Kerala High Court
Bank Of Baroda vs District Collector on 13 July, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
TUESDAY, THE 13TH DAY OF JULY 2021 / 22ND ASHADHA, 1943
WP(C) NO. 10107 OF 2021
PETITIONER/S:
1 BANK OF BARODA
ROSARB, ERNAKULAM, PALLIMUKKU, M.G ROAD, ERNAKULAM,
REPRESENTED BY ITS CHIEF MANAGER
2 ANSAR A.S,
S/O. ABDUL KHADERKUNJU, MANNANCHERRY P.O, ALAPPUZHA
DISTRICT PIN 688 538
3 ARIF A.S,
S/O. ABDUL KHADERKUNJU, MANNANCHERRY P.O, ALAPPUZHA
DISTRICT PIN 688 538
BY ADVS.
K.M.ANEESH
SRI.K.SANTHOSH KUMAR (KALIYANAM)
SRI.ADARSH KUMAR
SRI.BIJU VARGHESE ABRAHAM
SRI.DILEEP CHANDRAN
SRI.SHASHANK DEVAN
RESPONDENT/S:
1 DISTRICT COLLECTOR
COLLECTORATE, CIVIL STATION, ALAPPUZHA, PIN 688 001
2 SUB REGISTRAR,
MARARIKKULAM SUB REGISTRARS OFFICE, MARARIKKULAM P.O,
ALAPPUZHA DISTRICT PIN 688 522
3 VILLAGE OFFICER,
MANNANCHERRY VILLAGE, MANNANCHERRY P.O, ALAPPUZHA
DISTRICT PIN 688 538
4 AGRICULTURE INCOME TAX AND SALE TAX OFFICER,
STATE GENERAL SALES TAX DEPARTMENT, MINI CIVIL STATION,
WP(C) Nos. 6348 and 10107 OF 2021
2
ALAPPUZHA 688 013
5 THAHSILDAR (REVENUE RECOVERY)
AMBALAPUZHA, KIDANGAMPARAMP, ALAPPUZHA DISTRICT
PIN 688 013
BY ADV SHRI.K.P.JAYACHANDRAN, ADDL. ADVOCATE
GENERAL
OTHER PRESENT:
SRI.JAFAR KHAN.Y, GP
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 13.07.2021, ALONG WITH WP(C).6348/2021, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) Nos. 6348 and 10107 OF 2021
3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
TUESDAY, THE 13TH DAY OF JULY 2021 / 22ND ASHADHA, 1943
WP(C) NO. 6348 OF 2021
PETITIONER/S:
1 BANK OF BARODA
ROSARB, ERNAKULAM, PALLIMUKKU, M.G.ROAD,
ERNAKULAM REPRESENTED BY ITS CHIEF MANAGER.
2 RAJ TRADERS, REPRESENTED BY ITS MANAGING
PARTNER MR.JANNATHUL FIRDOUSE
OPPOSITE FEDERAL BANK, MANNANCHERRY P.O.,
ALAPPUZHA DISTRICT, PIN- 688 538.
BY ADVS.
K.M.ANEESH
SRI.K.SANTHOSH KUMAR (KALIYANAM)
SRI.ADARSH KUMAR
SRI.BIJU VARGHESE ABRAHAM
SRI.DILEEP CHANDRAN
SRI.SHASHANK DEVAN
RESPONDENT/S:
1 DISTRICT COLLECTOR
COLLECTORATE, CIVIL STATION, ALAPPUZHA, PIN -
688 001.
2 SUB REGISTRAR, MARARIKKULAM SUB REGISTRARS
OFFICE
MARARIKKULAM P.O., ALAPPUZHA DISTRICT, PIN -
688 522.
3 VILLAGE OFFICER
MANNANCHERY VILLAGE, MANNANCHERRY P.O.,
WP(C) Nos. 6348 and 10107 OF 2021
4
ALAPPUZHA DISTRICT, PIN - 688 538.
4 STATE OF KERALA
REPRESENTED BY ITS SECRETARY TO GOVERNMENT,
DEPARTMENT OF TAXES, SECRETARIAT,
THIRUVANANTHAPURAM - 695 001.
5 THHSILDAR (REVENUE RECOVERY)
AMBALAPUZHA, KIDANGAMPARAMP, ALAPPUZHA
DISTRICT, PIN - 688 013.
