2020 (12) TMI 1169 - HC - VAT and Sales Tax

Validity of attachment of property - recovery of arrears of property tax - petitioner requested to remove the encumbrance on the ground that she is a bonafide purchaser of the property for valuable consideration - HELD THAT - It is very clear that the petitioner purchased the property only after obtaining encumbrance on 08.08.2014. On the date of encumbrance dated 08.08.2014, there was no attachment made by the first respondent. The petitioner purchased the property from Rajiv under sale deed dated 04.09.2014, registered as document No.2758 of 2014 in Sub Registrar's Office, Kanniyakumari District. As seen from the sale deed dated 04.09.2014, the petitioner has paid a sale consideration of ₹ 13,43,048/- for the extent of property 3.850 cents situated at Agasteeswaram Taluk, Kanniyakumari District - Admittedly, the attachment over the property was executed by the first respondent only on 06.10.2015 for the arrears of property tax payable by V.S.K.Radha Krishnan, the father of the petitioner's vendor R.Rajiv. The respondents have also not produced any iota of evidence against the petitioner before this Court that the petitioner was aware of the proceedings initiated by the first respondent against the father of the petitioner's vendor for arrears of property tax. In the case on hand, the petitioner is a bonafide purchaser and has taken the property free of all encumbrance and she has no notice either actual or constructive about the proceedings initiated by the first respondent against the vendor's father Mr.Radha Krishnan for arrears of tax. The encumbrance (Attachment) reflected in the encumbrance as on 06.10.2015, will have to be removed by the second respondent, within a period of one week from the date of receipt of a copy of this order - Petition allowed.

Summary

Issues:
Challenge to attachment order dated 25.10.2019 over property purchased by petitioner, Bonafide purchaser protection, Legal validity of attachment, Application of Division Bench Judgment, Allegations of collusion, Constructive notice, Removal of encumbrance.

Analysis:
The petitioner challenged the attachment order dated 25.10.2019, asserting as a bonafide purchaser who bought the property after obtaining a clear encumbrance certificate. The petitioner contended that the attachment made on 06.10.2015 was arbitrary and illegal, seeking its quashing. The petitioner cited the Division Bench Judgment in a similar case, emphasizing protection for bonafide purchasers free of charges unknown to them. The petitioner's counsel highlighted the lack of evidence proving the petitioner's awareness of the tax arrears linked to the property's previous owner.

The Special Government Pleader argued that the larger land owned by the previous owner's father had been subdivided, with other plots sold post-attachment. The respondents acknowledged key dates, confirming the petitioner's purchase post-clear encumbrance. The Court noted the absence of evidence suggesting the petitioner's knowledge of the attachment proceedings against the previous owner's father. The Court referenced the Division Bench Judgment's principles, emphasizing protection for bonafide purchasers without notice of charges.

The Court found the petitioner to be a bonafide purchaser without any notice of the attachment, similar to the case in the Division Bench Judgment. Consequently, the Court deemed the attachment order arbitrary and illegal, ordering its quashing and the removal of the encumbrance within a week. The Court ruled in favor of the petitioner, allowing the writ petition without costs, closing the connected miscellaneous petition.