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2019 DIGILAW 837 (HP)

Vyudha Technologies Pvt. Ltd. v. State of H. P.

2019-07-02

ANOOP CHITKARA, V.RAMASUBRAMANIAN

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JUDGMENT : V. Ramasubramanian, J. 1. The purchaser of the property in an auction conducted by the authorized officer of Nationalized Bank in terms of provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (for short ‘SARFAESI Act’) has come up with the above writ petition, challenging the claim made by the Excise and Taxation Department of the State of Himachal Pradesh that they have first charge over the property purchased by the petitioner. 2. Heard Mr. Athar Ahmed, learned counsel for the petitioner, Mr. Ashwani Sharma, learned Additional Advocate General, for respondent nos. 1 to 4 and Mr. B.C. Negi, learned Senior Counsel for respondent nos. 5 and 6. 3. A company by name the M/s Rupana Paper Mills Pvt. Ltd. availed credit facilities from a consortium of Banks of which Punjab National Bank was a leading Bank. They mortgaged the land and their factory premises in favour of the bank, as a security for the repayment of loan, way back in the year 2004. The facilities granted by the Bank was later enhanced and the mortgage was reiterated in the year 2013. 4. After the borrower committed default in repayment, the bank approached the Debt Recovery Tribunal by filing an application in OA No. 151 of 2016 under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993 and secured a certificate of recovery for an amount of Rs. 220 crores. 5. Thereafter, the Bank initiated proceedings under the SARFAESI Act by issuing Demand Notice under Section 13(2) on 13.3.2015. It was followed by Possession Notice dated 18.12.2015 under Section 13(4) of the SARFAESI Act. Thereafter, the properties were brought to sale through an auction sale notice dated 03.06.2017. 6. At that time, it came to the notice of the Bank that the Excise and Taxation Department had served a notice dated 24.6.2017 claiming a first charge on the properties, for the Value Added Tax dues of the borrower Bank. Therefore, the Punjab National Bank and the Indian Overseas Bank, who are respondent Nos. 5 and 6 herein, came up with the Writ petition being CWP No. 1638 of 2017, challenging the notice dated 24.6.2017 issued by the Excise and Taxation Department. Therefore, the Punjab National Bank and the Indian Overseas Bank, who are respondent Nos. 5 and 6 herein, came up with the Writ petition being CWP No. 1638 of 2017, challenging the notice dated 24.6.2017 issued by the Excise and Taxation Department. During the pendency of the writ petition, this Court permitted the Punjab National Bank to proceed with the sale and sale was complete and sale certificate was issued on 12.12.2018. The petitioner in this writ petition became a highest bidder in whose favour the sale certificate was issued. 7. After the sale certificate was issued, the petitioner realized that it could not enjoy the fruits of its purchase, because of the claim made by the Excise and Taxation Department, which has become subject matter of dispute in the writ petition filed by the bank being CWP No. 1638 of 2017. Therefore, the auction purchaser has come up with this independent writ petition, seeking a mandamus to direct the State and the Excise and Taxation Department to lift their lien. Since the prayer in this writ petition is also related to the prayer made in the writ petition filed by the two Nationalized Banks, this writ petition was tagged alongwith other writ petition. But today, both the writ petitions could not be taken up for disposal as the writ petition filed by the Bank raises certain contentious issues relating to Section 26 of the H.P. VAT Act, 2005. However in the present writ petition, the scope of the dispute can be narrowed down for the reason that the petitioner purchased the property in question for a sum of Rs. 39 crores and the entire sale proceeds have now been kept in the Bank under the orders of the Court for any eventuality. The claim of the Excise and taxation Department for the statutory dues is only to the tune of Rs. 36 crores. Therefore, even if the State succeeds, they can be paid the statutory dues from out of the amount lying in the bank. In other words, the dispute now has got narrowed down to the sharing of the sale proceeds or the entitlement of one or the other of the parties to share the money and the parties to such dispute are only the Bank and the State. In other words, the dispute now has got narrowed down to the sharing of the sale proceeds or the entitlement of one or the other of the parties to share the money and the parties to such dispute are only the Bank and the State. Since the petitioner need not wait the outcome of the litigation between the State and the Nationalized Bank, and also since the relief granted to the petitioner in this writ petition will not have any bearing upon the rights of the Bank or the State, this writ petition will stand allowed. The charge said to have been created in terms of Section 26 of the H.P. VAT Act, 2005 shall stand lifted from the immovable property purchased by the petitioner and shall stand attached to the sale proceeds of the properties for the present. The entitlement of the State vis-a-vis with the Bank will be decided in CWP No. 1638 of 2017. 8. The writ petition is allowed on the above terms alongwith pending applications, if any.