TMI Blog2007 (1) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... <![endif]--><!--[if gte mso 10]> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch reads as under:- Security for the loan: a) The loan together with interest, commitment charge, premium on pre-payment, costs, charges, expenses and other monies due and payable under this agreement shall be secured by:- i) a first mortgage over the borrowers' immoveable and moveable properties including its moveable machinery, spares tools and accessories, present and future; and ii) a first mortgage on all the remaining assests of the borrower, present and future (save and except book debts in case of hypothecation), subject to prior charges created and/or to be created in favour of the borrowers' bankers on the borrowers' stocks of raw materials, semi finished and finished goods, consumable stocks and book debts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its letter dated 2.8.2004 (P-5) has been that it being secured creditor, was entitled to settle its account from the proceeds of the mortgaged property of M/s Jay Enn Castings and the question of adjusting the dues of Central Excise Department would arise only thereafter. On 14.10.2004, the Superintendent, Central Excise, intimated the PSIDC that the property belonging to M/s Jay Enn Castings was being attached under Section 142 of the Customs Act, 1962 and that the PSIDC was to refrain from disposing of the said property. In response thereto the PSIDC sent a detailed reply on 17.11.2004 (P-7), inter alia, stating that the property belonging to M/s Jay Enn Castings was mortgaged with the PSIDC as a security for recovery of loan which had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department to recover excise duty even after taking over the industry under Section 29 of the SFC Act is to prevail and the PSIDC must give way. According to the respondents in a mortgage only interest in the property is transferred to the mortgagee and the property still lies with the mortgager, therefore, in such a situation the Central Excise Department is vested with full power under Section 11 of the Central Excise Act, 1944 read with Section 142 of the Customs Act to effect recovery of its dues. It is claimed that charge by the Central Excise Department was created on 27.2.1998, which is much earlier than the claim of the PSIDC, which came into picture after M/s Jay Enn Castings started committing default in its payment. Mr. Govin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has rightly placed reliance on para 10 of the judgment where the common law doctrine of preferring crown debts has not been extended to granting priority over the secured private debts. The aforementioned para deserves to be extracted extenso: 10. However, the Crowns preferential right to recovery of debts over other creditors is confined to ordinary or unsecured creditors. The Common Law of England or the principles of equity and good conscience (as applicable to India) do not accord the Crown a preferential right for recovery of its debts over a mortgage or pledge of goods or a secured creditors. It is only in cases where the Crown's right and that of the subject meet at one and the same time that the Crown is in general preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Department does not deserve to be accepted because in that case the question raised in the instant petition is not debated. There was no issue as to whether in their capacity as mortgagee the financial institution was entitled to realise its dues in preference to the dues of the Department of Central Excise or the crown debts. Therefore, the reliance on the judgment of Hon'ble the Supreme Court in Macson Marbles's case (supra) is wholly misplaced, does not advance the case of respondent Nos. 1, 2 and 3. Therefore, we have no hesitation to reject the argument. C.W.P. No. 3875 of 2005 For the reasons aforementioned, this petition succeeds. We declare that the PSIDC have a preferential right to recover its dues as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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