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TMI Blog2006 (6) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... nnection and to take any action against 4th and 5th floor at Grearns Dugar, No. 149, Greams Road, Chennai-6, pending disposal of the above applications. By order dated April 29, 2005, this court granted injunction on condition that the applicant pays 50 per cent, of the amount due as arrears in respect of water and sewerage connection and property tax, except, surcharge and interest. The first respondent in this application is company in liquidation, viz ., Dugar Finance India Ltd. By order dated August 8, 2002, in C. P. No. 48 of 2000, this court ordered winding up of the company. Under orders of this court, the property of the first respondent, viz ., commercial complex at Greams Dugar, No. 149, Greams Road, Chennai-600 006, more particularly, 4th and 5th floor, with proportionate undivided share in the property, was sought to be sold to clear the dues to the creditors. The applicant herein is the successful purchaser of the property for a total sale consideration of Rs. 59,50,000 for each of the floor. Under orders of this court dated April 15, 2004, made in C A. Nos. 524 and 525 of 2004, the official liquidator executed sale deed dated December 10, 2004, in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid in priority to all other debts. Hence, the administrator was bound to clear the arrears from the sale proceeds recovered from the applicant. In the circumstances, the applicant submits that the first respondent be directed to pay the arrears. The administrator, the first respondent herein has filed his counter. The first respondent has made a specific reference as regards, the conditions stipulated in the tender form that the arrears of municipal tax, property tax, betterment levy, maintenance, if any, were to be paid by the purchaser only. The administrator representing the company in liquidation, the first respondent, could not be loaded with any liability in this regard. The administrator denied the contention that the applicant had to pay only the current due was not tenable. The administrator further contends that when once the applicant had bound itself with the tender conditions to clear the arrears, it cannot wriggle out of its responsibility. The claim of bona fide belief that since, betterment charges and other regulars charges were discharged for the 4th to 7th floor and hence, these dues were also discharged was totally false. Referring to the terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to the Board. That the third respondent submitted that the applicant had paid the water charges for the period from 1/2004-05 to 2/2004-05 along with surcharge for each floor. Placing reliance on the decision of this court rendered in W. P. No. 13894 of 1990 dated August 28, 1990, the respondent submitted that the arrears of tax, rate, charge, cost, fee, rent are liable to be recovered as arrears of land revenue under the Revenue Recovery Act and that the facts of the present case are not different. The applicant being a defaulter, is liable to clear the arrears. It is stated that as per the court's direction, the applicant has already paid 50 per cent, of the amount due, except surcharge. The arrears payable, have not been cleared in full so far. In the circumstances, apart from praying for vacating the injunction already granted, the third respondent prayed for rejection of the stand of this applicant. Mr. K. V. Anantha Krishnan, learned counsel appearing for the applicant made a reference to the sale deed dated December 10, 2004 and submitted that the consideration paid for the purchase of the property was a sum of Rs. 59,50,000 each, individually to the two floors, free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to section 69 of the Contract Act. Learned counsel appearing for the first respondent submitted that the case reported in State of Gondal v. Govindram Seksaria, AIR 1945 Bom 187 was distinguishable. In that case, the offer itself is subject to the terms of the tender forms. There is no contract implied to the contrary. As regards the term in the tender which clearly spoke about the responsibility of the purchaser to clear the dues, she further submitted that once the tender conditions were accepted and participated, the clause in the sale deed could not be invoked to resist the demand. In this context, she relied on the decision reported in the case of United Bank of India v. Official Liquidator [1994] 79 Comp Cas 262 (SC) ; [1994] 1 SCC 575. A perusal of the tender form shows that the applicant herein had specifically offered to purchase the property subjected to terms and conditions of the tender. Under clause 7 of the tender conditions, the arrears of municipal tax, property tax, betterment levy and maintenance should be paid by the purchaser in respect of the property brought for sale after confirmation of sale in his favour. The sale in this case was confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the judgment shows that one Lakpat Nath sold his property to Nathu Khan and three others. There was certain debts due from the vendor to the purchaser. The balance of the consideration was to be paid in cash. Anxious to settle their dues, the vendors had gone for arrangement with yet another party Bindesri Charan and there was a sale of another property. All these were necessitated for clearance of number of debts which included those on the property already sold to Nathu Khan and others, the respondents in the decided case. Bindesri Charan who had prior charge on the properties sold the properties which necessitated Nathu Khan and others to take steps to realise their securities by sale. Nathu Khan and others paid the said sum to clear the property. After payment, Nathu Khan and others instituted a suit against the Bindesri Charan and Lakpat Nath for recovery of the sum paid against the properties. Referring to the sale in favour of the Nathu Khan and others, the Privy Council held that the vendor had bound himself to deliver the property free from encumbrances and had delivered the properties. In the circumstances, the vendor was liable to reimburse the money paid by Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be sold, the seller shall be bound to pay all public charges and all incumbrances up to the date of sale. That liability exists before completion and continues thereafter whether the existence of such charges or incumbrances is discovered before or after completion. The obligation, unless there is a contract to the contrary, is absolute." ( i ) Referring to section 69 of the Contract Act, Justice Kama (as he then was) held, that (page 197) : "The various decisions considered under section 69, Contract Act, show that the party making the payment must have a contract to pay, or interest present, future or contingent in the property." ( ii ) On the facts the court held that there was no express or implied obligation on the part of the defendants to repay the amount. A reading of the above judgments clearly shows that section 55(1)( g ) of the Transfer of Property Act is absolute in its character, where there exists a covenant guaranteeing the non-existence of encumbrances irrespective of the fact that the same was discovered after the sale, the liability is that of the seller only. The purchaser making the payment on behalf of the vendor is entitled to the recoupment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nough records to support such a finding. Referring to the conduct of the parties, the court held that, no doubt the encumbrance was not mentioned in the documents, however, the clause used in the documents were wide enough to include the encumbrance on the property. Thus rejected the case of the plaintiff/purchaser. The case reported as Mahamed Ali Sheriff v. Budharaju Venkatapathi Raju [1921] 39 MLJ 449, is yet another decision of this court invoking section 55 of the Transfer of Property Act. The court held that mere knowledge on the part of the vendee of a defect in the title of the vendor would not by itself defeat the vendee's right on the basis of a covenant implied. Where there are express words of the vendor's covenant for title, the rights of the vendee could not be defeated, unless there are ambiguous expression in the document as regards what was intended or otherwise. The case in Mnhamood Mamuna Lebbai v. National Bank of India Ltd. [1944] 2 MLJ 264 is a decision of this court. Following the decision reported in Mahamed Ali Sheriff v. Budharaju Venkatapathi Raju [1921] 39 MLJ 449, that where the vendee finds subsequent to the sale containing a covenant a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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