B.Suresh Chand v. 1. State of Tamil Nadu

in 1998 (1) C.T.C. 124 = 108 S.T.C. 161, to contend that theappellant is a bonafide purchaser without notice of charge underSection 24(1) of the Tamil Nadu General Sales Tax Act, 1959(hereinafter referred to as "the Act") and therefore the propertypurchased by him under a registered sale deed dated 25.09.1977from the vendors' who were tax defaulters under the Act cannot beproceeded against for the recovery of sales tax arrears.2. However, the Revenue relied upon the decision of thisCourt rendered by two Division Benches in the case of CoramandelIndag Products India Limited Vs. Commercial Tax Officer and othersreported in 1993 (3) M.T.C.R. 81 and in the case of DeputyCommercial Tax Officer Vs. Azha Kumari reported in 1985 W.L.R.240. Having regard to the submissions made by the learned counselon either side, the Division Bench reasoned as here-under andrequested the Honourable Chief Justice to constitute a largerBench. The reasons given by the Division Bench in making thereference is extracted as here-under:-“All these cases dealt with the question as towhether the charge created under the Sales Tax isbinding on the bonafide purchaser for value. Whilein the first case it was held it does not, in theother two cases it was held that it does. Thedivision Bench which decided the Asha Kumari's caseand the one that dealt with the case of R.K.Steelsreferred to the decision of the Supreme Court inthe case of Ahmedabad Municipal Corporation of theCity of Ahmedabad Vs. Haji Abdul Gaful HajiHussenbhai, (A.I.R. 1971 S.C. 1201), but, read thejudgement of the Supreme Court differently. TheDivision Bench which decided the case of R.K.Steelsfound fault with the division Bench which decidedthe case of Asha Kumari and held that it haderroneously distinguished the ratio laid down bythe Supreme Court in the case of AhmedabadMunicipal Corporation of the City of Ahmedabad Vs.Haji Abdul Gaful Haji Hussenbhai, (A.I.R. 1971 S.C.1201). Judicial proprietory requires that if thereis a disagreement among the two Division Benches itshould be resolved, by a larger Bench. It wouldhave been proper if the Division Bench whichdecided the case of R.K.Steels had itself referredthe matter to a larger Bench instead of followingthe course that it did. It has been held by theSupreme Court in more than one case that the Co-ordinate Benches are bound by the decision of otherCo-ordinate Benches and in case of disagreement theproper course is to refer the matter to a largerBench.3. We, therefore, refer this case for decision by alarger Bench having regard to the conflicting viewsexpressed by two different Division Benches of thisCourt with regard to the extent a bonafidepurchaser for value is bound by the charge for https://hcservices.ecourts.gov.in/hcservices/ payment of arrears of sales tax created underSection 24 of the Tamil Nadu General Sales Tax.”3. The scope of the reference, in our considered view, is notonly that we have to decide the question of law, but also thequestion as to whether the appellant is a bonafide purchaserwithout notice of the charge under Section 24(1) of the Act and assuch whether his property cannot be proceeded against for therecovery of sales tax arrears. To decide that the entire factualmatrix of the case has to be set out and the facts are asfollows:-'For the sake of convenience, the parties are referred to asper their ranking in the suit'. The case of the plaintiffs is asfollows:-(i) The plaintiffs purchased the suit property on 25.09.1977and are in possession of the same as absolute owners. The seconddefendant, Deputy Commercial Tax Officer, Thirupathur, allegingthat one T.P.Narayanasamy and his son T.N.Subash are defaulters inthe payment of sales tax, issued a notice on 28.10.1977 to theplaintiffs calling upon them to pay tax arrears of a sum ofRs.1,01,879.67. The plaintiffs filed a claim application beforethe second defendant denying their liability. The seconddefendant issued an order to the plaintiffs on 11.09.1978 statingthat the sale by the defaulters is not binding on the departmentand negativing the claim of the plaintiffs. The plaintiffs arebonafide purchasers for value without notice on any manner ofclaim by anyone against the same. The plaintiffs have dischargedthe earlier debts of the transferors which were prior in point oftime over the claim of the department. The claim of thedepartment can only be against the defaulters and their property.T.N.Subash has no right or interest in the property sold to theplaintiffs. The plaintiffs after issuing notice under Section 80of the Code of Civil Procedure (hereinafter referred to as "theC.P.C.") have filed the suit in O.S.No.254 of 1978 before the Sub-Court, Thirupathur, to set-aside the order of the second defendantdated 11.09.1978 and to raise the attachment on the schedulementioned property and for injunction. 4. The defendants filed a written statement contending thatone T.P.Narayanasamy and his son T.N.Subash were the partners ofthe firm M/s. Kasthuri and Company, Jinnah Road, Thirupathur,carrying on business in sewing machines, motor cycles and spareparts. For the year 1974-75, the said firm was assessed to salestax of Rs.1,389.15. The order was served on 17.02.1976. The taxwas payable on or before 18.03.1976. Hence the said firm becamedefaulters on 18.03.1976. For the year 1975-76 the said firm wasassessed to sales tax of Rs.3,862.67. The order of assessment waspassed on 31.01.1977. The firm and its partners became defaulterson 02.03.1977. The said T.P.Narayanasamy and T.N.Subash werepartners of another firm by name S.V.Traders, Kancheepuram. Forthe year 1973-74, the firm S.V.Traders was assessed to sales taxof Rs.11,867/-. It was assessed to another sales tax ofRs.8,983/-. The order was served on 07.08.1974. For the year1974-75, the firm was assessed to sales tax of Rs.69,846/-. The https://hcservices.ecourts.gov.in/hcservices/ order was served on 26.11.1976. For the year 1975-76, the firm was assessed to sales tax of Rs.5,482/-. The order was served on05.12.1976. The said firm and its partners became defaulters forthe said three years. The commercial Tax