TaxTMI 
TaxTMI 
2020 (6) TMI 37
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....guntas in Sy. No.283 at Rampally Village, Keesara Mandal, Medchal District. As mentioned aforesaid, on account of failure to repay a loan, the creditor, Syndicate Bank, brought the property to auction for which an E-auction sale notice dated 25.5.2017 was issued in this behalf, in which the respondent was the successful auction-purchaser. In order to appreciate the controversy before us, it is necessary to reproduce some of the relevant clauses of the auction notice: "The property described below is being sold on "AS IS WHERE IS, WHATEVER THERE IS AND WITHOUT RECOURSE BASIS" under the rule no.8 & 9 of the Security Interest (Enforcement) Rules (hereinafter referred to as the rules) for the recovery of the dues detailed as under: .... .... .... .... .... .... The total amount due as on 30-04- 2017 Rs. 13,97,26,258.77 (Rs. Thirteen crores ninety seven lakhs twenty six thousand two hundred fifty eight and paisa seventy seven) with future interest & costs till date of payment accounts no 1) 373OSLB140940002 & 2) 30151010006439 Details of encumbrances over the property, as known to the bank For property no.01 Nil For property no.02: The subsequent to our MOD, the ....
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....cumbrance, property tax dues, electricity dues, etc., or any other dues to the Government, local authority or anybody, in respect of the property under sale." 3. The aforesaid auction notice shows that the unit was being sold on "as is where is, what is there is and without any recourse basis", as per Rules 8 & 9 of the Security Interest (Enforcement) Rules, 2002 (hereinafter referred to as the 'said Rules'). The aforesaid clauses of the E-auction sale notice show that the total outstanding dues were much larger, but the reserve price fixed was lower, and the actual sale consideration of the successful auctioneer was Rs. 9,18,65,000, which is approximately Rs. 10 lakh more than the minimum reserve price. Clause 24 reproduced aforesaid makes it clear that when the reference is to a sale on "as is where is, what is there is and without any recourse basis", the same is "in all respects and subject to statutory dues". This clause was further subject to another Clause 26, where the Authorised Officer carrying out the auction absolved himself of the liability for any charge, lien, encumbrance, property tax dues, electricity dues, etc. The purpose is to emphasise that a holistic readin....
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....ay also take note of the fact that the aforesaid dues partake the character of statutory dues under the Electricity Act, 2003 read with the General Terms & Conditions of Supply. 7. A writ petition was filed by the respondent before the High Court of Telangana and Andhra Pradesh seeking quashing of these demands predicated on a reasoning that as a subsequent purchaser, the respondent was not responsible for the dues of the earlier owner, and in that behalf relied upon the judgments of this Court in Isha Marbles v. Bihar State Electricity Board & Anr. (1995) 2 SCC 648 and Southern Power Distribution Company of Telangana Limited (through its CMD) & Ors. v. Gopal Agarwal & Ors. (2018) 12 SCC 644 Reliance on these judgments persuaded the learned single Judge to issue directions quashing the demand of appellant No.1. The appeal filed before the Division Bench against this order was also dismissed on 30.4.2018. 8. We have examined the submissions in the contours of the aforesaid controversy, and take note of the fact that in the case of Isha Marbles, (supra) the sale was in pursuance of Section 29(1) of the State Financial Corporations Act, 1951, but the important aspect was that th....
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....hat as an auction purchaser bidding in an "as is where is, whatever there is and without recourse basis", the respondent would have inspected the premises and made inquiries about the dues in all respects. The facts of the present case, as in the judgment aforesaid, are more explicit in character as there is a specific mention of the quantification of dues of various accounts including electricity dues. The respondent was, thus, clearly put to notice in this behalf. 12. The same view in case of a similar clause has been taken in Paschimanchal Vidyut Vitran Nigam Limited & Ors. v. DVS Steels and Alloys Private Limited & Ors. 6 (2009) 1 SCC 210 (2 Judge Bench) It has been further observed that if any statutory rules govern the conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfillment of the requirements of such rules and regulations so long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable. A condition for clearance of dues cannot per se be termed as unreasonable or arbitrary. 13. We may notice a slightly contra view in Haryana State Electricity Board v. Hanuman Rice Mills, Dh....