Syndicate Bank vs The Deputy Commissioner of Commercial Taxes (Recovery-1)

A.N. Venugopal Gowda, J.—Hotel Vandana Palace had taken loan from the petitioner. Because of its default in repaying the said loan, the petitioner took action under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ''the Act''). After taking formal possession of the mortgaged property, which was given as a security for due discharge of the loan, the said property was put to auction sale. Sri Vasu P. Shetty was the highest bidder and his bid was accepted, resulting into issuance of the sale certificate. Respondents having served on the petitioner the demand notices as at Annexures-A, B and C, to remit the sales tax dues amounting to Rs. 8,51,816/- and Rs. 6,08,950/- being the interest, out of the auction sale proceeds of the share of Sri Vittal M. Punja, partner of M/s. Vandana Palace, assailing the demand made vide Annexures-A, B and C, these writ petitions were filed on 6-7-2009 and an interim stay was granted on 15-7-2009. Heard Sri J.S. Shetty, learned Advocate for the petitioner and Sri A.G. Maldar, learned High Court Government Pleader for the respondents.

Hotel Vandana Palace had challenged the said auction sale conducted by the petitioner by filing an application before the Debts Recovery Tribunal. The application having been dismissed, writ petition filed, also having been dismissed, Writ Appeal No. 6368 of 2011 (GM-DRT) filed was allowed on 21-11-2011 M/s Hotel Vandana Palace Vs. The Authorized Officer under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Syndicate Bank, and the auction sale conducted by the petitioner in favour of Sri Vasu P. Shetty was set aside. The said judgment, when questioned by Sri Vasu P. Shetty, was upheld in C.A. No. 4679 of 2014 decided on 22-4-2014, by the Apex Court (See Vasu P. Shetty Vs. Hotel Vandana Palace and Others, ). The demand vide Annexures-A, B and C made by the respondents cannot now be enforced, on account of the said auction sale conducted by the petitioner having been set aside by the Division Bench of this Court and also having been upheld in the decision reported at Vasu P. Shetty''s case.

In the result, writ petitions are allowed and the respondents are prohibited from enforcing the demand made vide Annexures-A, B and C against the petitioner. However, this order would not come in the way of the respondents demanding the arrears and realising the same by proceeding against the partnership firm M/s. Hotel Vandana Palace, Khade Bazaar, Belgaum and its partners.