Officer, Chengalpet senta requisition to the second defendant on 21.03.1977 to instituteproceedings for the recovery of the sales tax arrears ofRs.96,187/- due by S.V.Traders, Kancheepuram.5. It is further contended that under Section 24 of the Actif default is made the whole of the amount outstanding on the dateof default shall become immediately due and shall be a charge onthe properties of the persons liable to pay the tax. Thedefaulters are also liable to pay penalty. The second defendantinitiated proceedings under the Tamilnadu Revenue Recovery Act.The suit house was attached and brought to sale after service ofdemand notice on the defaulters as required under the Act. Thedemand notice in Form-I dated 30.07.1977 has been served on thedefaulter T.N.Subash on 04.08.1977. After the receipt of thedemand notice the defaulters have executed a sale deed in respectof the said properties in favour of the plaintiffs in order todefraud the defendants. The sale is not binding on thedefendants. A copy of the notice dated 22.07.1978 was sent to theplaintiffs. The plaintiffs are not personally liable but theproperty purchased by them is subject to charge and is liable forthe said arrears. The S.V.Traders has been assessed to Sales taxof Rs.5,793/- for 1976-77. The order of assessment was served on07.04.1978. The said T.N.Subash on behalf of S.V.Traders in hisletter dated 22.09.1977 addressed to the Secretary, RevenueDepartment, Government of Tamilnadu had admitted the arrears ofsales tax and requested to pay the amount in instalments. Theplaintiffs filed the claim petition on 11.09.1978 before thesecond defendant, who had in his reply intimated about the chargeover the suit property and the arrears of sales tax by thetransferors. The plaintiffs are not bonafide purchasers for valuewithout notice of the defect in title. The plaintiffs were awareof the arrears of sales tax. The plaintiffs and the defaultersare close friends. The sale deed has been created collusively todefeat and delay the realisation of the sales tax arrears. Thedefendant does not admit that any consideration was paid towardsthe sale deed. The order of attachment was issued by way ofabundant caution. The plaintiffs have not discharged any allegedearlier debts of transferors. 6. The trial court framed the following issues:-(i) Whether the sale deed in favour of the plaintiffs istrue, valid and binding on the defendant?(ii) Whether charge had been created by operation of law overthe suit properties prior to said sale?(iii) Whether the defendants are not entitled to proceedagainst the suit properties for recovery of sales tax arrears dueby M/s. T.P.Narayanasamy and his son T.N.Subash?(iv) Whether there was no valid notice under Section 80C.P.C? https://hcservices.ecourts.gov.in/hcservices/ (v) Whether the valuation of suit and court fee paid are notcorrect?(vi) Are the defendants estopped from claiming charge?(vii) Whether the suit properties are liable for the claim ofdefendants against M/s. S.V.Traders, Kancheepuram?(viii) To what relief, if any, are the parties entitled to?7. During trial on the side of the plaintiffs, the secondplaintiff was examined as P.W.1 and 14 other witnesses wereexamined as P.Ws.2 to 15 and Exs.A-1 to A-46 were marked insupport of their claim. On the side of the defendants, D.Ws.1 to8 were examined and Exs.B-1 to B-36 were marked in support oftheir defence.8. The Learned Subordinate Judge on a consideration of theoral and documentary evidence adduced, decreed the suit with costsas prayed for. Being aggrieved by the judgement and decree passedby the learned Subordinate Judge, the unsuccessful defendantsfiled A.S.No.613 of 1984 before this Court. A Learned SingleJudge on a careful consideration of the evidence on record, thereasonings of the learned Sub-ordinate Judge by a detailedjudgement, set-aside the judgement and decree and allowed theappeal by judgement and decree dated 28.11.1997. Aggrieved bythat the second plaintiff has filed the above Letters PatentAppeal. 9. We heard Mr. V.Raghavachary learned counsel appearing forthe appellant and Mr.Srikanth, Special Government Pleaderappearing for the first respondent and Mr. R.Subbiah learnedcounsel appearing for the second respondent.10. Mr.V.Raghavachary learned counsel for the appellantsubmitted that the learned Single Judge without properlyconsidering the oral and documentary evidence adduced in the caseand without considering the reasonings of the trial court haserroneously held that S.V.Traders is a partnership firm. Thelearned counsel submitted that in Ex.A-46 the department itselfhas referred S.V.Traders as only a proprietory concern andtherefore the finding of the Learned Single Judge based on therepresentation of T.N.Subash to the Board of Revenue thatS.V.Traders is a partnership firm is erroneous. The learnedcounsel further submitted that the assessment of the concern inthe books of sales tax authorities is the determinative factor andnot the character of the representation made by T.N.Subash to theBoard of Revenue. The learned counsel further submitted thatT.P.Narayanasamy has nothing to do with S.V.Traders which is aproprietory concern or his son T.N.Subash and the tax arrears ofS.V.Traders has nothing to do with T.P.Narayanasamy. The learnedcounsel submitted that simply because T.N.Subash has joined withhis father T.P.Narayanasamy in the execution of Ex.A-1 sale deed,it would not mean that they are the joint owners of the property.The learned counsel further submitted that the Learned SingleJudge has failed to apply the law laid down in 1998 (1) C.T.C. 124 https://hcservices.ecourts.gov.in/hcservices/ (referred to supra) and submitted that the Learned Single Judgeought to have held that the plaintiffs were bonafide purchasers ofthe suit property without notice.11. The learned counsel for the appellant submitted thatExs.B-1 and B-2- assessment orders and Exs.B-3 and B-4-demandnotices coupled with the evidence of D.Ws.1 and 2 show thatS.V.Traders was only a proprietory concern and the same wasdescribed as 'Thiru.S.V.Traders' and if really it was apartnership firm, it would have been described as'Thiruvalargal.S.V.Traders' in