Point of Law : By virtue of Section 34(1) of the Act, a partial exception arises to the general principle in law, that exists to the benefit of all secured creditors viz a viz Crown/revenue dues.

JUDGMENT :

1. Heard Sri Navin Sinha, learned Senior Counsel assisted by Sri Madan Lal Srivastava, Sri Apoorv Hajela, learned Standing Counsel for the revenue and Sri Sumit Kumar Kakkar, learned counsel for the respondent-Bank.

2. Present writ petition has been filed, effectively to restrain the respondent-State authorities from adopting coercive measures against the property purchased by the petitioner company, under a registered sale-deed dated 16.07.2014. Thereby, Plot Nos.126/1, 10 and 126M situate at Village-Gathauna, Pargana Ujhani, District -Badaun (hereinafter referred to as 'the property-in-dispute') were purchased by the petitioner, from another company -M/s Kanha Vanaspati Ltd.-respondent no.7 (hereinafter referred to as 'assessee-in-default'). Relief has also been sought against the citation dated 26.05.2015, seeking those recoveries from the petitioner.

3. Undisputedly, the ‘assessee-in-default’ was assessed to tax for the A.Ys. 1992-93 (U.P. and Central), 1993-94 (Central), 2006-07 (Central) and 2006-07 (Entry Tax), under the provisions of U.P. Trade Tax Act, 1948, Central Sales Tax Act, 1956 and The U.P. Entry Tax Act. It was further faced with other demands of tax etc. raised against it for the A.Ys. 1994-95 to 2000-01. Those arrears of tax were stated to be Rs.17,64,83,574/-, in the impugned recovery citation dated 26.05.2015.

4. Though the revenue authorities deny, yet, upon exchange of affidavits, it appears, the ‘assessee-in-default’ owed dues to the State Bank of India, against loan facility availed by it. According to the petitioner, amongst others, the ‘property-in-dispute’ had been mortgaged by the ‘assessee-in-default’, to the State Bank of India. Thus, a first charge existed over the same which was duly registered with the Registrar of Companies, Kanpur. In this regard, a Certificate dated 06.08.2014, issued by the Registrar of Companies (Annexure 7 to the writ petition) certifying satisfaction of charge no. 80067412 dated 08.11.2005 for Rs. 32,89,00,000 in full has been placed on record. It is undisputed. The petitioner has brought on record copy of letter dated 15.07.2014 issued by the State Bank of India, acknowledging lifting its charge on the ‘property-in-dispute’, upon satisfaction of its dues under the One Time Settlement (OTS in short). Also, the State Bank of India has filed a copy of its letter dated 10.05.2015 written to the petitioner acknowledging the prior existence of its charge in favour of that bank and of that charge agreed to be lifted from over the ‘property-in-dispute’, upon payment of Rs. 2.61 crores.

5. In such facts, the petitioner claims, pursuant to the OTS entered between the ‘assessee-in-default’ and the State Bank of India, Rs. 2.61 crores were paid by it directly to that bank, towards the entire consideration for the ‘property-in-dispute’. Upon that deposit made, the charge (over it) was lifted on 15.07.2014. Only thereafter, the ‘property-in-dispute’ could be and it was sold by means of the registered sale-deed dated 16.07.2014, a copy of which is also on record. Later, the petitioner learnt about the attachment of the ‘property-in-dispute’, first made in the year 2015. By means of a Supplementary Affidavit filed to the writ petition, a copy of the Khatauni has been attached which document is admitted to the State. It recites, the fact of the attachment order made on 18.06.2015 -over the ‘property-in-dispute’ i.e., after the sale-deed came to be registered.

6. Relying on Section 34 of U.P Trade Tax Act, 1948 (hereinafter referred to as the 'Act, 1948'), it has been first submitted by Sri Sinha, the first charge over the ‘property-in-dispute’ was created in the year 2005, in favour of the State Bank of India. Undisputedly, it is a ‘banking company’ as defined under the Banking Regulation Act, 1949 (hereinafter referred to as the Banking Act). Therefore, by virtue of Section 34(2) of the Act, nothing contained in Section 34(1) of the Act, would apply to the transaction in questio