Karnataka High Court
The State Of Karnataka vs Bangalore Dehydration And Drying on 21 March, 2022
Bench: Alok Aradhe, S Vishwajith Shetty
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF MARCH 2022
PRESENT
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR.JUSTICE S. VISHWAJITH SHETTY
W.A. No.275 OF 2021 (GM-RES)
IN
W.P. No.8860 OF 2020 (GM-RES)
BETWEEN:
1. THE STATE OF KARNATAKA
REP. BY ITS SECRETARY
DEPARTMENT OF EXCISE
VIDHANA SOUDHA, VIDHANA VEEDHI
BANGALORE -560 001.
2. THE COMMISSIONER OF EXCISE
DEPARTMENT OF EXCISE, 2ND FLOOR
VAKKALIGARA BHAVAN, HUDSON CIRCLE
BANGALORE-560 027.
3. THE DEPUTY COMMISSIONER OF EXCISE
OFFICE OF THE DEPUTY COMMISSIONER OF EXCISE
BANGALORE URBAN DISTRICT
(BUD-1), NO.26/4B, 3RD FLOOR
INDUSTRIAL SUBURB, SANDAL SOAP FACTORY
NEXT TO METRO STATION
WEST OF CHORD ROAD, 2ND STAGE
RAJAJINAGAR, BANGALORE - 560 055.
... APPELLANTS
(BY MRS. VANI H, AGA)
2
AND:
1. BANGALORE DEHYDRATION AND DRYING
EQUIPMENT COMPANY PVT. LTD.
A COMPANY REGISTERED UNDER THE
PROVISIONS OF THE COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
NO.15, 1ST PHASE, 2ND CROSS
PEENYA, BANGALORE - 560 058
THROUGH ITS RESOLUTION PROFESSIONAL
MRS. R. BHUVANESHWARI
HAVING CORRESPONDENCE
ADDRESS AS C-006, PIONEER PARADISE
24TH MAIN ROAD, 7TH PHASE
JP NAGAR, BANGALORE - 560 078
2. M/S. BT AND FC PVT LTD.
A COMPANY REGISTERED UNDER THE
PROVISIONS OF COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT NO.15
1ST PHASE PEENYA, BANGALORE-560 081
REP. BY ITS RESOLUTION PROFESSIONAL
SRI. P. SRIVATSAVA
NO.5, 5TH CROSS, NAVYA NAGAR
JAKKUR, BANGALORE-560 064.
... RESPONDENTS
(BY MR. S.S. NAGANAND, SR. COUNSEL FOR
MRS. SUMANA NAGANAND, ADV., FOR C/R1)
---
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO ALLOW THIS WRIT APPEAL. SET
ASIDE THE ORDER PASSED BY THE LEARNED SINGLE JUDGE OF
THIS HON'BLE COURT IN WRIT PETITION NO.8860/2020 (GM-
RES) ALLOWED ON 23/12/2020. GRANT SUCH OTHER ORDER OR
ORDERS.
3
THIS W.A. COMING ON FOR ADMISSION, THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
This intra court appeal has been filed against the order
dated 23.12.2020 passed by the learned Single judge, by
which writ petition preferred by the respondent No.1 has
been allowed.
2. Facts giving rise to filing of this appeal briefly
stated are that respondent No.1 is a company registered
under the provisions of Companies Act, 1956 and is the
owner of land and building situated at No.15, I Phase, II
Cross Peenya, Yeshwanthpura Hobli, Bangalore. The
Inspector of Excise Department on 21.96.2010 conducted an
inspection of the distillery, which was run by respondent No.2
in the premises of respondent No.1 and it was found that the
provisions of Rule 8 and 24 of the Karnataka Excise
(Distilleries and Warehouse) Rules, 1967 were violated. It
was further found that the State Government has suffered
loss of revenue to the extent of Rs.1,67,22,959/-. Pending an
enquiry, the State Government had seized and attached the
distillery of respondent No.2 including the land and building.
The respondent No.2 had availed various credit facilities from
the State Bank of India and the respondent No.1 was a
corporate guarantor and the land and building were given as
collateral security to cover the credit facilities availed by
respondent No.2. The respondent No.2 failed to pay the debt
and its loan account was declared as Non-Performing Asset
whereupon proceedings under the Securitsation And
Reconstruction Of Financial Assets And Enforcement Of
Security Interest Act, 2002 was initiated and the property
was put to auction on 21.12.2011.
3. The State Government objected to the public notice
for auction on the ground that the Bank had no right to sell
the property. Therefore, the action of the State Government
was challenged by State bank of India in a writ petition in
W.P.No.47391/2011. The learned Single judge of this court
by an order dated 13.04.2012 recorded an undertaking by
the State Bank of India to pay the outstanding amount due
to State Government and property was directed to be
released in favour of the Bank. The State Bank of India was
granted the liberty to sell the property and to recover the
amount due upon such release. Accordingly the writ petition
was disposed of.
4. Thereafter, an enquiry was conducted by Deputy
Commissioner (Excise) and by an order dated 24.08.2016.
The Deputy commissioner directed respondent No.4 to
deposit Rs.1,67,22,959/- within a period of one week. On an
application filed by an operational creditor, National Company
Law Tribunal Bangalore, appointed one Shri Pankaj
Srivastava as the Resolution Professional. The Resolution
Professional submitted a report to the National Company Law
Tribunal recommending liquidation of respondent No.4 which
is pending before the National Company Law Tribunal.
Thereafter, a request was made to the State Government by
the resolution professional vide communication dated
19.05.2020 to release the property of the Respondent No.1
from attachment/sale. The said communication failed to
evoke any response. Thereupon, an affidavit was filed on
behalf of respondent No.1, in which challenge was made to
the order of attachment of the property in question. The
Learned Single judge by an order dated 23.12.2020 has
allowed the writ petition. In the aforesaid factual background,
this appeal has been filed.
3. Learned Additional Government Advocate while
inviting the attention of this court to the order dated
13.04.2012 passed in Writ Petition No. 47391/2011 and
47484/2011 submitted that admittedly, the State Bank of
India has furnished an undertaking to pay the outstanding
excise amount to the appellant herein. However, the
aforesaid aspect of the matter has been not been
appreciated. It is also submitted that the order of attachment
has been passed in respect of respondent No.2 and the
Managing Director of respondent No.1 and respondent No.2
is the same which has not been appreciated by the learned
Single Judge.
4. We have considered the submissions made on
both sides and has a record. The learned Single judge has
held as follows:
20. Though time was granted on previous
dates of hearing, no material is produced on behalf
of the State Government to demonstrate that
petitioner owes any Excise dues.
21. Thus, it is clear that the State could not
have exercised its power under the Excise Act to
attach the property belonging to the petitioner
company. Therefore, the attachment is illegal and
unsustainable in law.
5. Even in this appeal, the learned Additional
Government Advocate was unable to rebut the findings
recorded by the learned Single judge. In absence of any
liability to pay the excise dues by the Respondent No.1 or in
the absence of any undertaking by Respondent No.1 to pay
the excise duty which was due from Respondent No.2, we do
not find any ground to interfere with the view taken by
learned Single judge. Needless to state that the possession of
the property in question shall be handed over to respondent
No.1.
In the result, the appeal fails and is hereby dismissed.
Sd/-
JUDGE
Sd/-
JUDGE
SS