Exs.B-1 to B-4. He furthersubmitted that the trial court on consideration of the saiddocuments and the deposition of D.Ws.1 to 8 has clearly recorded afinding that S.V.Traders was only a proprietory concern, whereasthe said oral and documentary evidence has not been properlyconsidered by the Learned Single Judge. He further submitted thatthe trial court on a consideration of Ex.B-21 has observed thatfor the first time S.V.Traders was referred to asThiruvalargal.S.V.Traders, 502 Gandhi Road, Kancheepuram, in theletter dated 06.06.1978, whereas the plaintiffs had purchased theproperty on 25.09.1977 itself and in all the other documents,demand notices and assessment orders S.V.Traders, Kancheepuram wasreferred to as Thiru S.V.Traders. He further submitted that thetrial court, on a consideration of Ex.B-26-Form-IX alleged to havebeen signed by T.N.Subash and T.P.Narayanasamy submitted by themto the sales tax authorities describing them as partners of M/s.S.V.Traders Kancheepuram, has held that there is no evidence toshow that the signature in Ex.B-26 is that of T.P.Narayanasamy.The learned counsel further submitted that the trial court hasobserved that there is no proof that T.P.Narayanasamy himselfsigned in Ex.B-26 and the trial court on a comparision of thesignatures in Exs.B-14 and B-26 has observed that the signaturesdiffer, but the same have not been considered by the LearnedSingle Judge.12. The learned counsel further submitted that the plaintiffsbeing bonafide purchasers without notice are not liable to pay thesales tax arrears of their vendors and the property cannot beattached and sold for the sales tax arrears of either S.V.Traders,Kancheepuram or Kasthuri and Company. According to the learnedcounsel, the learned Single Judge has not considered the issuewhether the plaintiffs are bonafide purchasers without notice inthe light of the law laid down by the Division Bench of this Courtreported in 1998 (1) C.T.C. 124 (referred to supra).13. Per contra Mr. R.Subbiah learned counsel for the secondrespondent submitted that the trial court has placed too muchimportance on trivialities and has not properly considered Exs.A-46, B-15, B-24, B-25, B-26, B-27 and B-36, whereas the LearnedSingle Judge has considered the said documents elaborately and hascome to the right conclusion that S.V.Traders, Kancheepuram wasnot a proprietory concern as claimed by the plaintiffs, but it wasonly a partnership firm of which T.P.Narayanasamy and his sonT.N.Subash were partners. The learned counsel drew our attentionto the following observation made by the Tamilnadu Sales TaxAppellate Tribunal (Main Bench, Madras-1) in Ex.B-36, which reads https://hcservices.ecourts.gov.in/hcservices/ as follows:-"These details and documentary evidence give supportfor the existence of the stated partnership". 14. The learned counsel further drew our attention to Ex.B-25dated 01.07.1974 wherein in column-4 both the names of T.N.Subashand T.P.Narayanasamy have been specifically mentioned as sharers.The learned counsel further invited out attention to Ex.B-26 dated01.12.1975 which is Form-IX, prescribed under Rule 40 of theTamilnadu General Sales Tax Rules, 1959, wherein T.N.Subash andT.P.Narayanasamy have declared that they have entered intopartnership in regard to the business known as M/s. S.V.Traders,Kancheepuram and the form has been signed both by T.N.Subash andT.P.Narayanasamy. The learned counsel submitted that the learnedSingle Judge has extracted relevant portions from Exs.A-46, B-25,B-26 and B-36 and discussed threadbare the contents thereof andhas rightly come to the conclusion that S.V.Traders, Kancheepuramwas a partnership concern consisting of T.N.Subash andT.P.Narayanasamy as partners. The said finding of the learnedSingle Judge being based on documentary evidence is unassailable.The learned counsel further submitted that the learned SingleJudge has clearly observed that a perusal of the pleadings of boththe parties as well as the evidence clearly shows that theplaintiffs were very well aware of the sales tax arrears from1973-74 and knowing it fully well they have purchased the propertyfrom T.P.Narayanasamy. The learned counsel further submitted thatthe plaint does not contain proper pleadings containing thematerial facts in respect of their claim that they are bonafidepurchasers without notice of the sales tax arrears of theirvendors and in the absence of necessary pleadings they areprecluded from letting in any evidence in that respect and furthersubmitted that any amount of oral evidence in the absence ofnecessary pleadings cannot be looked into. He further submittedthat since the plaintiffs pleaded that they were bonafidepurchasers without notice the initial burden was on them to provethe said plea. According to the learned counsel, the plaintiffshave not discharged their burden and whereas the department byoverwhelming documentary evidence has proved that the plaintiffshad knowledge about the sales tax arrears of their vendors. Thelearned counsel further submitted that Ex.A-46 which is an orderdated 17.11.1975 passed by the Commissioner for Land Revenue andCommercial Taxes in a batch of revision petitions filed by thevendors of the plaintiffs, the Commissioner rejected the revisionpetitions filed by the plaintiffs' vendors challenging theassessment orders passed for the assessment year 1974-75 and whenEx.A-46 had been produced by the plaintiffs before the trialcourt, it is evident that they had knowledge about the sales taxarrears of M/s. S.V.Traders, Kancheepuram and therefore submittedthat the plaintiffs cannot be construed to be bonafide purchaserswithout notice. https://hcservices.ecourts.gov.in/hcservices/

