TMI Blog2006 (7) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... f the properties comprised in R. S. Nos. 271/2, 271/2B and C, 272, 273/9, 274/1, 274/2, 275/ 2, 266/2B, 267, 270/2, 265/5 and 270/1, Andipatti Taluk, Shanmugasundaram Village consisting of land and building thereon totally measuring 16.09 acres and created equitable mortgage for repayment of the loan. The Nedungadi Bank was amalgamated with Punjab National Bank as per the Nedungadi Bank Limited (Amalgamation with Punjab National Bank) Scheme, 2002. The said scheme of amalgamation has been confirmed as per the notification by the Ministry of Finance Company Affairs, Department of Economic Affairs (Banking Division), Government of India as on February 1, 2003. All the assets and liabilities were taken over by the Punjab National Bank and they have stepped into the shoes with all rights to recover the amount from the debtors of Nedungadi Bank Limited. As stated earlier, Shree Gayathri Cotton Mills (P) Ltd., (formerly Theni Periandavar Textile Mills (P) Ltd.,)/second respondent availed of cash credit facilities for a sum of Rs. 100 lakhs from Nedungadi Bank, Madurai and executed a cash credit agreement, evidencing the loan transaction. Since the second respondent defaulted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the decision in Madras High Court, ICICI Bank Ltd. v. Official Liquidator [2005] 124 Comp Cas 550; [2005] 1 CTC 758. In the abovesaid decision, this court held that the claim of secured creditor will prevail over crown debts and the Income-tax Depart ment cannot claim priority over the debts due to the secured creditor. The claim of the appellant was resisted by the learned Special Government Pleader for the first respondent. It is the definite stand of the first respondent that the appellant cannot claim priority over the debts due to the Department. It is clear that the assessee was liable from the year 1991 onwards and on the other hand, the second respondent created mortgage on September 25, 1997 in favour of the appellant herein. The first respondent claimed priority under section 24(2) of the TNGST Act. Section 24(2) reads as follows: 24. (2) Any tax assessed on or has become payable by, or any other amount due under this Act from a dealer or person and any fee due from him under this Act, shall, subject to the claim of the Government in respect of land revenue and the claim of the land development bank in regard to the property mortgaged to it under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r repayment of the amounts advanced to the respondents by the appellant-bank, the first respondent created a mortgage of the property. In that case, the appellantbank filed a civil suit in O.S. No. 5 of 1986 in the court of the Additional District Judge No. II, Bharatpur against the respondents for the recovery of a sum of Rs. 3,79,672 due with interest. While the suit was pending, the Commercial Tax Officer, Bharatpur got himself impleaded in the suit on the ground that he had a prior claim for the recovery of a sum of Rs. 1,19,122 as sales tax dues from the respondents and was entitled to realize it by sale of the mortgaged property. The claim of the Commercial Tax Officer, Bharatpur rests on the provisions of section 11AAAA of the Rajasthan Sales Tax Act, 1954. Section 11AAAA of the Act is as follows: 11AAAA. Liability under this Act to be the first charge. Notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax, penalty, interest and any other sum, if any, payable by a dealer or any other person under this Act, shall be the first charge on the property of the dealer, or such person. Under this section, the amount of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to the maximum limit of Rs. 5,00,000. The first defendant also executed a power of attorney in favour of plaintiff to collect the proceeds of the bill from the drawees separately. The seventh defendant issued a notice under section 26 of the Tamil Nadu General Sales Tax Act to pay the amount to it as if there are sales tax arrears from the first defendant. In that case, the decision of the honourable Supreme Court was considered and this court has held that the Sales Tax Department has got priority over the amounts due to it. A similar case arose under Kerala General Sales Tax Act, 1963 and the same was Delhi Auto and General Finance Pvt. Ltd. v. Tax Recovery Officer [1999] 114 STC 273 (SC); [1998] 8 SCC 705. Section 23 of the Kerala General Sales Tax Act is similar to section 24 of the Tamil Nadu General Sales Tax Act and interpreting the same, their Lordships said thus: (page 275) . . . it is idle to contend that the appellant has a priority for payment of the amount due to him over the sales tax amount due to the State from the borrower under the Kerala General Sales Tax Act. The appellant-lender's contention that he had a priority for payment of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X
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