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Saurashtra Paints Pvt. Ltd. Vs. Ahmedabad Muni. Corpo. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtGujarat High Court
Decided On
Judge
Reported in(1979)2GLR461
AppellantSaurashtra Paints Pvt. Ltd.
RespondentAhmedabad Muni. Corpo.
Cases ReferredHaji Abdul Gafur Haji Hussenbhai v. The Ahmedabad Municipal Corporation
Excerpt:
.....in the city of ahmedabad challenging the attempt of the municipality to put the property to auction sale in order to satisfy its dues of taxes leviable from the property. , have therefore filed the present petition for a prayer to quash the intended auction sale proceedings of the respondent municipal corporation on the ground that when the second mortgage debt has remained partially unsatisfied even by putting the whole of the property to auction sale, there remained no right with the original mortgagor over which the respondent municipal corporation could lay its hands for the purposes of recovering its dues, the legitimacy of which dues is not called in question in this petition. 5. the above-mention facts once for all clearly show that the suit property was at the back and..........in the city of ahmedabad challenging the attempt of the municipality to put the property to auction sale in order to satisfy its dues of taxes leviable from the property.2. a few facts deserve to be pertinently noted:the property in question belonged to one firm messrs. shivlal virchand contractors. as back as on 24-2-1955, the said owner of the property had mortgaged the property with the then bombay state finance corporation and the said debt came to be inherited by the gujarat state finance corporation. said m/s. shivlal virchand contractors had also created second mortgage on 13-10-1964 of the very property in favour of another creditor, m/s. rajendrakumar and co. then for the years 1965-66, 1966-67,1967-68 and 1968-69, municipal taxes also came to be due in respect of that.....
Judgment:

N.H. Bhatt, J.

1. This is an interesting petition by an auction purchaser of the property situated in the city of Ahmedabad challenging the attempt of the municipality to put the property to auction sale in order to satisfy its dues of taxes leviable from the property.

2. A few facts deserve to be pertinently noted:

The property in question belonged to one firm Messrs. Shivlal Virchand Contractors. As back as on 24-2-1955, the said owner of the property had mortgaged the property with the then Bombay State Finance Corporation and the said debt came to be inherited by the Gujarat State Finance Corporation. Said M/s. Shivlal Virchand Contractors had also created second mortgage on 13-10-1964 of the very property in favour of another creditor, M/s. Rajendrakumar and Co. Then for the years 1965-66, 1966-67,1967-68 and 1968-69, Municipal Taxes also came to be due in respect of that property and by virtue of Section 141 of the Bombay Provincial Municipal Corporation Act, 1949, this property was liable for those property taxes, due in respect of those very properties. With respect to the first mortgage in respect of the Gujarat State Finance Corporation, an application under the provisions of that Act was made and the decree was Corporation and the Darkhast No. 304/71 had come to be filed and in that Darkhast the suit property was put to auction sale on 17-3-1971 and the present petitioner had purchased the same. A sale certificate was also issued in his favour on 17-1-1974. With respect to the second mortgage created by Messrs. Shivlal Virchand Contractors in favour of Messrs. Rajendrakumar and Co., the Regular Civil Suit No. 2063/ 65 had come to be filed on 29-12-1975 and in that case a final decree had come to be passed on 25-11-1968 to execute which the Darkhast No. 222 of 1969 had come to be filed. A notice of sale under Order 21, Rule 66 of the Civil Procedure Code was issued on 14-4-1969. At this stage, the Sales-tax Recovery Officer claiming the sales-tax dues belonging to the Gujarat Government had advertised the sale of the property by publishing a notice in the local newspaper, 'Jansatta' on 11-7-1969, notifying that the disputed property would be put to auction sale by the State Government official on 19-7-1969. Similarly, the Municipal Corporation had also issued a public advertisement in the newspaper 'Gujarat Samachar' dated 24-6-1969 notifying to the public the sale of the property by public auction on 25-7-1969 to realise the property tax due on the property for the years 1965-66 to 1968-69. M/s. Rajendrakumar and C, the second mortgagee, and the holder of the decree in this suit No. 2063/65 therefore had filed two Writ Petitions in this High Court, namely Special Civil Application No. 974/69. against the present respondent Municipal Corporation, and the Special Civil Application No. 975/69 against the State of Gujarat seeking to restrain there two public authorities from conducting the simultaneous auction sale of the property. As far as the petition against the State of Gujarat was concerned, it was ultimately allowed by this High Court placing reliance on the case of Maganlal Bechardas v. Shah Kesharimal Dalichand and Ors., reported in 2 G.L.R. page 625 and the Writ of Mandamus issued by this High Court against the State of Gujarat stood final between the parties because the Supreme Court had summarily rejected their appeal. As far as the Writ Petition against the Corporation is concerned, it was withdrawn by M/s. Rajendrakumar and Co. in view of the statement made on behalf of the Corporation to the effect that the threatened sale would not be proceeded with.

