Allowed

Azad Rahim v. the State of Kerala and Others

Kerala HC16 Nov 2016WP(C)/1173/2010

Case brief

AI extract

What is this about?

The petitioner sought writ relief against the State for refusal to effect mutation of land purchased in a court auction from an official liquidator. The Court observed that the Company Act priorities protect the auction purchaser's right to mutation, even when the property was attached for tax dues, overriding the Sales Tax Act.

What did the court decide?

Directions issued to the District Collector and Tahsildar to effect mutation in favour of the petitioner within two months from the date of receipt of the judgment copy.

Azad Rahim Vs the State of Kerala and Others — Company and Corporate | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE SMT. JUSTICE P.V.ASHA

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WEDNESDAY, THE 16TH DAY OF NOVEMBER 2016/25TH KARTHIKA, 1938

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WP(C).No. 1173 of 2010 (V)

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PETITIONER(S) :

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AZAD RAHIM, AGED 58 YEARS, S/O. A.A.RAHIM, MALIKAVEEDU, LAKSHMI NADA, KOLLAM.

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BY ADVS. SRI.G.SREEKUMAR (CHELUR) SMT.PREETHY KARUNAKARAN SRI.K.RAVI (PARIYARATH)

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RESPONDENT(S) :

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1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVT., REVENUE DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM.

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2. THE DISTRICT COLLECTOR, COLLECTORATE, KOLLAM.

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3. THE TAHSILDAR, TALUK OFFICE, KOLLAM.

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BY SPL. GOVERNMENT PLEADER SRI. C.E.UNNIKRISHNAN BY SPL. GOVERNMENT PLEADER SRI. P.RAVINDRA NATH

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16-11-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Msd.

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WP(C).No. 1173 of 2010 (V)

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APPENDIX

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PETITIONER(S)' EXHIBITS :

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EXHIBIT P1: A TRUE COPY OF THE SALE DEED EXECUTED IN THE NAME OF THE PETITIONER DATED 16.11.2006.

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EXHIBIT P2: A TRUE COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER BEFORE 3RD RESPONDENT DATED NIL.

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EXHIBIT P3: A TRUE COPY OF THE COMMUNICATION BY THE TAHSILDAR, KOLLAM TO THE SECOND RESPONDENT DATED 24.01.2007.

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EXHIBIT P4: PHOTOCOPY OF THE LETTER NO. T.S.NO.111/CP 29/98/F.9 2834/2007 DATED 23.02.2007.

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RESPONDENT(S)' EXHIBITS :

NIL

//TRUE COPY//

P.A.TO JUDGE.

Msd.

P.V.ASHA J.

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W.P.(C).No.1173 of 2010

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--------------------------------------------- Dated this the 16^th day of November, 2016

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J U D G M E N T

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The grievance of the petitioner is over the refusal of the respondents in effect mutation of the land he purchased in an auction through Court.

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The petitioner is the auction purchaser of 89.104 cents of land lying in Sy.No.207/1, 2, 3 etc., in Thrikadavur Village, in a sale conducted by the Official Liquidator, on the basis of orders passed by the Company Court in C.P.No.29/1998 in respect M/s.Sun Refineries Private Ltd., which was in liquidation. The sale was confirmed by the Company Court and Ext.P1 sale deed was executed by the official liquidator in favour of the petitioner, on 16.11.2006, registered as per document No.2331 of Anchalummood Sub Registry.

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But the respondents did not effect mutation in the name of petitioner, on the ground that huge amount was due from the M/s.Sun Refineries Private Ltd. to Government towards sales tax and therefore clarification was required from the District Collector as to whether mutation can be effected in favour of the auction purchaser. Even after seeking clarification

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W.P.(C).No.1173 of 2010

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as early as on 24.01.2007, as per Ext.P3 letter of the Tahsildar, as the respondents were not taking any positive action, petitioner approached this Court seeking directions to the respondents to effect mutation in respect of his property, which he purchased in court auction.

