Contractual allocation of tax liabilities in auction sales can bind the purchaser despite no statutory first charge.

Tender conditions can validly shift outstanding tax liabilities to an auction purchaser where the purchaser bids with notice and accepts the contractual terms. Clause 2.7 went beyond a general "as is where is" basis and required the purchaser to discharge liabilities over and above the purchase consideration after due diligence. The dispute was treated as one of contractual allocation of liabilities, not whether the tax dues constituted a statutory first charge on the assets. The principle reflected in Section 55 of the Transfer of Property Act, 1882 supported enforcement of a contract to the contrary, and the purchaser was bound to pay the Central Excise and State Sales Tax dues.

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Issues: Whether the purchaser of auctioned assets was bound, under Clause 2.7 of the tender conditions, to discharge the unit's outstanding Central Excise and State Sales Tax liabilities even though those dues were not asserted as a first charge on the assets.

Analysis: The tender conditions did not stop at a general "as is where is" stipulation but specifically required the purchaser to meet any outstanding liabilities over and above the purchase consideration after due diligence. The purchaser participated in the auction with notice of these liabilities and accepted the contractual terms. The Court distinguished authorities dealing with statutory first charge or transfer of business, holding that the present dispute turned on the contractual allocation of liabilities, not on whether the tax dues created a charge by statute. The principle reflected in Section 55 of the Transfer of Property Act, 1882 supported enforcement of a contract to the contrary, and the sale conditions expressly placed the liabilities on the purchaser.

Conclusion: The purchaser was bound to satisfy the Central Excise and State Sales Tax dues under Clause 2.7, and the challenge to recovery of those dues failed.

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