HAJI ABDUL GAFUR HAJI HUSSENBHAI Vs. AHMEDABAD MUNICIPAL CORPORATION

JUDGEMENT

(1.) This appeal with leave under Clause 15 of the Letters Patent raises a very interesting question namely how far the doctrine of constructive notice affects an auction purchaser who purchases at a sale held by the Court in execution of a decree property which is subject to a charge in favour of the Municipal Corporation for arrears of municipal taxes. The property which forms the subject matter of dispute in the present appeal and to which for the sake of convenience we will refer as the suit property originally belonged to one Haji Nurmahmad Haji Abdulmian. Sometime towards the end of February 1949 Haji Nurmahmad Haji Abdulmian ran into financial difficulties and on 7th March 1949 a petition was presented for adjudicating him as an insolvent. On the petition interim Receivers were appointed to take charge of the estate of Haji Nurmahmad Haji Abdulmian and by an order dated 14th October 1950 he was adjudicated an insolvent. The Receivers appointed under the order of adjudication took charge of the estate of Haji Nurmahmad Haji Abdulmian and the suit property along with other properties belonging to Haji Nurmahmad Haji Abdulmian vested in the Receivers. Now it appears that the suit property was mortgaged in favour of a firm called Messrs. Hargovind Laxmichand and this firm obtained a mortgage decree for realisation of the mortgage and brought the suit property to sale in execution of the mortgage decree. At the auction sale the plaintiff was the highest bidder his bid being for Rs. 22 300.00and he was accordingly declared purchaser of the suit property on 28th November 1954. At the date when the plaintiff purchased the suit property there were municipal taxes in respect of the suit property in arrears for the years 1949-50 to 1953 The suit properly was therefore attached by the Municipal Corporation by an attachment notice dated 20th July 1955 for the arrears of municipal taxes which amounted to Rs. 543-79 np. Since the Municipal Corporation threatened to sell the suit property in pursuance of the attachment levied by it the plaintiff filed a suit for a declaration that he was the owner of the suit property and that the arrears of municipal taxes due from Haji Nurmahmad Haji Abdulmian were not recoverable by attachment of the suit property and that the warrant of attachment of the suit property issued by the Municipal Corporation was illegal and ultra vires. The plaintiff also sought a permanent injunction restraining the Municipal Corporation from taking the suit property in attachment for arrears of municipal taxes. The trial Court rejected the claim of the plaintiff for a declaration that the suit property was not liable to be attached for recovery of arrears of municipal taxes but held that the warrant of attachment actually issued by the Municipal Corporation was illegal and void and accordingly issued an injunction restraining the Municipal Corporation from enforcing that warrant of attachment against the plaintiff in respect of the suit property. The plaintiff was aggrieved by this decree passed by the trial Court and he therefore preferred Appeal No. 118 of 1959 in the District Court Ahmedabad. The Municipal Corporation was also dissatisfied with this decree and Appeal No. 116 of 1959 was accordingly preferred by the Municipal Corporation. Both the appeals came up for hearing before the Extra Assistant Judge Ahmedabad. The learned Assistant Judge held that by virtue of sec. 141 of the Bombay Provincial Municipal Corporations Act 1949 the suit property was subject to a first charge in favour of the Municipal Corporation for arrears of municipal taxes and that the Municipal Corporation was therefore entitled to recover arrears of municipal taxes by realising such charge. It was contended on behalf of the plaintiff before the learned Assistant Judge that even if the suit property was subject to a first charge in favour of the Municipal Corporation under sec. 141 the plaintiff must be held to have received the suit property free from the charge inasmuch as the plaintiff had no notice of the charge at the date when he purchased the suit property. This contention was negatived by the learned Assistant Judge by observing that though it was true that the plaintiff had no actual notice of the charge at the date when he purchased the suit property the plaintiff had certainly constructive notice of the charge and he could not therefore be said to have received the suit property free from the charge. The learned Assistant Judge accordingly took the view that the suit property was liable for the payment of arrears of municipal taxes and that the plaintiff was not entitled to a declaration that the municipal taxes were not recoverable from the suit property. So far as the question of legality of the warrant of attachment was concerned the learned Assistant Judge held that the warrant of attachment was not legal and valid inasmuch as it was issued in the name of Haji Nurmahmad Haji Abdulmian. According to the learned Assistant Judge it was the plaintiff who was liable to pay the arrears of municipal taxes and the proceedings were therefore required to be taken against him and the warrant of attachment should also therefore have been issued in the name of the plaintiff. The Assistant Judge in the result held that the warrant of attachment issued by the Municipal Corporation was illegal and void and that the Municipal Corporation was rightly restrained from enforcing that warrant of attachment against the plaintiff in respect of the suit property. The learned Assistant Judge in accordance with this view dismissed both the appeals. The plaintiff thereupon preferred a Second Appeal in this Court but the appeal was summarily rejected by Raju J. The learned Judge however granted leave under Clause 15 of the Letters Patent and that is how the present appeal comes before us.

