Section 11aaaa of the Rajasthan Sales Tax Act, 1954 creates a first charge on the property of a dealer, which has precedence over all other charges, including a mortgage.

( 1 ) BY this writ petition, the petitioner has sought the following reliefs :- (I) Quash the impugned orders/letters of the respondent No. 2, Annexure 5, dt. 18-4-1994, 16-8-1994, Annexure 9 and Annexure 10, dt. 22-12-1994. (ii) Hold that the respondents Nos. 1 and 2 are not entitled to attach/auction, sell or otherwise take over the possession of the industrial undertaking of the respondent No. 3, in violation of rights of the petitioner Corporation. (iii) Hold that the S. 11aaaa of the RST Act does not override statutory powers of the petitioner-Corporation, under Ss. 29/30 of the Act. (iv) Restrain the respondents Nos. 1 and 2 from auctioning the property, in question. (v) Set aside the sale or transfer, if any made by the respondent No. 2. (vi) Direct the respondents Nos. 1 and 2 to deposit realization, if any, made by them by auction of property of the respondent No. 3 with the petitioner-Corporation. (vii) Permit the petitioner-Corporation to take over the assets of the respondent No. 3 under Sections 29/30 of the S. F. C. Act, 1951. (viii) Strike down the provisions of Section 11aaaa of the Act as ultra vires and further realize their loan by sale, auction or otherwise transfer of property, in question. (ix) Award exemplary cost and compensation.

( 2 ) IT was contended by Mr. Vineet Kothari, learned counsel appearing for the petitioner that keeping in view Art. 4. 1 of the Loan Agreement No. 1 (Annexure 1) read with S. 29 (1) and S. 46 (B) of the State Financial Corporations Act, 1951, (in short the Act of 1951), a loan advanced by the Rajasthan State Industrial Development and Investment Corporation Ltd. (in short riico) to the respondent-Company will have a first charge on his assets and, therefore, the contention of the Sales Tax Department that respondent-Department will have a first charge on the assets of the respondent Company, cannot be sustained, because the provisions of the Act of 1951 , will have an overriding effect over the provisions of the Rajasthan Sales Tax Act because the former happens to be the Central Act and the Rajasthan Sales Tax Act happens to be the State Act. In this respect it was contended by him that the agreement being statutory and as it has been provided under S. 46 (B) of the Act of 1951 that the provisions of this Act and of any rules or orders made thereunder shall have an effect notwithstanding anything inconsistent therewith contained in any other law, this agreement should have an overriding effect over the provisions of Section 11aaaa of the Rajasthan Sales Tax Act, 1954. In this respect he has drawn our attention to sub-sec. (4) of S. 29, which reads as follows : this provision only provides that if the assets of an industry concern are taken over by RIICO under S. 29 (1) of the Act of 1951, then all costs, charges and expenses which in the opinion of the Financial Corporation have been properly incurred will be recovered from the industry concerned from the money which is received by it by selling of the mortgaged

property and in absence of any contract to the contrary the sale proceeds of the property of the industry will be held by the Corporation in trust to be applied firstly, in payment of such costs, charges and expenses and secondly in discharge of the debt due to the Financial Corporation. This does not create a first charge by the Corporation on the property of borrower. It only says that the property mortgaged with the Corporation can be taken over by it and it can be sold by it for discharge of his debt and in doing so, the proceeds of the sale will first be utilized in payment of the costs, charges etc. incurred in taking over the property of the industry and in selling it and thereafter the remaining property will be applied to the debt which has been taken by the debtor. This only provides the procedure for application of funds held in trust. It does not create any first charge as alleged by Mr. Kothari.

( 3 ) SECTION 46 (B) only provides that the provi