TMI Blog2016 (12) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... ops /properties, which the petitioners have purchased in bank auction for the period prior to 05/03/2014 is hereby quashed and set aside. Consequently, any amount recovered towards the property tax dues for the period prior to the petitioners purchased the properties /shops, the same may be refunded to the petitioners within a period of four weeks from today. However, it is observed that it will be open for respondent no.1-Corporation to recover the property tax dues for the period prior to 05/03/2014 from the erstwhile owner. - SPECIAL CIVIL APPLICATION NO. 17334 of 2016 - - - Dated:- 1-12-2016 - MR. M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE PETITONER : MR MAULIK R SHAH, ADVOCATE, MR PRATIK P THAKKAR, ADVOCATE FOR THE RESPONDENT : MR HS MUNSHAW, ADVOCATE, MR. SANDIP C BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] RULE. Shri H.S. Munshaw, learned advocate waives service of notice of rule on behalf of respondent no.1 and Shri Sandip C. Bhatt, learned advocate waives service of notice of rule on behalf of respondent no.2. In the facts and circumstances of the case and with the consent of the learned advocates appearing on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property tax from the petitioners for the period prior to 05/03/2014, which the petitioners paid under protest. Thereafter, the petitioners have preferred the present Special Civil Application for the aforesaid reliefs. [4.0] Shri Maulik Shah, learned advocate appearing on behalf of the petitioners has vehemently submitted that the impugned action of respondent no.1 in recovering the property tax with respect to the shops in question for the period prior to the petitioners purchased the same in the Bank auction is absolutely illegal and unauthorized. [4.1] It is submitted that the petitioners have purchased the shops in question in a Bank auction and on payment of full sale consideration. It is submitted that neither in the public auction /public notice nor at any time the petitioners and /or others were informed with respect to the dues of the property tax with respect to the shops in question. It is submitted that therefore for the dues of the property tax prior to they purchased the shops in the Bank auction i.e. for the period prior to 05/03/2014 the petitioners are not liable to pay any municipal tax /property tax concerned for the aforesaid properties. [4.2] In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the concerned properties /shops in a Bank auction conducted by respondent no.2 Bank in exercise of powers under the provisions of the Securitization Act. It is also not in dispute that in the auction notice /public notice inviting offers there was no reference to any dues of respondent no.1 towards property tax concerned of the aforesaid properties /shops. The sale certificates are issued in favour of the respective petitioners as far back as on 05/03/2014. Nothing is on record that prior to the sale the petitioners were informed with respect to any dues of respondent no.1 towards the property tax. In light of the aforesaid undisputed facts, the aforesaid question is required to be considered. [7.2] Identical question came to be considered by the Hon ble Supreme Court in the case of AI Champdany Industries Ltd. (Supra) . In the case before the Hon ble Supreme Court the appellant purchased the property of the Company in liquidation in Court sale. There were pre sale tax dues. The properties were also having municipal tax dues. The properties were auctioned on as-is-where-is and whatever-there-is basis. Having found that the appellantpurchaser received the property for va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and includes a mortgage, charge, hypothecation, assignment other than those specified in Section 31. The term secured asset is also defined in Section 2(zc) to mean the property on which the security interest is created. In turn, the words secured debt is defined in Section 2(ze) to mean a debt which is secured by any security interest. The term secured creditor is also defined in Section 2(zd) and it is not in dispute that Respondent Nos.1 and 2 are the secured creditors as defined under the SARFAESI Act. Thereafter, Section 13 of the SARFAESI Act provides for enforcement of security interest and measures by which enforcement is permissible including upon failure of the borrower to discharge its liability in full of the secured creditor within the period specified under Section 13(2) by taking possession of the secured assets and transferring the same either by way of lease, assignment and/or sale. Section 13(6) stipulates that any transfer of secured assets (after taking over the possession) by the secured creditor shall vest in the transferee all rights in, or in relation to the secured asset transferred as if the transfer had been made by the owner of such secured asset. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be recovered by enforcing their alleged charge under Section 38C of the BST Act against the said property, legitimately purchased by the Petitioners and without having any notice of the alleged dues of the Sales Tax Authorities. 12. What is also important to note is that, it is not even the case of Sales Tax Authorities that the Petitioners are a dealer within the meaning of provisions of the BST Act or that the Petitioners have taken over the business of the dealer who is the defaulter of the Sales Tax Authorities. In fact, on a careful perusal of Section 19(4) of the BST Act, it is clear that where a dealer who is liable to pay tax under the BST Act, transfers or otherwise disposes of his business in whole or in part or effects any change in the ownership thereof, in consequence of which he is succeeded in the business or part thereof by any other person, the dealer and the person succeeding, shall jointly and severally be liable to pay the tax including any penalty and interest due from the dealer. This is admittedly not the case before us. The Petitioners are not the successor in business of the Defaulter Company. It has, in fact, merely purchased the said property w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 filed a suit for a declaration that he was the owner of the property an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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