(2.) This being a Letters Patent Appeal preferred from a decision given by a single Judge of this Court in Second Appeal it is elementary that the findings of fact arrived at by the first appellate Court must be accepted as valid and binding and the only questions which can be debated before us are questions of law arising on those findings of fact. Having regard to the findings of fact reached by the first appellate Court it is clear that municipal taxes in respect of the suit property were in arrears for the years 1949-50 to 1953-54 at the date when the suit property was purchased by the plaintiff. Now sec. 141 of the Bombay Provincial Municipal Corporations Act 1949 provides that the property-taxes due under the Act in respect of any building or land shall subject to the prior payment of the land revenue if any due to the State Government thereupon be a first charge in the case of any building or land held immediately from the Government upon the interest in such building or land of the person liable for such taxes and upon the movable property if any found within or upon such building or land and belonging to such person; and in the case of any other building or land upon the said building or land and upon the movable property if any found within or upon such building or land belonging to the person liable for such taxes. The arrears of municipal taxes in respect of the suit property were therefore a first charge on the suit property by reason of sec. 141 at the date when the suit property was sold by the Court by public auction. This position was not seriously disputed by Mo. Arun H. Mehta learned advocate appearing on behalf of the plaintiff but he contended that the plaintiff had no notice of the charge at the date when he purchased the suit property and that the suit charge was therefore not enforceable against the suit property in the hands of the plaintiff. This contention was based on the second paragraph of sec 100 of the Transfer of Property Act which provides that 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. The argument was that the plaintiff was a person to whom the suit property was transferred for consideration and since he had no notice of the charge the charge was not enforceable against the suit property in his hands. The answer given by Mr. S. B. Vakil on behalf of the Municipal Corporation to this contention was a threefold one. The first answer was that since the plaintiff purchased the suit property at an auction sale held by the Court in execution of the mortgage decree the plaintiff could not be said to be a person to whom the suit property was transferred for consideration within the meaning of the second paragraph of sec. 100. The second answer given on behalf of the Municipal Corporation was that sec. 141 expressly provided that the charge created under that section shall be enforceable against all transferees including transferees for value without notice of the charge and the applicability of the equitable rule contained in the second paragraph of sec. 100 was therefore excluded by reason of the saving clause save as otherwise expressly provided by any law for the time being in force which qualified that Rule. The third answer which the Municipal Corporation made was that in any event the plaintiff had constructive notice of the charge and was therefore not entitled to take advantage of the provision enacted in the second paragraph of sec. 100. Now if any of these answers is a valid answer it is apparent that the plaintiff must fail for in that event he would not be entitled to place reliance on the second paragraph of sec. 100. Sec. 100 as originally enacted was in the following terms:

(3.) Turning now to the three contentions urged by Mr. S. B. Vakil on behalf of the Municipal Corporation in answer to the claim of the plaintiff to come within the second paragraph of sec. 100 the first contention was that the plaintiff could not be said to be a person to whom the suit property was transferred for consideration within the meaning of the second paragraph to sec. 100 since he was a purchaser at an auction sale held by the Court in the execution of a decree. So far as this contention is concerned there was at one time a conflict of decisions in the various High Courts in India as to whether an auction sale in execution of a decree could be regarded as a transfer within the meaning of the second paragraph of sec. 100 but this conflict has now been laid at rest by the decision of the Supreme Court in Laxmi Devi v. Mukand Kanwar A. I. R. 1965 S. C. 834 where the Supreme Court has taken the view that the second paragraph of sec. 100 must be deemed to include auction sales and that a purchaser at an auction sale held in execution of a decree would therefore be a transferee within the meaning of the second paragraph of sec. 100. This decision of the Supreme Court provides the most complete refutation of the first contention urged on behalf of the Municipal Corporation.