Auction purchaser free from predecessor tax dues where property passes under statutory sale without transfer of entire business.

Property sold by a State Financial Corporation under Section 29 of the State Financial Corporations Act, 1951 passes to the auction purchaser free from encumbrances, and the purchaser acquires only the transferred property rights, not the erstwhile owner's business liabilities. Section 49 of the M.P. Commercial Tax Act, 1994 applies to a transferee only where the entire business is transferred, and no specific statutory provision was shown authorising recovery of the predecessor's tax dues from the purchaser. The auction purchaser could not therefore be saddled with commercial tax arrears of the previous owner, and recovery from the purchased property was impermissible.

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Issues: Whether an auction purchaser of property sold by the State Financial Corporation under Section 29 of the State Financial Corporations Act, 1951 can be fastened with the commercial tax arrears of the erstwhile owner.

Analysis: The property was sold by the State Financial Corporation in exercise of statutory powers under Section 29, and the purchaser acquired only the property rights sold through auction, not the entire business of the previous owner. Under Section 29(2), the title of the purchaser is to be treated as free from all encumbrances. Section 49 of the M.P. Commercial Tax Act, 1994 contemplates liability of a transferee only where the entire business is transferred. The purchaser was not a party to the earlier tax liability, there was no privity of contract with the tax department, and no specific statutory provision was shown to permit recovery of the predecessor's dues from the purchaser. The charge, if any, could attach only to the sale proceeds in the hands of the corporation, not to the purchaser's property.

Conclusion: The auction purchaser cannot be made liable for the commercial tax arrears of the erstwhile owner, and recovery from the purchased property was impermissible.

Ratio Decidendi: Property sold by a State Financial Corporation under Section 29(2) of the State Financial Corporations Act, 1951 passes to the auction purchaser free from encumbrances, and in the absence of a specific statutory provision, the purchaser cannot be saddled with the predecessor's tax dues.

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