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2017 DIGILAW 197 (RAJ)

VIDEON v. State of Rajasthan

2017-01-17

DINESH MEHTA

body2017
Order : 1. By way of the present writ petition, the petitioner has challenged the seizure as well as the auction proceedings of a loader which according to the petitioner, belonged to it. 2. The facts of the case in brief are that the petitioner is a partnership firm having its principle place of business in Delhi. The petitioner-firm purchased four wheel loader from M/s Larsen & Toubro Limited and thereafter leased out the same to Swadeshi Cement Limited, respondent No.6, which was having its works at Rungtapuram, Tehsil Kotputli Distt. Jaipur. The loader in question was leased out, by way of a lease agreement executed on 30.06.1990, a copy whereof has been placed by the petitioner as Annexure-2 with the writ petition. Pending an outstanding demand against of sales tax to the tune of Rs. 24,03,035/- for the period of 1985-1986 to 1990-1991, the Commercial Taxes Inspector, Special Circle, G Jaipur attached the loader in question from the power and possession of respondent No.6 for securing its recovery. Said Swadeshi Cement Limited, respondent No.6 made a representation to the Commercial Taxes Officer vide its letter dated 16.8.1991 stating inter alia that the loader in question was not owned by them and as a matter of fact; was owned by Videon, (the petitioner) and said Swadesh Cement was only having lease hold rights of the loader, for which they have been paying annual lease rent. Respondent No. 6 sent yet another reminder dated 21.10.1991 with more or less the same contents. In the meanwhile, the Commercial Officer issued a public notice, dated 23.09.1991, 10.12.1991 and 7.1.1992, which is turn were got published in Rajathan Patrika on 27th August, 1991, Dainik Navjyoti on 23 November, 1991 and on 02nd January, 1991 respectively. Ultimately as the defaulter assessee did not pay the amount of demand against it, the Commercial Taxes Department auctioned the said loader on 7.1.1992. 3. According to the case of the petitioner, he came to know about such auction only in the last week of January, 1992 when his representative came to Rajasthan for collection of the lease money. 4. Learned counsel for the petitioner Mr. 3. According to the case of the petitioner, he came to know about such auction only in the last week of January, 1992 when his representative came to Rajasthan for collection of the lease money. 4. Learned counsel for the petitioner Mr. Alkesh Sharma arguing the case on behalf of the petitioner submitted that the proclamation of sale of the loader in question issued in Form No. STR 4 was illegal inasmuch as the loader in question did not belong to Swadeshi Cement Limited, for which he invited attention of the Court towards lease agreement dated 30.06.1990. Learned counsel for the petitioner raised an argument that the source of power of attachment is contained in Rule 65 of the Rajasthan Sales Tax Rules, 1955 which empowers an Assessing Officer to attach and recover the dues of the assessee by sale of movable assets. Advancing his argument further, he submitted that the Assessing Officer was made aware by the assessee M/s. Swadeshi Cement Limited, respondent No.6; by way of his representations dated 16.8.1991 and 21.10.1991 that it was not the owner of the loader and as a matter of fact the owner was Videon, the petitioner herein. Mr. Alkesh Sharma Vehemently argued that a plain reading of Rule 65 shows that the recovery can be made from sale of movable properties of the assessee-dealer, whereas in the present case assessee was Respondent No.6 and the loader in question did not belong to it. He submitted that in the present factual matrix attachment sale of the loader in question was per se, illegal and contrary to Rule 65 and the petitioner is entitled to the amount recovered from sale of said loader. 5. Learned counsel for the respondents submitted that the loader in question was attached on 30.03.1991 from the power and possession of Swadeshi Cement Limited, respondent No.6; who himself requested vide letter dated 22.3.1991 to release the said loader by claiming it to be belonging to it (assessee). Learned counsel for the respondents invited attention of the Court towards Annexure.R-2, whereby the loader was firstly released by the Additional Commissioner, in pursuance of the request made vide above referred letter dated 22.3.1991, written by its counsel. Learned counsel for the respondents invited attention of the Court towards Annexure.R-2, whereby the loader was firstly released by the Additional Commissioner, in pursuance of the request made vide above referred letter dated 22.3.1991, written by its counsel. Counsel for the respondents argued that the loader in question has been auctioned on 10.01.1992 and it is too late in a day to quash the auction proceedings particularly at the instance of the petitioner, who had never come into picture, till the loader was sold. Main thrust of the argument of learned counsel for the respondents, was that it is/was essentially a dispute between the petitioner and respondent No.6 for breach of trust or for not informing the petitioner. He went ahead to contend that it is, rather a case of connivance between the petitioner and respondent No.6, who at first instance did not pay the Government dues and then permitted loader in question to be auctioned and now they have brought to fore, the lessor, as the petitioner to set at naught, the auction proceedings on a technical ground. 