IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 11TH JANUARY 2008 / 21ST POUSHA 1929 WP(C).No. 14604 of 2005(L) -------------------------- PETITIONER: ------------ KHADI AND VILALGE INDUSTRIES COMMISSION NOW KNOWN AS COMMISSIONER FOR KHADI AND VILLAGE INDUSTRIES, STATE OFFICE, M.G.ROAD, THIRUVANANTHAPURAM - 1. REPRESENTED BY THE STATE DIRECTOR. BY ADV. SRI.P.SANTHALINGAM RESPONDENTS: ------------- 1. THE SECRETARY, NAVAJYOTHI CHARITABLE SOCIETY REG.NO.E.103/1997, ALLAPRA P.O. PERUMBAVOOR, ERNAKULAM DISTRICT 683 553. 2. K.R.RATHI, SECRETARY, NAVAJYOTHI CHARITABLE SOCIETY, KARAVATT MANAYATH HOUSE, ALLAPRA PO, VENGOLA VILLAGE, PERUMBAVOOR, ERNAKULAM DISTRICT. 3. THE TAHSILDAR, KUNNATHUNADU TALUK, PERUMBAVOOR, ERNAKULAM DISTRICT. 4. THE SPECIAL TAHSILDAR, (RR), ALUVA, ERNAKULAM DISTRICT. 5. THE DISTRICT COLLECTOR, COLLECTORATE, CIVIL STATION, KAKKANAD, ERNAKULAM 30. R2 BY ADV. SRI.RAJIV NAMBISAN SMT.SMITHA SUKUMARAN, GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 11/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) No. 14604/2005 APPENDIX PETITIONER'S EXHIBITS P1 : COPY OF SANCTION ORDER NO.BGT/A110/INST/KERALA/98-99 DATED 06/05/98 ISSUED BY PETITIONER TO R1. P2 : COPY OF MORTGAGE DEED NO.SOK/LEGAL/II/NCS/EB&HD 98-99/9826 TO 9830 DATED 16/10/1998 ISSUED BY PETIITOENR TO R1 CHAIRMAN. P3 : COPY OF ORIGINAL TITLE DEED NO.1018/97 DATED 20/03/1997 EXECUTED BY B.MADHUSOODANAN IN FAVOUR OF NAVAJYOTHI CHARITABLE SOCIETY. P4 : COPY OF SURETY BOND WITH REGN.NO.4362/1998 DATED 28/09/98 EXECUTED BY R2. P5 : COPY OF DEMAND NOTICE DATED 01/11/2001 NO.SOK/L.R/NCS/01-02/9300 ISSUED BY PETITIONER TO R1. P6 : COPY OF DEMAND NOTICE NO.SOK/LR/NOS/01-02/9307 DATED 01/11/2001 ISSUED BY PETITIONER TO R2. P7 : COPY OF REVENUE RECOVERY REQUISITION NO.SOK/LR/NCS/01-02/1373 DATED 04/02/2002 ISSUED BY PETITIONER TO R5. P8 : COPY OF LETTER NO.B16-24886/2002 DATED 12/08/2002 ISSUED BY R5 TO PETITIONER. P9 : COPY OF LETTER NO.K.DIS.15044/02 DATED 27/02/2004 ISSUED BY R3 TO PETITIONER. P10 : COPY OF LETTER NO.SOK/LR/NCS/03-04/16787/996 DATED 22/03/2004 ISSUED BY PETITIONER TO R5. P11 : COPY OF LETTER NO.SOK/LR/NCS/03-04/3574-78 DATED 17/06/2004 ISSUED BY PETITIONER TO R3. P12 : COPY OF LETTER NO.SOK/LR/NCS/04-05 DATED 16/02/2004 ISSUED BY PETITIONER TO R5. P13 : COPY OF LETTER NO.SPK/LR/NCS/04-05 DATED 16/02/2004 ISSUED BY PETITIONER TO R3. // TRUE COPY // PA TO JUDGE. jg C.N.RAMACHANDRAN NAIR, J. ----------------------------------- W.P.(C) No. 14604 of 2005 ------------------------- Dated, this the 11th day of January, 2008 J U D G M E N T Heard learned counsel for petitioner, learned counsel appearing for respondents 1 & 2 and learned Government Pleader. 2. Petitioner is challenging attachment of the properties of 1st respondent by 3rd respondent for recovery of arrears of sales tax. Petitioner’s challenge against attachment and proposed sale of defaulter’s properties is not tenable because it is settled law that State has priority over defaulter’s property for recovery of arrears of sales tax. However, learned counsel appearing for respondents 1 & 2 submitted that sale proceeds of 1st respondent’s properties will be sufficient to take care of the debt due to petitioner and the State. If it is correct, then I see no reason why 1st respondent cannot sell his properties and settle the liabilities of all the creditors and tax arrears. In the circumstances, I dispose of the writ petition directing 1st respondent to arrange for sale of properties and settle the sales tax liability and liabilities due to petitioner, if the same is possible. However, sale deed will be executed only after arrears due to State and petitioner are cleared. If 1st respondent offers to clear the arrears voluntarily by arranging sale of the properties, WP(C) No. 14604/2005 -2- then there will be direction to petitioner to waive entire penal and default interest and recover only the balance loan arrears with contract rate of interest. If the sale of properties of 2nd respondent is not confirmed, there will be direction to 3rd respondent to withhold confirmation of sale for three months from now, within which time, 1st respondent will settle liability by arranging sale of properties or otherwise. However, if 1st respondent does not settle liabilities to both State and the petitioner, there will be direction to 3rd respondent to proceed for sale of properties of 1st respondent in auction first and if sale proceeds are sufficient to take care of arrears of sales tax and arrears due to petitioner, then the sale of 2nd respondent’s property should not be confirmed. However, if sale proceeds of 1st respondent’s properties is not sufficient to clear the arrears of sales tax and arrears due to petitioner, then 3rd respondent will proceed to sell the properties of 2nd respondent, the guarantor, also and clear the arrears. The 3rd respondent is directed to expedite the matter at the earliest. (C.N.RAMACHANDRAN NAIR, JUDGE.) jg