MUNICIPAL BOARD Vs. ROOP CHAND JAIN

JUDGEMENT

(1.) This is a plaintiff's appeal arising out of a suit for the recovery of arrears of taxes. The plaintiff is the Municipal Board of Cawnpore. Defendants 2 and 3 are auction purchasers of certain property which was owned by defendant 1. It appears that defendant 1 has not paid his taxes to the Municipal Board for a period of eleven years. In this action the Corporation seek to recover the amount due in respect of arrears from the defendants by sale of the property purchased by defendants 2 and 3 in respect that it has a charge over that property in virtue of the terms of Section 177, Municipalities Act of 1916. Section 177 is in the following terms: All sums due on account of a tax imposed on the annual value of building or lands or of both shall, subject to the prior payment of the land revenue (if any) due to His Majesty thereupon, be a first charge upon such buildings or lands.

(2.) In respect of arrears of taxes therefore there is conferred upon the Municipal Board by statute a charge upon the property on which the taxes are leviable. The suit has been dismissed against defendants 2 and 3 however for the reason that they have been held to be bona fide purchasers without notice of the charge. It was not disputed that defendants 2 and 3 are bona fide purchasers of the property over which the Municipality held a charge in respect of arrears of taxes. Further it is not disputed that in fact they had no notice of the said charge. It was contended for the plaintiff however that defendants 2 and 3 had constructive notice. It was alleged that it was clearly the duty of defendants 2 and 3 to have satisfied themselves that the Municipality had no charge over the property in respect of arrears of taxes before they proceeded to purchase it at the auction sale. It was further contended in support of this argument that the amendment to Section 100, T.P. Act, did not apply to an auction sale held in execution of a decree. The amendment referred to is as follows: ...and save as otherwise expressly provided by any law for the time being in force no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge.

(3.) The argument presented was that this amendment had no application to a transfer by auction sale held in execution of a decree in view of the provisions of Section 2, T.P. Act. This Section, inter alia, provides that nothing contained in the Act shall affect any transfer by operation of law or by, or in execution of, a decree or order of a Court of competent jurisdiction. The result of this provision, it was contended, was to remove transfer by auction sale held in execution of a decree from the ambit of the provisions of Section 100 of the Act. In support of this contention reference was made to a Bench decision of this Court in Indra Narain v. Mohammad Ismail . In that case it was held that: As Section 2(d) clearly provides that nothing in the Act shall apply to any transfer in execution of a decree other than so provided in chap. IV it is clear that Section 100 as amended does not refer to auction sales or auction purchasers.