IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR & THE HONOURABLE MRS. JUSTICE M.C.HARI RANI FRIDAY, THE 5TH SEPTEMBER 2008 / 14TH BHADRA 1930 WP(C).No. 29703 of 2004(J) ---------------------------------------- PETITIONER: -------------------- STATE BANK OF TRAVANCORE, PERUMANOOR ERNAKULAM, KOCHI-682 015, REPRESENTED BY ITS CHIEF MANAGER SRI. P. JOHN VARGHESE. BY ADV. SRI.M.PATHROSE MATTHAI (SR.) RESPONDENTS: ------------------------- 1. THE TAHSILDAR (REVENUE RECOVERY) KANAYANNUR TALUK, ERNAKULAM. 2. GOPALAN NAIR, PROPRIETOR, INDIA MACHINE TOOLS, HOUSE G. 135, GOPAL BAUGH, PANAMPILLY NAGAR, KOCHI-682 036. 3. DEBT RECOVERY TRIBUNAL, ERNAKULAM, PANAMPILLY NAGAR, KOCHI-682 036. BY SR.GOVERNMENT PLEADER SRI.BENJAMIN PAUL -R1 & 2 ADV. SRI.THOMAS MATHEW NELLIMOOTTIL FOR R3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.29703/2004 J APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE JUDGMENT AND DECREE IN O.A.NO.K-84/1999 DTD. 17/07/2002 OF THE HON'BLE DEBTS RECOVERY TRIBUNAL, ERNAKULAM. EXT.P2: COPY OF THE NOTICE DTD. 16/10/2002 ISSUED BY THE 3RD RESPONDENT. EXT.P3: COPY OF THE PROCLAMATION OF SALE ISSUED BY THE 3RD RESPONDENT DTD. 10/03/2003. EXT.P4: COPY OF THE PROCLAMATION OF SALE DTD. 8/09/2004 ISSUED BY THE 3RD RESPONDENT. EXT.P5: COPY OF THE NOTIE DTD. 3/09/2004 ISSUED BY THE 1ST RESPONDENT. EXT.P6: COPY OF THE OBJECTION DTD. 23/09/2004 BY THE PETITIONER TO THE 1ST RESPONDENT. EXT.P7: COPY OF THE LETTER NO.E6.742/01-02/ST. DTD. 29/09/2004 ISSUED BY THE 1ST RESPONDENT. RESPONDENT'S EXHIBITS: N I L /TRUE COPY/ P.S.TO JUDGE Kss 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