K.S. Radhakrishnan, J.

Question that has come up for consideration in this case is whether a decree obtained by a bank before the introduction of S.26B of the Kerala General Sales Tax Act, 1963 would override the first charge created in favour of the State.

2. The South Indian Bank Ltd. instituted a suit, O.S.720 of 1992 before Sub Court, Trichur for realization of amounts due to the bank. Loans were secured by equitable mortgage of immovable properties created by deposit of title deeds by respondents 3 to 5. Suit was decreed on 30.1.1995 for an amount of Rs. 3,51,36,073.18 inclusive of costs with future interest at 23.25% from the date of suit till realization by sale of items 1 to 12 in the plaint A schedule immovable properties and also the movables described in plaint B to F-schedule. Bank also filed OA.1081 of 1998 before the Debts Recovery Tribunal, Chennai for recovery of the amounts as per the decree by sale of immovable properties mortgaged in favour of the bank. Noticing that the second respondent Tahsildar initiated proceedings for sale of some of the items of properties mortgaged in favour of the bank for recovery of arrears of sales tax due from respondents 3 to 5 bank has approached this court with the present Writ Petition seeking a declaration that the bank who is a secured creditor has a first charge over the immovable properties which has been described in Ext.P3 proceedings initiated by the Tahsildar.

3. Counter affidavit was filed in the Writ Petition by the Tahsildar stating that the defaulters are in arrears of sales tax to the tune of Rs.85,45,276/- excluding the future interest after the revenue recovery certificate. Defaulters had failed to clear the arrears even after the receipt of statutory notice and consequently the property measuring an extent of 16.56 acres in Chalissery Village was attached on 25.06.93. Further it is also stated that the State was not a party in O.S. No.720/92 of Sub Court, Thrissur and was unaware of the pendency of those proceedings and therefore the decree would not bind the State.

4. Learned single Judge did not examine the question as to whether the State has the first charge over the property in question over the decree obtained by the Bank. Learned single Judge felt that it is open to the Bank to agitate the question before the Civil Court and the mere fact that Ext.P3 is proceeded with will not adversely affect the right of the bank for raising such contentions. Bank is aggrieved by the said judgment and has come up with this appeal.

5. Counsel appearing for the bank Sri. Prabhakaran contended that the amendment made in the Kerala General Sales Tax by the Finance Act, 1999 with effect from 1.4.1999 has no retrospective effect and it does not override or nullify the decree of the Civil Court passed in OS.No.720 of 1992 as early as 30.01.1995. Counsel submitted that the equitable mortgage was created by respondents 3 to 5 in favour of the Bank on 12.06.1984 and the bank had filed the suit on 15.05.1992. Suit was decreed on 30.1.1995. Counsel pointed out the second respondent issued Ext.P3 notice on 2.6.1999. Consequently, the bank has got prior charge over the immovable properties proposed to be sold for sales tax arrears by virtue of equitable mortgage created as early as 12.6.1984. Placing considerable reliance on paragraph 21 of the decision of the Supreme Court in Dena Bank v. Bhikhabhai, (2000) 5 SCC 694 counsel submitted that when the rights of the bank was crystallized by a decree on 30.1.1995 S.26 B was not introduced. Counsel submitted the said provision cannot have retrospective effect so as to defeat the decree passed prior to the introduction of the said provision.

6. Senior Govt. Pleader for Taxes Sri. Raju Joseph on the other hand, contended that so long as the decree has not been executed the State has got the right to proceed against the properties covered by the decree. Placing reliance on the decision of the Apex Court in Union of India v. Mis. Som