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2021 (10) TMI 846 - HC - VAT and Sales TaxSeeking restraint on respondent-State authorities from adopting coercive measures against the property purchased by the petitioner company - preferential rights of secured creditors - charge created over the ‘property-in- dispute’ - plea of alternative remedy - HELD THAT:- Undisputedly, the State Bank of India is a ‘banking company’ defined under the Banking Act. Therefore, it became open to it to raise a plea based on Section 34(2) of the Act. A plain reading of that provision brings out the existence of a non obstante clause created by the legislature. Thus, nothing contained in Section 34(1) of the Act, 1948 shall apply to (i) a charge created in favour of the State Bank of India or (ii) transfer made ‘in favour’ of the State Bank of India. In face of the charge (over the ‘property-in-dispute’), created ‘in favour’ of the State Bank of India on 08.11.2005, it survives for consideration whether despite that charge being satisfied on 15.07.2014, it insulated the transfer of the ‘property-in-dispute’ made in favour of the petitioner, on 16.07.2014, from the recoveries being sought by the revenue authorities. Section 34(2) of the Act insulates a 'charge' or 'transfer' made ‘in favour of’ a ‘banking company’, as defined under the Banking Act. Hence, spoken in the literal sense, that transfer may not appear to be directly protected under subsection (2) of section 34. Though the debt of the State Bank of India may remain a secured debt against its charge existing on the ‘property-in-dispute’ and it may remain entitled to recover its dues upon sale of the ‘property-in-dispute’, to the exclusion of the Crown/state dues, however, that sale may be obtained only in its own name - there is absolutely no warrant to allow for such an anomalous, uncertain, and therefore undesirable and even absurd result to arise. Plainly, there is nothing in the language of the Act, to allow for such a restrictive condition to be read into the words ‘in favour of’ prefixed to the words ‘banking company’ appearing in section 34(2) of the Act. That narrow meaning (as discussed above) would lead to results that are wholly absurd and may defeat the very object of enactment of Section 34(2) of the Act. In the facts of the present case, there is absolutely no doubt that the transfer of the ‘property-in-dispute’ took place for the sole benefit of a ‘banking company’ as defined under the Banking Act. Therefore, that transaction was covered within the meaning of the words - “in favour of the banking company”. In such undisputed facts, the non-obstante clause pre-fixed to sub-Section (2) of Section 34 of the Act, wholly insulates the sale-deed dated 16.07.2014. In fact, it takes that sale-deed out of the reach and gaze of sub-Section (1) of Section 34 of the Act. The exact wording of the prayer clause apart, in effect that prayer is duly supported by pleadings and material on record. In absence of any doubt as to the rights of the parties that stand established on the strength of undisputed facts noted above, it would be hyper technical to deny relief to the petitioner. The substance and the essence of the prayer made is clear. It arises on a clear cause of action admittedly existing, in the shape of the attachment order enforced by the State respondents. Also, all material facts giving rise to the cause of action and for our decision are undisputed. The writ Court cannot be seen to be diffident or stingy in granting the consequential relief. A writ Court ensures obedience to the rule of law. In that process, relief may flow to the petitioner as a natural outcome of the exercise. Once, the facts are clear and the crease or doubt in law stands cleared, relief must flow unhindered, upon application of that law to the clear facts of the case. It may not be obstructed on mere technicalities – such as the objection to the exact wording of the prayer clause. The respondents are restrained from proceeding against the personal assets of the petitioner or the ‘property-in-dispute’, so however, they may remain at liberty to recover their dues from respondent no. 7 and its properties, in accordance with law - Petition allowed.
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