TaxTMI 
TaxTMI 
2025 (6) TMI 1101
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....e is and whatever there is" condition. The 1st respondent had also specified the terms and conditions of sale of movable assets of the Company in Company Petition No. 2 of 1996, published on 1.6.2022, a true copy of which has been produced as Annexure B. The applicant participated in the tender and was the successful bidder. He deposited the entire sale consideration. Annexure C is the temporary receipt issued on 22.6.2022, evidencing the remittance of the amount. Annexure D is the communication dated 22.7.2022 issued by the Official Liquidator to the applicant, and Annexure E is the receipt issued for Rs. 32,51,800/- paid vide demand draft dated 4.8.2022. The 1st respondent sent Annexure F letter dated 18.8.2022 directing the applicant to be present on 22.8.2022, for receiving the Copper Ingots. On 22.8.2022, when the goods were tested, it was noted that they were obsolete lead scrap and not copper. Annexure G is the mahazar. 3. Since the materials that were available to be delivered were not consistent with what had been advertised for sale, the applicant demanded a refund of the amount. Annexure H is the request made by the applicant to the Official Liquidator. However, by Anne....
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.... test results for determine the Quality and Grade of the Cu Alloy I employed 3 Nos. of unskilled labours along with 300 kg Electronic Scale for Weighment of the Ingots Due to Space constraint the Lot "A" were not Physically Weighed, the Weighment written on the Ingots are assumed to be the Actual Weight. However, while Liquidating the weighment should be made in external weighment Souce which were Authorised with Appropriate Weighment limit and Accuracy." 8. The counsel pointed out that the bidders were not afforded the facility to test the purity of the ingots or whether the products were copper ingots as generally understood. Reference was made to the dictum in United Bank of India v. Official Liquidator & Ors. [(1994) 1 SCC 575], wherein it was held that, in a sale of assets of the company in liquidation by the Official Liquidator on "as is where is" basis, any mistake in the notice inviting tender will not vitiate the sale. The Senior Counsel also referred to the decision of a Division Bench judgment of the Madras High Court in TCI Distribution Centres Ltd. v. The Official Liquidator and Ors. [2009 SCC OnLine Mad. 1481]. The Division Bench held that the dictum in United....
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.... judgment are extracted below: "143. Thus, the implication of the expression "as-is-where is" or "as-is-what-is basis" or "as-is-where-is, whatever there-is and without recourse basis" is not limited to the physical condition of the property, but extends to the condition of the title of the property and the extent and state of whatever claims, rights and dues affect the property, unless stated otherwise in the contract. The implication of the expression is that every intending bidder is put on notice that the seller does not undertake any responsibility to procure permission in respect of the property offered for sale or any liability for the payment of dues, like water/service charges, electricity dues for power connection and taxes of the local authorities, among others. 144. The view which we take finds support in the judgments of this Court in Paramount Polymers [Dakshin Haryana Bijli Vitran Nigam Ltd. v. Paramount Polymers (P) Ltd., (2006) 13 SCC 101 : AIR 2007 SC 2] and Srigdhaa Beverages [Telangana State Southern Power Distribution Co. Ltd. v. Srigdhaa Beverages, (2020) 6 SCC 404 : (2020) 3 SCC (Civ) 748]. In Paramount Polymers [Dakshin Haryana Bijli Vitran Nigam Ltd. v....
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....held that the auction-purchasers were bound to inspect the premises and provide for the dues in all respects. This Court observed : (SCC p. 410, para 16.2) "16.2. Where, as in cases of the e-auction-notice in question, the existence of electricity dues, whether quantified or not, has been specifically mentioned as a liability of the purchaser and the sale is on "AS-IS-WHERE-IS, WHATEVER-THERE-IS AND WITHOUT RECOURSE BASIS", there can be no doubt that the liability to pay electricity dues exists on the respondent (purchaser)." 146. To conclude, all prospective auction-purchasers are put on notice of the liability to pay the pending dues when an appropriate "as-is-where-is" clause is incorporated in the auction-sale agreement. It is for the intending auctionpurchaser to satisfy themselves in all respects about circumstances such as title, encumbrances and pending statutory dues in respect of the property they propose to purchase. In a public auction-sale, auction-purchasers have the opportunity to inspect the premises and ascertain the facilities available, including whether electricity is supplied to the premises. Information about the disconnection of power is easily discover....
