KOLLATHUR P.O., AIROOR, RANNI. 32 SAJEEV K.K., S/O.LATE K.K.KARUNAKARAN, ERUNNAKUZHI POLAKKEL, PADINJATTUMCHERRY, KAVIYOOR P.O., THIRUVALLA. 33 KOZHY JACOB, S/O.JACOB KOSHY, MURIGIYIL HOUSE, NJALIBHAGAM MURIYIL, KAVIYOOR P.O., THIRUVALLA. 34 EAPPEN MATHAI, S/O.LATE MATHAI PHILIP, PALAKKUNNEL PUTHENPARAMBIL, VALLAMKULAM EAST P.O., ERAVIPEROOR. 35 KARUN KUMAR THOMAS, S/O.LATE M.P.THOMAS, MAVELIMALAYIL, PADINJATTUMCHERRY, KAVIYOOR P.O., THIRUVALLA. 36 KURIEN THOMAS, S/O.LATE K.K.THOMAS, KONDOOR NJALIYIL HOUSE, CHAKOOMBHAGAM, KALLOOPPARA P.O. 37 LILLY THOMAS, S/O.A.T.THOMAS, KONDOOR NJALIYIL HOUSE, CHAKOOMBHAGAM, KALLOOPPARA P.O. 38 P.J.SEBASTINCE, S/O.LATE JOHN JOSEPH, POLACHIRA MANNEL, PADINJATTUMCHERRY, PAREKUNNATHARA, KAVIYOOR P.O., THIRUVALLA. 39 R.DAN BHADUR, S/O.LATE RAM BHADUR, UNITED TROPICAL VENEERS (QUARTERS), PADINJATTUMCHERRY, KAVIYOOR P.O., THIRUVALLA. ..4/- ..4.. WP(C).No. 17019 of 2014 40 GEORGE THOMAS @ TONY, AGED 36 YEARS, S/O.MOHAN K.VARKEY, PROPRIETOR OF TONY WOOD INDUSTRIES, PERUNTHA, CHANGANASSERRY. BY ADVS.SRI.P.HARIDAS SRI.P.C.SHIJIN RESPONDENT(S): 1. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF FINANCE, CENTRAL SECRETARIAT, NEW DELHI-110 001. 2. STATE OF KERALA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF TAXES, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001. 3. CHIEF COMMISSIONER OF INCOME TAX, ERNAKULAM, PIN-682 018. 4. INCOME TAX OFFICER, THIRUVALLA, PATHANAMTHITTA, PIN-689 101. 5. INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, PATHANAMTHITTA, PIN- 689 645. 6. COMMERCIAL TAX OFFICER, COMMERCIAL TAX OFFICE, THIRUVALLA, PATHANAMTHITTA, PIN-689 101. 7. INDIAN OVERSEAS BANK, REPRESENTED BY ITS AUTHORIZED OFFICER, ASSET RECOVERY MANAGEMENT BRANCH, CENTRAL OFFICE, ANNEX BUILDING, 1ST FLOOR, 763, ANNA SALAI , CHENNAI-600 002. 8. THE CHIEF MANAGER, INDIAN OVERSEAS BANK, SOW CARPET BRANCH, CHENNAI, PIN- 600 001. 9. THE DISTRICT LABOUR OFFICER, PATHANAMTHITTA-689 645. 10. UNITED TROPICAL VENNERS (PET.) LTD., KAVIYOOR, THIRUVALLA, REPRESENTED BY ITS MANAGING DIRECTOR-689 101. 11. SMT.BHARATHI SUDHARIYA, MANAGING DIRECTOR,UNITED TROPICAL VENNERS (PVT) LTD., 12-D, LINK LESHMAN APARTMENT, NEAR SOUTH OVER BRIDGE, VALLANJAMBALAM, KOCHI-682 101. ..5/- ..5.. WP(C).No. 17019 of 2014 12. P.P.THOMAS, KUZHIKKALA HOUSE, KARIKKOTTU, KUMBANADU, THIRUVALLA, PATHANAMTHITTA, PIN-689 101. 13. K.S.SIMON, KURUDAMANNIL, AYROOR P.O., THIRUVALLA, PATHANAMTHITTA DISTRICT, PIN-689 101. 14. THASILDAR, TALUK OFFICE, THIRUVALLA, PIN-689 101. 15. THE CHIEF COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, ERNAKULAM, PIN- 682 018. 16. THE COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, KOTTAYAM, PIN- 688 001. 17. THE EXCISE OFFICER, CUSTOMS AND CENTRAL EXCISE, KOTTAYAM, PIN- 689 101. R1 BY ADV. SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL R3,R4 BY SRI.P.K.R.MENON, SENIOR COUNSEL ADV. SRI.JOSE JOSEPH, S.C R2,R5,R6,R9 & R14 BY SPL.GOVT. PLEADER SRI.P.RAVINDRANATH (TAXES) R7 & R8 BY ADV. SRI.LEO GEORGE, S.C R10 BY ADVS. SRI.BINU MATHEW SRI.TOM THOMAS (KAKKUZHIYIL) SRI.ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS SMT.NISHA BINEESH R11 BY ADVS. SRI.K.M.ANEESH SRI.K.SANTHOSH KUMAR (KALIYANAM) SRI.ADARSH KUMAR SRI.BIJU VARGHESE ABRAHAM SRI.DILEEP CHANDRAN R15,R16 & R17 BY ADV. SRI.P.R.SREJITH, S.C ADV. SRI.THOMAS MATHEW NELLIMOOTTIL, S.C SRI.GIRIJAN P.T.(ADVOCATE COMMISSIONER) THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Msd. 22.03.2018 WP(C).No. 17019 of 2014 (B) APPENDIX PETITIONER(S)' EXHIBITS EXHIBIT P1. TRUE COPY OF THE AUCTION NOTICE DATED 01.02.2010. EXHIBIT P2. TRUE COPY OF THE REPRESENTATION DATED 16/2/2010 SUBMITTED BEFORE THE 3RD RESPONDENT. EXHIBIT P3. TRUE COPY OF THE NOTICE DATED 22/2/2010. EXHIBIT P4. TRUE COPY OF THE RECOVERY CERTIFICATE DATED 26/4/2010 OF DRT, CHENNAI. EXHIBIT P5. TRUE COPY OF THE JUDGMENT IN W.P.(C)NO. 7216/2010 DATED 4/10/2010 OF THIS HON'BLE COURT. EXHIBIT P6. TRUE COPY OF DELIVERY NOTE NO.CTVAE-C-0211013 DATED 31/1/2014. EXHIBIT P7. TRUE COPY OF DELIVERY NOTE NO.CTVAE-C-0211014 DATED 05/02/2014. EXHIBIT P8. TRUE COPY DELIVERY NOTE NO.CTVAE-C-0211016 DATED 05/02/2014. EXHIBIT P9. TRUE COPY OF DELIVERY NOTE NO.CTVAE-C-0211019 DATED 21/2/2014. EXHIBIT P14. TRUE COPY OF APPEAL NOS.E/543/2006-DB, E/544/2006-DB AND E/545/2006-DB FILED BEFORE THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH, BANGALORE. EXHIBIT P40(A): TRUE COPY OF THE RECEIPT OF PAPER PUBLICATION IN MALAYALA MANORAMA DATED 21.12.2017. EXHIBIT P40(B): TRUE COPY OF THE RECEIPT OF PAPER PUBLICATION IN HINDU DAILY DATED 23.10.2017. RESPONDENT(S)' ANNEXURES & EXHIBITS : ANNEXURE A: PARTICULARS REGARDING THE ARREARS DUE FROM M/S. UNITED TOPICAL VENEERS (PVT.)LTD. EXHIBIT R11(A): TRUE COPY OF THE APPLICATION FOR AMNESTY SCHEME MADE BY THE PETITIONER DATED 08.03.2018. ADVOCATE COMMISSIONER(S)' ANNEXURES : ANNEXURE A: NOTICE OF INSPECTION DATED 18.08.2015. ANNEXURE B: PANEL OF VALUERS DATED NIL. ANNEXURE C: REPORT OF MR.K.A.THOMAS DATED 05.10.2015. ANNEXURE D: BILL OF MR.K.A.THOMAS DATED 05.10.2015. ANNEXURE D1: FEE RECEIPT OF MR.T.HARI DATED 25.09.2015. WP(C).No. 17019 of 2014 (B) ANNEXURE E: WORK MEMO OF THE PETITIONERS DATED 20.08.2015. ANNEXURE F: NOTICE OF INSPECTION DATED 16.09.2015. ANNEXURE G: WARRANT OF THIS HON'BLE COURT DATED 11.08.2015. ANNEXURE H: TRUE COPY OF PUBLICATION OF SALE, PUBLISHED IN THE “MALAYALA MANORAMA NEWS PAPER”, RELEVANT PART. ANNEXURE I: TRUE COPY OF PUBLICATION OF SALE, PUBLISHED IN “THE HINDU” NEWS PAPER, RELEVANT PART. ANNEXURE J: TRUE COPY OF APPLICATION SUBMITTED BY MR.GEORGE THOMAS, THIRUVALLA. ANNEXURE K: TRUE COPY OF FILLED TENDER FORM, ALONG WITH SUPPORTING DOCUMENTS SUBMITTED BY MR.GEORGE THOMAS, THIRUVALLA. ANNEXURE L: TRUE COPY OF PROCEEDINGS OF THE ADVOCATE COMMISSIONER. ANNEXURE M: TRUE COPY OF STATEMENT OF ACCOUNTS, SUBMITTED BY THE BRANCH MANAGER, INDIAN OVERSEAS BANK, THIRUVALLA BRANCH. //TRUE COPY// P.S.TO JUDGE Msd. 22.03.2018 A. MUHAMED MUSTAQUE, J. ......................................... W.P.