2014 (9) TMI 418 - HC - VAT and Sales Tax

Recovery of dues - Attachment of property - petitioner is an innocent purchaser or not - Notice for eviction of property - Knowledge of creation of charge - Held that - the warrant of attachment in this case, was not appropriately published in accordance with section 22 of the Punjab Revenue Act, which stipulates that every proclamation shall be made by beat of drum or other customary method, and by posting of a copy thereof on a conspicuous place in or near the land to which it relates. There is no material on record for the court to reasonably deduce that the warrant was made known to the Sub-Registrar, under the Registration Act, so that a potential purchaser of the suit property was alerted in that regard. Indeed, the two affidavits filed on behalf of the Revenue--the first by the Sub-Registrar, and the second one by the Divisional Commissioner clarify that there is nothing to show that the attachment was made known to that office. Furthermore, even though the respondents urge that the warrant of attachment was pasted on the premises, no date or other particulars are forthcoming. In the absence of these basic requirements, it was not humanly possible for anyone, including the petitioners, to ascertain the Revenue s charge. Therefore, the petitioners were innocent purchasers without notice of any attachment order in respect of the suit property. - Decided in favour of appellant.

Summary

Issues Involved:
1. Quashing the warrant of attachment and eviction notice.
2. Bona fide purchaser status and clear title of the property.
3. Validity of service of the warrant of attachment.
4. Applicability of Section 68 of the Delhi Sales Tax Act.
5. Constructive notice and the Transfer of Property Act.

Detailed Analysis:

1. Quashing the Warrant of Attachment and Eviction Notice:
The petitioners sought directions to quash the warrant of attachment and eviction notice concerning a property in Defence Colony. They argued that they were bona fide purchasers and unaware of any encumbrances on the property. The court examined the validity of the attachment and the subsequent actions by the tax authorities.

2. Bona Fide Purchaser Status and Clear Title of the Property:
The petitioners purchased the property based on representations that it was free from all liens and encumbrances. They relied on the due diligence conducted by Deutsche Bank, which sanctioned a home loan after verifying the property's title. The court noted that the sale deeds contained specific assurances about the property's clear title, and the Sub-Registrar did not disclose any encumbrance at the time of registration.

3. Validity of Service of the Warrant of Attachment:
The petitioners argued that they first became aware of the attachment through a show-cause notice in 2008. They contended that the service of the warrant on the sixth respondent's driver did not constitute valid service under relevant laws. The court found that the attachment notice was not properly served on the Sub-Registrar, and the records did not reflect any such service.

4. Applicability of Section 68 of the Delhi Sales Tax Act:
The tax authorities argued that they followed due process and that the attachment was valid under Section 68 of the Delhi Sales Tax Act, which nullifies any transfer seeking to defeat revenue claims. They contended that the petitioners' claim of being innocent purchasers was untenable as the sixth respondent was aware of the attachment.

5. Constructive Notice and the Transfer of Property Act:
The court examined whether the petitioners had constructive notice of the attachment. It referred to Section 100 of the Transfer of Property Act, which protects purchasers without notice of a charge. The court found that the warrant of attachment was not appropriately published as required by law, and there was no material to suggest that the attachment was made known to potential purchasers. Consequently, the petitioners were deemed innocent purchasers without notice.

Conclusion:
The court held that the attachment order dated March 9, 2004, was not binding on the petitioners as they were innocent purchasers without notice. The warrant of attachment, show-cause notice, and eviction notice were quashed concerning the petitioners. However, the respondents were allowed to recover dues from the sixth respondent through other legal means. The writ petition was allowed without any order as to costs.