Statutory charge on property cannot bind auction purchasers without actual or constructive notice, the High Court held.

A statutory charge over immovable property was held unenforceable against auction purchasers who acquired the property without actual or constructive notice of the charge. Applying section 100 of the Transfer of Property Act, the Court held that a charge cannot prevail against a transferee unless notice is shown or constructive notice can be inferred. As no notice was issued to the purchasers and no material established constructive notice, the revenue authorities could not enforce the sales tax encumbrance against them. The impugned order was set aside and the encumbrance entry was directed to be removed from the records.

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Issues: Whether the sales tax charge over the property could be enforced against purchasers who bought the property in court auction without actual or constructive notice of the charge.

Analysis: The property had been sold in execution proceedings and the petitioners became the auction purchasers. The revenue authorities sought to enter and enforce an encumbrance on the basis that sales tax arrears due from the former owner created a first charge over the property. The Court applied section 100 of the Transfer of Property Act and followed the principle that a charge cannot be enforced against a transferee unless the transferee had notice of it, or constructive notice can be inferred. On the facts, there was no notice issued to the petitioners and no material to show constructive notice.

Conclusion: The charge could not be enforced against the petitioners, and the encumbrance entry was liable to be removed.

Final Conclusion: The writ petition succeeded, the impugned order was set aside, and the consequential encumbrance was directed to be removed from the records.

Ratio Decidendi: A statutory charge over immovable property is not enforceable against a transferee who purchased the property without actual or constructive notice of the charge.

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