2011 (6) TMI 751 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment involves issues related to the attachment of properties by the Regional Provident Fund Commissioner and Recovery Officer u/s 11(2) of the E.P.F. and M.P. Act,1952, in the context of a property auctioned under the SARFAESI Act.

Details of the Judgment:

1. Background and Auction of Properties:
The petitioner purchased two properties in a public auction under the SARFAESI Act from a bank that had taken possession and sold the properties due to default by the previous owner. The petitioner and his wife acquired plot Nos. 49 and 81 respectively, with sale certificates issued by the bank.

2. Impugned Notice and Legal Arguments:
The second respondent issued a notice demanding arrears from the previous owner, leading to an attachment of the properties. The petitioner, represented by senior counsel, argued that as a bona fide purchaser under the SARFAESI Act, the attachment order was invalid and the petitioner's rights should not be obstructed.

3. Court Proceedings and Observations:
The second respondent did not appear, while the bank contested the claim. The petitioner's counsel highlighted that the attachment was not recorded in the encumbrance certificate at the time of purchase, establishing the petitioner as a bona fide purchaser.

4. Validity of Purchase and Possession:
The petitioner's purchase was before the attachment order, and the encumbrance certificate did not reflect the attachment until later. The possession was taken by the bank before the auction, further supporting the petitioner's claim as a bona fide purchaser.

5. Legal Precedents and Priority of Claims:
Citing legal precedents, the court emphasized that the petitioner's purchase without notice of the attachment should not be affected by the second respondent's claim. The court upheld the petitioner's rights as a bona fide purchaser under the SARFAESI Act.

6. Conclusion and Judgment:
The court set aside the impugned order, allowing the petitioner to retain ownership of the properties without interference. The second respondent was directed to address any claims to the bank, recognizing the petitioner's status as a bona fide purchaser. The writ petition was allowed with no costs incurred.

In summary, the judgment addressed the conflict between the attachment of properties under the E.P.F. and M.P. Act and the rights of a bona fide purchaser under the SARFAESI Act, ultimately ruling in favor of the petitioner's ownership rights.