6 ADDL. AGRICULTURE INCOME TAX AND SALE TAX
OFFICER
SOUGHT TO BE IMPLEADED
BY ADVS.
SHRI.K.P.JAYACHANDRAN, ADDL. ADVOCATE GENERAL
GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 13.07.2021, ALONG WITH WP(C).10107/2021, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) Nos. 6348 and 10107 OF 2021
5
P.V.KUNHIKRISHNAN, J.
===================
WP(C) Nos. 6348 and 10107 OF 2021
===================
Dated this the 13th day of July 2021
JUDGMENT
These two writ petitions are connected and
therefore, I am disposing these two writ petitions by a
common judgment.
2. I will narrate the facts in WP(C) No.6348/21
first. First petitioner in this writ petition is a
nationalized bank. According to the petitioners, on
01.03.2011 Mr. Gopalakrishnan Pillai, S/o Bhaskara
Panicker and Rajalakshmi, D/o Gopalakrishnan Pillai
created mortgage of their property having 35.98 Ares
of land and building in Re.Sy.No.214/1/2, 214/1/3 and
214/03/2 (old Sy. No. 281/11) in Mannachery Village,
Ambalapuzha Thaluk, in Alappuzha District as a
WP(C) Nos. 6348 and 10107 OF 2021
security for a loan availed by them from the
Alappuzha Branch of the 1st petitioner. Subsequently,
the above loan account was transferred to 1 st
petitioner branch at Ernakulam for administrative
purposes. According to the 1st petitioner, there was
default in repaying the loan amount and
consequently, the proceedings under Securitsation
and Reconstruction of Financial Assets &
Enforcement of Security Interest Act, 2002 (for short
SARFEASI Act) was initiated. Ultimately the
mortgage property was sold by the petitioner under
the provisions of the SARFEASI Act. Ext.P1 is the sale
certificate dated 29.05.2020 issued by the 1st
petitioner in favour of the 2nd petitioner.
3. While the petitioner was continuing the
SARFEASI proceedings, the Village Officer,
Mannachery village issued a communication to the 1 st
WP(C) Nos. 6348 and 10107 OF 2021
petitioner stating that, there are sales tax arrears
from the borrowers and they have attached the
property of the borrowers for the recovery of sales
tax arrears. Ext.P6 was issued to the 1 st petitioner.
Ext.P7 is the letter issued by the District Collector to
the 1st petitioner dated 30.11.19 which also contain
the same version in Ext.P6. In Ext.P7, the District
Collector also stated that, the bank should vacate the
property and otherwise, appropriate steps will be
taken. Challenging Ext.P6 and P7 the petitioners filed
WP(C) No. 35082/2019. This Court after considering
Section 31B of the Recovery of Debts and Bankruptcy
Act, 1993 and Section 26 E of the SARFEASI Act was
pleased to quash Ext.P6 and Ext.P7. Ext.P2 is the
judgment. Subsequently, the petitioners approached
this Court by filing WP(C) No. 12678/2020. Ext. P3 is
the judgment in which this Court directed the
WP(C) Nos. 6348 and 10107 OF 2021
petitioner to produce the sales certificate before the
Sub registrar, Mararrikulam, Sub registrar office to
register the sales certificate. It is submitted that, the
petitioners subsequent to Ext.P2 judgment
approached the second respondent for registration of
sales certificate. Exts.P2 and P3 judgments were
produced before the 2nd respondent. However 2nd
respondent informed the petitioner that, 2nd
respondent is not a party to Ext.P2 judgment and
hence they cannot accept the document for
registration until a communication from the 1 st
respondent is received with respect to the judgment
of this Court. Ext.P4 is the letter issued by the 2 nd
respondent to the 1st respondent. Thereafter, Ext.P5
communication was issued by the District Collector,
Alappuzha to the 5th respondent-thahsildar to initiate
revenue recovery proceedings. At that stage, this writ
WP(C) Nos. 6348 and 10107 OF 2021
petition is filed with following prayers.