15. By placing reliance on the following decisions, thelearned counsel for the second respondent submitted that thedefence of purchase without notice is one which ought to bespecifically pleaded and proved by one who pleads so.(i) A.I.R. 1928 Patna 587 (Murat Singh Vs. Pheku Singh)(ii) A.I.R. 1939 Nagpur 132 (Mt. Renukabai W/o. SitaramjiWankhade Vs. Bheosan Hapsaji Junghare and others).(ii) A.I.R. 1940 Nagpur 163 (Seth Ghasiram Seth DalchandPalliwal Vs. Mt. Kundanbai, W/o. Rameshwar Shukul and others). 16. The learned counsel for the second respondent furtherdrew our attention to Exs.A-3 and A-7-the reply notice and noticesent by the plaintiffs respectively and submitted that theplaintiffs had not claimed either in Ex.A-3 or Ex.A-7 that theyhave no notice about the sales tax arrears of their vendors. Hefurther invited our attention to the cross examination of P.W.1wherein he had categorically stated that they did not enquireT.P.Narayanasamy as to whether there was sales tax arrears. P.W.1has also stated in his cross examination that he had not enquiredeither T.P.Narayanasamy or T.N.Subash about S.V.Traders.17. In reply Mr. V.Raghavachary learned counsel for theappellant submitted that the plaint contains the necessarypleadings and it can be inferred from the plaint that theplaintiffs have no notice about the sales tax arrears of theirvendors and they are bonafide purchasers. The learned counselsubmitted that there is no need to plead that the plaintiffs madeenquires with their vendors regarding their sales tax arrears.The learned counsel relied upon the following decisions:(i) 62 Law Weekly 377 (Adinarayana Vs. Jagannadha Rao).(ii) A.I.R.1934 Privy Council 68 (Bhup Narain Singh Vs. GokulChand Mahton and others).(iii) A.I.R. 1929 Patna 300 (Ramdeni Singh and another Vs.Gumani Raut and another).(iv) A.I.R. 1977 Allahabad 328 (Ram Lakhan Vs. Ram Govind andothers).(v) A.I.R. 1984 Patna 277 (Rameshwar Singh Vs. Hari NarayanSingh and others).18. The learned counsel on either side submitted that theHonourable Supreme court in the decision reported in 2006 (1)S.C.C. 615 (State of Karnataka and another Vs. Shreyas Papers (P)Ltd., and others) has approved the decision of the Division Benchof this Court reported in 1998 (1) C.T.C. 124 (referred to supra)equivalent to 108 S.T.C. 161 and therefore the law laid down in1993 (3) M.T.C.R. 8 (referred to supra) and 1985 W.L.R. 240(referred to supra) is no longer good law. https://hcservices.ecourts.gov.in/hcservices/

19. Now we have to consider the above submissions of thelearned counsel. (i) In 1985 W.L.R. 240 (referred to supra) the Division Benchhas laid down as follows:-"If the tax assessed remained unpaid for a periodof 21 days after the notice of demand had beenserved, that charge can be enforced by invoking theprovisions of the Revenue Recovery Act, underSection 24(2) of the Tamil Nadu General Sales TaxAct. Since the learned Judge has not consideredthe scope of S.24(1) but proceeded only on thebasis of S.24(2) we are not inclined to agree withthe view expressed by the learned Judge thatarrears of sales tax cannot be recovered from theproperties sold by the assessee after a charge hasfastened itself on the properties of the defaulter,on his default in paying the arrears of sales taxwithin the time stipulated by S.24(1)."(ii) In 1993 (3) M.T.C.R. 8 (referred to supra), the DivisionBench after referring to the decision reported in 1985 W.L.R. 240(referred to supra) has observed as follows:-"The Division Bench held that as a result of Sec.24(1) of the Act, a charge was created over theproperties for the sales tax amount due by thetransferor even before the transfer was actuallyeffected and the said charge can be enforcedagainst the properties transferred which are inthe hands of the transferee. The decision inAhamedabad Municipality Vs. Haji Abdul (A.I.R.1971 S.C.1201) relied on by the learned counselfor the appellant is not quite relevant, for, thatdecision was rendered with reference to Sec. 141of the Bombay Provincial Municipal Corporation Act1949. Sec. 141(1) of the Bombay ProvincialMunicipal Corporation Act 1949 merely creates acharge for the property tax. There is noprovision in the Bombay Provincial MunicipalCorporation Act, similar to Sec. 24(2) of TamilNadu General Sales Tax Act, 1959, providing forenforcement of the charge created under Sec. 141(1) of the Bombay Provincial Municipal CorporationAct. Therefore, the ratio of the decision of theSupreme Court in Ahmedabad Municipality Vs. HajiAbdul (A.I.R. 1971 S.C. 1201) cannot be applied tothe facts of the present case. We are inclined tofollow the decision of the Division Bench of thisCourt in Deputy Commercial Tax Officer Vs. AzhaKumari (1985 W.L.R. 240) and hold that the chargecreated for arrears of sales tax over theproperties of the defaulter under Sec. 24(1) ofthe Act can be enforced in the hands of the https://hcservices.ecourts.gov.in/hcservices/ transferee by invoking the provisions of the Revenue Recovery Act as provided in Sec. 24(2) ofthe Act". (iii) In 1998 (1) C.T.C. 124 equivalent to 108 S.T.C. 161(referred to supra), the Division Bench in paragraph 15 observedas follows:-"Having regard to the clear and categorical viewsexpressed by the Supreme Court in AhmedabadMunicipal Corporation of the City of Ahmedabad Vs.Haji Abdul Gafur Haji Hussenbhai, A.I.R. 1971 S.C.1201, we are not inclined to accept the twoDivision Bench judgements of this Court in Dy.Commercial Tax Officer's case, 1985 (14) STL 164(Mad.) and Coramandel Indag Products India Ltd.'scase 1993 (3) M.T.C.R. 8, we would have normallyreferred the issue for decision by a Full Bench,but for the fact that the judgement of the SupremeCourt is crystal clear. To repeat unless aprovision is made in any statute contrary to therule of Section 100 of the Transfer of PropertyAct, a bona fide purchaser for considerationwithout notice of the charge is protected. Thisproposition of law is too very clear and socategorically emphasised by the Supreme Court inAhmedabad Municipal Corporation case, A.I.R.1971S.C.1201. We therefore with respect differ fromthe views expressed by the two Division Benchjudgements referred to above and propose to followthe judgement of the Supreme Court".and ultimately held as follows:-" ... following the Supreme Court judgement inAhmedabad Municipal Corporation of the City ofAhmedabad Vs. Haji Abdul Gafur Hani Hussenbhai,A.I.R.1971 S.C.1201 that the respondent is a bonafide purchaser without notice of the charge underSection 24(2) of the Sales Tax Act and therefore,his property cannot be proceeded against for therecovery of sales tax arrears."