RANJIT SINGH, J. - (1.) A short, but interesting question of law arises in the bunch of these writ petitions. The issue raised in these petitions relates to the doctrine of priority of crown debt due on account of arrears of tax/excise duty in favour of State over the secured or other creditors. In other words, Union of India has filed these petitions involving the doctrine of priority of crown debt while seeking priority of recovery of its taxes in the form of excise duty/other taxes, over the rights of creditors like financial Corporations.
(2.) IN all there are 36 writ petitions listed, out of which 24 petitions have been filed by Union of India against the Financial Corporations, seeking a writ of mandamus to the effect that the tax/excise duty payable to the Union of India would have a priority over the debts payable to the Financial Corporation, 6 writ petitions have been filed by the Punjab Financial, Corporation, 3 by the Haryana Financial Corporation challenging the order passed against them in this regard, whereas 3 writ petitions have been filed by the private individuals, challenging the auction proceedings. All the 36 writ petitions are being disposed of by the common judgment. Main submissions in this case made on behalf of Union of India were from Civil Writ Petition No. 3413 of 2005 (Union of India Ropar v. Punjab Financial Corporation, Chandigarh and another). Accordingly, the facts necessary to determine the legal issue raised have been taken from the said writ petition. It may require a mention at the outset that pleadings in this writ petition are lacking in detail, may be because of the fact that Union of India- petitioner was mainly concerned with the legal issue raised relating to crown debt priority only. The brief facts, as mentioned in this writ petition, are accordingly being taken note of.
(3.) THIS writ petition has been filed on behalf of Central Excise Department. M/s Kishan Organics Private Limited, Chanalon, (hereinafter called "the Company") is stated to be registered with the Central Excise Department for manufacture of excisable goods. This concern was debtor of Punjab Financial Corporation Limited, Chandigarh (hereinafter called, "PFC".). The Company closed down its operation and now the whereabouts of its owners are also not known. Since the Company owed debt to PFC, the Unit was taken over in exercise of the powers given to Financial Corporation under the Punjab Financial Corporation Act. The Company was accordingly put to auction and was disposed of for Rs. 15 lacs. Even after adjusting the sale proceeds so realized, a sum of Rs. 34.41 lacs to PFC is still stated to be outstanding towards the Company. The Central Excise Department took up the matter with PFC vide their communication dated 26.10.2004 and in response thereto, the intimation about the sale and sale proceeds, as aforementioned, were brought to the notice of the Central Excise Department by the PFC. PFC had further informed the Central Excise Department that they did not have any surplus deposit, which could be paid to satisfy the Central Excise dues towards the Company. Claiming that the Central Excise Department had been continuously asking for recovery of its due from PFC as it had taken over and sold the Unit, which faced a categorical refusal, the department was left with no option but to make the present approach by filing writ petitions for realization of its dues from the PFC. In support of the stand in the writ petitions, reliance has been placed on number of judgments to say that the amount due to the department as taxes would have a priority over the claim of the Financial Corporation and hence, the Financial Corporation was not justified in law in declining to pay central excise dues before adjusting its debts.;