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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
VINEET KOTHARI, J.
The Commissioner, Commercial Taxes Department, Rajasthan, Jaipur & Ors. - Appellant
Vs.
Balveer Singh s/o Shri Munsi Ramji & Ors. - Respondents
S.B. Civil Second Appeal No. 251/1994
Decided on : 16-12-2015
SALE OF PROPERTY - VOID - REVENUE - FRAUD - CAVEAT EMPTOR - FIRST CHARGE - RAJASTHAN SALES TAX ACT, 1994 - SECTION 11-AAA AND 11-AAAA.
Fact of the Case:
The plaintiff, Balveer Singh, a minor, purchased a shop from his father, Munshi Ram, who had a power of attorney from the defaulter assessee, Subhash Chandra. The sale was for a paltry sum of Rs.6,000/-. The Commercial Taxes Department challenged the sale as void, as it was made to defraud the revenue. The trial court agreed and dismissed the plaintiff's suit. The appellate court reversed the trial court's decision.
Finding of the Court:
The High Court allowed the second appeal filed by the Commercial Taxes Department and held that the sale was void. The court held that the transfer was made to avoid and defraud the Revenue and that the sale deed was non est in law. The court also held that the Commercial Taxes Department was free to realize its dues from the attachment and auction of the suit shop.
Issues: 1. Whether the learned appellate court has misread the evidence as regards the issues No.1 & 2 and erroneously reversed the finding of the trial court? 2. Relief.
Ratio Decidendi: 1. The court held that the maxim of “caveat emptor” applies to a case of this nature. It means that the buyer must take care and make all necessary enquiries and ascertain all the facts relating to the property to be purchased prior to committing in any manner. 2. The court held that the sale in question was not bona fide, as the seller Munshiram was father of the purchaser, a minor son Balveer Singh aged 15 years only at that time and was a student only, on the strength of a power of attorney of the Assessee-Subhash Chandra, who was the Assessee in default of the Commercial Taxes Department, and the said Power of Attorney was not even produced before the learned trial court. 3. The court held that the findings of the learned appellate court and the manner, in which it has set aside the well reasoned findings of the learned trial court are, therefore, clearly perverse and cannot be sustained in law.
Final Decision: The High Court allowed the second appeal filed by the Commercial Taxes Department and held that the sale was void. The court held that the transfer was made to avoid and defraud the Revenue and that the sale deed was non est in law. The court also held that the Commercial Taxes Department was free to realize its dues from the attachment and auction of the suit shop.
1. The present second appeal under Section 100 of the Code of Civil Procedure has been filed by the defendant-Commercial Taxes Department of the State of Rajasthan in this Court on 09.05.1994, aggrieved by the reversal of the judgment and decree dated 02.12.1991 of the learned trial court of Munsif & Judicial Magistrate, First Class, Bhadra in Civil Suit No.45/87 – Balveer Singh Vs. State of Rajasthan & Ors., rejecting the suit filed by the plaintiff-Balveer Singh s/o Shri Munshiram for injunction in respect of the suit shop allegedly purchased by him by registered sale deed from one Subhash Chandra s/o Shri Chiranji Lal Tyagi, proprietor of M/s. Subhash Trading Company, Bhadra, who was a defaulter Assessee of the appellant-Commercial Taxes Department to the extent of Rs.4,39,390.57 in the year 1978.
2. The plaintiff-Balveer Singh, a minor of 15 years at that time, allegedly purchased the suit shop in question from his father, Munshi Ram, who on the strength of a power of attorney of defaulter Assessee-Subhash Chandra, sold the suit shop in question for a paltry sum of Rs.6,000/- by a registered sale deed 24.05.1980, when the defaulter Assessee-Subhash Chandra was in default to the tune of Rs.4,39,390.57, as aforesaid. The suit for injunction filed by Balveer Singh against Commercial Taxes Department came to be rejected by the learned trial court deciding both the issues against the plaintiffs and in favour of the defendant-Commercial Taxes Department and the trial court held that the said transfer of the shop in question by registered sale deed on 24.05.1980 was to defraud the Revenue, and therefore, the same was void, as hit by Sections 11-AAA and 11-AAAA of the Rajasthan Sales Tax Act, 1994 (hereinafter referred to as 'the Act of 1994').
3. The relevant findings on issues No. 1 & 2 of the learned trial court in the impugned order dated 02.12.1991 are quoted below for ready reference:-
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