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2019 (9) TMI 1495 - CALCUTTA HIGH COURTDemand of outstanding dues towards the property tax or maintenance charges from the respondent - sale of property by Bank to respondent free from all encumbrances - whether an authorized officer is under obligation to disclose pre-sale tax dues on secured asset as an encumbrance in the notice under the proviso to Rule 8(6) (a) and (f), or, the authorized enjoys a statutory immunity under rule 9(7) of the said Rules and the auction purchaser may be allowed to deposit with him the money required to discharge any such encumbrance? HELD THAT:- Rule 8(6)(a) of the Security Interest (Enforcement) Rules, 2002 imposes an obligation upon the authorized officer to disclose by a public notice the description of the immovable property to be sold including details of the encumbrances known to the secured creditor, when the secured asset is decided to be sold by either inviting tenders or by holding public auction. Under clause (f) of sub-rule (6) of Rule 8, the authorized officer is also bound to disclose any other thing which he considers material for a purchaser to know in order to judge the nature and value of the property. Learned Senior Counsel for the appellant vehemently argues that the appellant- Bank or its officers cannot be fastened with the obligation for alleged nondisclosure of pre-sale municipal tax dues as encumbrance while issuing notice under section 8(6) of the said Rules as the sale was conducted "as is where is" and "as is what is" basis; secondly, property tax dues were not known to the authorized officer; thirdly, even if such encumbrance was disclosed, the purchaser would have been directed to deposit such amount for discharging such encumbrance; and, fourthly, Clause E of the terms of E-auction sale notice imposed equal obligation upon the purchaser to make independent enquiries regarding encumbrances and title of the secured asset. Therefore, after completion of sale process and delivery of possession of the secured asset in favour of the respondent, he cannot claim refund of pre-sale municipal tax dues from the Bank. In HARYANA FINANCIAL CORPORATION VERSUS RAJESH GUPTA [2009 (12) TMI 995 - SUPREME COURT], the Hon'ble Supreme Court distinguished the powers of secured creditor and the official liquidator in selling the property and held that an official liquidator does not hold any guarantee or warrantee in respect of the property sold. Under the SARFAESI Act, the secured creditor or the authorized officer on its behalf exercises the right of an owner selling the property. Thus, the Hon'ble Supreme Court held that the principles laid down in the case of UNITED BANK OF INDIA VERSUS OFFICIAL LIQUIDATOR [1993 (10) TMI 231 - SUPREME COURT] is not applicable in case of sale of secured asset under the SARFAESI Act. Rules 8 and 9 deal with the stage anterior to the issuance of sale certificate and delivery of possession. Rule 9(8) casts a duty upon the authorized officer to deliver the property to the purchaser free from encumbrances requiring the purchaser to deposit money for discharging the encumbrances. The ignorance of the second creditor regarding the encumbrance on the property is no longer a good and acceptable defence in view of the statutory provisions - In the instant case, it is not disputed that the appellant-Bank did not disclose pre-sale property tax dues which is a charge on the land or building in respect of the secured asset. Therefore, the appellant-Bank has failed to discharge its statutory obligation and after completion of sale and delivery of possession the auction purchaser-respondent cannot be fastened with the liability to discharge such encumbrances. This is more so because the Bank or its authorized officer failed to disclose the encumbrance to the purchaser and claim money for discharge of such encumbrance under Rule 9(7) of the said Rules, 2007. Appeal dismissed - decided against appellant.
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