1982 (9) TMI 219 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the property transfer under section 8 of the Bihar and Orissa Public Demands Recovery Act (P.D. Act).
2. Applicability of indemnity clause in the sale deed.
3. Conflict between section 29(4) of the State Financial Corporations Act and section 8 of the P.D. Act.

Detailed Analysis:

1. Validity of the Property Transfer under Section 8 of the P.D. Act:
The main contention was whether the sale by the Bihar State Financial Corporation to the petitioner was a voluntary or involuntary sale. The petitioner argued that the sale was involuntary and thus not subject to the prohibition under section 8 of the P.D. Act. Section 8(a) of the P.D. Act states that any private transfer of immovable property after the service of notice under section 7 shall be void against any enforceable claim in execution of the certificate. Section 29(1) of the State Financial Corporations Act allows the Financial Corporation to sell mortgaged property in case of default.

The court held that the sale by the Financial Corporation was a private sale under section 69(1)(a) of the Transfer of Property Act, and not an involuntary sale. Therefore, the transfer was void against the claim enforceable in execution of the certificate dues. The court stated, "the transfer by the Financial Corporation to the petitioner was a private sale, and therefore, hit under the provisions of section 8 of the P.D. Act."

2. Applicability of Indemnity Clause in the Sale Deed:
The petitioner argued that the sales tax authority should not proceed against the property in their hands due to the indemnity clause in the sale deed, which stated that the property was sold free from all encumbrances and the Financial Corporation would indemnify the purchaser against any claims.

The court rejected this argument, stating that the indemnity clause did not absolve the property from the charge created by the sales tax dues. The court emphasized that the sales tax authority, which was the certificate-holder, was not a party to the transfer deed and thus not bound by the indemnity clause. The court stated, "if the law gives the sales tax authority right to proceed against the property in the hands of the petitioner for realisation of the certificate dues filed against the H.B.C. and the H.V.L., can it be said to be an arbitrary act on the part of the sales tax authority? The answer undoubtedly is, no."

3. Conflict between Section 29(4) of the State Financial Corporations Act and Section 8 of the P.D. Act:
The Financial Corporation argued that section 29(4) of the Act should prevail over section 8 of the P.D. Act due to section 46B of the Act, which states that the provisions of the Act shall have effect notwithstanding anything inconsistent in any other law.

The court found no inconsistency between the provisions of the two Acts. Section 46B of the Act states that its provisions are in addition to, and not in derogation of, any other law unless expressly inconsistent. The court concluded that section 8 of the P.D. Act was not inconsistent with the provisions of the State Financial Corporations Act and thus remained applicable. The court stated, "the effect of section 8 of the P.D. Act is not taken away by section 46B of the Act and it should be read as in addition to the provisions of the Act."

Conclusion:
The writ application was dismissed, and the court upheld the orders of the certificate officer, the Collector, the Commissioner, and the Member, Board of Revenue. The property in the hands of the petitioner remained liable for the certificate dues, and the indemnity clause did not protect the petitioner from the claims enforceable under the P.D. Act. The court found no merit in the arguments presented by the petitioner and affirmed the applicability of section 8 of the P.D. Act in the case.

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