"i. Issue a writ of mandamus or other
appropriate writ, direction or order directing
the 2nd respondent to delete the entry of
Revenue recovery attachments in their records
with respect to the property having 35.98
Ares of land and building in Re.Sy.No.214/1/2,
214/1/3 and 214/03/2 (old Sy. No. 281/11) in
Mannachery Village, Ambalapuzha Thaluk, in
Alappuzha District.
ii. Issue a writ of mandamus or other
appropriate writ, direction or order directing
the 2nd respondent to to register the original of
Exhibit P1 Sale certificate issued by the 1st
petitioner in favour of the 2nd petitioner.
iii. Issue a writ of mandamus or other
appropriate writ, direction or order directing
the 3rd respondent to effect the transfer of
registry of the properties covered by Exhibits
P1 Sale certificate in favour of 2 nd petitioner
and to permit them to pay property tax in their
name after the registration of original of
Exhibit P1 Sale certificate is completed.
iv. To grant such other reliefs as may
be prayed for in the circumstances of the
case."
4. In WP(C) No. 10107/2021 also the
contentions of the petitioners are similar. In that
case also, the Mr. Gopalakrishnan Pillai, S/o Bhaskara
Panicker and Rajalakshmi, D/o Gopalakrishnan Pillai
WP(C) Nos. 6348 and 10107 OF 2021
mortgage yet another property for the same loan and
that property was having 6.85 Ares of land with a
building in Re. Sy. No. 214/2, (old Sy. No. 281/11) in
Mannachery Village, Ambalapuzha Thaluk, in
Alappuzha District. As far as that property is also
concerned the sale proceedings was initiated under
SARFEASI Act and Ext.P1 in that writ petition is the
sale certificate. The similar orders were passed by
this Court in that case also and Ext.P4 judgment
dated 15.12.20220 in WP(C) No. 35082/2019 is the
judgment by which Exts.P2 and P3 were quashed.
WP(C) No. 10107/2021 is filed with the following
prayers.
"i. Issue a writ of mandamus or other
appropriate writ, direction or order directing
the 2nd respondent to delete the entry of
Revenue recovery attachments in their records
with respect to the property having 6.85 Ares
of land and building in Re. Sy. No. 214/2, (old
Sy. No. 281/11) in Mannachery Village,
Ambalapuzha Thaluk, in Alappuzha District.
WP(C) Nos. 6348 and 10107 OF 2021
ii. Issue a writ of mandamus or other
appropriate writ, direction or order directing
the 2nd respondent to to register the original of
Exhibit P1 Sale certificate issued by the 1st
petitioner in favour of the 2nd petitioner.
iii. Issue a writ of mandamus or other
appropriate writ, direction or order directing
the 3rd respondent to effect the transfer of
registry of the properties covered by Exhibits
P1 Sale certificate in favour of 2nd and 3rd
petitioners and to permit them to pay tax in
their name after the registration of original of
Exhibit P1 Sale certificate is completed.
iv. To grant such other reliefs as may be
prayed for in the circumstances of the case."
5. The learned Government Pleader filed a
detailed counter affidavit in both the writ petitions.
The learned Government Pleader submitted that,
Ext.P4 judgment dated 15.12.2020 in WP(C) No.
35082/2019 is challenged before the division bench
by filing Writ Appeal No. 616/2021 and the writ
appeal is even now pending. The learned Government
Pleader submitted that, the judgment passed by the
learned single judge in the above writ petition is
against the provisions of the statute and also against
WP(C) Nos. 6348 and 10107 OF 2021
the settled position as per the judgment of this Court
and the Apex Court. The learned Government Pleader
takes me through the judgment of the Apex Court in
Central Bank of India Vs. State of Kerala and
others (2009 (4) SCC 94), Maharashtra State
Co-operative Bank Ltd. v. Babulal Lade and
Others (2019 KHC 7202) and The Madras High
Court judgment in Sridhar V. V. Authorized
Officer Indian, Bank, Guindy Branch, Chennai
(2018 KHC 2927).
6. The learned Government Pleader also
submitted that, as per the Security Interest
(Enforcement) Rule 2002, Ext. P1 sale certificate
itself will not stand. The learned Government Pleader
takes me through Rules 8 (7), 9 (7) to contend that
Ext.P1 sale certificate will not stand. The learned
Government Pleader also relied the interim order
WP(C) Nos. 6348 and 10107 OF 2021
passed by this Court on 01.10.2020 in WP(C) No.
19291/2020. The learned Government Pleader also
relied a Calcutta High Court judgment also to canvas
his position.