(iv) In 2006 (1) S.C.C. 615 (referred to supra), the ApexCourt while considering the enforceability of the charge createdunder Section 13(2) (i) of the Karnataka Sales Tax Act 1957observed as follows:-"19. While the expression "charge" is not defined bythe KST Act, this concept is well known in propertylaw and has been defined by Section 100 of theTransfer of Property Act, 1882 (hereinafter "the TPAct"). Here "charge" is defined as:'100. Where immovable property of one personis by act of parties or operation of lawmade security for the payment of money toanother, and the transaction does not amountto a mortgage, the later person is said tohave a charge on the property, and all the https://hcservices.ecourts.gov.in/hcservices/ provisions hereinbefore contained whichapply to a simple mortgage shall, so far asmay be, apply to such charge.Nothing in this section applies to thecharge of a trustee on the trust propertyfor expenses properly incurred in theexecution of his trust, and, save asotherwise expressly provided by any law forthe time being in force, no charge shall beenforced against any properly in the handsof a person to whom such property has beentransferred for consideration and withoutnotice of the charge'.20. As the section itself unambiguously indicates, acharge may not be enforced against a transferee ifshe/he has has no notice of the same, unless by law,the requirement of such notice has been waived.This position has long been accepted by this Courtin Dattatreya Shanker Mote Vs. Anand Chintaman Datarand in Ahmedabad Municipal Corpn, of the City ofAhmedabad Vs. Haji Abdulgafur Haji Hussenbhai(hereinafter "Ahmedabad Municipal Corpn."). In thisconnection, we may refer to the latter judgement,which is particularly relevant for the present case.21. Ahmedabad Municipal Corpn. was a case where aperson was in arrears of property tax, due under theBombay Provincial Municipal Corporation Act, 1949.Consequently, the Municipal Corporation created acharge over the property of the defaulter. However,the property was sold in execution of a mortgagedecree. When the Municipal Corporation purported toexercise their charge over the property, thepurchaser in court-auction filed a suit for adeclaration that he was the owner of the propertyand that the arrears of municipal taxes due by thetransferor were not recoverable from him byproceeding against the property purchased in theauction. In the appeal before this Court, theMunicipal Corporation's main argument was that wherethe local law provided for the creation of a chargeagainst a property for which municipal taxes weredue, transferees of such properties were imputedwith constructive knowledge of any charge createdagainst the properties that they had purchased.This argument was, however, rejected. This Courtheld that while constructive notice was sufficientto satisfy the requirement of notice in the provisoto Section 100 of the TP Act, whether the transfereehad constructive notice of the charge had to bedetermined on the facts and circumstances of thecase. In other words, this Court held that therecould be no fixed presumption as to the transfereehaving constructive notice of the charge against theproperty. In fact, the principle laid down in https://hcservices.ecourts.gov.in/hcservices/ Ahmedabad Municipal Corpn. has been correctly applied in a sales tax case similar to the presentcase".After laying down the law as aforesaid the Apex Court in the lightof the facts of that case held as follows:-"23. In these circumstances, we are of the viewthat the first respondent was a purchaser for valuewithout notice of the sales tax arrears of thedefaulting company or the consequent charge on theproperty. This would therefore attract theprinciple laid down by this Court in AhmedabadMunicipal Corpn. which is also emboidied in theproviso to Section 100 of the TP Act. Thus, theproperty in the hands of the first respondent wasfree of the charge and it is not open to theappellants to enforce the liabilities of thedefaulting company in this manner against the firstrespondent". Thus it is clear that the law laid down by the Division Bench in108 S.T.C. 161 (referred to above) has been approved by the ApexCourt. 20. Therefore we hold that in view of the Honourable SupremeCourt's judgement approving the law laid down in 108 STC 161(referred to above) by its decision reported in 2006 (1) S.C.C.615 (referred to above) the law laid down by the Division Benchesof this Court in the decisions reported in 1985 W.L.R. 240(referred to supra) and 1993 (3) M.T.C.R. 8 (referred to supra)are no longer good law. We hold that the property purchased by abonafide purchaser without notice of the charge under Section 24(1) of the Act cannot be proceeded against for the recovery ofsales tax arrears. 21. Now in the light of the law laid down in 2006 (1) S.C.C.615 (referred to supra) we have to see, in the present case,whether the plaintiffs are bonafide purchasers of the suitproperty without notice.22. To decide the said issue, it will be useful to refer tothe relevant provisions of the Act and the Transfer of PropertyAct.(i) Sections 19 and 24 of the Act read as follows:"19. Liability of firms. - (1) Where any firm isliable to pay any tax or other amount under thisAct, the firm and each of the partners of the firmshall be jointly and severally liable for suchpayment.(2) Where a partner of a firm liable to pay any taxor any amount under this Act retires, he shall,notwithstanding any contract to the contrary, beliable to pay the tax or other amount remainingunpaid at the time of his retirement and any tax orother amount due up to the date of retirement, https://hcservices.ecourts.gov.in/hcservices/ though unassessed".“24. Payment and recovery of tax. - (1) Save asotherwise provided for in sub-section (2) ofSection 13, the tax assessed or has become payableunder this Act from a dealer or person and anyother amount due from him under this Act shall bepaid in such manner and in such instalments, ifany, and within such time as may be specified inthe notice of assessment, not being less thantwenty-one days from the date of service of thenotice. The tax under sub-section (2) of Section13 shall be paid without any notice of demand. Indefault of such payment the whole of the amountoutstanding on the date of default shall becomeimmediately due and shall be a charge on theproperties of the person or persons liable to paythe tax or interest under this Act.