Smt. Devendari Singh vs State Of U.P. And 3 Others
2018 Latest Caselaw 1095 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Court No. - 40
 

 
Case :- WRIT - C No. - 15202 of 2018
 

 
Petitioner :- Smt. Devendari Singh
 
Respondent :- State Of U.P. And 3 Others
 
Counsel for Petitioner :- Neeraj Kumar Srivastava,Raghunandan Singh Yadav
 
Counsel for Respondent :- C.S.C.,Satish Chaturvedi
 

 
Hon'ble Amreshwar Pratap Sahi,J.

Hon'ble Shashi Kant,J.

We had heard learned counsel for the petitioner and passed the following order on 26.04.2018 :

"Heard learned counsel for the petitioner and Sri Sahai, learned counsel for the State Bank of India and the learned Standing Counsel for the respondent nos.1 and 4.

The petitioner is an auction purchaser of a bus bearing Registration No. U.P. 70-DT 2756. The said bus had been sold in an E-auction that was purchased for a consideration of Rs. 6,15,000/- by the petitioner. The Authorized Officer of the Bank conducted the said auction and a sale certificate was issued on 7th October, 2017 to the petitioner coupled with a release certificate as well.

The bus had been hypothecated with the bank. The hypothecation deed which was there with the borrower was cancelled in February, 2017.

After the sale and the issuance of the certificate, the petitioner requested the respondent no. 4 to carry out the transfer in favour of the petitioner but the petitioner has been called upon to pay the balance amount of road tax and other taxes to the tune of Rs. 1,50,000/- that was due for the period prior to the sale.

Learned counsel submits that the petitioner became owner only after the sale and prior to that, it was either the liability of the registered owner or of the bank with whom the bus had been hypothicated and possession had been taken over. To substantiate the plea, the petitioner has relied on the letter of the bank sent to the Transport Authority on 22nd March, 2017 wherein it is stated that the vehicle had not been plying on the road and therefore the road tax should be waived. This letter was obviously sent to the Transport Authority much prior to the auction sale in favour of the petitioner.

Learned counsel submits that this therefore, establishes that the bank had stepped into the shoes of the owner and was in possession of the vehicle and therefore, it is the bank which is to discharge the liability of such taxes.

Learned counsel for the petitioner has relied on the Apex Court judgment in the case of Naveen Kumar Vs. Vijay Kumar and others 2018 (3) SCC 1 paragraph no.12 to contend that where a motor vehicle was subject to an agreement of higher purchase, lease or hypothication, the person in possession of the vehicle under that agreement is to be treated as the owner for the purpose of the Motor Vehicles Act.

Learned counsel submits that it was either the registered owner and if the possession had been taken over by the bank then it was the bank which was the owner of the vehicle in possession of the same liable to pay the taxes for the period prior to the sale in favour of the petitioner.

Prima facie, the contention appears to be correct but at the same time, learned counsel for the bank and the learned Standing Counsel have invited the attention of the Court to Clauses 13 and 16 of the auction notice to contend that the liability to pay any such dues realizable by the State Government as tax is not the liability of the seller. Consequently, it is the petitioner who would be liable to pay the tax.

Let a counter affidavit be filed by the bank as also by the State responding to the contentions raised on behalf of the petitioner particularly with regard to the status in law as explained by the Apex Court in the case of Naveen Kumar (supra) about the liability of payment of tax.

The counter affidavit be filed with two weeks'.

List immediately thereafter."

Sri Satish Chaturvedi, learned counsel appearing for the respondent-Bank has invited the attention of the Court to Clause 16 of the terms and conditions of the e-auction notice which categorically states that the Bank shall not be responsible for any payment of tax due to the Government in respect of the property that is proposed to be auctioned. According to Sri Chaturvedi this includes the tax liability in the present case relating to the vehicle. He further submits that this is a condition precedent for any applicant for participating in the auction. He therefore submits that such a condition was not in consideration before the Supreme Court in the case of Naveen Kumar (supra) and therefore present facts and law applicable cannot be countered with the aid of the judgment of the Supreme Court in the case of Naveen Kumar (supra). He submits that had this condition no. 16 not being included in the notice, then the petitioner could have had a arguable case but after having participated in the auction under the said terms and conditions, the petitioner has acquired not only the vehicle but also the liabilities thereof including the tax liability in terms of Clause 16 of the e-auction terms and conditions referred to herein above. He therefore submits that the petitioner cannot seek any such remedy beyond the terms and conditions under which the petitioner herself has participated in the auction proceedings.

We have considered the submissions raised and we find that the judgment in the case of Naveen Kumar (supra) does explain the liability to be the obligation of the Bank/Financial Institution in possession of the vehicle under the terms of hypothecation and therefore for the purpose of payment of tax the Bank/Financial Institution would be deemed to be owner of the vehicle from whom tax can be realised. The Supreme Court has considered the definition of the word 'owner' occuring in Section 2(30) of the Motor Vehicles Act which was held to be a departure from the meaning of the word 'owner' as occurring earlier in Section 2(19) of the un-amended Act.

In the instant case the situation stands altered because clause 16 of the terms and condition of the auction was made known to every purchaser or participant bidder that the Bank shall not be liable for any taxes that are due to the Government. Consequently, this entails that if there is any existing liability of taxes on the property sought to be auctioned, payable to the Government, the same would also stand transferred to the purchaser.

In view of the aforesaid it is clear from the terms and conditions of e-auction under which the petitioner participated and purchased the vehicle that there cannot be any escape of the liability of payment of taxes by the petitioner. The petitioner cannot therefore contend that the Bank continues to be liable to pay taxes of the vehicle that were due to the Government. In fact this liability stood transferred under the said terms and conditions itself once the purchaser has participated in the auction in accordance thereof. 

Learned counsel for the petitioner has further cited a decision of a learned Single Judge of the High Court of Orissa in the case of Ishwar Chandra Prusti; Kumaramani Pradhan; Siddhartha Sankar Ray Vs. R.T.O., Sambhalpur and Others, 2015 AIR (Ori) 82. There also the tax leviable was challenged on the ground that the vehicle having been purchased in the auction shall not be liable to pay the taxes that were over due on the vehicle. The learned Single Judge relied on another Division Bench judgment of the same Court in the case of Bachan Singh Vs. The Road Transport Officer & Others, AIR 2009 (Orissa) 185. We have perused the said decision and we find that the said judgments no where indicate the existence of such a pre-condition for liability of tax as involved in the present case. Thus, if such a condition was not existing in the terms of auction then the Orissa High Court was justified in holding that the liability cannot be transferred unless there was an express provision with regard to the same.

In the present case it is clear that there is a pre-condition and therefore the facts involved in the present controversy are clearly distinguishable from the facts involved that were considered in the judgment by the Orissa High Court. Consequently the same would not be an authority applicable on the proposition presently involved.

There is no other legal provision in the Act, 2002 on the basis whereof it can be construed that the said liability is not transferable and would continue to be that of the Bank.

Consequently the issue raised by the petitioner in the present writ petition does not hold water and has to be answered in favour of the Bank.

The writ petition therefore fails and is hereby dismissed.

Order Date :- 30.5.2018

A. Verma