IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 22ND AUGUST 2008 / 31ST SRAVANA 1930 WP(C).No. 21205 of 2005(Y) -------------------------- PETITIONER: ------------ STATE BANK OF INDIA, SIB BRANCH, THIRUVANANTHAPURAM, REPRESENTED BY ITS CHIEF MANAGER. BY ADV. SRI.P.V.SURENDRANATH RESPONDENTS: ------------- 1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY TO REVENUE DEPARTMENT, SECRETARIAT, TRIVANDRUM. 2. THE DISTRICT COLLECTOR, THIRUVANANTHAPURAM. 3. DEPUTY TAHSILDAR, REVENUE RECOVERY OFFICE, THIRUVANANTHAPURAM. 4. M/S.TOUCH STONE ELECTRICALS PVT. LTD., REGD. OFFICE, 82B, INDUSTRIAL DEVELOPMENT AREA, KOCHUVELI, TRIVANDRUM, REPRESENTED BY ITS MANAGING DIRECTOR. 5. BIJU PADMANABHAN, S/O.P.RAMACHANDRAN NAIR, TOUCH STONE MANOR, VANCHIYOOR, TRIVANDRUM. 6. KRISHNAKUMAR.S., S/O.SOMASEKHARAN NAIR, AMBALATHUVILA, T.C.NO. 605 (1), V.V.ROAD, PETTAH, TRIVANDRUM, 28/170, KALTHAMUKKU, TRIVANDRUM. 7. RAVIKUMAR.S., S/O.SOMASEKHARAN NAIR, T.C.NO.30/1396, PRIYA, HNRA 371, MUKKU MUKKU, PETTAH, TRIVANDRUM. 8. PREETHAKUMARI, W/O.BIJU PADMANABHAN, TOUCH STONE MANOR, VANCHIYOOR, TRIVANDRUM. 9. THE RECOVERY OFFICER, DEBTS RECOVERY TRIBUNAL, ERNAKULAM. R1 TO R3 BY G.P. SRI.TEKCHAND BY ADV. SMT.A.SREEKALA, ADDL.CGSC FOR R9 SRI.P.PARAMESWARAN NAIR ASST.SG. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: P1: TRUE COPY OF GENERAL AGREEMENT FOR THE GRANT OF SMALL INDUSTRIAL ADVANCES AND HYPOTHECATION OF MOVABLES, BOOK DEBTS AND OTHER ASSETS DT.7.10.1998. P2: TRUE COPY OF TITLE DEED/SALE DEED NO.1793/97 DT.22.5.1997 WITH RESPECT TO THE AFORESAID 10 CENTS OF LAND AND THE BUILDING THEREON EXECUTED IN FAVOUR OF R5 AND DEPOSITED WITH THE PETITIONER BANK WITH INTENTION TO CREATE EQUITABLE MORTGAGE IN FAVOUR OF THE BANK. P3: TRUE COPY OF CONFIRMATION LETTER DT.29.10.98 CONFIRMED BY R4. P4: TRUE COPY OF TITLE DEED/SALE DEED NO.1874/97 DT.3.6.97 EXECUTED IN FAVOUR OF THE R5 AND DEPOSITED WITH THE PETITIONER BANK WITH INTENTION TO CREATE EQUITABLE MORTGAGE IN FAVOUR OF THE BANK. P5: TRUE COPY OF ORDER/DECREE IN O.A. 314/2003 DT.23.6.04. P6: TRUE COPY OF NOTICE OF DEMAND DT.27.9.04 ISSUED BY THE RECOVERY OFFICER IN DRC 1634/SBI/TVM IN O.A. 314/03. P7: TRUE COPY OF DEMAND NOTICE PURPORTED TO BE ISSUED U/S.34 OF THE R.R. ACT DEMANDING AN AMOUNT OF RS.22,55,519 TOGETHER WITH INTEREST @ 24% P.A. P8: TRUE COPY OF ATTACHMENT NOTICE PURPORTED TO BE ISSUED U/S.7 OF THE R.R. ACT FOR ATTACHMENT OF MOVABLES DT.NIL. P9: TRUE COPY OF REPRESENTATION DT.9.6.2005 ISSUED BY PETITIONER BEFORE THE DEPUTY TAHSILDAR. P10: TRUE COPY OF VALUATION REPORT PREPARED BY CHARTERED ENGINEER AND APPROVED VALUER WITH RESPECT TO THE PROPERTY OF 10 CENTS OF LAND WITH FACTORY BUILDING IN SY. NO.2623/94 OF KADAKAMPALLY VILLAGE, INDUSTRIAL DEVELOPMENT AREA, KOCHUVELI, TRIVANDRUM. TRUE COPY PA TO JUDGE C.N.RAMACHANDRAN NAIR, J. .................................................................... W.P.(C) No.21205 of 2005 .................................................................... Dated this the 22nd day of August, 2008. JUDGMENT The question raised is whether State has priority over debt due to the Bank under a mortgage executed by the defaulter. The issue is decided against the petitioner by this court holding that State has priority even over mortgage debt. Counsel for the petitioner-Bank submitted that the said judgment is under appeal before the Supreme Court and judgment is expected shortly. I do not think W.P. should be kept pending waiting for Supreme Court judgment in the matter because if judgment of the Supreme Court is in favour of the petitioner, amount collected in recovery proceedings should be paid by the State to the petitioner. This court had in fact ordered sale of defaulter's property vide order dated 2.8.2005 and it is not known whether the property is sold or not. The W.P. is accordingly disposed of directing the third respondent to appropriate sale proceeds towards arrears of sales tax provisionally subject to final judgment of the Supreme Court in the pending appeal. As and when Supreme Court judgment comes, it is for the petitioner to claim the amount from the third respondent, if judgment is in favour of the petitioner. The third respondent 2 is directed to consider petitioner's claim based on judgment of the Supreme Court. C.N.RAMACHANDRAN NAIR Judge pms