Allowed

The Fenderal Bank Ltd. v. the Deputy Commissioner of Customs

Kerala HC8 Apr 2013WP(C)/700/2013

Case brief

AI extract

What is this about?

The High Court entertained a writ petition by a bank facing obstruction in selling mortgaged assets due to statutory bonding by Customs and Excise authorities. The Court permitted the sale but directed the petitioners to deposit the portion due to respondents in an interest-bearing account, ensuring debonding for purchaser possession upon proof of dues.

What did the court decide?

Petitioner permitted to sell assets; must deposit amount due to respondents in an interest-bearing account pending DRT adjudication; respondents must debond premises upon deposit.

The Fenderal Bank Ltd. Vs the Deputy Commissioner of Customs — Customs and Excise | Kerala HC (2013)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE ANTONY DOMINIC

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MONDAY, THE 8TH DAY OF APRIL 2013/18TH CHAITHRA 1935

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WP(C).No. 700 of 2013 (J)

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PETITIONER:

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THE FENDERAL BANK LTD., REPRESENTED BY ITS CHIEF MANAGER, ASSET RECOVERY BRANCH, FEDERAL BANK, MARINE DRIVE, KOCHI-682 031.

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BY ADVS.SRI.K.K.CHANDRAN PILLAI (SR.) SRI.THOMAS JAMES MUNDACKAL SRI.BOBBY THOMAS SRI.ARUN ANTONY

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RESPONDENT(S):

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1. THE DEPUTY COMMISSIONER OF CUSTOMS, CUSTOMS HOUSE, KOCHI-682 004.

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2. THE SUPERINTENDENT OF CENTRL EXCISE, COIMBATORE III-E RANGE, COIMBATORE-641 008.

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3. KONCHERRY WEAVERS (P) LTD., MAYITHARA P.O., CHERTHALA ALLEPPEY DISTRICT. REPRESENTED BY ITS MANAGING DIRECTOR K.S.SHAJI PIN:688 539.

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4. UNION OF INDIA,

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REPRESENTED BY THE SECRETARY, MINISTRY OF FINANHCE NEW DELHI-110 001.

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R1,R2 & 4 BY ADV. SRI.THOMAS MATHEW NELLIMOOTTIL,SC,CB EX. R1,R2 & 4 BY ADV. SRI.JOHN VARGHESE,SC,CEN.BOARD OF EX. R3 BY ADV. SRI.T.K.VIPINDAS R3 BY ADV. SMT.P.K.PRIYA R3 BY ADV. SRI.K.V.SREE VINAYAKAN R3 BY ADV. SRI.K.M.MUHAMMED HUSSAIN

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08-04-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 700 of 2013 (J)

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APPENDIX

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PETITIONER(S) EXHIBITS:

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EXHIBIT P1: TRUE COPY OF LETTER DATED 2.6.2011 FROM THE 2ND RESPONDENT TO THE PETITIONER. EXHIBIT P2: TRUE COPY OF LETTER DATED 20.4.2012 ADDRESSED TO THE 2ND RESPONDENT. EXHIBIT P3: TRUE COPY OF THE STATEMENT DATED 10.10.2012 FILED IN WPC 21712/2012. RESPONDENTS' EXHIBITS : EXHIBIT R1(A): COPY OF THE B17 BOND (GENERAL SECURITY) DATED 31/3/2005 EXECUTED BY 3RD RESPONDENT. EXHIBIT R1(B): COPY OF CIRCULAR NO.8/2004-CUS DATED 28/1/2004 ISSUED BY MINISTRY OF FINANCE. EXHIBIT R1(C): COPY OF INSTRUCTIONS IN APPENDIS 16-C ISSUED BY THE MINISTRY OF COMMERCE. EXHIBIT R3(A): COPY OF THE ORDER OF THE DEBT RECOVERY TRIBUNAL, ERNAKULAM DATED 24/4/2012 IN S.A.NO.124/2012. EXHIBIT R3(B): COPY OF THE DEMAND NOTICE ISSUED BY THE RESPONDENTS 1 AND 2. EXHIBIT R3(C): COPY OF THE JUDGMENT IN W.P.(C).21712/2012 DATED 18/10/2012. EXHIBIT R3(D): COPY OF THE I.A.2859/2012 IN S.A.124/2012 FILED BY THE PETITIONER BEFORE THE DEBT RECOVERY TRIBUNAL. EXHIBIT R3(E): COPY OF THE COUNTER FILED BY THE RESPONDENT 1 AND 2 HEREIN BEFORE THE DRT IN I.A.2859/2012 IN S.A.124/2012.

