2006 (6) TMI 225 - HC - Companies Law

Summary

Issues Involved:
1. Liability for past arrears of property tax and water and sewerage tax.
2. Injunction to restrain the Corporation of Chennai and Chennai Metropolitan Water Supply and Sewerage Board from claiming past arrears.
3. Injunction to prevent disconnection of water and sewerage services.
4. Applicability of Section 55(1)(g) of the Transfer of Property Act, 1882.
5. Applicability of Section 69 of the Contract Act.
6. Applicability of Section 530(a) of the Companies Act.
7. Interpretation of tender conditions regarding arrears.

Detailed Analysis:

1. Liability for Past Arrears of Property Tax and Water and Sewerage Tax:
The applicant, M/s. Shriram Chits Tamil Nadu P. Ltd., sought a direction for the administrator of Dugar Finance India Ltd. to bear past arrears of property tax and water and sewerage tax for the period from 2/98-99 to 2/03-04 for the 4th and 5th floors at No. 149, Greams Road, Chennai-6. The court noted that the applicant had agreed to the tender conditions which included the responsibility to clear the arrears post-confirmation of sale. The court held that the applicant, having knowledge of the arrears and participating in the tender, was estopped from denying liability. The terms of the tender form were upheld, making the applicant responsible for the arrears.

2. Injunction to Restrain the Corporation of Chennai and Chennai Metropolitan Water Supply and Sewerage Board from Claiming Past Arrears:
The applicant sought an injunction to prevent the Corporation of Chennai and the Chennai Metropolitan Water Supply and Sewerage Board from claiming past arrears. The court dismissed this request, reinforcing that the applicant was bound by the tender conditions to clear the arrears.

3. Injunction to Prevent Disconnection of Water and Sewerage Services:
The applicant also sought an injunction to prevent disconnection of water and sewerage services. The court noted that the applicant had already paid 50% of the arrears as per an earlier court order. The court did not find merit in the applicant's plea to avoid the remaining arrears, thus dismissing the application.

4. Applicability of Section 55(1)(g) of the Transfer of Property Act, 1882:
The applicant argued that under Section 55(1)(g) of the Transfer of Property Act, the seller is bound to discharge all encumbrances unless there is a contract to the contrary. The court, however, found that the tender conditions, which the applicant accepted, constituted a contract to the contrary. Therefore, Section 55(1)(g) did not absolve the applicant of the liability for past arrears.

5. Applicability of Section 69 of the Contract Act:
The applicant invoked Section 69 of the Contract Act, which entitles a person who pays money on behalf of another to reimbursement. The court found no relevance in this section as the applicant had agreed to the tender conditions, which explicitly stated that the purchaser would bear the arrears. Hence, Section 69 did not apply.

6. Applicability of Section 530(a) of the Companies Act:
The applicant contended that under Section 530(a) of the Companies Act, taxes due within 12 months before the due date should be paid in priority from the company's estate. The court dismissed this argument, stating that the section was not relevant to the case at hand, as the applicant had agreed to the tender conditions.

7. Interpretation of Tender Conditions Regarding Arrears:
The court emphasized that the tender conditions were clear in stating that the purchaser would bear the arrears of municipal tax, property tax, betterment levy, and maintenance post-confirmation of sale. The court held that the applicant, having accepted these conditions, could not now contest them. The sale deed's recital that the property was free from encumbrances did not override the tender conditions.

Conclusion:
The court dismissed the applications, holding that the applicant was liable for the past arrears of property tax and water and sewerage tax as per the tender conditions. The court found no merit in the applicant's pleas under the Transfer of Property Act, Contract Act, and Companies Act. The injunctions sought by the applicant were also denied.