WP/2675/2004 of State Bank of Hyderabad rep., by its Vs The Commercial Tax Officer, Ferozguda Circle, on 6 February 2026

1. The instant writ petition has been filed by the State Bank of India (formerly State Bank of Hyderabad) challenging the notice of sale issued.in Form No.7 under Section 36 of the Revenue Recovery Act, L864, dt.30.01.2004, by the 2',d respondent-Deputy Commissioner (Tax Officer), as being illegal, without jurisdiction, and violative of the principles of natural justice and also consequently prayed to stay of all further proceedings, including the auction of immovable properties bearing Plot Nos.68 to 77 to an extent of 25OO sq. yards with RCC shed to the extent of 3022 sq. ft with two industrial sheds bearing Nos.8-66 ,8-66/L(3O22 sq. ft each) in Survey No.311 and 312 of IDA, Bachupalli, Quthbullapur Mandal, Ranga Reddy District, and for ,1

issuance of a clearance certificate in respect of the said properties to the petitioner-Bank.

2. The brief facts of the case are that the petitioner-Bank is a statutory corporation and in pursuance of the state policy, to promote industriahzatron of the states, it had advanced loan facilities to M/s Universal Packaging Industry, a partnership firm with Syed Ishak Hussain, as Managing Partner, and Smt Parwin Taj, as other partner and to M/s Amaran Packets Pvt. Ltd., a private limited company, with Syed Anwar Hussain as Managing Director and Smt Zikera Sultan, as other Director, by mortgaging immorrable properties comprising Plot Nos.68 to 77 to an extent of 2500 sq. yards with RCC shed to the extent of 3022 sq. ft with two industriai sheds bearing Nos.B-66, 8- 66/l(3O22 sq. ft each) in Survey No.311 and 312 of [DA, Bachupatli, Quthbullapur Mandal, Ranga Reddy District.

3. The petitioner further contends that as the said loanees failed to clear the loan dues, their accounts \ rere classified as Non-Performing Assets (NPAs), consequently by invoking the provisions of SARFAESI Act,2oo2, the petitioner took possession of the mortgaged properties on ll.l2.2oo2. Pursuant thereto, sale notices were issued to the borrowers on 26.07.2003, and after following due process, the \\r properties were sold in a public auction held on 22.12.2003 for a sum of Rs.3B,L},ooo/-, and the said amount was adjusted tourards the outstanding dues of the aforesaid two loanees.

4. It is further contended by the petitioner-Bank that the 1.t respondent, by letter, dt.06. 12.2oo3, claimed that the borrowers were in arrears of sales tax dues and, placing reliance on the judgments of the Hon'ble supreme court of India in state Bank of Bikaner & Jaipur a. Nationq.l Iron & Steet Rolting corporation & Otherst and state of Mad.hga prad,esh and. Another a. stqte Bq.nk of Indore & Othersz claimed that the Commercial Tax Department had a first charge over the properties of the dealer in respect of amounts payable under the Act and requested to remit the sales tax arrears for the assessment years lggg-2ooo and 2ool-o2 out of the sale proceeds of the properties belonging to M/s universal packaging Industries and M/s Amaran packaging. Further, the l"t respondent also alleged to have addressed a letter to the 3.d respondent not to register the subject properties situated at Bachupally, Ranga Reddy District. while so, the 2nd respondent got published notices in Form No.S in the Ranga Reddy District Gazette Extraordinary, 1 CivilAppeal No.916j,/1994 , dt.t4.t2.Lgg4 2 CivilAppeal No.11528 of 1996, dt.15.03.2001

dt.26.12.2OO3, attaching the properties of the borrowers for recovery of the said amounts and in the event of failure to pay the dues within fifteen days, the attached properties rvould be put to sale by conducting auction. Thereafter, the 2"cl respondent issued impugned auction notice in Form 7, dt.30.01.2}04 under Section 36 of the Revenue Recovery Act, L864, seeking to attach and sell the aforementioned properties in public auction and the said notice was challenged in the instant Writ Petition.

5. Heard Ms. Asvari.C, learned counsel representing Sri K.V. Subramanva Narsu, learned counsel for petitioner and learned Assistant Government Pleader for Taxes appearing for respondent Nos.1 and 2, and none appeared for the 3.d respondent.

6. Learned counsel for the petitioner-Bank contends that the subject plots belonged to the individual directors and not to the borrowing firms and that, despite a reply sent to the lsr respondent, the properties were nonthless attached and sold in terms of the notices issued under Section 27 of the Act for recovery of the sales tax dues from the dealers.

7. It is further contended by the counsel for petitioner-Bank that Section 16C of the Andhra Pradesh General Sales Tax Act, 1957 (for short the APGST Act'), provides that, notwithstanding anything to the contrary contained in any law for the time being in force, any amount of tax, penaity, interest or other sum payable under the Act shall be the first charge on the properties of the dealer or such person, the lst and. 2"d respondents lacked jurisdiction to attach and sell the subject properties, which were under mortgage to the petitioner-Bank and the possession thereof had been taken by the Bank by invoking the provisions of SARFAESI Act, 2OO2. In the instant writ petition, the petitioner has also challenged the uires of Section 16C of the APGST Act as being unconstitutional being violative of Article 254 of the Constitution of India and is repugnant to the provisions of the Transfer of Property Act, 1882, a central enactment and also contended that SARFAESI Act, 2OO2,being central enactment cannot be superseded by the State enactment.

