TMI Blog2015 (10) TMI 2458X X X X Extracts X X X X X X X X Extracts X X X X ..... con Oil was already functioning at another address duly registered under the Maharashtra Value Added Tax Act, 2002. Even after the purchase of the secured property, the Petitioners once again obtained a 7/12 extract of the secured property dated 12th April, 2013. Even in this 7/12 extract, the charge of the Sales Tax Authorities (in the sum of ₹ 2,77,73,073/-) was not reflected. It is only for the first time on 7th January, 2014 that the charge of the Sales Tax Authorities was reflected in the 7/12 extract of the secured property. This was much after the sale of the secured property was confirmed in favour of the Petitioners. In these circumstances, we find that Mr Joshi is fully justified in contending that the Petitioners had no knowledge or notice of the charge of the Sales Tax Authorities before they purchased the secured property from Respondent No.2 and therefore, the Sales Tax Authorities cannot enforce their charge against the secured property. Iccon Oil was wound up by and under the orders of this Court and this Court by its order dated 18th March 2015, passed in Company Application (L) No.603 of 2014, has given liberty to the Sales Tax Authorities to file thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Iccon Oil was also a debtor of Respondent No.2 SICOM. To recover its dues from Iccon Oil, Respondent No.2 conducted an auction of the secured property under the provisions of the SARFAESI Act. In this auction, the Petitioners were the highest bidder and the sale was accordingly confirmed in their favour. It is in these circumstances that the Petitioners claim to be the owners of the secured property. 4. It appears that Iccon Oil, apart from being a debtor of Respondent No.2, was also in arrears of its Sales Tax dues to the tune of ₹ 2,77,72,073/-. To recover these arrears, Respondent No.5 passed the impugned attachment order, attaching the secured property. As stated earlier, it is the case of the Petitioners that when they purchased the secured property, they had no notice of the purported charge / claim of the Sales Tax Authorities in the sum of ₹ 2,77,72,073/-. It is in these circumstances that the Petitioners challenge the legality and validity of the impugned attachment order (Exh.'Q' to the Petition), on the ground that the same is arbitrary, illegal and without jurisdiction. 5. The contesting Respondents in this Writ Petition are Respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 25th August, 2012 under the provisions of the SARFAESI Act, inviting offers in respect of the secured property on an as is where is and as is what is basis. The Petitioners, being desirous of purchasing the secured property, bid in the public auction held on 10th September, 2012 and offered a consideration of ₹ 2,21,50,000/-. This offer was subsequently revised on 21st February, 2013 to ₹ 2,65,00,000/-. 10. On 15th March 2013, Respondent No.2 was pleased to accept this offer of the Petitioners and accordingly, the Petitioners made payment of the full sale consideration of ₹ 2,65,00,000/- on 21st March 2013. On 1st April 2013, Respondent No.2 confirmed receipt of the entire sale consideration and requested the Petitioners to proceed with the execution of the sale certificate. 11. It is the case of the Petitioners that prior to purchasing the secured property, the Petitioners undertook a complete title due diligence and obtained a 7/12 extract dated 15th May, 2012 (Exh.'G' to the Petition) in respect of the secured property which recorded the name of Iccon Oil as the owner. The other rights column of the 7/12 extract recorded that one District In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attaching the secured property for recovery of the outstanding dues of the Sales Tax Authorities. These dues of M/s Iccon Oil (in the sum of ₹ 2,77,72,073/-) were for the periods 1999-2000, 2001-2002 and 2002-2003. Accordingly, by a letter dated 22nd May 2013, Respondent No.7 (Tahasildar, Khalapur) enclosed a copy of the said order of attachment and directed Respondent No.8 to take further necessary action to record the charge of the Sales Tax Authorities in the sum of ₹ 2,77,72,073/-. After the Petitioners obtained possession of the secured property, on 7th April 2014, a visit was paid by the Sales Tax Inspectors to the place of business of Iccon Oil for recovery of the sales tax dues. At this time, the Sales Tax Inspectors learnt that the secured property had been sold by Respondent No.2 and the same was in possession of the Petitioners. This was duly recorded by the Sales Tax Inspectors in their submission which is annexed at Exh. P to the Petition. 14. Be that as it may, in furtherance of recovering the Sale Tax dues, on 20th June 2014, Respondent No.3 (Commissioner of Sales Tax, VAT, Admin.) issued a notice under section 62A of the Bombay Sales Tax Act, 1959 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition, on or about 18th November, 2014 Respondent No.5 herein (Sales Tax Officer, C008) filed Company Application (L) No.603 of 2014 praying that this Court be pleased to direct Iccon Oil to settle the dues of the Sales Tax Authorities amounting to ₹ 2,77,73,073/-. Thereafter, Company Petition No.653 of 2013 as well as Company Application (L) No.603 of 2014 were disposed of by two separate orders, both dated 18th March, 2015. By the order passed in the Company Petition (Exh W to the Petition), this Court ordered the winding up of M/s Iccon Oil and appointed the Official Liquidator (Respondent No.6 herein) to take charge of the assets belonging to M/s Iccon Oil. As far as Company Application (L) No.603 of 2014 is concerned, this Court ordered that since Iccon Oil had been wound up, the Government of Maharashtra through the Department of Sales Tax, shall file their claim before the Official Liquidator (Exh X to the Petition). With these directions Company Application (L) No.603 of 2014 was disposed of. 18. In this factual background, Mr Joshi, learned counsel appearing on behalf of the Petitioners, submitted that they are the bonafide purchasers of the secured property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the charge/dues of the Sales Tax Authorities and therefore the impugned attachment order passed by Respondent No.5 in relation to the secured property and belonging to the Petitioners, was arbitrary, capricious, without jurisdiction and in flagrant violation of the principles of natural justice. 