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TMI Blog2016 (12) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... stion due and payable by the erstwhile owner so far as the period prior to 05/03/2014. The petitioners have also prayed to refund the amount of property tax and /or other taxes already recovered from the petitioners for the period prior to 05/03/2014. [3.0] The facts leading to the present Special Civil Application in a nutshell are as under; [3.1] The Shop Nos.5005 to 5008 and 5020 to 5023 situated at 5th Floor, Golden Plaza, Ring Road Area, Surat were originally owned by one M/s.Fenil Creation Pvt. Ltd. For the dues of the Central Bank of India, possession of the aforesaid shops were taken by the Bank in exercise of powers under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Securitization Act"). The aforesaid shops were put to auction by the Bank. Public notice dated 10/01/2014 was given by the Bank inviting tenders. Upset price was fixed at Rs. 66 lakhs. At this stage, it is required to be noted that in the auction notice, there was no reference to any dues of respondent no.1 - Corporation towards the property tax and other taxes. Thereafter, the petitioners, being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners Vs. Bank of Maharashtra rendered in Writ Petition No.4188/2014. Making the above submissions and relying upon the above decisions, it is requested to allow the present petition and direct respondent no.1 to refund the amount of property tax already recovered for the period prior to 05/03/2014. [5.0] Shri Munshaw, learned advocate appearing on behalf of respondent no.1 has tried to oppose the present petition by submitting that the property tax is recoverable on the properties /shops, and therefore, with respect to the property tax, irrespective of the owner, Corporation is entitled to recover the property tax. Making the above submissions, it is requested to dismiss the present petition. [6.0] Shri Sandip Bhatt, learned advocate appearing on behalf of respondent no.2 - Central Bank of India has, as such, supported the petitioners by submitting that the petitioners have purchased the shops in question on payment of full sale consideration and in Bank auction. He has admitted that in the public notice /auction notice there was no reference to any dues of respondent no.1-Corporation towards property tax. [7.0] Heard the learned advocates appearing on behalf of the respective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provincial Municipal Corporation Act provides for property tax dues to be first charged on property but made no express provision regarding its enforceability against transferee for value without notice of charge, the purchaser is not liable to pay the pre-sale tax dues and /or property tax. [7.3] Identical question came to be considered by the Bombay High Court and the recent decision in the case of M/s. Sonoma Management Partners (Supra). In the case before the Bombay High Court petitioners purchased the property pursuant to the sale conducted by the Banks under the provisions of the Securitization Act and the Rules framed thereunder. The sales tax department sought to recover the sales tax dues of the defaulter Company from the subsequent purchaser who purchased the property pursuant to the sale conducted by the Banks under the provisions of the Securitization Act and Rules. The aforesaid came to be challenged by the subsequent purchasers and after considering the law on the point and other decisions the Division Bench of the Bombay High Court has held that the sales tax dues of the owner / Company cannot be recovered from the subsequent purchaser who have purchased the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion notice as well as a sale notice in respect of the said property. It is pursuant to this sale notice that the Petitioners have purchased the said property from Respondent Nos.1 and 2. 11. What is important to note is that this entire purchase was done by the Petitioners before the alleged dues of the Sales Tax Authorities was brought to their notice. The chronology of events set out above clearly indicates that the Petitioners placed their bid for purchasing the said property on 1 September, 2010 along with their earnest money deposit. Thereafter, the sale was confirmed in favour of the Petitioners on 15 September, 2010, once the sale was confirmed the Petitioners on 22 September, 2010 paid the balance purchase price and thereafter a Sale Certificate was also issued in favour of the Petitioners on 23 September, 2010. Thereafter, a Deed of Conveyance was executed by Respondent No.1 in favour of the Petitioners in respect of the suit property and which was registered with the Registrar of Assurances on 10 March, 2011. It is, at the time of execution and registration of this Deed of Conveyance, that the Petitioners for the first time perused the 7/12 extract relating to the sui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tretch of the imagination be termed as a successor of the business of the Defaulter Company to enable the Sales Tax Authorities to recover their dues from the Petitioners by enforcing their alleged charge against the said property purchased by the Petitioners under the provisions of the SARFAESI Act. 13. In the view that we have taken, we are supported by a decision of the Supreme Court in the case of State of Karnataka & Anr Vs. Shreyas Papers Pvt. Ltd.4 On the issue of enforcement of charge, the Supreme Court at paragraphs 18 to 21 thereof (of the SCC report) opined thus: "18. The next limb of Mr Hegde's arguments was that since Section13(2)(i) of the KST Act creates a charge on the property of the defaulting company, the charge would continue on the properties, even if it changes hands by transfer. 19. While the expression "charge" is not defined by the KST Act, this concept is well known in property law and has been defined by Section 100 of the Transfer of Property Act, 1882 (hereinafter "the TP Act"). Here "charge" is defined as: "100. Where immovable property of one person is by act of parties or operation of law made security for the payment of money to anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. This argument was, however, rejected. This Court held that while constructive notice was sufficient to satisfy the requirement of notice in the proviso to Section 100 of the TP Act, whether the transferee had constructive notice of the charge had to be determined on the facts and circumstances of the case. [Ibid., at SCC pp. 765-66 (para 12) : AIR pp. 1207-08(para 8)] In other words, this Court held that there could be no fixed presumption as to the transferee having constructive notice of the charge against the property. In fact, the principle laid down in Ahmedabad Municipal Corpn. [(1971) 1 SCC 757, 759-61 (paras 3 & 4) : AIR 1971 SC 1201, 1202-04(para 3)] has been correctly applied in a sales tax case similar to the present case. [CTO v. R.K. Steels, (1998) 108 STC 161 (Mad)] (emphasis supplied) 14. In the facts of the present case and considering this authoritative pronouncement of the Supreme Court, we have no hesitation in holding that the Petitioners, having no knowledge (either actual or constructive) of the dues of the Sales Tax Authorities before they purchased the said property, the Sale Tax Authorities cannot recover their dues from the Petitioners by enforcin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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