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2008 Supreme(P&H) 1400
PUNJAB AND HARYANA HIGH COURT
Ajay Tewari, J.
Aastha Trading Company - Petitioner
Versus
State of Punjab and others - Respondents
Civil Writ Petition 16657 of 2005.
Decided On : 19 August, 2008
For the Petitioner:Mr. D.S. Patwalia Advocate.
For the Respondent Nos. 1 to 3: Mr. S.S. Sahu, AAG, Punjab.
For the Respondent No. 6:Ms. Jyoti Sarin, Advocate.
For the Respondent No. 7:Mr. A.P. Jagga, Advocate.
For the Respondent No. 9:Mr. Vivek Sethi, Advocate for Mr. Sanjiv Bansal, Advocate.
The priority of government dues over private debts and the liability of auction purchasers under statutory sale were central legal principles established in the judgment.
Headnote:
Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 - Auction Purchaser of Mortgaged Property - 2002 Act - Summary of Acts and Sections: Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (2002 Act), State Financial Corporations Act, 1951 (SFC Act), Karnatka Sales Tax, 1957 (KST Act), Transfer of Property Act (TP Act), Central Excise Act, Customs Act - The court discussed the legal provisions and interpretations related to the liability of auction purchasers, enforcement of charges on property, and priority of government dues over private debts.
Fact of the Case:
The petitioner, an auction purchaser of mortgaged property, challenged auction notices issued for the realization of dues of workmen, Industries Department, and Taxation Department. The court directed the petitioner to deposit an additional amount for disbursement to the workmen upon property registration.
Finding of the Court:
The court set aside the auction notices seeking to recover amounts due to the Industries Department and Taxation Department, quashed the auction notices, and directed registration of the sale made in favor of the petitioner.
Issues: Challenges to auction notices, refusal to register sale, and disbursement of additional amount to workmen.
Ratio Decidendi: Auction purchasers under statutory sale are not liable for previous owner's dues. The court emphasized the priority of government dues over private debts and held that the Industries Department and Taxation Department cannot enforce payment of their dues against the property purchased by the petitioner.
Final Decision: The petitions were allowed, auction notices were quashed, and directions were issued for property registration and disbursement of additional amount to workmen.
Ajay Tewari, J. - This judgment will dispose of 3 writ petitions, bearing CWPs Nos. 16657 of 2005, 310 of 2007 and 13848 of 2007 since common questions of law and fact are involved therein.
2. The petitioner is an auction purchaser of mortgaged property of the respondents No. 4 and 5 which was sold by respondent No. 7 under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest, Act, 2002 (hereinafter referred as the 2002 Act) for a consideration of Rs. 4.00 crores. Subsequently, it transpired that various other agencies were seeking to claim amounts due to them from the aforesaid respondents No. 4 and 5 by enforcing their respective charge/s against the same property. In CWP No. 16657 of 2005, the claims relate to arrears of workmens dues respondent No. 6. The Director of Industries and Commerce, Punjab was impleaded through its application as respondent No. 8 vide order dated 7.8.1986. The said respondent claimed that respondent No. 4 also owed certain amounts to it and that respondent No. 7. Bank should pay the amount of Rs. 4,55,000/- due to it for a separate loan raised by respondent No. 4. Similarly, the Taxation Department was also impleaded as respondent No. 9 on its application vide order dated. 11.5.2007 and claimed that an amount of Rs. 87 lakhs was due to it as arrears of sales tax and it had the first right to recover the said amount as arrears of land revenue. The petitioner has challenged the notice issued by respondents No. 1 and 2 to auction a portion of the property purchased by it from respondent No. 7, for realization of the dues of the workmen, the Industries Department and the Taxation Department.
3. In CWP No. 310 of 2007, the petitioners have challenged the second auction notice for the same property issued by respondent No. 1 to effect the same recoveries as were sought to be effected in CWP No. 16657 of 2005.
4. In CWP 13848 of 2007, the petitioner has challenged the order of the respondents No. 1 and 2 whereby they have refused to register the sale made by respondent No. 3 (the Bank which was respondent No. 7 in the earlier two petitions) in favour of the petitioner.
5. As regards the workmens dues, the matter was adjourned on 7.8.2008 to enable the parties to reach at the possibility of amicable settlement. During of the course of hearing of these petitions, the counsel for both the parties are agreed that in case the petitioner deposits another amount of Rs. 20,00,000/- with the Registrar of this Court by 23rd August 2008 (for onward transmission to the Assistant Labour Commissioner, Hoshiarpur) along with proceeds of the earlier deposit made by the petitioner in pursuance to order dated 30.1.2007 passed by this Court in C.M. 1295 of 2007 in CWP No. 310 of 2007 for disbursement to the workers, the workmen would have no further claim against the petitioner over the property purchased by it. The only caveat put by the learned counsel for the petitioner is that the money deposited by it should be released only in the event of these writ petitions being allowed vis-a-vis the other respondents and the property being consequently registered in its name free from all encumbrances.
6. Coming to the claims of the Industries Department and the Taxation Department, the said claims need not detain us for long. In M/s. Isha Marbles v. Bihar State Electricity Board & another reported as JT 1995(2) SC 626, the Honble Supreme Court held that a bona fide auction purchaser under a statutory sale was not liable to clear electricity dues of the previous owner by holding as follows :
"What we have discussed above appears to be the law gatherable from the various provisions which we have detailed out above. It is impossible to impose on the purchasers a liability which was not incurred by them."
7 Thereafter, in State of Karnatka and another v. Shreyas Papers Pvt.Ltd. & others reported as JT 2006(1) SC 180, (the Honble Supreme Court stated the following questions) :
"1.1
