Liquidation sale registration cannot be blocked by unproved attachment, while prior electricity dues remain with the property.
A liquidated asset sold under the Insolvency and Bankruptcy Code could not be subjected to refusal of registration on the basis of an alleged de facto attachment for earlier electricity arrears, because no insolvency claim had been lodged and the alleged encumbrance was not shown as a legal recordable charge. Registration of the sale deed was therefore directed. At the same time, a purchaser buying on an "as is where is, whatever there is" basis could not treat prior electricity dues as automatically extinguished; the principle of caveat emptor preserved the earlier liability attached to the property.
Issues: (i) Whether the Sub-Registrar could insist on a no objection certificate and refuse registration of the sale deed executed during liquidation on the basis of an alleged de facto attachment for earlier electricity arrears. (ii) Whether the purchaser of the liquidated asset took the property free from the erstwhile owner's electricity dues.
Issue (i): Whether the Sub-Registrar could insist on a no objection certificate and refuse registration of the sale deed executed during liquidation on the basis of an alleged de facto attachment for earlier electricity arrears.
Analysis: The property had been sold in liquidation under the Insolvency and Bankruptcy Code, and the alleged demand arose from a period much earlier than the CIRP and liquidation. No claim had been lodged by the authorities during the insolvency process, and the asserted attachment was not reflected as a legal encumbrance in the record. In these circumstances, the insistence on a no objection certificate and refusal to register the sale deed was held to be unjustifiable.
Conclusion: The refusal to register the sale deed was not justified, and registration was directed.
Issue (ii): Whether the purchaser of the liquidated asset took the property free from the erstwhile owner's electricity dues.
Analysis: The sale deed recorded that the property was sold on an "as is where is, whatever there is" basis. On that footing, the principle of caveat emptor applied, and the purchaser could not claim that prior liabilities attached to the property stood automatically wiped out merely because the sale was conducted in liquidation.
Conclusion: The liability in respect of the property was not extinguished.
Final Conclusion: The sale deed was to be registered, but the prior liability attached to the property was preserved.
Ratio Decidendi: A purchaser in liquidation who buys property on an "as is where is, whatever there is" basis cannot insist that prior statutory liabilities are wiped out, though registration of the sale deed cannot be withheld on an unperfected or unproved de facto attachment once the insolvency process has proceeded without any admitted claim.
TaxTMI 
AI Drafter ✕
TaxTMI 
