O S F C v. Sto

OJC No.3403 of 1994

1. 19.12.2018

By way of this Original Jurisdiction Case, the petitioner-Orissa State Financial Corporation (for short, ‘Financial Corporation’) has challenged the action of the State Government, whereby the State Government has issued notice of attachment dated 23.02.1994 in Form-2 under Annexure-1, which is supposed to have been issued against the original assessee [M/s Nandighosh Combines (P) Ltd.] whose properties were attached by the Financial Corporation and pursuant to issuance of such notice, the petitioner-Corporation has put its objection vide Annexure-11 and filed petition dated 17.03.1994 under Annexure-12 for allowing at least three months’ time to the petitioner-noticee to collect necessary document and papers for putting his claim in the tax recovery proceeding.

Learned counsel for the petitioner mainly contended that the petitioner-Financial Corporation vide Annexure-9 has issued notice dated 21.09.1992 of recalling the loan amount under Section 30 of the State Financial Corporation Act, 1951 (for short, ‘SFC Act’) followed by notice dated 17.10.1992 (Annexure-10) issued under Section 29 of the SFC Act, for taking possession of the Industrial Unit. On failure to recover the loan, the properties of the Industrial Unit, i.e., the loanee, was put to auction and it was informed vide Annexure-11 to clear up the entire dues along with up-to-date interest and other charges. It is further contended that in spite of their objection, the same were not heeded to by the Sales Tax Officer, for which they are constrained to approach this Hon’ble Court.

We have heard learned counsel for the petitioner. No doubt, the Financial Corporation has the power to

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issue notice under Section 29 of the SFC Act for recovery of the loan dues. Nonetheless, under the Constitution, the Taxing dues have the precedence over other dues. The assessment has been done and agreement has been entered into much much prior to disposal of the property. Property came to be disposed of vide Annexure-11, i.e., on 27.10.1992, whereas the attachment is sought for nonpayment of tax dues from August, 1985 to 31^st March, 1991. The total amount comes to Rs.13,91,331/- as on 23^rd February, 1994. It is stated at the Bar that the property was put to auction only on 30.11.1992.