WAVE INDUSTRIES PVT. LTD. versus STATE OF U.P. & ORS.

Citation: [2022] 16 S.C.R. 1130 · Decided: 15-12-2022 · Supreme Court of India · Bench: K.M. JOSEPH · Disposal: Disposed off

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 16 S.C.R.
WAVE INDUSTRIES PVT. LTD.
v.
 STATE OF U.P. & ORS.
(Civil Appeal No. 9272 of 2022)
DECEMBER 15, 2022
[K.M. JOSEPH AND HRISHIKESH ROY, JJ.]
Liability – Slump Sale Agreement dated 17.07.2010, followed
by a sale deed, was entered into between U.P State Sugar
Corporation Limited-Seller (UPSSCL) and Appellant-Purchaser for
UPSSCL’s loss making Amroha sugar mill – Dispute arose w.r.t
outstanding liability of unpaid duty, penalty, and interest, if to be
discharged by the seller or the purchaser – Subsisting dues arising
out of transactions occurring on dates prior to the sale, if contingent
or conditional liability or an accrued liability which may be
computed or discharged at a subsequent date – Held: There is no
dispute that the liability towards the duty in question for the Amroha
unit are in respect of business transactions for the period anterior
to the signing date of the Slump Sale Agreement – The business
liability for the Amroha unit had arisen out of the operation of the
unit during the period before the same was sold to the appellant,
although the liability is to be quantified and discharged at a future
date – When the liability is capable of being estimated with
reasonable certainty, the liability is not to be treated as a contingent
one and should be considered as a liability which may be discharged
at a future date – Thus, the liability in question not being a contingent
one, the same cannot be fastened on the purchaser who were not
operating the unit, prior to the Slump Sale Agreement dated
17.7.2010 – Further, in clause 12.1 and 12.2 of the Agreement read
with Clause 9 of the Sale Deed, the liability of the purchaser, for
the operation and activities of the unit, arose only after the signing
date – Thus, dues relating to the activities and operation of the unit
upto 17.7.2010 (signing date), were the liabilities of the UPSSCL –
Also, prior to 17.7.2010, the appellant was neither a dealer nor a
manufacturer and therefore, had no tax or duty obligations to satisfy
for the operation of the Amroha unit – Impugned order erroneously
   [2022] 16 S.C.R. 1130
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held that the liabilities for the transactions made prior to the sale
agreement are to be borne by the purchaser, set aside.
Disposing of the appeals, the Court
Held : 1.1 There is no dispute that the liability towards the
duty in question for the Amroha unit are in respect of business
transactions for the period anterior to the signing date of the
Slump Sale Agreement. Moreover assessment orders and
recovery citations have been issued by the taxing authorities in
the name of the UPSSCL. The business liability for the Amroha
unit had definitely arisen out of the operation of the unit during
the period before the same was sold to the appellant, although
the liability is to be quantified and discharged at a future date.
When the liability is capable of being estimated with reasonable
certainty, the liability is not to be treated as a contingent one and
should be considered as a liability which may be discharged at a
future date. Such being the position in law and the liability in
question not being a contingent one, the same cannot be fastened
on the purchaser who were not operating the unit, prior to the
Slump Sale Agreement dated 17.7.2010. In clause 12.1 and 12.2
of the Slump Sale Agreement read with Clause 9 of the Sale Deed,
the liability of the purchaser, for the operation and activities of
the unit, arose only after the signing date. This would suggest
that dues relating to the activities and operation of the unit in the
period upto 17.7.2010 (signing date), were the liabilities of the
UPSSCL while the dues relating to activities and operation of the
unit for the period subsequent to 17.7.2010, were to be the
responsibility of the purchaser. The liability of the purchaser for
the dues relating to activities and operations of the unit for the
period anterior to 17.7.2010, could not therefore have been
fastened on the appellant in view of the clear provisions made in
clause 9 of the Sale Deed read with Clause 12.1 and 12.2 of the
Slump Sale Agreement as both are specific in nature. In the same
context, the clause 2.6 which speaks of contingent liabilities and
legal cases pending in respect of the unit, to be fastened on the
purchaser and the seller being absolved of such liability, are
generic conditions provided under clause 2.6 of the Slump Sale
Agreement and this Court i

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