THE STOCK EXCHANGE, BOMBAY versus V. S. KANDALGAONKAR & ORS.

The lien possessed by the Stock Exchange on member's securities makes it a secured creditor, which has priority over government dues; the membership card is not property liable to attachment for income tax recovery.

Parties: Appellant: The Stock Exchange, Bombay; Respondents: V. S. Kandalgaonkar & Ors.
Jurisdiction: India
Judgment Date: 25 September 2014
Procedural Posture: Civil Appeal / Final Judgment of Supreme Court
Outcome: Appeal allowed, judgment of Bombay High Court set aside.
Legal Topics: Priority of Government Debts, Secured Creditors, Stock Exchange Rules, Income Tax Recovery, Statutory Liens

Insolvency Law Income Tax Law Securities Law Priority of Government Debts Secured Creditors Stock Exchange Rules Income Tax Recovery Statutory Liens

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Full judgment text Legal principles 3 Authorities cited 16 Party arguments 2 Amounts and remedies 2

Parties

The Stock Exchange, Bombay

Appellant

V. S. Kandalgaonkar & Ors.

Respondents

Procedural Posture

Civil Appeal / Final Judgment of Supreme Court

Legal Issues

1 Whether a Stock Exchange's lien as a secured creditor has priority over government dues for income tax
2 Whether membership rights/cards are property liable to attachment for income tax recovery
3 Whether government dues have paramountcy over statutory and secured liens

Ratio Decidendi

Court Disposition

Appeal allowed, judgment of Bombay High Court set aside.

Orders

Set aside impugned judgment passed by Division Bench of Bombay High Court.
Stock Exchange's lien on deposited securities prevails over government income tax dues.