Personal undertaking under a sales tax security bond did not create an enforceable charge against a bona fide purchaser.

A security bond furnished under the sales tax regime did not create a valid mortgage or charge where it was only a personal undertaking and did not comply in substance with the prescribed form for security over immovable property. A charge on immovable property is not enforceable against a transferee for consideration without notice unless the statute expressly permits such enforcement. On the facts, the purchaser had bought for value and there was no material showing actual or constructive notice, so the encumbrance entry could not be sustained against the property.

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Issues: (i) Whether the security bond executed for registration under the sales tax regime created a mortgage or charge over the property. (ii) Whether the encumbrance entry could be enforced against a subsequent bona fide purchaser without notice.

Issue (i): Whether the security bond executed for registration under the sales tax regime created a mortgage or charge over the property.

Analysis: The relevant statutory scheme permitted security to be furnished in the form of immovable property, and the prescribed form contemplated mortgage or charge of the scheduled property. However, the bond produced by the vendor contained only a personal undertaking to pay amounts due and did not conform to the prescribed form in substance. In the absence of a duly created mortgage or charge in accordance with the statutory requirements and the applicable principles governing creation of security over immovable property, the bond could not be treated as creating an enforceable charge over the property.

Conclusion: The security bond did not create a valid mortgage or charge over the property and was only a personal undertaking.

Issue (ii): Whether the encumbrance entry could be enforced against a subsequent bona fide purchaser without notice.

Analysis: A charge, unlike a mortgage, is not enforceable against a transferee for consideration without notice unless the statute expressly provides otherwise. The material showed that the petitioner had purchased the property for value, had verified the encumbrance records, and there was no material to establish actual or constructive notice of any enforceable charge. Since the statutory framework did not authorise enforcement of such a charge against a bona fide transferee without notice, the encumbrance entry could not be sustained against the petitioner.

Conclusion: The encumbrance entry was unsustainable against the petitioner, who was a bona fide purchaser without notice.

Final Conclusion: The challenged encumbrance and the underlying recovery action could not stand against the petitioner's property, and the writ petition was allowed.

Ratio Decidendi: A charge on immovable property cannot be enforced against a transferee for consideration without notice unless the governing statute expressly provides for such enforcement, and a mere personal undertaking does not by itself create a mortgage or charge.

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