20. Mr Joshi additionally submitted that the Sales Tax Authorities have been extremely complacent, if not negligent, in pursuing their claim against Iccon Oil. He submitted that on their own showing the assessment orders for the periods 1999-2000, 2001-2002 and 2002-2003 were passed as far back as on 20th October, 2006, 20th October, 2006 and 26th February, 2008 respectively. Despite this, and having their claim crystallized as far back as on 20th October, 2006 and 26th February 2008, the Sales Tax Authorities did nothing to ensure that their charge / claim is reflected in the 7/12 extract of the secured property. The Sales Tax Authorities being this complacent, could not now decide to chase the secured property in the hands of the Petitioners, who admittedly have no outstanding dues of the Sales Tax Department. He submitted that Respondent No.5 has further been complacent by not pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken note of the sales tax dues and made an entry in Ferfar Note 1483 dated 15th January, 2013 as per the directions of the Tahasildar. Thereafter, on 29th April, 2013 additional information was provided in Form No.4 to the Tahasildar, Khalapur, District Raigad regarding the survey numbers. In this factual background, Mr Sharma submitted that the Petitioners had full knowledge of the dues of the Sales Tax long before they decided to purchase the secured property. Having done so with open eyes, the Petitioner today cannot contend that they are bonafide purchasers for value without notice of the claim of the Sales Tax Authorities. He therefore submitted that the impugned order of attachment levied on the secured property is fully justified and the Sales Tax Authorities would be entitled to recover their dues by enforcing their charge against the said secured property. 23. With the help of learned counsel, we have perused the papers and proceedings in this Writ Petition alongwith the impugned order of attachment. It is not in dispute that the secured property was mortgaged inter alia in favour of Central Bank of India who issued a demand notice under section 13(2) of the SARFAESI A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es was reflected in the 7/12 extract of the secured property. This was much after the sale of the secured property was confirmed in favour of the Petitioners. In these circumstances, we find that Mr Joshi is fully justified in contending that the Petitioners had no knowledge or notice of the charge of the Sales Tax Authorities before they purchased the secured property from Respondent No.2 and therefore, the Sales Tax Authorities cannot enforce their charge against the secured property. 26. As far as the documents relied upon by Mr Sharma are concerned, nothing has been brought to our notice that any of these documents were brought either to the notice of Respondent No.2 or the Petitioners, or that the Petitioners had knowledge (actual or constructive) of the claim/charge of the Sales Tax Authorities, prior to them purchasing the secured property in a public auction conducted under the provisions of the SARFAESI Act. 27. There is no dispute about the fact that the dues of Iccon Oil crystallized in favour of the Sales Tax Authorities by virtue of the assessment orders that were passed as far back as on 20th October 2006, 20th October, 2006 and 26th February 2008 respectively. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied) 20. As the section itself unambiguously indicates, a charge may not be enforced against a transferee if she/he has had no notice of the same, unless by law, the requirement of such notice has been waived. This position has long been accepted by this Court in Dattatreya Shanker Mote v. Anand Chintaman Datar [(1974) 2 SCC 799, 811 (para 18)] and in Ahmedabad Municipal Corpn. of the City of Ahmedabad v. Haji Abdulgafur Haji Hussenbhai [(1971) 1 SCC 757, 759-61 (paras 3 4) : AIR 1971 SC 1201, 1202- 04(para 3)] (hereinafter Ahmedabad Municipal Corpn. ). In this connection, we may refer to the latter judgment, which is particularly relevant for the present case. 21. Ahmedabad Municipal Corpn. [(1971) 1 SCC 757, 759-61 (paras 3 4) : AIR 1971 SC 1201, 1202-04 (para 3)] was a case where a person was in arrears of property tax, due under the Bombay Provincial Municipal Corporation Act, 1949. Consequently, the Municipal Corporation created a charge over the property of the defaulter. However, the property was sold in execution of a mortgage decree. When the Municipal Corporation purported to exercise their charge over the property, the purchaser in court-auction file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of charge, the Supreme Court, whilst considering the provisions of Section 100 of the Transfer of Property Act, 1882 gave its findings in paragraphs 18 to 21 thereof. These findings are binding on us and we cannot distinguish the aforesaid decision on the specious ground that the same is rendered in the context of the provisions of the Karnataka Sales Tax Act, 1957. Secondly, even otherwise, we find that the very same judgment of the Supreme Court in the case of Shreyas Papers (2006) 1 SCC 615 : AIR 2006 SC 865 has been relied upon by a another Division Bench of this Court in the case of M/s.National Steel and Agro Industries Ltd, Mumbai v/s the State of Maharashtra and Others. 2015 (2) ABR 805 to which one of us (S. C. Dharmadhikari, J.), was a party. This decision was rendered in context to the Bombay Sales Tax Act, 1959. We find that this exact argument was canvassed before the the Division Bench in M/s.National Steel and Agro Industries Ltd s case 2015 (2) ABR 805, and the same was repelled by this Court. The argument canvassed before the Division Bench was that no assistance could be derived from the decision of the Supreme Court in the case of Shreyas Papers. (2006) 1 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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