Indian Bank Vs Commercial Tax Officer (Madras High Court)
Madras High Court held that provisions of Section 26E of the SARFAESI Act and Section 34 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) would prevail over the provisions of Section 24 of the Tamil Nadu General Sales Tax Act, 1959 (TNGST Act).
Facts- The petitioner is a Nationalised Bank and had sanctioned secured overdraft facilities to the assessees and a loan to the assessee. On 14.08.1990, as a collateral, the assessees created an equitable mortgage over their half undivided share of the land ad-measuring 1 ground and 2105 sq. ft., together with building situated thereupon at Western Row of 103, New Avadi Road, Plot No.A-45, Survey No.77/5, Kilpauk, Chennai (‘property’/’property in question’) by deposit of title deeds.
Documents of title were deposited with the petitioner in the Kilpauk Branch on 29.01.1991 and the creation of equitable mortgage was confirmed under letter dated 30.01.1991. The bank had been a tenant of the assessees, occupying a portion in the basement, ground and first floors of the property in question.
While this is so and the aforesaid arrangement had continued since 1991, the bank was in receipt of notices in Form B-6 issued u/s. 26 of the Act. The notice was to the effect that the assessees were in arrears of sales tax and hence any money which is either due or that may become due to the petitioner from the defaulting assessee or any money held by the petitioner on account of the defaulting assessee is required to be paid forthwith to the Sub-Treasury Officer in favour of the Commercial Tax Officer.
