The sale of goods for the realization of securities provided to a banking company falls outside the prohibition contained in Section 8 of the Banking Companies Regulation Act, 1949, and therefore, the petitioner is deemed to be a 'dealer' under the Sales Tax Act.

TIRATH S. THAKUR, J.

( 1 ) THE petitioner is a nationalised bank who appears to have extended certain facility to a company by name M/s. Gladstone Lyall and Co. Ltd. Certain agreements are said to have been executed between the petitioner and the said company, whereunder certain goods like movables, plant and machinery have been hypothecated in favour of the petitioner-bank. The hypothecated plant and machinery were liable to be sold by the petitioner-bank in the event of a default in payment by the borrowing company. The borrower appears to have committed such a default, with the result that in exercise of the powers available to it under the hypothecation agreement in question, the petitioner-bank sold by auction the goods hypothecated with it. While these goods were yet to be moved outside the State of Karnataka by the purchaser, the Commercial Tax officer (Intelligence), Check-Post, Mangalore and the Deputy Commissioner of Commercial taxes, Mangalore Division, Mangalore, issued notices annexures B, C and D to the writ petition dated April 11, 1989 and July 21, 1989, calling upon the petitioner not to deliver the goods sold by it to the purchasers till such time the sales tax liability on the same was determined and cleared under the Act. Aggrieved by this notice, the petitioner has come up to this Court in the present writ petition for a writ of certiorari quashing the same.

( 2 ) THE petitioner's case is that the respondents are in error in treating the petitioner to be a "dealer" within the meaning of the Karnataka Sales Tax Act, 1957.

( 3 ) I have heard Sri Ramabadran, learned counsel appearing for petitioner and the Government advocate for the respondents.

( 4 ) THE question urged in this petition is in my opinion squarely covered by two judgments of this court in United India Insurance Co. Ltd. v. Commissioner of Commercial Taxes ILR1989 KAR 3473 and Karnataka Pawn Brokers' Association (Regd.) v. State of Karnataka ILR1993 KAR 240. In the first of these cases, the question that arose for consideration was whether by reason of an insurance company selling salvaged goods, it could be treated to be a "dealer" within the meaning of the Karnataka Sales tax Act. The insurance company had argued that since the company was not actually engaged in the activity of purchase or sale of any goods and was concerned only with carrying on insurance business, therefore the question of it being treated as carrying on any business of sale and purchase of the goods did not arise. This Court however repelled the argument relying upon a judgment of the apex Court in Member, Board of Revenue, West Bengal v. Controller of Stores, eastern Railway, Calcutta AIR1989 SC 1468 , JT1989 (2 )SC 215 , 1989 (2 )SCALE1145 , 1989 Supp (2 )SCC236 , [1989 ]2 SCR777 , [1989 ]74 STC5 (SC ), 1989 (2 )UJ176 (SC ). This Court held that selling of goods by the appellant-insurance company was incidental or ancillary to the main business of insurance carried on by it and therefore the appellant-company was a 'dealer' for the purpose of the Act, which expression included even a casual trader carrying on a business activity. While holding so this Court dissented from the decisions of the Allahabad and Madras High Courts cited before it and observed that the said decisions in so far as the same ran counter to the view taken by the apex Court, were not binding. Relying upon the definition of the term "business" as given by section 2 (1) (f-2) of the Karnataka sales Tax Act, this Court held that any transaction in connection with, or ancillary to such trade, commerce, manufacture, adventure or concern of the petitioner was bound to be treated to be a business.

( 5 ) IN the second case, a similar question was raised by the Pawn Brokers' Association. The question was whether pawn brokers could be considered to be dealers under section 2 (1) (k) of the Act. Relying upon the Division Bench judgment in United India Insurance Co. Ltd. v. Commissioner of Commercial Taxe

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