6. I have heard the arguments on behalf learned counsel for the parties and gone through the record. Before adverting to the legal submission made by the counsel for the petitioner, it would be appropriate to first look at the conduct of the parties involved in the present case. As facts stated, the petitioner is a lessor having given the loader in question on lease hold rights to respondent No.6, Swadeshi Cement Limited. After seizure of the vehicle on 20.03.1991, respondent No.6 Swadeshi Cement requested the Additional Commissioner to release the loader without disclosing that the same is on lease hold rights with it and has got it released. With a view to get the loader released, respondent No.6, through the counsel made a representation at 22.03.1991 and invoked the sympathy of the departmental authorities by saying that it is a sick company and if the vehicle is not released, their manufacturing process would come to a stand still. Subsequently Respondent No.6, Swadeshi Cement Limited, the lessee kept on writing letters to the Commercial Taxes Officer seeking release of the vehicle as the same did not belong to it and belonged to Videon, the petitioner. At the time of making representation dated 21.10.1991, the respondent No.6 was very much aware that loader in question would be going to be auctioned. At the time of making representation dated 21.10.1991, the respondent No.6 was very much aware that loader in question would be going to be auctioned. Inspite of the fact that the loader was attached and being put to distress, said respondent No.6 did not think it appropriate to inform the petitioner, being lessor about the attachment of the equipment. It is interesting to note that in the first two representations sent by the respondent No.6, it did not enclose copy of the lease agreement, however it was only on 10.01.1992, when the said loader stood auctioned on 07.01.1992, respondent No.6 produced the photocopy of the lease agreement for perusal of the Commercial Taxes Department. It is inquisiting that prior to auction the loader, the department has issued three public notices in the newspaper, had the petitioner any legitimate objection or concern, it ought to have raised objection before the authorities or availed its remedies prior to the date of auction i.e. 10.01.1992. The loader in question, attached in March 1991, was sold on 7.1.1992, was lying attached for good nine months. The petitioner kept sitting on the wall being a silent spectator, only to raise grudge; after the auction proceedings were concluded. In the present factual backdrop, this Court has strong reasons to believe that the petitioner and respondent No.6 were having hands in a glove. The reason for such belief are not far to seek. As soon as the loader was auctioned on 10.01.1992, the petitioner has sprung into action and filed the original application before the Rajasthan Taxation Tribunal in the last week of January, 1992. If the petitioner being lessor, had any, cause of action or serious concern should have approached the Courts of law, prior to the auction having taken place. The petitioner has enclosed the representations made by said Swadeshi Cement Limited as Anenxure-4 and Annexure-5 with the writ petition, to bring out a case that the Commercial Taxes Department was aware of the factum of the loader being owned by the petitioner. This Court fails to understand as to how the petitioner has got copies of these representations? The natural answer would be: they have been made available by the Respondent No.6 or its Counsel. This Court fails to understand as to how the petitioner has got copies of these representations? The natural answer would be: they have been made available by the Respondent No.6 or its Counsel. It is also interesting to observe that the notices issued by this Court to respondent No.6 have returned unserved which were ultimately served by way of publication of the notices in newspaper, having circulation in Delhi, as directed vide order dt.29.03.2010. Even if, for a moment it is presumed to be a case of bona-fide ignorance, then the petitioner’s essential grievances is against respondent No.6 who has failed to keep the petitioner/lessor informed or posted about the attachment and distress of the leased assets. Under the lease agreement, it was the duty of the lessee to keep the loader intact and harmless and free from damages. The indemnity clause of the lease agreement clearly holds the lessee namely respondent No.6, Swadesh Cement Limited responsible or liable for breach of such condition. 7. In this regard it will be apt to have a look at the lease agreement executed between the parties on 30.06.1990. A perusal thereof, particularly indemnity clause reveals that it was the lessee who was to indemnify the lessor and was required to hold the loader safe and harmless. For ready reference, it is deemed appropriate to reproduce the indemnity clause of the lease agreement as under : - “INDEMNITY : The Lessee agrees to comply with all laws and regulations relating to the transportation, possession, operation and use of the Equipment and assume all liabilities including injuries to or deaths of persons arising from or pertaining to the transportation, possession, operation or use of the Equipment. The Lessee does hereby agree to indemnity and keep indemnified and hold safe and harmless the Lessor against all such liabilities and also against loss of Equipment by seizure by any person than the Lessor for any reason whatsoever or resulting from any legal process instituted by any person other than the Lessor provided that such indemnity shall not apply to such loss as has arisen or arises due to any act, lapse, fault, or other cause on the part of the Lessor.” 8. As such I am of the considered view that the petitioner’s remedy lies against respondent No.6 and not against the Commercial Taxes Department which had bonafidely auctioned the loader in question after following due procedure of law. 9. This Court is not inclined to entertain the present writ petition which has been ostensibly filed by respondent No.6. As this Court is not inclined to entertain the writ petition in view of the above facts, the argument of learned counsel for the petitioner in relation to applicability of Rule 65 of the Rajasthan Sales Tax Rules, 1955 is not delved upon and the question of law is left open to be decided in an appropriate case. Petitioner will however be free to take appropriate remedies against respondent No.6 for the breach of conditions of lease agreement dt.30.06.1991.