Statutory first charge on secured property prevails where purchaser takes title with knowledge of outstanding tax dues.

A purchaser of secured property through a private negotiated sale, with actual or constructive knowledge of outstanding commercial tax dues, cannot claim protection as a transferee for value without notice under the Transfer of Property Act, 1882. The commercial tax law created a first charge on the property, and that charge was not extinguished by the repeal of the earlier enactment by the Madhya Pradesh VAT Act, 2002. The purchaser therefore took the property subject to the statutory encumbrance, and the authorities could proceed in accordance with law. The writ petition failed, with liberty preserved to pursue the statutory remedy regarding the charge.

---

---

Issues: Whether the petitioner, having entered into a private negotiation for purchase of the secured property with knowledge of the outstanding commercial tax dues, could resist the commercial tax charge and obtain protection under the Transfer of Property Act, 1882.

Analysis: The property was initially proceeded against by the secured creditor under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, but the auction did not culminate in acceptance of the bid. The subsequent transaction was through private negotiation, during which the petitioner expressly acknowledged the assets and liabilities of the company and the existence of substantial statutory dues. On these facts, the petitioner could not invoke the protection available to a transferee for value without notice under Section 100 of the Transfer of Property Act, 1882. The commercial tax legislation created a first charge on the property, and the petitioner was treated as having constructive notice of the encumbrance. The repeal of the earlier tax enactment by the Madhya Pradesh VAT Act, 2002 did not extinguish the charge, and the statute also preserved the right of first charge, while permitting the parties to pursue the statutory mechanism under Section 33(2) where property is sold by a bank or financial institution.

Conclusion: The petitioner had no enforceable claim to be from the commercial tax charge, and the commercial tax authorities could proceed in accordance with law.

Final Conclusion: The writ petition failed, with only liberty preserved for recourse to the statutory remedy regarding the charge on the property.

Ratio Decidendi: A purchaser who acquires secured property through a negotiated transaction with knowledge, actual or constructive, of subsisting statutory tax dues takes the property subject to the first charge created by the tax law and cannot claim the protection of transfer for value without notice.

---