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The respondents have filed a counter affidavit stating that huge amounts are due from M/s.Sun Refineries to Govt, and various authorities under Govt. A sum of Rs.2,53,76,586/- along with interest was due towards sales tax for various periods and its properties including the one purchased by the petitioner was attached in the proceedings under the Revenue Recovery Act for realisation of sale tax dues. It is also stated that SLP(C).No.28700/2009 filed by M/s Sundaram Finance is pending regarding the revenue recovery proceedings initiated against the Company. In effect the contention of the respondents is that Govt. of Kerala is having the first charge on the property towards the arrears of sale tax.

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The petitioner has produced Ext.P4 letter of the official liquidator addressed to the Tahsildar informing that the property which was sold, was attached for realizing the dues towards sales tax, bank loan, current charges etc. It was stated that the property was sold by inviting tenders on 9.11.2004

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W.P.(C).No.1173 of 2010

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and the sale was confirmed as per order dated 4.1.2005 of the Company Court in report No.14 and the Official liquidator executed the sale in favour of the petitioner on the basis of the direction as well as permission from the company court. Referring to the provisions in Section 456(2) and 537 (1) of the Companies Act, 1956, the Official Liquidator informed that any creditor of the company can claim the amount due to them with the official liquidator as and when the claims are invited from the creditors of the company by individual notices/advertisements in leading newspapers and they can file claim against the company as and when the claims are invited by the official liquidator.

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Learned Government Pleader submits that the official liquidator has not invited any claims so far.

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I heard the learned counsel for the petitioner and the learned Special Government Pleader.

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The petitioner has purchased the property as early as on 16.11.2006, from the Official Liquidator in the auction conducted through the court on the basis of the interim orders in C.P.No.29/1998. The sale was confirmed by the Company Court and on the basis of permission granted by the Company Court on 20.2.2005 in Co.Appln No.620/2005 in Report No.14 in

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W.P.(C).No.1173 of 2010

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the C.P., the official liquidator executed the sale deed in favour of petitioner in respect of 89.104 cents of property in Sy.No. 207/1, 2 and 3, along with improvements in Trikkadavur village, with all rights and title and the sale deed was registered on 16.11.2006. From the letter of the official liquidator Ext.P4 and from Ext.P1 sale deed, it is evident that the property of the Company was put in public auction after inviting tenders and the sale was confirmed in favour of M/s Vee Pee Associates and that the sale deed was executed and registered in favour of the petitioner who was the nominee of the auction purchaser, based on permission granted by the Company Court and after receiving the entire consideration of Rs.17,74,000/-. Ext P1, sale deed provides that absolute title and ownership is conveyed to petitioner free from all encumbrances.

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Now respondents are objecting mutation on the ground that the company in liquidation was in huge arrears towards sale tax and the property was already attached under Revenue recovery Proceedings. But the respondents have not stated anything regarding action if any they took, when tenders were invited for the auction or against the sale which is already confirmed by the company court. Thus there is no justification

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W.P.(C).No.1173 of 2010

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in the refusal to effect mutation of the property in favour of the petitioner, which is permitted in Ext.P1 sale deed. The respondents cannot have any objection as against mutation, when they did not raise any objection against sale.

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The learned Special Govt. Pleader vehemently argued that the property which the petitioner purchased was already attached towards the huge amount due from the Company towards Sales Tax and when first charge is created over the property, it cannot be mutated on the basis of a subsequent transfer in the light of Section 26B of the Kerala General Sales Tax Act, 1963. It was also pointed out any transaction involving the property after the attachment would be void and hence the petitioner cannot have any title free from the said charge.

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This court has already considered a similar issue in Assistant Commissioner Assessment Kollam v. Official Liquidato r [2014 (1) KHC 233] in which it was held that Section 26B of the KGST Act would not prevail over the priorities under Section 529A of the Companies Act and upheld the right of the auction purchaser to get mutation effected in his favour.

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Under the above circumstances, there will be a

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W.P.(C).No.1173 of 2010

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direction to the respondents 2 and 3 to see that appropriate steps are taken to effect mutation in favour of the petitioner in respect of the property covered by Ext.P1, at any rate, within a period of two months from the date of receipt of copy of the judgment.

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The writ petition is allowed accordingly.

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Sd/-

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P.V.ASHA, JUDGE.

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Azad Rahim v. the State of Kerala and Others

Case brief

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Azad Rahim v. the State of Kerala and Others

Case brief

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