/TRUE COPY/

P.A.TO JUDGE

ANTONY DOMINIC, J

W.P.(C).700/2013

Dated this the 8^th day of April, 2013

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JUDGMENT

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Heard the learned senior counsel for the petitioner, learned Standing Counsel appearing for respondents 1, 2 and 4 and the learned counsel appearing for the 3^rd respondent.

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3^rd respondent had availed of loans from the petitioner and as security thereof, mortgaged different items of properties. 3^rd respondent has committed default and as a result, SARFAESI Proceedings were initiated by the Bank. It appears that in the meantime, 3^rd respondent had imported certain machineries and according to the 1^st respondent, the export obligations were not fulfilled. Suffice it to say that machineries are still kept under bond in a building situated in the secured properties. Although Bank had once sold the property, sale was set aside by the DRT by Ext.R3(a) order.

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The present grievance of the Bank which led to the filing of the writ petition is that, according to them, in view of the

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W.P.(C).700/13

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continued bonding, even if the Bank succeeds in concluding the sale of the mortgaged assets, Bank will not be in a position to hand over possession of the property to the successful bidder. Yet another contention that the Bank raises is that in view of the subsisting mortgage, it has first charge over the secured assets.

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However, the stand taken by respondents 1, 2 and 4 is that in view of the statutory provisions contained under the Customs Act, they are entitled to first charge the property in question and that therefore, they should be allowed to sell the property.

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Parties are in agreement that the dispute as to whether respondents 1 and 2 have first charge over the property in question, is the subject matter of S.A.124/12 which is now pending consideration of the DRT. Therefore, it is for the Tribunal to adjudicate on that issue and pronounce upon the same, after hearing the parties thereof, which includes respondents 1 and 2. Therefore, the only question that survives to be considered in this writ petition is whether pending adjudication of the disputed issue of first charge, Bank should be permitted to proceed with the sale of the mortgaged assets as directed by the DRT in Ext.R3(a)

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W.P.(C).700/13

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order and if the sale materializes, what should be done with the sale proceeds.

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Having heard the submissions made by both sides, I am inclined to think that if the Bank is permitted to proceed with the sale with a direction to keep the required amount out of the sale proceeds, in an interest bearing account, pending adjudication in S.A.124/12, that will not prejudice the interest of respondents 1 and 2.

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Therefore, I dispose of this writ petition with the following directions.

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a)Petitioner/Bank will be at liberty to proceed with the sale of the secured assets of the 3^rd respondent.

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b)Respondents 1 and 2 will intimate to the Bank the amount due to it from the 3^rd respondent and such an intimation shall be given within three weeks from today.

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c)On receipt of the initiation as above, petitioner/Bank shall keep the amount stated

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W.P.(C).700/13

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to be due to respondents 1 and 2 in an interest bearing account, which shall be pending adjudication of the question of first charge by the DRT before which, S.A.124/12 is now pending.

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d)Once the sale materializes and the amount is kept in deposit as ordered above, respondents 1 and 2 shall debond the premises so that, the petitioner/Bank can hand over possession thereof to the successful purchaser.

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e)It is directed that once the above steps are completed, if any balance amount out of the sale proceeds is available, Bank will appropriate the balance amount towards the liability of the 3^rd respondent.

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It is made clear that the directions herein are without prejudice to the contentions of the parties in S.A.124/12.

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Sd/- ANTONY DOMINIC, JUDGE

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mrcs

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/true copy/ PA To Judge

The Fenderal Bank Ltd. v. the Deputy Commissioner of Customs

Case brief

What is this about?

What did the court decide?

The Fenderal Bank Ltd. v. the Deputy Commissioner of Customs

Case brief

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