JUDGMENT: - This is a dispute between ?d two wings of the State. Each one is trying to claim priority over the other.

THE FACTS :

This petition is at the instance of M/s. to SICOM Ltd., the Company established by the Government of Maharashtra for development of industries under the provisions of the State Financial Corporation Act, 1951 ("Act" for - short); which carries on business of financing industrial undertaking in the State of Maharashtra.

2. The Government of India, in exercise of powers conferred by sub-section (1) of section 46 of the said Act, issued Notification dated 11th December, 1986, extending provisions of various sections amongst other, sections 27,29,30,31, 32-A to 32-F, 41, 41A and 44 of the said Act of the said Act to the petitioner. The petitioner is, therefore, deemed State Financial. Corporation within the meaning of section 46 of the said Act.

3. The petitioner, under an Indenture of Mortgage dated 22nd December 1986 has advanced a sum of Rs. 51,00,000/- by way of term loan to one M/s Nihal Cast Nylon Pvt. Ltd. ("the borrower" for short). In consideration of the petitioner advancing the said term loan, the borrower created a first charge by way of legal mortgage of its fixed assets situate at its factory premises at Satara as well as the first charge by way of hypothecation/charge on the plant and machinery, electrical and other installation furniture and fixtures acquired by them lying in the factory; and/ or to be acquired by them described in the schedule annexed to the said Indenture of Mortgage. The borrower, for having borrowed additional loan amount, has 1 also executed second indenture of mortgage dated 22nd December 1986 so as to create 1 charge on its movable and immovable assets.

4. The borrower committed several defaults in repayment of principals as well as interest accrued thereon. Hence, the petitioners in exercise of its power under section 29 of the said Act issued notice to take possession of the said securities and, thereafter took actual possession thereof. However, since some repayments were made by the borrower to the Corporation as such Corporation appears to have handed over properties back to the borrower company on 20th April, 1994.

However, the Company continued to commit defaults and hence by a recall notice dated 19th March, 1996, the petitioner recalled the entire outstanding dues; due and recoverable from the borrower.

5. The factual matrix reveals that the respondents/the customs authorities found that a sum of Rs. 48,08,242/- was recoverable by them from the borrower; as such they informed their recoverable dues from the borrower on account of duty liability to the petitioner-SICOM Ltd. and expressed their intention to attach and seize the proprieties of the borrower. The petitioner by its letter dated 11 th September, 1996, immediately, informed the respondents that they had a mortgage of the properties of the borrower in their favour and that their properties were duly charged in their favour.

6. On being enquired, the borrower by its letter dated 22nd June, 1998 forwarded a copy of the notice issued by the respondents seeking to detain the securities of the petitioner for alleged claim of excise dues relating to the year 1991 and 1993 under purported exercise of its powers under Rule 230 of the Central Excise Rules, 1944.

7. Being aggrieved by the approach of the respondents to take action against the petitioners securities, despite putting to their notice the petitioners charge thereon, the petitioner by its letters dated 21st July, 2002;

22nd August, 2000 followed by their Advocates notice dated 8th January 2002, called upon the respondents to desist from taking any action against their securities and called upon them to remove their seal, if any, from the properties of the borrower. There was no response from the respondents. As such petitioner preferred to file this petition under Article 226 of the Constitution of India to enforce their claim.

SUBMISSIONS

8. Mr. Dhond, lea

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