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2015 (9) TMI 1594 - HC - CustomsDetention of property - property in the nature of a factory with plant and machinery - order of attachment - recovery of outstanding dues of the Customs Department - liability of last owner - The main grounds raised in the petition are that the authorities have no power under Section 142(1) of the Customs Act to take any such action. The action is otherwise arbitrary and violative of Articles 14 and 19(1)(g) of the Constitution. The property was purchased by the petitioner by paying full sale consideration which was executed by the receiver appointed by DRT. The petitioner is, therefore, not liable to discharge any liabilities of the past owner. Held that: - there is fair amount of commonality in the persons representing the erstwhile owner company and the present petitioner company. We may recall that the present sale deed was executed between the said two entities. One Shri Suresh Ramnani is shown to be an additional Director of the erstwhile company who of course ceased to be as such w.e.f. 30-3-2011. Ms. Kajal Suresh Ramnani, wife of Suresh Ramani, is one of the subscriber of the petitioner company. Mr. Suresh Ramnani himself is also one of the subscribers. It is also pointed out that one Mr. Prem V. Ramnani was the Director of the erstwhile company as well as the subscriber of the present company. Another person Mr. Vishandas Ramnani who is also the subscriber of the petitioner company has shown the same address as Mr. Suresh Ramnani, Additional Director of the erstwhile company. Even though, therefore, being legal entities, we may not employ the principle of lifting of the veil and treat both the companies as a clock of each other their transaction must be seen with the degree of circumspection. There cannot be prospective dues of the outstanding taxes. It must refer to the period anterior to the date of execution of the sale deed. Even on this count, the petitioner cannot escape the liability to be answerable to the Customs Department for the past dues of the erstwhile owner. The contention of the petitioner, that the petitioner agreed to discharge only the liabilities arising after the date of the sale deed, is not in consonance with the language used in Clause 3 of Para 15 of the sale deed. Before Section 11E was added to the Central Excise Act, the view prevailing as propounded by the Supreme Court was that in absence of any statutory recognition of a prior charge, dues of the Customs or the Central Excise Department would not prevail over the dues of the secured creditors. Section 11E of the Central Excise Act now provided that the dues of the department will have priority over the case of the secured creditors. Departmental dues would not have priority over the dues of the secured creditor. The question of applicability of Section 11E in the present case, certainly would have been one of the issues to be tackled. In this context, the question would immediately arise whether in view of Rule 9 of the Customs (Attachment) Rules, in face of the attachment imposed by the Customs Department the property could have been sold at all - However, when purchaser itself, as noted, agreed to discharge such dues, this question bales into insignificance. There was no serious delay on part of the department so as to defeat public deeds. The subsequent owner had agreed to discharge the dues of the erstwhile owner, the question whether it was the property of the business which was sold need not be gone into - petition dismissed - decided against petitioner.
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