7. It is an admitted case that this Court as per
judgment dated 15.12.2020 was pleased to set aside
the order passed by the District Collector and the
Village Officer. The relevant partition of the judgment
dated 15.2.2020 in WP(C) No. 35082/2019 is
extracted hereunder;
" 6. I have considered the submissions so
advanced and also perused the materials placed
before me.
7. It is seen from records that subject
property was taken possession under the
SARFAESI Act by the petitioner as the loan
account became Non Performing Asset. On the
very same property, the respondent/State is
contending that it has first charge for recovery of
dues of the sale tax. The 3rd respondent had
issued a communication dated 25.11.2019 to the
effect that the property is attached by the State
and the petitioner bank should provide access to
the property. Similar is the notice at Ext.P3
issued by the District Collector, asking the
petitioner to open the gate and door of the
property of which the possession is taken by the
WP(C) Nos. 6348 and 10107 OF 2021
petitioner under the SARFAESI Act.
8. The question which falls for
consideration is whether the State has better
right over the secured assets for recovery of its
dues. This question is no more res integra. The
petitioner has rightly relied on the judgments of
this Court in Travancore Devaswom Board V.
Local Fund Audit reported in 2020(3) KLT 296
and State Bank of India V. State of Kerala
reported in 2019(4) KLT 521. Perusal of the
rulings cited by the learned Standing Counsel
appearing for the petitioner makes it clear that
Section 26E of the SARFAESI Act and Section
31B of the RDB Act create a 'First Charge' by way
of a priority to the Banks/Financial Institutions to
recover and satisfy their debts, notwithstanding
any statutory 'First Charge' in favour of the
Revenue.
9. In the light of law laid down by this Court
in the above mentioned rulings, the petition
deserves to be allowed and the same is allowed
by quashing and setting aside Exts.P1 and P3
communications issued by respondents and
quashing the attachment of the secured assets by
the respondents."
8. A division bench of this Court in
Travancore Devaswom Board V. Local Fund
Audit (2020(3) KLT 296) considered a similar issue
and this Court observed in para 10 and 17, which is
extracted hereunder;
" 10. Under Section 26E of the SARFAESI Act,
priority in payment has been statutorily created in
WP(C) Nos. 6348 and 10107 OF 2021
favour of a secured creditor over all other debts
including taxes payable to the Central Government
or State Government on registration of the
security interest. Section 31B of the RDB Act has
created a right upon the secured creditor to
realize debts due and payable to them by sale of
assets over which security interest has been
created, with priority in sale and priority in
payment over all other debts including
Government dues due to the Central or State
Governments. A mere reading of the aforesaid
extracted provisions leave no room for any doubt,
that a secured creditor under the SARFAESI Act
has predominance over statutory charges due to
the Government. The non obstante clause in both
provisions makes the intention of Parliament
explicit that even as against statutory charges
created under other Central Enactments, secured
creditors shall have the right for priority in
payment and priority to realise the debt by
bringing the secured asset for sale.
17. Viewed in the above principles of law,
it can safely be concluded that the provisions of
SARFAESI Act and RDB Act (as amended)
containing provisions commencing with non-
obstante clauses and giving specific priority to
secured creditors even over the taxes due from the
Governments, will prevail over the KVAT Act."
9. This Court in State Bank of India V. State
of Kerala 2019(4) KLT 521 considered a similar
issue and this Court observed in para 36, which is
extracted hereunder;
"36. Irrefragibly, when the secured creditors have
a right in priority to have their debts extinguished,
WP(C) Nos. 6348 and 10107 OF 2021
obviously, their right to proceed against the
property would also rank high than that is claimed
by the Revenue. The assertion of the Revenue that
their 'Charge' will continue over the property until
it is sold by them, hence, is rendered without
forensic support to stand on."
10. In the light of the above judgments of the
division bench in Travancore's case (Supra) and the
judgment of this Court in State Bank of India's case
(Supra), the contention of the learned Government
Pleader will not stand. The learned Government
Pleader submitted that, the judgment in WP(C) No.
