AHMEDABAD MUNICIPAL CORPORATION OF THE CITY OF AHMEDABAD versus HAJJ ABDULGAFUR HAJI HUSSENBHAI

Citation: [1971] SUPP. 1 S.C.R. 63 · Decided: 18-03-1971 · Supreme Court of India · Bench: VISHISHTHA BHARGAVA · Disposal: Dismissed

Judgment (excerpt)

63 
-AHMEDABAD MUNICIPAL CORPORATION OF THE CITY 
A 
OF AHMEDABAD 
v. 
HAJJ ABDULGAFUR HAJI HUSSENBBAl 
March 18, 1971 
II. 0. DUA AND V. BHARGAVA, JJ.] 
Transfer of Property Act (4 of 1882), s. 100-App/icabi/ity to auction 
sales-Whether s. 141(1) of the Bombay Provincial Municipal Corporatiun 
Act, _1949, falls ·within the saving provision of s. 100, T P. Act-Constructive 
notice of existence of arrears of municipal taxes-If and when can be im· 
B 
puled to auction purchaser. 
C 
Jn 1950, a building vested in the receivers on its owner being adjudicat· 
ed an insolvent. Jn 1951, the receivers secured necessary orJers frotn court 
for paying off municipal taxes then due, but the receivers did not pay and the 
municipal corporation did not also pursue the matter. Jn 1954, the property 
was brought to sale in execution of a mortgage decree obtained by a mort-
&agee of the property and the respondent purchased it at the court sale. Be-
fore the purchase he made enquiries from the receiver if there were any dues 
D 
against the property, but he was not informed about the arrears of muni.:i-
pal taxes. In 1955, the municipal corporation attached the property f01 
arrears of municipal taxes due from 1949, and the purchaser filed a suit 
for a declaration that the arrears were not recoverable by sale of the pro-
perty. 
On the questions: (!) whether under s. 141(1) of the Bombay Provin-
E 
cial Municipal Corporation Act, 
1949, read with s. 100 of the Transf¢r 
of Property Act, 1882, the property could be sold for the arrears in the 
hands of the respondent even if he was a transferee for consideration with-
uut notice, and (2) whether the respondent, who was an auction purchaser 
at a court sale, could be held liable to pay the arrears of taxes and the 
property could be held subject to the liability on the ground that he had 
~onstructive notice of the existence of the arrears. 
HELD: (1) Section 100, Transfer of Property Act, lays down that no 
charge is enforceable against any property in the hands of a transferee for 
consid~ration without notice of the charge except when it is otherwise ex-
pressly provided by any law for the time being in force. The real core 
of the saving provision of law is not mere enforceability of the charge 
against the property but enforceability of the charge, against the property 
in tire hands of a transferee for consideraUon without notice of the charge. 
S. 141 of the Bombay Municipal Act is not such a provision. 
rt merely 
creatE's a charge in express language. but apart from creating a statutory 
charge, it does not further provide that the charge is enforceable against 
the property in the hands of a transferee for consideration without notice 
of the charge. (67 A-B ; 68E] 
(2) (a) There is no basis for the contentions that s. 100 of the Trans-
fer of Property Act does not apply to auction sales and that therefore the 
exeoution purchuers purchase the property subject to all the charges and 
encumbrances which would bind the judgment debtor. 
This Court in 
Lanni Devi v. Mukand Kunwar, (1965] I S.C.R. 726 pointed out that s: 
100 applies to proceedings by operation of law also. [69A-B] 
F 
G 
H 
64 
A 
B 
c 
D 
E 
SUPRElll! COURT REPORTS 
[1971] SUPP. s.c.R. 
(b) According to s. 3, Transfer of Property Act, a person is said I<> 
have notice of a fact when he actuaUy knows the fact or when but for 
wilful absention from enquiry or search which he ought to have made, or 
gross negligence, he would have known it. In the latter case he is presum· 
ed. to have constructive notice. For drawing the presumption in the prest>nt 
case, therefore, the question is not whether the purchaser had the means 
of obtaining, and might with prudent caution have obtained, knowledge 
of the charge but whether in not doing so, he acted with wilful abstentioa 
or gross negligence. There is no principle of law imputing, to all intend· 
ing purchasers of property in municipal areas where municipal taxes are 
a charge on the property, constructive knowledge of the existence of such 
municipal taxes and of the reasonable possibility of those taxes being in 
arrears. lt is a question of fact or a mixed question of f~ct and law deprn. 
ding on the facts and circumstances of the case. 
The material in the 
present case does not justify that the respondent purchaser should be fixed 
with any constructive notice of the existence of the arrears. because (i) he 
could not reasonably have thought the municipal corpor

Excerpt shown. Read the full judgment & AI analysis in Lexace.