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2019 Supreme(Mad) 1673
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
Indian Overseas Bank, Represented by its Manager - Appellant
Versus
The State Tax Officer, Kallakurichi, Villupuram District & Another - Respondents
W.P. No. 25394 of 2019 & W.M.P. No. 24934 of 2019
Decided On : 27-08-2019
For the Petitioner:Ananda Gomathy Murugesan, Advocate.
For the Respondent:G. Dhanamadhri, Government Advocate.
The main legal point established in the judgment is the interpretation and application of the priority of charge over mortgaged property and the rights of a third party purchaser, as determined by the principle established by the Hon’ble Full Bench of the Court and the relevant provisions of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016.
Headnote:
Priority of Charge - Auction Notice - Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, Section 41, Section 31B - The court discussed the priority of charge over mortgaged property in relation to tax and other dues, as well as the rights of a third party purchaser of the mortgaged property. The court referred to the principle established by the Hon’ble Full Bench of the Court in a previous case and considered the implications of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, particularly Section 41 and Section 31B. The court's decision was influenced by the interpretation of these legal provisions and their application to the specific case before them.
Fact of the Case:
The writ petitioner challenged an auction notice issued by the sole respondent with regard to one of the five items of properties sought to be brought to auction. The challenge was based on the priority of charge over the mortgaged property and the rights of a third party purchaser, referencing a previous order of the Hon’ble Full Bench of the Court.
Finding of the Court:
The court directed that the auction of the property in question shall proceed, but the confirmation of the sale shall be subject to the outcome of Special Leave Petitions in the Supreme Court, which is seized of the matter. The court emphasized that the order should not be quoted as a precedent due to the unique circumstances of the case.
Issues: The key issue was the challenge to the impugned auction notice with respect to the priority of charge over the mortgaged property and the rights of a third party purchaser, based on the previous order of the Hon’ble Full Bench of the Court.
Ratio Decidendi: The court's decision was based on the principle established by the Hon’ble Full Bench of the Court in a previous case and the interpretation of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, particularly Section 41 and Section 31B.
Final Decision: The writ petition was disposed of with the direction that the auction of the property in question shall proceed, but the confirmation of the sale shall be subject to the outcome of Special Leave Petitions in the Supreme Court. The court emphasized that the order should not be quoted as a precedent due to the unique circumstances of the case.
JUDGMENT :
(Prayer: Writ Petition is filed under Article 226 of the Constitution of India, seeking for a Writ of Certiorar calling for the records of the 1st Respondent in Na.Ka.A3/1362/2015 dated 30.07.2019 and quash the same as being illegal and against the provisions of law as per the judgment dated 10.11.2016 in W.P.No.2675 of 2011 passed by the full bench of this Court.)
1. Ms.Ananda Gomathy Murugesan, learned counsel on record for writ petitioner and Ms.G.Dhanamadhri, learned Government Advocate, who has accepted notice on behalf of sole respondent (now) in the instant writ petition, are before this Court.
2. To be noted, in the writ petition as filed, there were two respondents, but at the hearing, learned counsel for writ petitioner gave up the second respondent and has made an endorsement in the case file to that effect, which reads as follows:
‘The 2nd respondent is given up.’
3. In the light of the aforesaid endorsement and reiteration of the same by learned counsel on record for writ petitioner Bank, there is only one writ petitioner and a sole respondent in the instant writ petition now.
4. In the aforesaid backdrop, with consent of learned counsel on both sides, main writ petition is taken up, heard out and is being disposed of.
5. An ‘auction notice dated 30.07.3019 bearing reference Na.Ka.A3/1362/2015’ (hereinafter ‘impugned auction notice’ for brevity) has been issued by the sole respondent and in the instant writ petition challenge to impugned auction notice is with regard to one of the five items of properties which are sought to be brought to auction. Though the prayer in the writ petition places a challenge to the impugned auction notice in its entirety, at the hearing, learned counsel on record for writ petitioner abridges the prayer and submits that vide the impugned auction notice five items of immovable properties are sought to be brought to auction and the writ petitioner’s challenge to the impugned auction notice is restricted to one of the 5 items of immovable properties, namely “TAMIL” (hereinafter ‘said property’ for clarity and convenience). Therefore, to state with clarity and specificity, challenge to impugned auction notice is a limited challenge qua said property alone.
6. Before this Court proceeds to set out the lone ground on which challenge is predicated, it may be necessary to mention that this Court has noticed that the auction has been fixed tomorrow i.e., 28.08.2019 (Wednesday at 11.00 am) in the forenoon. The case file placed before this Court reveals that instant writ petition has been presented and filed in this Court on 26.08.2019. The affidavit filed in support of the instant writ petition is completely silent about how and when the writ petitioner Bank gained knowledge about the impugned auction notice.
7. At the hearing, it is submitted that the impugned auction notice was dropped off in the writ petitioners Bank’s branch in Kallakurichi, Villupuram District apparently by the borrower on 22.08.2019.
8. In the normal circumstances, this Court would not have been inclined to interfere in a matter of this nature as this is clearly, not merely an eleventh hour attempt, but it is ‘59th minute of eleventh hour’ attempt.
9. This takes us to the ground on which the challenge to impugned auction notice is predicated.
10. Notwithstanding several averments in the affidavit filed in support of the writ petition, grounds urged, contentions canvassed and raised, learned counsel for writ petitioner, at the hearing, focused on one pivotal submission and that one pivotal submission is predicated on an order of a Hon’ble Full Bench of this Court dated 10.11.2016 made in W.P.Nos.2675 of 2011 etc., wherein and whereby Hon’ble Full Bench answered a reference. The reference reads as follows:
“(a) As to whether the Financial Institution, which is a secured creditor, or the department of the government concerned, would have the ‘Priority of Charge’ over the mortgaged property in question, with regard to the tax an