35082/2019 and the decisions inTravancore's case
(Supra) and State Bank of India's case (Supra) has
not attained finality. But this Court can not wait
indefinitely till those judgments attained finality. As
far as this particular case is concerned, there is a
judgment of this Court in WP(C) No. 35082/2019 by
which, the orders passed by the Village Officer and
District Collector are already quashed by this Court
WP(C) Nos. 6348 and 10107 OF 2021
and this Court specifically stated that Section 26E of
the SARFEASI Act and Section 31B of the RDB Act
create a first charge by way of priority to the banks,
financial institutions to recover and satisfy their
debts notwithstand to any statutory first charge in
favour of the revenue. In such circumstances, till the
above judgment is varied or modified by the division
bench, that judgment will stand. In such
circumstances, according to me, these writ petitions
are to be allowed. Therefore, these writ petitions are
allowed with the following directions.
1. The 2nd respondent is directed to delete the
entry of revenue recovery attachment in their records
with respect to property having for 6.85 Ares of land
and building in Re. Sy. No. 214/2, (old Sy. No. 281/11)
and 35.98 Ares of land and building in
Re.Sy.No.214/1/2, 214/1/3 and 214/03/2 (old Sy. No.
WP(C) Nos. 6348 and 10107 OF 2021
281/11) in Mannachery Village, Ambalapuzha
Thaluk, in Alappuzha District.
2. The 2nd respondent is directed to register
the original of Ext.P1 sale certificate issued by the 1 st
petitioner in favour of the above petitioners in these
writ petitions if it is other wise in order.
3. The competent authority will complete the
mutation of property and accept tax in accordance to
law.
4. The above exercise should be completed
within one month from the date of receipt of a copy of
this judgment.
(Sd/-)
P.V.KUNHIKRISHNAN
JUDGE
LU
WP(C) Nos. 6348 and 10107 OF 2021
APPENDIX OF WP(C) 6348/2021
PETITIONER ANNEXURE
EXHIBIT P1 TRUE COPY OF THE SALE CERTIFICATE
DATED 29/05/2020 ISSUED IN FAVOUR
OF 2ND PETITIONER.
EXHIBIT P2 TRUE COPY OF THE JUDGMENT DATED
15/12/2020 IN W.P.(C)
NO.35082/2019.
EXHIBIT P3 TRUE COPY OF THE JUDGMENT OF THIS
HON'BLE COURT IN W.P. (C)
NO.12678/2020.
EXHIBIT P4 TRUE COPY OF THE LETTER NO.6/2021
DATED 19/02/2021 ISSUED BY THE 2ND
RESPONDENT.
EXHIBIT P5 TRUE COPY OF THE DIRECTION GIVEN BY
THE 1ST RESPONDENT TO THAHSILDAR
(RR).
EXHIBIT P6 TRUE COPY OF THE COMMUNICATION
DATED 25-11-2019 ISSUED BY THE 5TH
RESPONDENT.
EXHIBIT P7 TRUE COPY OF THE COMMUNICATION
DATED 30-11-2019 ISSUED BY THE 1ST
RESPONDENT.
RESPONDENTS EXHIBITS
ANNEXURE R1(a) THE TRUE COPY OF THE ORDER IN WRIT
PETITION (C ) NO. 19291/2020 DATED
01.10.2020.
WP(C) Nos. 6348 and 10107 OF 2021
APPENDIX OF WP(C) 10107/2021
PETITIONER ANNEXURE
EXHIBIT P1 TRUE COPY OF THE SALE CERTIFICATE
DATED 2-03-2020 ISSUED IN FAVOUR OF
2ND AND 3RD PETITIONERS.
EXHIBIT P2 TRUE COPY OF THE COMMUNICATION DATED
25-11-2019 ISSUED BY THE 5TH
RESPONDENT
EXHIBIT P3 TRUE COPY OF THE COMMUNICATION DATED
30-11-2019 ISSUED BY THE 1ST
RESPONDENT
EXHIBIT P4 TRUE COPY OF THE JUDGMENT OF THIS
HON'BLE COURT IN W.P(C) NO. 35082/19
EXHIBIT P5 TRUE COPY OF THE LETTER NO. 6/2021
DATED 19-01-2021 ISSUED BY THE 2ND
RESPONDENT.
EXHIBIT P6 TRUE COPY OF THE DIRECTION GIVEN BY
THE 1ST RESPONDENT TO THAHSILDAR (R.R)
RESPONDENTS EXHIBITS
ANNEXURE R1(a) THE TRUE COPY OF THE ORDER IN WRIT
PETITION (C ) NO. 19291/2020 DATED
01.10.2020.
// True Copy // PA To Judge