(2) Any tax assessed on or has become payable by,or any other amount due under this Act from adealer or person and any fee due from him underthis Act, shall, subject to the claim of theGovernment in respect of land revenue and the claimof the Land Development Bank in regard to theproperty mortgaged to it under Section 28(2) of theTamil Nadu Co-operative Land Development Banks Act,1934 (Tamil Nadu Act X of 1934), have priority overall other claims against the property of the saiddealer or person and the same may without prejudiceto any other mode of collection be recovered,(a) as land revenue, or(b) on application to any Magistrate, by suchMagistrate as if it were a fine imposed by him;Provided that no proceedings for such recoveryshall be taken or continued as long as he has, inregard to the payment of such tax, other amount orfee, as the case may be, complied with an order byany of the authorities to whom the dealer or personhas appealed or applied for revision, underSections 31, 31-A, 33, 35, 36, 37 or 38."(ii) With regard to the aspect of notice, the interpretationclause- Section 3 of the Transfer of Property Act 1882 reads asfollows:-"a person is said to have notice" of a fact when heactually knows that fact, or when, but for wilfulabstention from an enquiry or search which he oughtto have made, or gross negligence, he would haveknown it".iii) Section 100 of the Transfer of Property Act 1882 readsas follows:"100. Charges - Where immovable property of one https://hcservices.ecourts.gov.in/hcservices/ person is by act of parties or operation of lawmade security for the payment of money to another,and the transaction does not amount to a mortgage,the latter person is said to have a charge on theproperty; and all the provisions hereinbeforecontained (which apply to a simple mortgage shall,so far as may be, apply to such charge).Nothing in this Section applies to the charge of atrustee on the trust-property for expenses properlyincurred in the execution of his trust, (and saveas otherwise expressly provided by any law for thetime being in force, no charge shall be enforcedagainst any property in the hands of a person towhom such property has been transferred forconsideration and without notice of the charge)." 23. From a reading of the above said provisions the followingconclusions emerge:Under Section 19 of the Act when the firm is liable to paytax under the Act, the firm and each of the partners of the firmshall be jointly and separately liable for payment of such tax.Under this Section, for the liability of the firm, the partnersare also liable and therefore their properties cannot escape thetax liability. When such a person has effected transfer of hisproperty after the assessment proceedings under the Act arecompleted it cannot be stated that he did not intend to evade thetax and as such the sale will not be binding on the department.But, at the same time, the legislature has intended to protect thehonest person who had purchased the property from such a seller,if he had not colluded with the seller and he had no notice of theliability of the vendor. While sub-section(1) of Section 24creates a 'charge' on the properties of a defaulter to the extentof his dues, sub-section (2) states that the dues will havepriority over all other claims against those properties, exceptland revenue and claims of Land Development Bank in regard toproperty mortgaged to it. 24. The meaning of the term "charge on the property" is to befound in Section 100 of the Transfer of Property Act, in which ithas been equated to a 'simple mortgage', and it has also been laiddown therein that, in the absence of a specific provision in anylaw, no charge shall be enforced against any property in the handsof a person to whom such property has been transferred forconsideration and without notice of a charge. Thus, while Section24(1) of the Act gives the tax dues only the status of a simplemortgage over the properties of the defaulter, Section 24(2) givesthese dues a priority over all other claims against that propertyexcept claims for land revenue and of Land Development Bank. 25. A reading of Section 3 of the Transfer of Property Act,1882 leads to the conclusion that, not only a wilful abstentionfrom an enquiry which a person ought to have made, but the grossnegligence to make enquiry also would amount to notice of a factto him. When the prudence of a person requires him to make anenquiry, but due to his own negligence he failed to make enquiry,he falls in the category of a person, with notice. A purchaser of https://hcservices.ecourts.gov.in/hcservices/ the property who claims the transaction to be bona fide without notice, the yardstick to be applied for the "notice" is given inSection 3 of the Transfer of Property Act, 1882 and only by theapplication of this provision, a purchaser who seeks protection isto be identified, whether he is a purchaser for value withoutnotice. The necessity of the purchase, the intention of thetransfer, the relationship between the vendee and vendor are allvital factors to find out the reasonableness of the person inpurchasing the property. Sometimes unexplained secrecy or thehaste in the transactions may also throw some light on the bonafides or mala fides. To decide whether a transaction was genuineor bona fide or mala fide, all facts relating to the conduct ofthe parties to the transaction have to be weighed as a whole. 