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....If the sale be by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample, if the goods do not also correspond with the description. With this rule, that where the sale is not merely a sale of a specific article, but is a sale of an article by description, the article must answer to that description, we may compare the statement of the civil law, si aes pro auro veneat, non valet: aliter atque si aurum quidem fuerit, deterius autem quam emptor existimarit: tunc enim emptio valet . Generally, if the article tendered agrees, in its nature, with the description, the buyer takes the risk as to its quality; and in this respect there appears to be no difference between a sale of victuals and a sale of any other commodity. There can be no implied warranty as to quality, unless the case falls within one of the classes of cases next to be mentioned." 14. In the case at hand, the description of the goods in the Annexure A auction notification is "Copper ingots". Admittedly, the goods turned out to be "copper alloy ingots". Pure copper and copper alloys are different commercial metals that have different qualities and uses. Hence, the a....
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....as to quality or fitness for a particular purpose may be annexed by the usage of trade. (4) An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith." 15. Section 16 of the Sale of Goods Act deals with the implied condition or warranty as to quality or fitness. The proviso to Section 16(2) says that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed. The Courts have considered the scope and extent of the above provision and held that the defects can be either patent or latent and in cases where there is a latent defect that could not be detected on examination, the purchaser will have to be given the benefit of the implied condition as regards the quality of the goods. G. Mckenzie & Co. (supra) was a case decided by the Calcutta High Court, where a pleader had purchased a Plymouth car of the 1937 model, manufactured by M/s. Chrysler Corporation. The Car was sold by M/s G. Mackenzie & Co. After a few months of purchase, the car broke down. The engine was dismantled and sent for examination. It was noted that several parts wer....
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....n been laid down in any judicial decision. The definition given by Farwell, L.J., in The Bristol Tramways Co.'s [L.R. [1910] 2 K.B. 831 at pp. 839-840.] case does not perhaps fully cover the case of latent defects. When a latent defect is discovered subsequently, it must be regarded as being in existence ab initio. If the defect be such as, if known at the time of sale, will make the article unmerchantable, then it must be accepted that the article Was unmerchantable ab initio. The matter may be viewed from another aspect also. The merchantable quality implied by the second exception may be regarded as part of the description of the article sold. When an article is sold by description, it may be regarded as a sale of an article of that description, which is free from any latent defect which, if known at the time, will make it unmerchantable. When, in such a case, a latent defect of that kind is discovered, it may be said that such an article with such a defect was not the article contracted for, and that the case falls within sec. 15. In this case both the Courts have found as a fact, that the particular car delivered to the Plaintiff was not what a Plymouth car of average q....
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.... prepared on the basis of the enquiry made with the previous owners. Even the rough sketch produced shows that the property did not have the frontage. It was the contentions put forth by the respondents' side that in the sale notice it was made clear that the property was sold 'as is where is and whatever there is basis' and, hence, whatever be the discrepancies found, the appellant purchaser should not complain but take the property as it is. No doubt, the sale notice contained the clause 'as is where is and whatever there is basis'. But, the Official Liquidator should not be permitted to take shelter under the clause in a case where the company under liquidation had no title to sell in respect of the part of the property and there were lot of mis-descriptions in respect of the property and the survey numbers were found to be different. Even the Official Liquidator has candidly admitted that an extent of 2.33 acres of land in S. No. 330/7 was classified as Cherry Natham and the Court has to issue a direction to the Government for re-classification of the land in accordance with law. It is pertinent to point out that he has stated in the report that the said land is in th....