IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 13TH NOVEMBER 2008 / 22ND KARTHIKA 1930 WP(C).No. 31327 of 2008(D) -------------------------- PETITIONER(S): --------------- INDIAN BANK, CIRCLE OFFICER, CHITTOOR ROAD, ERNAKULAM, KOCHI-682035 REPRESENTED BY ITS DEPUTY GENERAL MANAGER. BY ADV. SRI.S.EASWARAN RESPONDENT(S): --------------- 1. THE INTELLIGENCE OFFICER, COMMERCIAL TAXES, SQUAD NO.1,THALASSERY. 2. M/S.THIRUVEPATHY MILLS PVT.LTD,KANNUR, REPRESENTED BY THE OFFICIAL LIQUIDATOR, HIGH COURT OF KERALA, ERNAKULAM. 3. SRI.S.ABDUL SALAM, SCRAP MERCHANT, NEAR POLICE LANE, MILLARPET, BELLARY, KARNATAKA. BY GOVERNMENT PLEADER SHRI C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13/11/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M. JOSEPH, J. ```````````````````````````````````````````````````` W.P.(C) No. 31327 OF 2008 D ```````````````````````````````````````````````````` Dated this the 13th day of November, 2008 J U D G M E N T Ext.P16 is an order by which the 1st respondent has imposed penalty on the petitioner. The petitioner Bank had advanced a loan to the 2nd respondent(hereinafter, referred to as “the Company”). According to the petitioner, the immovables were hypothecated to the petitioner Bank. The BIFR appointed the petitioner as the chairperson of the committee constituted to sell the assets of the company. There was a direction also by this court in Ext.P11 to conduct the sale. It is accordingly that the petitioner proceeded to sell the immovables and movables. The petitioner came to be served with notice by the tax authority calling upon it to produce documents. The petitioner filed Ext.P13 objection. Thereafter, the petitioner was served with Ext.P14 notice proposing imposition of penalty. This is on the ground that the petitioner was a registered dealer under the KVAT Act, WPC.31327/08 : 2 : and it did not account this transaction or file return. The petitioner preferred Ext.P15 objections. It is overruling the objections of the petitioner that Ext.P16 penalty order is passed. 2. I heard learned counsel for the petitioner and learned Government Pleader. Learned counsel for petitioner would contend that a direct approach is made and necessitated in Article 226 as this is a clear case where the proceeding is without jurisdiction. It is the case of the petitioner that the petitioner is not a dealer under the Act when it acted as chairperson of the committee for disposal of the assets. Definition of “dealer”reads as follows, inter alia,. “ Dealer means any person who carries on the business of buying, selling, supplying or distributing goods, executing works contract, delivering any goods on hire-purchase or on any system of payment by instalments; transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred WPC.31327/08 : 3 : payment, or for commission, remuneration or other valuable consideration not being an agriculturist and includes:- (f) A bank or a financing institution, which, whether in the course of its business or not sells any gold or other valuable article pledged with it to secure any loan, for the realisation of such loan amount.” 3. Learned Government Pleader points out that actually this is a case of pledge and the petitioner fulfills the definition of the word 'dealer' and the petitioner is a registered dealer under the Act. He would submit that the petitioner is admittedly a creditor of the 2nd respondent and the amount realised is for the benefit of the petitioner. Learned counsel for petitioner contends that it is to be noted that in this case when acting as chairperson of the committee it cannot be said that the sale of the movables in question was with the purpose of realisation of such loan amount, as is contemplated in the provision. According to the learned WPC.31327/08 : 4 : counsel for the petitioner, the sale in the instant case cannot be said to be for realisation of such loan amount even if it is assumed that there is a pledge as contended by the learned Government Pleader. 4. The question as to whether there is a pledge or hypothecation would be better decided in my view before the appellate authority which would be better placed to appreciate the facts necessary for arriving at the findings of this nature. Therefore, I would think that the petitioner should be relegated to prefer an appeal. The petitioner has been visited with a penalty. I feel that having regard to the totality of facts and circumstances of the case, the following orders should be passed. 5. If the petitioner prefers appeal within three weeks from today, the appellate authority will take a decision thereon in accordance with law, after affording an opportunity for hearing to the petitioner, within three months from the date of receipt of a copy of this judgment. Recovery proceedings WPC.31327/08 : 5 : against the petitioner shall be kept in abeyance till the disposal of the appeal on condition that the petitioner pays a sum of Rs.2 lakhs within one month from today. Writ petition is disposed of as above. (K.M.JOSEPH, JUDGE) aks