Case: State Of Karnataka &amp; Anr Vs. Shreyas Papers Pvt. Ltd.

A company by name Mishal Paper Mills (P) Ltd. (hereinafter), was running a medium-scale duplex board manufacturing unit. The second respondent, Karnataka State Industrial Investment & Development Corporation Ltd. (hereinafter, had extended financial assistance to the Defaulting Company. However, the Defaulting Company defaulted in repayment of the loans granted to it by the Corporation. Acting under the provisions of Section 29(1) of the SFC Act, the Corporation took over the assets of the Defaulting Company. On 17.3.1992, the Corporation advertised the sale of theof the Defaulting Company i.e. the land, building, plant and machinery. In response to the advertisement, and after several rounds of negotiations, Shreyas Papers (P) Ltd. (hereinafterentered into an agreement with the Corporation for purchase of the land, building, plant and machinery of the Defaulting Company, which was put up for sale. In Clause (2) of the offer to purchase (dated 5.6.1992), the first respondent specificallyshall be taking over the unit withliabilities and shall not be held responsible for any existing statutory liabilities of the above said unit like Sale Tax, Excise Duty, Municipal taxes, E.S.I. and P.F. development loan, Central and State subsidy and rank liabilities etc. except as agreed in the meeting for KEB and labour

Reasoning: In our view, it is not necessary for us to go into this question. As we have pointed out at the commencement, only two issues were raised in the writ petition and seem to have been argued before the High Court: First, with regard to the validity of Section 15 of the KST, the High Court has dealt with it, and in this appeal by the State, this contention could not have been advanced. The second issue urged before us was with regard to the liability of the first Respondent for the charge created on the properties of the Defaulting Company. The High Court, rightly in our view, held that the first respondent before us was not liable for the tax arrears of the Defaulting Company. No issue as to the liability of the Corporation was raised or argued before, or decided by the High Court.26. It is well accepted that, save for exceptional circumstances, new reliefs, not argued or claimed before the High Court, cannot be prayed for before this Court. In these circumstances, we decline to enter into the said question, and leave it open to be sorted out between the appellants and the second respondent in any appropriate proceedings.The Final Findings27. In light of our findings above, we find no merit in C.A. No. 3170/2000 and consequently it is dismissed.28. Civil Appeal Nos. 3171-3173/2000 pertained to the tax dues of M/s. Alpha Pharmaceuticals, which is the second respondent in these three appeals. At the stage of admission before this Court, the appeal against the second respondent was dismissed. During the final arguments, Mr. Hegde, stated that the sales tax arrears arising out of the common judgment of the High Court of Karnataka in Writ Petition Nos. 14332/98 and 14442-43/98 have already been recovered from the transferee concerned namely M/s. Bal Pharma Ltd., which is the first respondent in these appeals.