Judgment

Sujata V.Manohar, J.

(1) EAVE granted.

(2) THE appellant, namely, the State Bank of Bikaner and Jaipur had given cash credit facilities to Respondent 1, National Iron and Steel Rolling Corporation. Respondents 2 to 5 are the partners of Respondent 1. As a security for repayment of the amounts advanced to Respondent 1 by the appellant-bank. Respondent 1 created a mortgage of their factory premises situated at Industrial Area, Bharatpur by a Deed of Mortgage dated 18/10/1977. They have also, by a Letter of Promise dated 10/6/1981, pledged the plant and machinery installed in the said premises to the bank as a security for the said advances. There is also an agreement for the pledge of movables dated 7/1/1980 executed by the first respondent in favour of the appellant-bank.

(3) THE appellant-bank filed Civil Suit No. 5/86 in the court of the Additional District Judge II, Bharatpur against the respondents for the recovery of a sum of Rs. 3,79,672.00 due and payable under the above cash credit facility and for future interest @ 16.25% p.a. with quarterly rests. In this suit the appellant-bank also asked for the realisation of the mortgage security under Order 34, Rule 4 of the Code of Civil Procedure.

(4) WHILE the suit was pending, the Commercial Taxes Officer, Bharatpur got himself impleaded in the suit on 18/5/1990 on the ground that he had a prior claim for the recovery of a sum of Rs. 1,19,122.00 as sales tax dues from Respondent 1 and was entitled to realize it by sale of the mortgaged property.

(5) THE property which is the subject-matter of the mortgage has been sold by auction under the orders of the court for a sum of Rs. 4,02,000.00 to one Smt Kamlesh Goel. Under the orders of the court the sale proceeds have been deposited in court. It was contended by the Commercial Taxes Officer, Bharatpur that the sales tax dues of the first respondent were liable to be paid first out of the sale proceeds. The claim of the appellant-bank could be satisfied only out of the balance amount. The trial court by its judgment and order dated 18/5/1990 accepted this claim of the Commercial Taxes Officer. The revision petition of the appellant-bank was dismissed by the High court by the impugned judgment and order. Hence this appeal by special leave.

(6) THE claim of the Commercial Taxes Officer, Bharatpur rests on the provisions of Section 11-AAAA of the Rajasthan Sales Tax Act, 1954. Section 11-AAAA has been introduced in the Rajasthan Sales Tax Act, 1954 by way of an amendment in 1989. Section I I-AAAA is as follows

"11-AAAA. Liability under this Act to be the first charge. Notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax, penalty, interest and any other sum, if any, payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer, or such person." Under this section the amount of sales tax or any other sum due and payable by a dealer or any other person under the Rajasthan Sales Tax Act, 1954, is a first charge on the property of the dealer or of such person. It is on account of the provisions of this section that the Commercial Taxes Officer claimed priority for the recovery of the sales tax dues from the sale proceeds of the mortgaged property. The appellant, however, contended that since the mortgage in their favour is prior in point of time, their claim will have precedence over the claim of the sales tax authorities.

(7) IT is, therefore, necessary to consider the effect of Section 11-AAAA of the Rajasthan Sales Tax Act, 1954 on an existing mortgage in respect of the property of the dealer or the person liable to pay sales tax or other sums under the Rajasthan Sales Tax Act, 1954. Section 100 of the Transfer of Property Act deals with charges on an immovable property which can be created either by an act of parties or by operation of law. It provides that