(C).No.17019 of 2014 .......................................... Dated this the 20th day of March, 2018. JUDGMENT Petitioners 1 to 39 are employees/retired employees of M/s. United Tropical Veneers (Pvt) Ltd (hereinafter referred to as 'the Company' for short). The 40th petitioner is a works contractor. They approached this Court challenging the SARFAESI notice and recovery certificate issued by the DRT produced as Exts.P1 to P4 to recover the amount due to the Indian Overseas Bank. One of the prayers in the writ petition is that the petitioners may be permitted to purchase the property without any liability after fixing the amount. The petitioners also impleaded the revenue authorities as parties in the writ petition. 2. As seen from the counter filed by the Special Government Pleader (Taxes), Rs.1,29,13,090/- is due as on 8.2.2018 towards the sales tax arrears from the Company. In view of the fact that the petitioners had come forward to purchase the property and there is an apparent dispute between the State and the Bank in regard to appropriation of the amount, this Court by an order dated 11.8.2015 appointed an Advocate Commissioner to assess the value of the property with the assistance of an approved valuer. That valuation report was placed before this Court. Thereafter by an order dated 10.11.2017, this Court by an agreement of the parties, appointed the same Advocate W.P.(C).No.17019 of 2014 2 Commissioner to sell the property. Thereafter the sale was ordered to be conducted as a revenue sale since an attachment was already prevailing as early as in 2008 effected by the revenue authority. Accordingly publication was taken out in Malayala Manorama daily and The Hindu daily news papers having circulation in all over the State. It was made clear in the order itself that the expenses for such publication shall be made from the sale proceeds. Thereafter the 40th petitioner purchased the property in auction. There were no other bidders. The 40th petitioner offered Rs.Four Crores and One Thousand as highest bid. 3. The Government had floated the AMNESTY Scheme to settle the liability of the defaulters of tax. The last date for applying for AMNESTY Scheme was on 30.9.2017. However, the last date for payment of the amount was on 30.6.2018. The Company has now come forward to avail AMNESTY Scheme. It is to be noted that the auction purchaser deposited the entire amount with the Indian Overseas Bank in a non lien account. 4. The Tahsildar is the seisin of the matter as he had initiated proceedings under the Revenue Recovery Act as early as in 2008. This Court appointed an Advocate Commissioner to sell the property in auction to avert the conflict of sale being initiated by the revenue as well as the bank. The parties have not raised any objection to such recourse. W.P.(C).No.17019 of 2014 3 5. In fact, the Central Excise Department raised a claim over the property for recovery of the dues. In a writ petition filed by the Indian Overseas Bank in W.P.(C).No.21806/2008, this Court declared that the Bank is having right to proceed against the property. The sale notice issued by the Department and challenged in that writ petition was quashed and set aside. 