STATE BANK OF HYDERABAD Vs. M. SOMASUNDARAM
LAWS(DR)-2005-8-23
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on August 29,2005

STATE BANK OF HYDERABAD Appellant
VERSUS
M. SOMASUNDARAM Respondents

JUDGEMENT

K. Gnanaprakasam, J. - (1.) AGGRIEVED by the order dated 15.12.2003, passed by the DRT -I, Chennai, the State Bank of Hyderabad, Chennai -6, has preferred this appeal. The question involved in this appeal is whether the property tax, water and sewerage tax and electricity dues and also the amount due to flat owners association are public charges in respect of the property sold, to be discharged by the seller of the property.
(2.) THE property of the defendant in the OA was mortgaged to the appellant Bank and the same was brought to sale by public auction held on 20.9.2001 by the Recovery Officer of the DRT, and the respondent herein namely, Mr. M. Somasundaram, purchased the property in the public auction for a sale consideration of Rs. 8,10,000/ -. After purchase, the respondent came to know that there were dues in respect of property tax, water and sewerage tax, electricity dues, to the extent of Rs. 59,227/ - and a sum of Rs. 12,600/ - payable to the Flat Owners Association, and in all Rs. 71,827/ -. The said amount was demanded by the auction purchaser either from the Recovery Officer or from the Tribunal. His representations were sent to the appellant Bank and they by their letter turned down the request by stating that while fixing the upset price, the arrears of tax, repairs etc. were taken into consideration and the upset price was also reduced from Rs. 9,70,000/ - to Rs. 8,00,000/ - and, therefore, the auction purchaser is not entitled to claim the said amount. The Recovery Officer submitted his report and on that report, the DRT took up a suo motu inquiry and the appellant Bank reiterated the very same contention before the DRT that the upset price was reduced by taking into consideration the tax due and repairs to be done etc. But the Tribunal allowed the claim of the auction purchaser and the said order is under challenge in this appeal. Heard the learned Advocate for the appellant and the respondent. Now the point for consideration is whether the auction purchaser is entitled to claim deduction of the property tax, water tax, electricity charges, in and out of the sale consideration.
(3.) THE rights and liabilities of buyer and seller are governed by the provisions of the Transfer of Property Act, 1882. Section 55 of the Transfer of Property Act deals with the rights and liability of the buyer and seller which is as under - In the absence of a contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following or such of them as are applicable to the property sold: (1) The seller is bound - (a) to disclose to the buyer any material defect in the property (or in the seller's title thereto) of which the seller is, and the buyer is not, aware, and which the buyer could not with ordinary care discover; (b) to produce to the buyer on his request for examination all documents of title relating to the property which are in the seller's possession or power; (c) to answer to the best of his information all relevant questions put to him by the buyer in respect to the property or the title thereto; (d) on payment or tender of the amount due in respect of the price, to execute a proper conveyance of the property when the buyer tenders it to him for execution at a proper time and place; (e) between the date to the contract of sale and the delivery of the property, to take as much care of the property and all documents of title relating thereto which are in his possession as an owner of ordinary prudence would take of such property and documents; (f) to give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits; (g) to pay all public charges and rent accrued due in respect of the property up to the date of the sale, and, except where the property is sold subject to encumbrances, to discharge all encumbrances on the property then existing. Sub -clause (g) clearly indicates that the seller is bound to pay all public charges and rent in respect of the property sold and also all the encumbrances on such property due on the date of sale (Emphasis supplied) and to discharge all encumbrances on the property then existing. There cannot be any doubt that the amount due in respect of the property tax, water tax, sewerage tax etc. are public charges though not the amount due to Flat Owners Association in respect of the property upto the date of sale and the vendor is liable to pay those charges. The only exception is that if the property is sold on a contract to the contrary as stated in Section 55, the seller is not liable to pay these amounts. But in the instant case, there is no material to indicate that the property was sold on a contract to the contrary as stated in Section 55 or subject to any encumbrance.;


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