26. The plaintiffs in this case have not disputed theliability of their vendors to pay the sales tax, even at the timeof the sales, but claim protection under the exception clause, forwhich the parameters of Section 3 of the Transfer of Property Act1882 have to be applied. Every purchaser from the assessee isnaturally interested to protect the property and will claim to bea bonafide purchaser. For the sake of their claim, the Courtcannot approve the transaction as a bonafide sale. 27. Under Section 101 of the Evidence Act, 1872 whoeverdesires any court to give judgement as to any legal right orliability depending on the existence of facts which he asserts,must prove, that those facts existed. Therefore, it is for him toestablish that there was no wilful abstention of enquiry or searchof the facts, on his part about the vendor before the saletransaction was completed. 28. In this context it will be useful to refer to Order 6Rule 2 of C.P.C., which reads as follows:-"Order 6 Rule 2: Pleading to state material factsand not evidence. - (1) Every pleading shallcontain, and contain only, a statement in aconcise form of the material facts on which theparty pleading relies for his claim or defence asthe case may be, but not the evidence by whichthey are to be proved".29. A reading of the above provisions show that the partymust plead all material facts on which he means to rely at thetrial. If any one of the material fact is omitted, the statementof claim is bad and it would mean no pleading and no cause ofauction for the suit. If material facts are not pleaded, a courtcannot permit evidence to be led. In 1977 (1) S.C.C. 511 (UdhavSingh Vs. Madhav Rao Scindia) the Supreme Court has defined theexpression "material facts" in the following words:-"All the primary facts which must be proved at thetrial by a party to establish the existence of acause of auction or his defence are materialfacts". https://hcservices.ecourts.gov.in/hcservices/

30. The distinction between "material facts" and"particulars" cannot be overlooked. Material facts are primaryand basic facts which must be pleaded by the party in support ofthe case set up by him, either to establish his cause of auctionor defence. Since the object and purpose is to enable theopposite party to know the case he has to meet, in absence ofpleading a party cannot be allowed to lead evidence. Failure tostate even a single material fact, hence, will entail dismissal ofthe suit. Particulars, on the other hand, are the details of thecase. They amplify, refine and embellish material facts. Theygive the finishing touch to the basic contours of a picturealready drawn so as to make it full, more clear and moreinformative. 31. If in the light of the provisions contained in Order 6Rule 2 (1) of C.P.C. the averments in the plaint are considered,it can easily be seen that all the primary facts which must beproved at the trial by the plaintiffs to establish their case thatthey are bonafide purchasers for value without notice have notbeen stated in the plaint. It is pertinent to point out at thisjuncture that nowhere in the plaint the plaintiffs pleaded thatS.V.Traders, Kancheepuram was a proprietory concern and it was nota partnership firm. Likewise nowhere in the plaint it has beenstated that the plaintiffs either enquired with their vendors orwith the authorities of the sales tax department as to whether anysales tax arrears is due from their vendors.32. In the written statement the defendants have put forththe following pleas, viz.,:(i) Thiru.T.P.Narayanasamy and his son T.N.Subash werepartners of another firm named S.V.Traders dealing business inmoped scooters and spare parts at No.502, Gandhi Road,Kancheepuram. For the year 1973-74 the said firm was assessed tosales tax of Rs.11,876/- and AST of Rs.8,983/-. For the year1974-75 the said firm was assessed to sales tax of Rs.69,846/- andfor the year 1975-76 the said firm was assessed to sales tax ofRs.5,482/-. Due to failure to pay the said amounts, the said firmand its partners became defaulters on 05.09.1974, 24.12.1976 and03.01.1977 for the said three years respectively. (ii) The defendants have specifically pleaded that afterreceipt of the demand notice the defaulters namely the vendors ofthe plaintiffs have executed a sale deed in respect of the suitproperty in favour of the plaintiffs, in order to defraud thedefendants and the sale deed is not binding on the defendants.(iii) The plaintiffs are not bonafide purchasers for valuewithout notice of the defects in title. The plaintiffs were awareof the said arrears of sales tax. The said Kundanlal Baffna is aclose friend to the said defaulters. The sale deed has beencreated collusively between the plaintiffs and the said defaultersto defraud the defendants and to defeat and delay the realisation https://hcservices.ecourts.gov.in/hcservices/ of sales tax arrears. But the plaintiffs have not chosen to deny the said pleadings inthe written statement by filing a reply statement.33. At this juncture we should point out that neither inEx.A-3-reply notice sent by the plaintiffs through their counselnor in Ex.A-7-legal notice issued under Section 80 of the C.P.C.,the plaintiffs have stated that S.V.Traders, Kancheepuram is aproprietory concern and not a partnership firm or the plaintiffsmade necessary enquiries to ascertain about the sales tax dues oftheir vendors and inspite of their enquiries they were unable toascertain the sales tax liability of their vendors. 34. Lord Denman, C.J. in the case of William Vs. Wilcox (1838(3) A.D. & EI 314 (331) stated as follows:"It is an elementary rule in pleading that, when astate of facts is relied it is enough to allege itsimply, without setting out the subordinate factswhich are the means of proving it, or the evidencesustaining the allegation".If Exs.A-3, A-7 and the pleadings in the plaint are considered in the light of the above said observation of Lord Denman, C.J., wehave to point out that when it is sought to be proved by theplaintiffs that S.V.Traders, Kancheepuram was not a partnershipfirm but it was only a proprietory concern and the plaintiffsclaim to be bonafide purchasers and without notice the factualfoundation for the same or otherwise the primary facts which mustbe proved at the trial should have been set out in Exs.A-3 and A-7and pleaded in the plaint but the plaintiffs have miserably failedto do so. It is settled law that any amount of oral evidence inthe absence of pleadings cannot be looked into. 35. The learned counsel for the second respondent relied uponthe following decisions viz.:-(i) In A.I.R. 1928 Patna 587 (referred to supra), theDivision Bench of the Patna High Court has held as follows:-"If the defendants wished to avail themselves ofthe defence that they were purchasers for valuewithout notice, they should have pleaded it". In the said decision, it is further observed that the defence of apurchase without notice is one which ought to be specificallyalleged as well as proved by one who relies upon it.