3. As noted above, the sale took place in the first mortgage decree of the Gujarat State Finance Corporation and the bid was made by the present petitioners who by that time had already got assigned in their favour the decretal tights of M/s. Rajendrakumar and Co. in the Civil Suit No. 2063/65, referred to hereinabove, the deed of assignment being dated 20-9-1970.

4. After the petitioners purchased the suit property in auction sale for Rs. 1,40,000/- which was not even sufficient to defray the two mortgage debts, the Municipal Corporation again purported to attach this property on 22-3-1973 and put through the newspaper the notice (Annexure 'O') dated 13-7-1976 informing the public that the Municipal Corporation would auction the suit property on 12-8-1976. The auction purchaser from the holder of the second mortgage-decree, M/s. Saurashtra Paints Pvt. Ltd., have therefore filed the present petition for a prayer to quash the intended auction sale proceedings of the respondent Municipal Corporation on the ground that when the second mortgage debt has remained partially unsatisfied even by putting the whole of the property to auction sale, there remained no right with the original mortgagor over which the respondent Municipal Corporation could lay its hands for the purposes of recovering its dues, the legitimacy of which dues is not called in question in this petition.

5. The above-mention facts once for all clearly show that the suit property was at the back and call of the earlier mortgagees namely the Gujarat State Finance Corporation and M/s. Rajendrakumar and Co., the two mortgages being respectively dated 24-2-1955 and 13-10-1964. The claim of the Municipal Corporation for taxes for the years 1965-66 to 1968-69 can be said to have arisen for the first time on the 1st of April 1965, 1966, 1967 and 1968, but in no case earlier. The moot question that arises for my determination in this petition is whether there was any subsisting property in the hands of the owner of the property, namely, Messrs. Shivlal Virchand Contractor which could be proceeded against by the Municipal Corporation in exercise of the right of charge recognised by Section 141 of the Bombay Provincial Municipal Corporation Act. It is to be noted with partinence at this stage that the two earlier mortgagees had their full control over the property with all its facets of rights as long as the mortgage-dues were not satisfied. Whatever rights and liabilities that arose subsequent to the mortgage would be required to stand in a queue and wait till those earlier claims were satisfied. The subsequent sale which was effected in favour of the petitioner to satisfy the debts could not fetch sufficient amounts even to discharge those mortgage debts. When those two mortgage debts had priority and when those two mortgage debts together consumed the whole of the property, nothing remained out of the property against which the subsequent charge-holder namely the respondent Corporation could proceed against. In this view of the matter, the attempt of the respondent corporation is only to complicate the issued to the embarrassment of the petitioner and such an unauthorised act on the part of the respondent Corporation is required to be arrested or thwarted. The learned Counsel appearing for the respondent invited my pointed attention to the decision of the Supreme Court in the case of The Ahmedabad Municipal Corporation of the City of Ahmedabad v. Haji Abdul Gafur Haji Hussenbhai, reported in : AIR1971SC1201 , which in its turn confirmed the judgment of the Division Bench of this High Court in the case of Haji Abdul Gafur Haji Hussenbhai v. The Ahmedabad Municipal Corporation, reported in 8 GLR page 65. The ratio of these judgments is only this much that a charge including the statutory charge under Section 141 of the Bombay Provincial Municipal Corporation Act, 1949 becomes operative in respect of only those persons who deal with the property subsequently with the knowledge of the charge but not otherwise. The judgment proceeds on the well-known principle of Section 100 of the Transfer of Property Act on the interpretation of which the case rested. To me this citation appears to be absolutely irrelevant. In this case, it is an admitted fact that before the property came to be put to auction sale, the auction purchaser, that is the petitioner, had full knowledge of the claim advanced by the Corporation against the property. It, therefore, follows fortiori that the petitioner purchased the property subject to the rights, if any, vested in the respondent Corporation. This knowledge, however, doesn't create a right. It only fastents the auction purchaser with the knowledge of the existence of any right, if there be any. As elaborated by me above, the right of the Corporation remains only a money claim because the property has exhausted itself to answer the earlier liabilities. If it be so, the knowledge of the petitioner about the advancement of the alleged claim by the Corporation doesn't improve the position of the respondent Corporation in any manner.

6. In the above view of the matter, the respondent Corporation is required to be restrained from going ahead with the intended auction of the suit property or any part of the bundle of rights of the property because the entire bundle of rights of the property has exhausted itself in answering the earlier registered liabilities which had converted themselves into the decretal liabilities. I, therefore, quash the proceedings initiated by the respondent Corporation for sale of the property scheduled in the Petition and restrain the respondent Corporation, its Officers, employees, agents and servants from selling or attempting to sell by public auction or otherwise the said property or any part thereof and from taking any steps or measures against the said property for recovery of its tax dues in respect of the said property for any period prior to the auction sale. Rule is accordingly made absolute with no order as to costs.

The operation of this judgment is stayed for a period of one month from today to enable the Municipal Corporation to have further recourse in accordance with law.


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