LexUNION OF INDIA & ORS. versus SICOM LTD. & ANR.
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A B [2008] 17 S.C.R. 120 UNION OF INDIA & ORS. v. SICOM LTD. & ANR. (Civil Appeal No. 7128 of 2008) DECEMBER 5, 2008 [S.B. SINHA AND CYRIAC -JOSEPH, JJ.] State Financial Corporation Act, 1951 - s.468 - Secured debts under the Act - Recovery of - Held: Would C have precedence over the central excise dues - Central Excise Act, 1944 - s. 11 - Interpretation of statutes - Non- obstante clause in a statute - Interpretation of. Constitution of India, 1950- Articles 13, 372 - Common o law principle of crown debt - Applicability of- Held: Common law which is a law within the meaning of Article 13 of Constitution is saved in terms of Article 372'- However, when Parliament or State Legislature makes an enactment, same would prevail over common lal!J- State Financial Corporation E Act, 1951. Words and phrases: Crown debt - Meaning of. Respondent no.2 borrowed a sum of Rs.51 lakhs from respondent no.1-Corporation by an indenture of F mortgage. The mortgage created under the said document was governed by the State Financial Corporation Act, 1951. Respondent no.2 committed defaults in repayment of the principal amount of loan and interest accrued thereon. Respondent no.1-Corporation G invoked Section 29 of the 1951 Act and took over the physical possession of the mortgaged assets. Respondent no.2 also owed central excise dues payable to the appellant and the latter in order to recover the central excise dues from respondent no.2 sought to H 120 ~. r >- UNION OF INDIA & ORS. v. SICOM LTD. & ANR. 121 attach and seize its properties. Respondent no.1 filed writ A petition. The High Court held in favour of respondent no.1. In the instant appeals, it was contended for the appellant-Union of India that the crown debt and, in B particular, arrears of tax would have priority over all other debts. The question for consideration before the Court was: Whether realization of the duty under the Central Excise Act will have priority over the secured debts in c terms of the State Financial Corporation Act, 1951. Dismissing the appeals, the Court HELD: 1. Generally, the rights of the Crown to recover D the debt would prevail over the right of a subject. Crown . debt means the debts due to the State or the king; debts j._ which a prerogative entitles the Crown to claim priority before all other creditors. Such creditors, however, must be held to mean unsecured creditors. Principle of Crown E debt as such pertains to the common law principle. A common law which is a law within the meaning of Article 13 of the Constitution is saved in terms of Article 372 thereof. A debt which is secured or which by reason of the provisions of a statute becomes the first charge over the property having regard to the plain meaning of Article F 1 372 of the Constitution of India must be held to prevail over the Crown debt which is an unsecured one. It is trite that when a Parliament or State Legislature makes an enactment, the same would prevail over the common law. Thus, the common law principle which was existing on G the date of coming into force of the Constitution of India ' must yield to a statutory provision. To achieve the same purpose, the Parliament as also the State Legislatures inserted provisions in various statutes, providing that the statutory dues shall be the first charge over the H 122 . SUPREME COURT REPORTS [2008] 17 S.C.R. A properties of ·the tax-payer. [Paras 7 and 8] [1.27-B;.O, G- ~ . ~ . Macson Marbles Pvt. Ltd. v~ Union of India (2003) 158 EL T 424 (SC), distinguished B Mis. ,Builders Supply Corporation v. The Union of ·India & Ors. AIR(1965) SC 1061; Superintendent and Remembrancer of Legal Affairs, West· Bengal v. Corporation of Calcutta AIR (1967) SC 997; Bank of. Bihar v. State of Bihar & Ors. AIR (1971) SC 1210; Revathinna/Balagopa/a c Varma v. His Highness Sri Padmanabhadasa Vaima(since deceased) & Ors. (1991) 2 SCALE 1142; Dena Bank v. · Bhikhabhai Prabhudas Parekh & Co. & Ors. (2000) 5 SCC 694; · Sitani Taxtiles & Fabrics (P) Ltd, v. Asstt. Commissioner of Customs& Central Excise,.Hyderabad-1(1999)106 ELT 0 · 296.; (AP); Bank of/ndia v. Siriguppa Sugars & Cheimicals Ltd. (2007) 8 SCC 353; State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling Corporation & Ors. (1995) 2 SCC 19; KSllDC Ltd. v. Secretary, Ministry of Commerce (2005)187 ELT 12 (Kar); /CIC/ Bank Ltd.(Since substituted· · E by Standard Chartered Bank) V. SI
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