6. There are two rival claims. One is by the State and the other is by the Bank based on mortgage. The State would be satisfied, if the entire amount is settled under the AMNESTY Scheme, though the application was not filed in time. The State's right in terms of Section 26B of the Kerala General Sales Tax Act cannot be overlooked, but, at the same time, the Bank can also invoke mortgagee's right. The Bank's claim is referable to Section 31(b) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993. The conflict of claims backed by statutory provisions led to a dilemma in what manner this amount has to be appropriated. This Court is of the view that the present dilemma can be resolved, if the State is allowed to appropriate the amount towards the sales tax arrears by allowing the Company to settle the liability under the AMNESTY Scheme. It is to be noted that the Company had filed an application though belatedly for such relief. Therefore, treating that matter as settled under the AMNESTY Scheme, the amount due under the AMNESTY Scheme i.e., W.P.(C).No.17019 of 2014 4 Rs.37,11,210/- shall be released by the Bank in favour of Deputy Tahsildar (RR) within three days from today. 7. The amount due to the Bank is around Rs.Six Crores and Forty One Lakhs. The balance amount shall be appropriated by the Bank subject to any claim made by the Company for one time settlement. The Company has filed an application to set aside the sale with a prayer that they may be allowed to wipe off the entire liability within three months. Therefore, the Company's request as above can be safeguarded in I.A.No.1068/2018 by allowing them to set aside the sale provided that the Company pays Rs.Four Crores and One Thousand along with 10% interest from the date of deposit by the auction purchaser till the Company clears the amount of the auction purchaser. However, it is made clear that it has to be done within three months from today. If the Company pays the amount within time, the sale would stand set aside. 8. The actual expenses incurred by the petitioners i.e., Rs.4,07,804/- shall be released to them by the Bank. The balance amount would be appropriated by the Bank subject to one time settlement if any available. 9. In the event, the Company fails to clear this amount within the time granted by this Court, the sale shall be confirmed in favour of the 40th petitioner by the Tahsildar, Revenue Recovery, Thiruvalla. The Tahsildar shall also issue the sale certificate. The W.P.(C).No.17019 of 2014 5 Tahsildar shall also free to demand the actual expenses incurred. The Revenue Authority is entitled to recover the actual expenses incurred for initiating revenue recovery proceedings. In order to avoid the dispute, the amount is calculated as Rs.1,500/-, that shall also be given by the Bank in favour of Tahsildar, Thiruvalla. The Bank shall also ensure that the amount towards expenses shall be released to the petitioners without any delay. The sale certificate shall be issued under the Revenue Recovery Act on expiry of three months from today, if the Company fails to get the sale set aside within the time allowed to them. This writ petition is disposed of in the light of the stand and submissions made by the parties before this Court as above. No other points were urged before this Court. No costs. Sd/- A. MUHAMED MUSTAQUE, JUDGE. cl "