AIR 2003 (NOC) 101 (ORI) ::2002 A I H C 3827 ::(2002) 2 BankJ 424 ::(2002) 144 ELT 257 ::(2002) 93 Cut LT 460 ::(2002) 1 Orissa LR 558

Orissa High Court

Hon'ble Judge(s): P. K. BALASUBRAMANYAN, C. J. , C.J. AND , A. S. Naidu , JJ

State Financial Corporation Act (1951) , S.29, S.468— Enforcement of mortgage - Recovery of excise dues - Principle of priority of crown's debt - Applicability - Undertaking of defaulter taken over by Financial Corporation and subsequently sold by Financial Corporation under S. 29 to petitioner-company - Excise duty outstanding against defaulter can be enforced against transferee from Financial Corporation i.e. petitioner-company. Central Excises and Salt Act (1 of 1944) , S.37— The debt payable under the Central Excise Act and assessed as outstanding, is a debt due to the State (Union of India) and consequently, it is a crown debt which has precedence over the mortgage debt which can be recovered by the Financial Corporation by proceeding under S. 29 of the Financial Corporations Act. Since R. 230(2) of the Excise Rules read with S. 11 of the Excise Act entitles the department to recover the amount from the manufacturing unit or the manufacturer or whoever be in possession, the right of the department to proceed against the unit in the hands of the transferee from has to be recognised State Financial Crop. Therefore, where State Financial Crop. in exercise of its power under S. 29 of the State Financial Corporation Act, 1951, took over the Industrial Unit of defaulter with all its assets in terms of S. 29(1) of that Act and subsequently sold ....