Auction purchasers under the SARFAESI Act cannot be held liable for the previous owner's tax liabilities unless explicitly stated in the sale notice.

JUDGMENT :

Tarlok Singh Chauhan, J.

The instant petition has been filed for grant of the following substantive relief(s):-

I. A writ in the nature of certiorari be issued quashing the claim entries of respondents No. 1 to 3 recorded in the Annexure P-4 attaching the property in question, which already stands mortgaged with respondent No. 4 and purchased in auction by the petitioner and also quashing the tax and other liabilities over the said property.

II. A writ in the nature of mandamus may be issued directing the respondent No. 1 to delete the claim entry of respondents No. 2 and 3 department from the revenue records.

2. The facts are not in dispute.

3. The petitioner purchased immovable property from UCO Bank (Respondent No. 4) in an E-auction held on 11.09.2018 whereby land measuring 2 Bighas 4 Biswas and factory building comprised in Khasra No. 736/586/2-4 Kita in Khata/Khatauni No. 81/88 Min situated in village Kunjahal, Pargana Dharampur, Tehsil Baddi, District Solan, H.P. in accordance with the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the ‘SARFAESI Act’). The reserve price of the said secured assets was kept Rs. 117.00 lacs.

4. The petitioner participated in the auction and offered highest bid of Rs. 1,05,00,000/-. Respondent No. 4 being ‘Secured Creditor” under the SARFAESI Act while exercising power under Section 13 read with Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002 issued Sale Certificate in favour of the petitioner mentioning therein the description of the immovable property purchased by it.

5. Later on, the petitioner came to know that respondent No. 2 i.e. Department of Excise and Taxation had got a mutation No. 688, dated 21.07.2018, recorded regarding the fact that the said property stood charged with respondent No. 1, whereas respondent No. 4 had already created a charge over the property vide mutation No. 298, dated 10.01.2018, where the property stood charged with respondent No. 4 prior to the charge of respondents No. 1 to 3.

6. It is in this background that the petitioner has filed the instant petition.

7. Identical issue came up before the learned Division Bench of this Court of which one of us (Justice Tarlok Singh Chauhan, J) was a Member in CWP No. 1817 of 2023, titled as Rajinder Singh vs. State of H.P. & Ors., decided on 14.09.2023.

8. It shall be apt to reproduce the relevant observations of the aforesaid judgment, which read as under:-

14. ANALYSIS OF STAND OF PETITIONER:

14(i). The first prayer of the petitioner needs to be granted for the reason ; firstly, that consequent upon E- auction and confirmation of sale on 26.10.2022 (Annex- ure P-2) and after the issuance of sale certificate on 20.01.2023, Annexure P-3, once the petitioner has ac- quired an absolute right, title and interest in the scheduled immoveable property under the SARFAESI Act then, the rights and interests which had accrued in favor of the bonafide auction purchase-petitioner cannot be defeated or curtailed or taken away, negated or nullified, or extinguished merely on the basis of a red ink entry contained in the revenue records as per Rapat No 196, dated 01.12.2016 when, the State Tax Authorities were bound to recover the outstanding dues of State Sales Tax/Excise Taxes, under HP VAT Act, from the Original Loanee, being the past dealer, M/s Aradhana Wines, who had raised a loan for his business against such property ; secondly, the rights, title and interests which had accrued in favour of the auction purchase-petitioner can be curtailed or restricted or taken away or nullified or extinguished only in case of fraud or collusion as per the mandate of Law laid down by the Hon’ble Apex Court in the cases of C Natarajan ; Shakeena ; Sadashiv Prasad Singh; Rana Girders ; Shreyas Papers and Valji Khimji (supra), which factors are absent in the instant case; thirdly, the liability of the Erstwhile Loanee-dealer, M/s Aradhana Wines had