IMPORTANT POINT
Dues in relation to the Municipal Tax do not create any encumbrance on the property. It does not create any charge.
In absence of any statutory provision making the municipal dues a charge on the property, the Municipality being an unsecured creditor would be required to stand in queue before the Official Liquidator for the purpose of realizing its dues.

JUDGMENT

S.B. Sinha, J. —

1. Leave granted.

2. Wool-Combers of India Limited (the company) went in liquidation. Appellant purchased assets of the company in liquidation in a court sale for a consolidated sum of Rs.7,03,00,000/-. Sale was confirmed by the learned Company Judge by an Order dated 15th September, 2006.

3. Appellant was served with a notice dated 15-02-2007 by Bhatpara Municipality claiming payment of arrears of property tax amounting to Rs.47,59,597.19/- for the period from 1991-1992 and 2006-2007, stating :

“that before adopting the said stringent measure for realizing the arrear property tax once again give you and opportunity to pay all arrear property tax in respect of the said holdings being 1/, West Ghoshpara Road, Ward No. 12, amounting to Rs.47,59,597.19/- plus statutory interest within seven days from the receipt thereof.”

4. Appellant contends that it has no liability to pay the said dues and the same has to be adjusted from the sale proceeds. It is furthermore stated that on and from the date of purchase it had paid all municipal rates and taxes subsequent to the date of sale.

Appellant on receipt of the said notice took out a Chamber Summons praying, inter alia, for the following reliefs :

“(a) Necessary clarification be made that Sale confirmed in favour of applicant by order dated 15th September, 2006 would make the applicant liable for payment of property tax only on and from the date of confirmation of sale i.e. 15th September, 2006 and not for any period prior thereto;

(b) Order dated 15th September, 2006 be suitably modified and/or clarified in terms of prayers above;

(c) Injunction restraining the respondent no. 2 from claiming any alleged arrear property tax for period prior to 15th September, 2006;

(d) Direction be given to the respondent no. 2 lodge its claim before the Official Liquidator for any alleged claim on account of property tax for period prior to 15th September, 2006.

(e) Injunction restraining the respondent no. 2 from giving any effect and/or further effect to the notice dated 15th February, 2007 and 6th March, 2007 being Annexures “E” and “G” respectively to the affidavit in support of this summons;

(f) Ad-interim orders in terms of prayers above;

(g) Costs of and/or incidental to this application be paid by the respondent no. 2;

(h) Such further and/or other order or orders as this Hon’ble Court may deem fit and proper.”

5.aa By reason of an order dated 7th February, 2008, the said application has been dismissed, stating :

“Having considered the submissions of the parties the terms “as is where is basis and whatever there is basis” signifies, the condition, quality and the quantity in which the assets sold, exists. It does not take into account the liabilities attached to the assets sold. The terms and conditions of sale, however, called upon the bidders to satisfy themselves regarding title and encumbrance attached to the said asset. Encumbrance would include the liability attached to the asset including the tax payable. Therefore, it was incumbent upon the purchaser to make enquiry regarding liabilities (to be read as encumbrance) attached to the asset before making the offer, The tax payable to the municipality is one such encumbrance and for not making enquiry the petitioner cannot avoid payment.”

6. An intra court appeal preferred thereagainst has been dismissed by a Division Bench of the said court.

7. Mr. Sunil Kumar, learned senior counsel, in support of this appeal, would contend that a purchaser is not liable to pay the property tax prior to the date of purchase and remedy of the respondent municipality, if any, was to have its claim satisfied from the sale proceeds in terms of Sections 529 and 529A of the Companies Act, 1956.

8. Mr. Sibaji Sen, learned senior counsel appearing on behalf of the respondent-Municipal Corporation, on the other hand, would draw our attention to the advertisement for sale to contend that the appellant had a duty to make an enquiry in rega