8. Per contra., the learned Assistant Government Pleader appearing for respondent Nos.l & 2 would contend that Section 16C of the Andhra Pradesh General Sales Tax Act, 1957, unequivocally empowers the sales tax,dues as a first charge on the assets of the dealer. [n view of such statutory first charge, the l.t and 2"d respondents are fulIy empowered to proceed against the subject properties by effecting attachment and bringing them to sale, in accordance with due process of law.

9. It is further contended by the learned Assistant Government Pleader that although the petitioner has chalienged the constitutional vatidity of Section 16C of the APGST Act, no material or substantive grounds have been placed on record to demonstrate that the said provision is violative of any ccnstitutional mandate. As such, it is subrnitted that the rvrit petition is devoid of merits and is liable to be dismissed.

10. We havr: giverr earnest consideration to the submissions of the learned counsel appearing for the petitioner and tkre learned Assistant Governmen[ Pleader for respondent Nos. L and, 2 and perused the material on record 1i. From the facts stated it is evident that the petitioner-Bank hact extencled loan facilities to the borrowers i.e., M/s Universal Packaging lndustry and M/s Amaran Packets pv-t. Ltd., and the said bor-rowers defaulted in repaynrent. It is equally true that the borrowers were in arrears of sales tax dues for the relevant assessment years. Though ttre petitioner has challenged tlte uire.s of Section 16C of the ApGST Act, no cogent material or substantive grounds have been placed on record to demonstrate as to how the said provision is unconstitutional or repugnant to any Central enactment.

12. The Honble Apex court in state of A.p.& others a. McDoutell & Co. & Otherss held as under: "43-... .A law made by Parliament or the legislature can be struck down bg courts on two ground.s and. two grounds alone, ui"z,., (1) lack of legislatiue competence and

(2) uiolation of any of the fundamental rights guaranteed. in Part III of the constitution or of ang other constitutional proui.sion. There is no third ground.'

13. In the present case, the challenge to the constitutional validity of Section 16C of the APGST Act, 1957 was made on mere assertions, unsupported by any material on record. In the absence of any supporting material establishing such infirmities, the challenge to the constitutional validity cannot be sustained and is, accordingly, rejected.

74. Further, a plain reading of Section 16c of the APGST Act makes it clear that the sales tax dues constitute a first charge on the properties of the dealer. The respondents, therefore, were well within 'atR tggo sct62t

e their jurisdiction to initiate recovery proceedings in accordance with law.

15. Apparently, neither thc defaulting borro',vers nor the alleged auction purchasers have been impleaded by the petitioner as parties to the present u,rit petition or the affected parties have choose to participate in these proceedings, though much tirne has elapsecl from the filing of the rrrit petition in 2OO4 and also both the counsel for petitioner as well as the respondent-State are unable to give the status of the property as on toda_v. Thus, in our considered opinion, their presence was necessary for an effective and complete adjudication of the issues involved.

16. Moreover, the clispute essentially pertains to inter se claims between the secured creditor and the statutory authority, while the persons directly affected b), the proceedings or any beneficiaries have not approached this Court, even after a lapse of more than 21 years since the filing of the writ petition. on this ground also, the writ petition is liable to be dismissed.

17. In vieu, of the aforesaid facts and circumstances, vue find no merit in the writ pe[ition as no strbstantial grounds are placed by the \\

petitioner for interference by this court and accordingly the writ petition is dismissed. No order as to costs.

18. However, it is made clear that the affected parties, if so advised and if otherwise entitled in law and if their grievance still survives, are at liberty to challenge the auction proceedings or any other orders affecting their rights before the competent court of law. As a sequel, miscellaneous petitions, if any, pending shall stand closed. . OSMAN ALI BAIG TANT REGIST /TRUE COPY// SECTION OFFICER One Fair Copy to the (For His Hon'ble SRI Lordships Kind and KOSHY r) To, one Fair copy to.the Hon'ble sRl JUST|CE SUDDALA cHALApATHt RAo (For His Lordships Kind Perusal)

1. one cc to sRl K.V.SUBRAHMANYA NARUSU, Advocate topucl

2. 11 LR Copies

3. The Under secretary, Union of lndia, Ministry of Law, Justice and company Affairs, New Delhi

4. Ing..secretary, Telangana Advocates Association, Library, High court Buildings, Hyderabad. -

5. Two ccs to G.l- FoR TAXES, High court for the State of relangana at Hyderabad [OUT]

6. Two CCs to GP FOR STAIVIPS & REGISTRATION, High Court for the State of Telangana at Hyderabad TOUTI

7. Two CD Copies IIt BSR BS

HIGH COURT DATED: 06/0212026 'ir-,lI t' () (J

ORDER

WP.No.2675 of 2004 DISMISSING THE WRIT PETITION, WITHOUT COSTS 2 5 l'1,liB 2i]2$ * * 3 3 a (.