Chittapragada Veerraju and anr. Vs. Muppala Rayanim Dora Garu and ors. - Court Judgment

Excerpt:
- central excise act, 1944.[c.a. no. 1/1944]. section 11: [p. santhasivam, a. kulasekaran & s. tamilvanan, jj] possession of property taken by bank under the securitisation & reconstruction of financial assets and enforcement of security interest act, 2002 - claim towards tax due priority - held, where the bank took possession of the property under section 13 of the s..r.f.a.e.s.i. act, it would be a secured creditor and would have precedence over crowns debt namely excise department in instant case, in the absence of specific provision of first charge in central excise act as well as customs act. generally, the dues to government i.e., tax, dues etc (crows debts) get priority over ordinary debts. only when there is a specific provision in the statute claiming first charge over the property, the crowns debt is entitled to have priority over the claim of others. in the absence of such specific provision in the central excise act as well as in customs act claim of secured creditor will prevail over crowns debts. -- securities & reconstruction of financial assets & enforcement of security interest act, 2002 [c.a. no. 54/2002]. section 13: possession of property taken by bank under the act - claim towards tax due priority - held, where the bank took possession of the property under section 13 of the act, it would be a secured creditor and would have precedence over crowns debt namely excise department in instant case, in the absence of specific provision of first charge in central excise act as well as customs act. generally, the dues to government i.e., tax, dues etc (crows debts) get priority over ordinary debts. only when there is a specific provision in the statute claiming first charge over the property, the crowns debt is entitled to have priority over the claim of others. in the absence of such specific provision in the central excise act as well as in customs act claim of secured creditor will prevail over crowns debts. - on the basis of our previous decisions, the decree has clearly to be scaled down in the following way.wadsworth, j.1. this petition arises out of an application under section 19 of madras act iv of 1938. the applicants, who are the petitioners here, sought to scale down a decree dated 26th september, 1936, passed on a mortgage of 8th november, 1920. the mortgage was for a sum of rs. 5,570, made up by the discharge of four earlier promissory notes, the principal of which totalled to rs. 4,300, with interest thereon and a small fresh advance. towards this mortgage there were three payments before suit. on 5th april, 1923, a sum rs. 1200 was paid and appropriated for interest and on 6th june, 1923 a sum of rs. 400 was paid and of this sum rs. 211-14-0 were appropriated for interest and the balance for principal. on 4th october, 1924, a payment o-f rs. 3,367 was made and the endorsement is that it was made towards principal and interest of the debt; that is to say, there was apparently no specific appropriation towards either principal or interest. on the basis of our previous decisions, the decree has clearly to be scaled down in the following way. the principal will be rs. 4,300, the principal of the original note's renewed in the mortgage. the payments actually appropriated before 1st october, 1937, will stand appropriated. the payment made on 4th october, 1924, which has not been specifically appropriated will be disregarded in calculating the amount of interest outstanding on 1st october, 1937, unless it can be established that there has been a specific appropriation before 1st october, 1937, no fresh evidence being admissible. after calculating the amount of interest outstanding on 1st october, 1937, and treating it as discharged, the balance of the debt will be scaled down on the basis that the principal remaining bears interest at the rate laid down in section 12 from 1st october, 1937, and the interest on costs will be scaled down with regard to the provisions of section 9; that is to say, interest will run at 5 per cent, per annum up to 22nd march, 1938, and thereafter at the decree rate of six per cent.2. the petitioner is entitled to his costs in revision from respondents 1 and 2. the application is remitted to the lower court for disposal in the light of this judgment.