TMI Blog2018 (3) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... fide purchaser from seeking protection under Section 24 (A) of the Act. It cannot be said that there was willful abstention or gross negligence in making any enquiry that would tantamount to a notice under Section 3 of the Transfer of Property Act, and the appellant / writ petitioner is a bona fide purchaser for value. Petition allowed - decided in favor of petitioner. - W.A(MD)No.866 of 2015, M.P.(MD)No.1 of 2015, W.P(MD)No.7482 of 2015, M.P.(MD)Nos.1 and 2 of 2015, W.A(MD)No.866 of 2015 - - - Dated:- 1-2-2018 - M. Sathyanarayanan And R. Hemalatha, JJ. For the Appellant : Mr.N.Sudalaimuthu for Mr.S.Karunakar For the Respondents : Mr.A.Muthukaruppan JUDGMENT ( Judgment of the Court was delivered by R. Hemalatha, J.) The appellant herein filed a writ petition in W.P.(MD)No.7482 of 2015 before the learned Single Judge for issuance of Writ of Certiorarified Mandamus, calling for the records in Na.Ka.A3/2350/02 dated 02.03.2015 and Na.Ka.A3/2350/2002 dated 20.04.2015 and to quash the same and direct the respondents to raise the charge created over the property. Along with the said writ petition, he filed M.P.(MD)No.1 of 2015 in which an interim order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter, the first respondent issued another notice dated 16.05.2014, contending that the properties would be brought for sale in public auction under the Revenue Recovery Act, after creating a charge over the property. The appellant / writ petitioner sent a written objection dated 02.07.2014, not to conduct the public auction and the first respondent without considering the objection made by the appellant / petitioner, fixed the date of auction as 05.05.2015. 3.The specific contention of the appellant / writ petitioner is that since he is a bona fide purchaser for value, there is no justification for the first respondent in making a claim against him. 4.Assailing the correctness of the proceedings dated 16.05.2014, and by inviting the attention of this Court to Proviso to Section 24 (A) of Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as the Act ), Mr.N.Sudalaimuthu, learned Counsel appearing on behalf of Mr.S.Karunakar, learned Counsel for the appellant / writ petitioner would submit that no doubt, during the pendency of any proceedings under the Act or after the completion thereof, any dealer against whom, there is a charge, parts with the possession (by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for value need not institute any suit before a Civil Court to establish his bona fides, if he has no actual or constructive notice of the charge prior to the transfer of the property. His specific contention is that when the appellant / writ petitioner verified the encumbrance certificate from the office of the Sub-Registrar, Tenkasi II Sub Registration District, Tenkasi, (the second respondent's office), no encumbrance was marked with regard to the property which he had purchased. It is the specific contention of the learned Counsel appearing for the appellant / writ petitioner that in none of the proceedings passed by the first respondent, it has been specifically mentioned that the vendor of the appellant / writ petitioner has transferred the property in favour of the appellant / writ petitioner with an intention to defraud payment of arrears of sales tax. 8.Per contra, Mr.A.Muthukaruppan, learned Additional Government Pleader appearing for the first respondent would contend that the Commercial Tax Officer, can proceed against the property of the dealer, if such a dealer with an intention to defraud the revenue, had sold the property to some other person. Placing relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovery shall be taken or continued as long as he has, in regard to the payment of such tax, other amount of fee, as the case may be, complied with an order by any of the authorities to whom the dealer or person has appealed or applied for revision, under Sections 31, 31-A, 33, 35, 36, 37 or 38. (3)On any amount remaining unpaid after the date specified for its payment as referred to in sub-section (1) or in the order permitting payment in instalments, the dealer or person shall pay, in addition to the amount due, interest at [one and a half percent per month of such amount for the first three months of default and two per cent per month of such amount for the subsequent period of default]: Provided that if the amount remaining unpaid is less than one hundred rupees and the period of default is not more than a month, no interest shall be paid: Provided further that where a dealer or person has preferred an appeal or revision against any order of assessment or revision of assessment under this Act, the interest payable under this sub-section, in respect of the amount in dispute in the appeal or revision, shall be calculated on the amount that becomes due in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Nadu General Sales Tax Act, 1959. In the present case, the encumbrance certificate does not reveal the charge created over the property and there is nothing to infer that the appellant / writ petitioner and his vendor with an intention to defraud the tax payable to the first respondent colluded with each other and effected transfer of the property. The business conducted by the vendor of the writ petitioner was actually closed on 01.04.2002 and the property had been purchased by the writ petitioner only in the year 2004. Therefore, it cannot be said that he had actual or constructive notice of the charge created over the property for payment of arrears of sales tax in respect of the business conducted by his vendor. 10.A bona fide purchaser takes the property he buys free of all charges of which he has no notice either actual or constructive. He is said to have constructive notice when ordinary prudence or care would have impelled him to undertake an enquiry which would have disclosed a charge. If for instance, the charge is created by a registered document, then the purchaser would be held to have constructive notice of that charge inasmuch as a prudent purchaser would in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty. The main contention of the Municipal Corporation was that where the law provided for the creation of a charge against a property for which municipal taxes were due, transferees of such properties were imputed with constructive notice. This argument was however, rejected by the Honourable Supreme Court. The Court held that, while the constructive notice was sufficient to satisfy the notice as per Proviso to Section 100 of the Transfer of Property Act, whether the transferee had constructive notice of the charge, had got to be determined on the facts and circumstances of the case. The Honourable Supreme Court has also held that it cannot be presumed that the transferee had constructive notice of the charge against the property. In the present case, as already observed, the encumbrance certificate does not reveal the charge created over the property. 14.In the light of the above judgments, it can been seen that even though a charge is created on the properties on the finalisation of the assessment of tax and a demand is raised, the same would not preclude the bona fide purchaser from seeking protection under Section 24 (A) of the Act. The specific contention of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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