Bona fide purchaser protection and writ limits: disputed notice and colourable transfer claims must be proved in civil proceedings.

Protection under the proviso to section 24-A of the Tamil Nadu General Sales Tax Act, 1959 applies only to a transferee who proves purchase for adequate consideration without notice of the pending tax liability or recovery proceedings. Notice includes actual knowledge as well as wilful abstention from enquiry and gross negligence under section 3 of the Transfer of Property Act, 1882. On the materials noted, the purchasers had not shown absence of notice, as assessment and recovery steps had already preceded several purchases. Disputed questions about bona fide purchase, colourable transfer, and fraud are ordinarily not decided in writ proceedings under article 226, but must be established on evidence in appropriate civil proceedings.

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Issues: (i) Whether purchasers of immovable property from assessees in arrears of sales tax could claim protection under the proviso to section 24-A of the Tamil Nadu General Sales Tax Act, 1959 as bona fide purchasers for value without notice; (ii) whether a writ petition under article 226 of the Constitution of India was a proper forum to decide disputed questions of bona fides, notice, and alleged colourable transfer.

Issue (i): Whether purchasers of immovable property from assessees in arrears of sales tax could claim protection under the proviso to section 24-A of the Tamil Nadu General Sales Tax Act, 1959 as bona fide purchasers for value without notice.

Analysis: The statutory protection under the proviso to section 24-A is available only where the transfer is for adequate consideration and without notice of the pending proceedings or tax liability. The concept of notice is governed by section 3 of the Transfer of Property Act, 1882, which includes not only actual knowledge but also wilful abstention from enquiry and gross negligence. Whether a purchaser satisfies that standard depends on the conduct of the parties, the circumstances of the transfer, and the surrounding facts. The purchasers did not establish on the admitted materials that they were without notice, and the record showed that assessment orders and recovery steps had preceded the purchases in several matters.

Conclusion: The purchasers were not entitled, on the materials before the Tribunal, to claim automatic protection as bona fide purchasers without notice.

Issue (ii): Whether a writ petition under article 226 of the Constitution of India was a proper forum to decide disputed questions of bona fides, notice, and alleged colourable transfer.

Analysis: The question whether a transfer is genuine, colourable, fraudulent, or protected by the proviso to section 24-A turns on disputed facts and the evidence of the parties. Such questions cannot ordinarily be determined in writ proceedings, which are confined to admitted facts or pure questions of law. Section 101 of the Indian Evidence Act, 1872 places the burden on the person asserting the factual basis of the claimed protection to prove it. The purchasers therefore had to establish their want of notice and bona fides in appropriate civil proceedings, not in writ jurisdiction.

Conclusion: Article 226 was not a proper forum for adjudicating these disputed factual claims.

Final Conclusion: The Tribunal held that the challenge to the revenue recovery notices could not be sustained in writ proceedings, and the purchasers were left to work out their remedy by civil suit to establish title and bona fide purchase, if so advised.

Ratio Decidendi: Protection against revenue recovery for a transferee of property depends on proof of adequate consideration and absence of actual or constructive notice, and disputed questions on bona fide purchase or colourable transfer cannot ordinarily be decided in writ jurisdiction.

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