MADHAVIBEN JITENDRABHAI RUPARELIYA vs STATE OF GUJRAT
SCR/SPECIAL CIVIL APPLICATION NO.9565 of 2023
Facts:
1.Dispute pertains to a land bearing Block No.496 (old Revenue Survey No.388/1, 401 and 414) situated at village Rakanpur, Tal. Kalol, Dist. Gandhinagar admeasuring 17,401 Sq. Mts. paiki Sub-plot Nos.5 and 6 admeasuring 1343.50 Sq. Mts. The aforesaid land was originally owned by Shakarabhai Jesingbhai Patel and seven others. The said was a non-agricultural land for which N.A. order was passed in the year 1993 and the land was thereafter sub-divided for industrial purpose by Shakarabhai J. Patel and other co-owners. The petition is concerned with parcel of land bearing Sub-plot No.5, admeasuring 1343 Sq. Mts. in Block No.496 paiki as well as Sub-plot No.6.
2.Both M/s. Pramukh Pharmaceuticals as well as Akshar Steel Feb Industries sold their respective lands bearing Sub-plot Nos.5 and 6 to M/s. Helios Enprint Limited in the year 1996. 3.4 On 6.8.1997, revised N.A. permission for Block No.496 paiki Sub-plot Nos.5 and 6 admeasuring 1343.50 Sq. Mts. was granted by the Deputy Development Officer, Kalo. In the year 2000, Helios availed various financial facilities from respondent No.4 Bank by mortgaging the aforesaid subject property and charge was created on the land to the tune of Rs.70 Lacs in favour of respondent No.4 and the same was recorded in the revenue record for which Entry No.2624 was mutated
3.It is the case of the petitioner all throughout as canvassed in the petition as well as in the written submissions that actually, both the parcels of land i.e. Block No.496 paiki Sub-plot Nos.5/1 and 5/2 and Sub-plot No.6 was owned by M/s. Dolplast Machinery and the same had never belonged to Helios. In the year 2002 – 03, upon Helios having defaulted on repayment of loan and was declared a non-performing asset, the respondent No.4 Bank initiated the proceedings under SARFAESI Act by filing Original Application No.264 of 2003 before the Debts Recovery Tribunal, Ahmedabad.
4.As Helios also did not make any payment towards the liability of Sales Tax – the respondent No.3 department, a charge over the subject land was registered on 15.9.2006. According to the petitioner, the aforesaid charge was registered by the Sales Tax department after a period of six years and six months after the charge of respondent No.4 Bank was registered as back as in the year 2000.
5.On 12.10.2007, pursuant to a public auction conducted by respondent No.4 Bank in respect of the subject land, respondent No.5 – Minaxiben who happens to be wife of petitioner No.2 and Director of petitioner No.1 Company participated in the bidding and as she was the highest bidder, the Bank issued a certificate of sale in her favour in respect of movable and immovable property lying inside the property. Subsequently on 2.5.2008, registered Sale Deed was executed by the Bank in favour of respondent No.5 – Meenaxiben for which Entry No.1146 was mutated mentioning that the Bank through its authorized signatory had sold the subject land in favour of respondent No.5 – Minaxiben
6.Thereafter, respondent No.5 – Minaxiben sold the subject land to petitioner No.1 who was represented through petitioner No.2 by way of registered Sale Deed. On 31.5.2022, the respondent No.4 Bank issued No Objection Certificate for entering the name of the petitioner in the revenue record. Therefore, the petitioner No.1 once again approached Mamlatdar for mutation of its name in the revenue record. However, Mamlatdar, Kalol on 21.11.2022 passed an order rejecting the application of the petitioner on two grounds i.e. that seller’s name does not tally as per village Form No.7/12 and that over the land in question, there is already a charge registered in favour of respondent No.3 department.
7.Application is filed challenging the order.
Issue: Who will have first charge over the property in question i.e. Secured Creditor or the State / Central Government (Crowns debt) on account of non-payment of dues of Sales Tax department?
Argument:
Respondent:
1.Counsel for state argued that the petitioners are not entitled for the discretionary relief because whether the Bank has the “first charge” or not cannot be decided in the petition at the instance of the present petitioner i.e. auction purchaser. That the petitioners cannot maintain the petition especially when, the erstwhile owner namely Minaxi Manishbhai Hansoti has never challenged the attachment order passed by the Sales Tax Department. That the petitioner cannot be said to be to be “auction purchaser” but a “subsequent purchaser.
2It was argued that admittedly the auction was held on “as is where is whatever there is basis” and therefore the right of the authorities with respect to the charge does not go away.
Decision: The Hon’ble HC allowed the petition and held that Secured Creditor will have first charge.
Rationale:
1.Hon’ble HC noted that each of the petitioners are bonafide purchasers of the property in question and they have purchased the property by way of auction conducted under the provisions of law and more particularly, pursuant to the proceedings before the Debts Recovery Tribunal and, therefore, after having invested huge amount and after having succeeded in getting the Sales certificate, denial to mutate the name of the petitioners in the revenue records would amount to penalizing the petitioners.
2.It held that Reflection of their names in the revenue record by way of mutation entry is merely a consequential action based upon their title over the property in question. When their title is unquestionable, as the respective Banks have issued Sales Certificate in favour of petitioners, the petitions cannot be thrown away on the ground of alleged delay.
Order:
