TMI Blog2019 (5) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... ntains a title warranty from SIDCO to the Fourth Respondent and does not impose liability for commercial tax dues on the Fourth Respondent. When the documents on record are examined in the context of section 24-A of the TNGST Act, there is little doubt that the Petitioner herein was aware of the sales tax dues of the Fourth Respondent and was duly notified that he would be liable in respect thereof. Thus, he would not be entitled to any protection as a bona fide purchaser. In the instant case, by way of specific clauses in the Second Sale Deed, the implied warranties on title under Section 55 of the Transfer of Property Act, 1882 were varied by a contract to the contrary, namely, the specific clauses in the Second Sale Deed. Consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourth Respondent availed of loan facilities from the Third Respondent herein and as security in respect thereof, a mortgage was created over Shed No.134. Thereafter, the Fourth Respondent defaulted in servicing the aforesaid loan facility and, therefore, the Third Respondent decided to bring the mortgaged property to sale. Accordingly, an auction notice was issued in respect of the proposed auction sale on 20.02.2006. In response thereto, the Petitioner herein participated in the auction and was the successful purchaser. As the successful auction purchaser, negotiations were held between the Petitioner and the Third Respondent. By letter dated 04.03.2006, the Petitioner stated, in relevant part, as follows: T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchaser hereby declares taxes, levies, statutory and other liabilities etc if found due in respect of the schedule property shall be borne and paid by the purchaser without any reference to the vendor (emphasis added) 6.Thereafter, a notice dated 27.09.2006 (the Notice) was issued by the Commercial Tax Officer (FAC), Assessment Circle, Varadarajapuram Circle, i.e. the First Respondent herein, to the Fourth Respondent herein calling upon the said Respondent to discharge the Sales Tax dues of ₹ 12,41,710/- within 15 days from the date of receipt of the notice. Upon coming to know of the said notice, the Petitioner herein filed this Writ Petition. 7.At the hearing, the learned counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the SRO concerned. Therefore, he submitted that the Petitioner is a bona fide purchaser for valuable consideration and is, therefore, entitled to protection under Section 24-A of the TNGST Act. 8.He also submitted that it was a statutory sale under Section 29 of the State Financial Corporations Act, 1957 (the SFC Act) and, therefore, the Petitioner is entitled to enjoy the property without encumbrances. 9.In reply, the learned counsel appearing for the Third Respondent referred to the terms and conditions of sale, wherein Clause 16 makes the purchaser liable for commercial tax dues. In addition, the learned counsel also referred to clause 7 of the Second Sale Deed wherein it is reiterated that the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch contains a title warranty from SIDCO to the Fourth Respondent and does not impose liability for commercial tax dues on the Fourth Respondent. Indeed, the letter dated 04.03.2006 from the Petitioner to the Third Respondent puts the matter beyond doubt. By the said letter, the Petitioner herein acknowledged that he is fully aware about the sales tax dues and his liability in respect thereof upon purchase of the property. In fact, in view of recognising this debt, the Petitioner had requested for a lower price. In light of the above documents, it cannot be said that the Petitioner was unaware about the sales tax dues of the Fourth Respondent and the liability of the purchaser in respect thereof. Therefore, the Petitioner is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COMPANY case are in the factual context of a bona fide purchaser who was unaware about the sales tax dues. Therefore, the said cases do not advance the cause of the Petitioner. The contention of the Petitioner that his purchase was under the SFC Act and that, therefore, he is entitled to an encumbrance-free property is completely untenable. The SFC Act enables a state financial corporation to step into the shoes of the defaulting borrower in order to bring the mortgaged/charged property to sale without the intervention of Court. In that respect, it is akin to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. In effect, there are no implied warranties on title or encumbrance-free sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
