TaxTMI 
TaxTMI 
1971 (3) TMI 89
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....Court itself there have been conflicting expression of opinion. In this Court there being no representation on behalf of the respondent the appeal was heard ex parte. The property which is the subject matter of controversy in this litigation originally belonged to one Haji Nur-Mahammad Haji Abdulmian. He apparently ran into financial difficulties in February, 1949, and insolvency proceedings were started against him in March, 1949. By an interim order receivers took charge of his estate and finally on October 14, 1950 he was adjudicated insolvent. The property in question accordingly vested in the receivers. This property had been mortgaged with a firm called Messrs. Hargovind Laxmichand. In execution of a mortgage decree obtained by the mortgagee this property was auctioned and purchased at court sale by the plaintiff Haji Abdulgafur Haji Hussenbhai, (respondent in this Court) for Rs. 22,300. He was declared purchaser on November 28, 1954. At the time of this purchase there were municipal taxes in respect of this property in arrear for the years 1949-50 to 1953-54, which means that the receivers had not cared to pay the municipal taxes during all these years. The property was a....
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....roperty subject to all the defects of title and the doctrine caveat emptor (let the purchaser beware) applies to such purchaser. The case of the judgment debtor having no saleable interest at all in the property sold such as is contemplated by 0. 21, R. 91, C. P. C. is, however, different and is not covered by this doctrine. The second point canvassed was that there is an express provision in Section 141(1) of the Bombay Provincial Municipal Corporation Act, 1949 (hereinafter called the Bombay Municipal Act) for holding the present property to be liable for the recovery of municipal taxes and, therefore though the property was subject only to a charge not amounting to mortgage and, therefore, involving no transfer of interest in the property, the same could nevertheless be sold for realizing the amount charged, even in the hands of a transferee for consideration without notice. Section 141 of the Bombay Municipal Act is an express saving provision as contemplated by Section 100 of Transfer of Property Act, contended Shri Desai. This submission has no merit as would be clear from a plain reading of Section 100 of the Transfer of Property Act, 1882 and Section 141 of the Bombay Munic....
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.... charges payable under section 134 for water supplied to any premises and the costs of recovery of property-taxes as specified in the rules. (2) In any decree passed in a suit for the enforcement of the charge created by sub-section (1), the Court may order the payment to the Corporation of interest on the sum found to be due at such rate as the Court deems reasonable from the date of the institution of the suit until realisation, and such interest and the cost of enforcing the said charge, including the costs of the suit and the cost of bringing the premises or moveable property in question to sale under the decree, shall, subject as aforesaid, be a fresh charge on such premises and moveable property along with the amount found to be due, and the Court may direct payment thereof to be made to the Corporation out of the sale proceeds." Sub-section (1). as is obvious, merely creates a charge in express language. This charge is subject to prior payment of land revenue due to the State Government on such building or land. The section, apart from creating a statutory charge, does not further provide that this charge is enforceable against the property charged in the hands of a transfer....
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....tion of a purchaser at an execution sale is the same as that of the judgment-debtor and his position is somewhat different from that of a purchaser at a private sale. Execution Purchasers. according to this decision, purchase the property subject to all the charges and encumbrances legal and equitable which would bind the debtors. We do not agree with the view taken in this decision. We how,ever, do not consider it necessary to go into the matter at length because we find that this decision was expressly overruled by this Court in Laxmi Devi v. Mukand Kunwar([1965] 1 S.C.R. 726.) and the High Court, relying on this Court's decision, had also repelled a similar contention pressed on behalf of the Municipal Corporation there. This Court pointed out in Laxmi Devi's case (I.L.R. [1943] All. 453.) that the provisions of Section 2(d) of the Transfer of Property Act prevail over Section 5 with the result that the provisions of Section 57 and those contained in Chapter IV of the Transfer of Property Act must apply to transfer, by operation of law. Section 100, it may be pointed out, falls in Chapter IV. Reliance was next placed on a Full Bench decision of the Allahabad High Court in Nawal ....
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....no escape. The appellants are private purchasers of the property and if they had enquired at the time of their purchase, they would have discovered that the rates were in arrears; as a matter of fact, they would be personally liable under Section 223 for the arrears of the year immediately prior to the date of their purchase, and they admit that they have satisfied such arrears, though they do not disclose whether by enquiry they had ascertained the existence of the arrears before they made the purchase. The Court then, proceeded to deal with the position of the vendor from whom the appellants had purchased the property in order to see if he could raise the defence of being a purchaser for value without notice. The appellant's vendor was a mortgagee who had acquired title by foreclosure-an involuntary alienation by his mortgagor-and it was held that to him constructive notice could not be imputed to the same extent as to a purchaser at a private sale. But had he made enquiries from the municipal authorities he could still have ascertained whether any arrears of consolidated rates were due. When he had taken the mortgage ,be was aware that if the rates were not paid the arrears woul....
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....e intimate to the public in the "Press" or by other publication a list of the properties which are charged in respect of arrears of taxes. There is nothing upon the record to justify the conclusion that the defendants could have demanded any information from-the municipality in regard to charges on immovable property within the municipal limits." The Court then noticed the fact that the Kanpur Corporation had allowed II years' arrears of taxes to accumulate and it was observed that no intending purchaser was bound to presume that taxes upon the property, he contemplates purchasing had not been paid in the ordinary course, in the absence of special intimation by the municipality. On this reasoning the suggestion of constructive notice was negatived. According to Section 3 of the Transfer of Property Act which is described as interpretation clause, a person is said to have notice of a fact when he actually knows that fact or when before wilful abstention from an enquiry or search which he ought to have made or gross negligence he would have known it. There (1) XLI B.I.R. 257. are three explanations to this definition dealing with three contingencies when a person acquiring immovable ....
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....lect. Negligence is ordinarily understood as an omission to take such reasonable care as under the circumstances is the duty of a person of ordinary prudence to take. In other words it is an omission to do something which a reasonable man guided by consideration which nor- mally regulate the conduct of human affairs would do ordoing something which a normally prudent and reasonable man would not do. The question of wilful abstention or gross negligence and, therefore, of constructive notice considered from this point of view is generally a question of fact or at best mixed question of fact and law depending primarily on the facts and circumstances of each case and except for cases directly falling within the three explanations, no inflexible rule can be laid down to serve as a straight- jacket covering all possible contingencies. The question one has to answer in circumstances like the present is not whether the purchaser had the means of obtaining and might with prudent caution have obtained knowledge of the charge but whether in not doing so he acted with wilful abstention or gross negligence. Being a question depending on the behaviour of a reasonably prudent man, the Courts hav....
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....es were a charge on the property they need not pursue the matter with the receivers and also need not approach the insolvency court. If so, then this, in our opinion, was not a proper attitude to adopt. In any event the plaintiff could not reasonably have thought that the municipal corporation had not cared to secure payment of the taxes due since 1949. On the facts and circumstances of this case, therefore, we cannot hold that the plaintiff as a prudent and reasonable man was bound to enquire from the municipal corporation about the existence of any arrears of taxes due from the receivers. It appears from the record, however, that he did in fact make enquiries from the receivers but they did not give any intimation. The plaintiff made a statement on oath that when he purchased the building in question it was occupied by the tenants and the rent used to be recovered by the receivers. There is no rebuttal to this evidence. Now, if the receivers were receiving rent from the tenants, the reasonable assumption would be that the municipal taxes which were a charge on the property and which were also given priority under Section 61 of the Provincial Insolvency Act, 1920, had been duly pa....