At the stage of admission before this Court, the appeal against the Second Respondent was dismissed.32428/93 before the High Court of Karnataka, assailing the claim of the Second Appellant.
As the sales tax authorities were number willing to relent, the First Respondent moved a Writ Petition No.
Being aggrieved thereby, the State of Karnataka hereinafter the First Appellant and the Second Appellant are before us.
RRY.CR.3.92 93.1168 dated 11.8.1993 By a companymon judgment dated 22.9.1999 rendered in four similar writ petitions, the High Court of Karnataka allowed the writ petition.
On 8.1.1993, the Commercial Tax Officer Recovery , Dharwad hereinafter the Second Appellant addressed a letter to the Secretary, Mandal Panchayat, Aloor, Haliyal Taluk, Karnataka, requesting him to enter encumbrance into the Record of Rights of the properties specified therein, on the ground that those properties were the properties of a defaulter of sales taxthe Defaulting Companyto the extent of Rs.21,79,715/ .
This offer was accepted by the Corporation and the sale took place companysequent thereto.
In response to the advertisement, and after several rounds of negotiations, Shreyas Papers P Ltd. hereinafter the First Respondent entered into an agreement with the Corporation for purchase of the land, building, plant and machinery of the Defaulting Company, which was put up for sale.
The Second Respondent, Karnataka State Industrial Investment Development Corporation Ltd. hereinafter the Corporation , had extended financial assistance to the Defaulting Company.
For the first time, by letter dated 8.1.1993 of the Second Appellant to the Mandal Panchayath, Aloor Taluk, the issue of sales tax dues of the Defaulting Company was brought to the surface.
On 17.3.1992, the Corporation advertised the sale of the assets of the Defaulting Company i.e. the land, building, plant and machinery.
In Clause 2 of the offer to purchase dated 5.6.1992 , the First Respondent specifically stated We shall be taking over the unit with zero liabilities and shall number be held responsible for any existing statutory liabilities of the above said unit like Sale Tax, Excise Duty, Municipal taxes, E.S.I. and P.F. development loan, Central and State subsidy and rank liabilities etc.
The High Court held that the petitioner, being the purchaser in the auction from the Corporation, only of the land, building, plant and machinery, companyld number be companysidered as the transferee of the ownership of the business of the Defaulting Company.
It was further stated that the First Respondent being the transferee of the business, was jointly liable to discharge the arrears of sales tax of the Defaulting Company by virtue of Section 15 1 of the KST Act.
The substantive reliefs claimed therein were two fold Declare that the provisions of Section 15 of the Karnataka Sales Tax Act are void Issue a writ of mandamus or any other appropriate writ or order or direction restraining the respondents 1 and 2 number to take any action against the petitioner for the recovery of the alleged sales tax recovery as mentioned in the companymunication No.
This is further borne out by the companyrespondence between the First Respondent and the Corporation.
Acting under the provisions of Section 29 1 of the SFC Act, the Corporation took over the assets of the Defaulting Company.
and labour dues.
The Facts in Civil Appeal 3170/2000 A companypany by name Mishal Paper Mills P Ltd. hereinafter the Defaulting Company , was running a medium scale duplex board manufacturing unit.
except as agreed in the meeting for KEB.
However, the Defaulting Company defaulted in repayment of the loans granted to it by the Corporation.
A letter was addressed, as requested, on 5.7.1993 by the Corporation to the Second Appellant.
It also numbered that the assets of the Defaulting Company had been transferred from the Corporation to the First Respondent on 12.8.1992.
On 11.8.1993, the Second Appellant issued a numberice under Section 15 of the KST Act informing the First Respondent that a charge had been created on the properties of the Defaulting Company on 17.2.1992 as the latter had defaulted in payment of sales tax.
The First Respondent wrote a letter dated 31.5.1993 to the Corporation thereby requesting that a letter be addressed to the Second Appellant to withdraw his letter dated 8.1.1993, as the Corporation was the first charge holder and the assets had been sold to it by the Corporation free of all charges.
