Tax recovery sale and prior mortgage: recovery 'as if' land revenue did not extinguish earlier secured interests.

A statutory sale for recovery of sales tax arrears passes free of prior encumbrances only where the governing enactment expressly treats the dues as land revenue or authorises recovery as land revenue. Recovery provisions framed merely as collection 'as if' land revenue do not, by themselves, extinguish an earlier mortgage or other secured interest. On that construction, the tax sale did not override the mortgagee's security, and the purchaser took subject to the prior encumbrance. The mortgage decree was upheld and the appeal failed.

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Issues: Whether a sale of immovable property held by the sales tax recovery authorities for recovery of tax arrears, by invoking the Revenue Recovery Act and the Tamil Nadu General Sales Tax Act, passes title free from prior encumbrances and overrides an earlier mortgage.

Analysis: Section 42 of the Tamil Nadu Revenue Recovery Act applies where lands are brought to sale on account of arrears of revenue and makes such a sale free of encumbrances. The statutory scheme under section 9(2) of the Central Sales Tax Act and sections 24(2) and 29 of the Tamil Nadu General Sales Tax Act empowers recovery of tax arrears as if they were arrears of land revenue, but the language used is materially different from a provision that deems the dues to be land revenue or authorises recovery as land revenue simpliciter. The governing distinction is that a fiction framed as recovery 'as if' or 'in like manner as' land revenue does not, by itself, extinguish prior secured interests, whereas a statute that treats the dues as land revenue or authorises recovery as land revenue may attract the protection of section 42. On that construction, the tax sale did not displace the mortgagee's security.

Conclusion: The sale was not free from prior encumbrances and the appellant purchaser remained bound by the earlier mortgage, against the appellant.

Final Conclusion: The mortgage decree was upheld and the appeal failed because recovery of sales tax arrears under the relevant statutes did not confer title free of the prior mortgage.

Ratio Decidendi: A statutory sale for recovery of tax arrears passes free of prior encumbrances only when the governing enactment expressly treats the dues as land revenue or authorises recovery as land revenue; a provision permitting recovery merely 'as if' land revenue does not extinguish pre-existing secured interests.

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