IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 6TH JUNE 2008 / 16TH JYAISHTA 1930 WP(C).No. 17347 of 2004(M) -------------------------- PETITIONER: ------------ THE COMMISSIONER OF CENTRAL EXCISE, CALICUT COMMISSIOENRATE, CALICUT. BY ADV. SRI.P.S.SREEDHARAN PILLAI, SCGSC SRI.JOHN VARGHESE, SCGSC RESPONDENTS: ------------- 1. M/S.VENUS ELECTRONICS, VII/202, CHANDRA NAGAR, NH BYE PASS ROAD, PALAKKAD 678 007. 2. M/S.KERALA FINANCIAL CORPORATION, BRANCH OFFICE, IST FLOOR CENTURY COMPLEX, MATHAKOVIL STREET, SULTHANPET, PALAKKAD 678 001. BY ADV. SRI.T.V.GEORGE/SRI. V.B. UNNIRAJ, SC, KFC FOR R2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 APPENDIX PETITIONER'S EXHIBITS: EXT.P1 TRUE COPY OF THE ORDER IN ORIGINAL NO. 2/2002 DATED 1.1.2002 ISSUED BY THE DEPUTY COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, PALAKKAD DIVISION. EXT.P2 TRUE COPY OF THE ORDER IN APPEAL NO.139/03 DATED 28.2.2003 ISSUED BY THE COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE (APPEALS), COCHIN. EXT.P3 TRUE COPY OF THE DEMAND LETTER DATED 12.5.2003 ISSUED TO THE FIRST RESPONDENT BY THE ASST. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, PALAKKAD DIVISION. EXT.P4 STRUE COPY OF THE REVENUE RECOVERY NOTICE DATED 22.6.2002 ISSUED BY THE TAHSILDAR, PALAKKAD TALUK. RESPONDENTS' EXHIBITS: NIL. TRUE COPY P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR, J. -------------------------------------------- W.P.C. NO. 17347 OF 2004 -------------------------------------------- Dated this the 6th day of June, 2008 JUDGMENT Strangely the dispute is betwEen the Central Government and a Kerala Govt. owned financial institution for recovery arrears due from the defaulter, namely, the first respondent. The claim of the Central Government that being crown debt it is entitled to priority. On the other hand, KFC contended that it is entitled to priority by virtue of mortgage. If mortgage is created prior to the date of incurring of liability by the first respondent to Central Excise Department, KFC is entitled to recover the arrears by sale of property as Central Govt. has no priority over the mortgage debt created earlier. W.P. is therefore disposed of directing the recovery agency to attach and sell the property of the defaulter immediately if not already done. Relative claim of preference between the petitioner and second respondent will be considered by the recovery authority based on the above observation. (C.N. RAMACHANDRAN NAIR) Judge kk 2