(ii) In A.I.R.1939 Nagpur 132 (referred to supra) it has beenlaid down as follows:-"Whether the matter falls squarely within Section100 or whether it comes under a more general ruleof law, the burden is on the transferee toestablish that he is the bonafide transferee forvalue without notice." https://hcservices.ecourts.gov.in/hcservices/ (iii) In A.I.R. 1940 Nagpur 163 (referred to supra) theDivision Bench affirmed the law laid down in A.I.R. 1939 Nagpur132 (referred to supra).On the basis of the law laid down in the above said threedecisions the learned counsel for the respondents submitted thatin the plaint the plaintiffs have not specifically alleged withmaterial particulars that the plaintiffs were bonafide purchaserswithout notice and he further submitted that as per Section 101 ofthe Evidence Act, burden of proving the same is on the plaintiffsbut they have not discharged that burden. The said submissions ofthe learned counsel merit acceptance and as pointed out already byus, the plaint does not contain the primary facts which must beproved at the trial by the plaintiffs to establish their case thatthey are bonafide purchasers for value without notice. In theabsence of specific pleadings in the plaint the plaintiffs areprecluded from letting in any oral evidence on this aspect.36. Now we have to consider the submissions made by thelearned counsel for the appellant on the basis of the followingdecisions:-(i) In the decision reported in 62 Law Weekly 377 (referredto supra), while considering the question of bonafides of asubsequent purchaser in a suit for specific performance, it isobserved as follows:"On the question whether the fifth defendant is abona fide purchaser for value without notice, theCourts below have differed, the lower appellateCourt holding that he was not. It lies upon theparty seeking to defeat a prior contract for thesale of land to prove that he is a purchaser forvalue before judgement bona fide and without noticeof the previous contract. The initial burden isupon the purchaser. It may be that very littleevidence on the part of the purchaser is sufficientto discharge the onus in a particular case".(ii) In the decision reported in A.I.R. 1934 Privy Council 68(referred to supra), the Privy Council with reference to Section27 of the Specific Relief Act (1 of 1877) has observed as follows:"...., the section lays down a general rule thatthe original contract may be specifically enforcedagainst a subsequent transferee, but allows anexception to that general rule, not to thetransferor, but to the transferee, and, in theirLordships opinion it is clearly for the transfereeto establish the circumstances which, will allowhim to retain the benefit of transfer which primafacie, he had no right to get. Further thesubsequent transferee is the person within whoseknowledge the facts as to whether he has paid andwhether he had notice of the original contract lie,and the provisions of Ss.103 and 106, Evidence Act,1872 having a bearing on the question". https://hcservices.ecourts.gov.in/hcservices/ (iii) In A.I.R. 1929 Patna 300 (referred to supra) withreference to Section 27 of the Specific Relief Act, it is observedas follows:-"It is thus clear that the party who wants to takethe advantage of the exception has to prove it. Itwas, therefore, incumbent upon defendants 2 and 3to prove in the first instance that they weretransferees for value and that they had paid theirmoney in good faith and without notice of theoriginal contract. This view is supported by thedecision of this Court in Dharamdeo Singh Vs. RamPrasad Sah (1918 (4) Patna Law Weekly 152 = 44 I.C.470) where it was held that in a suit for specificperformance of a contract if the plaintiff proveshis prior contract, the burden of proving asubsequent bona fide transfer for value withoutnotice under S. 27 (b), Specific Relief Act, lieson the party alleging it. The same view was takenby the Calcutta High Court in Hem Chander De Vs.Amiyabala (A.I.R. 1925 Calcutta 65 = 52 Calcutta121). The learned Subordinate Judge was,therefore, right in throwing the onus upon thedefendants to prove that they were transferees forvalue without notice of the original contract.Very little evidence on the part of the defendantsof want of knowledge of the plaintiff's contractwould have discharged this onus and shifted theonus on the plaintiff but in this case defendant 2who gave his evidence does not even say on oaththat he was not aware of the plaintiff's contract".(iv) In A.I.R. 1984 Patna 277 (referred to supra), it isobserved as follows:-"In a suit for specific performance of a contractif the plaintiff proves his prior contract, theburden of proving a subsequent bona fide transferfor value without notice lies on the party allegingit. This is the settled law but it is also wellsettled that very little evidence, and in certaincircumstances a mere denial, regarding want ofknowledge of the plaintiff's contract woulddischarge this onus and shift the onus upon theplaintiff". (v) The decision reported in A.I.R. 1977 Allahabad 328(referred to supra) deals with the scope of Section 19(b) theSpecific Relief Act and Section 41 of the Transfer of PropertyAct, which in our considered view has no relevance to the facts ofthis case.37. In our considered view the above decisions support thecontention of the respondents rather than the appellant. Even asper the above decisions, the initial burden is upon the purchaserand though very little evidence on the part of the purchaser is https://hcservices.ecourts.gov.in/hcservices/ sufficient to discharge the onus in a particular case. Whether, in this case, the plaintiffs have let in any evidence to dischargethe onus will be considered a little latter.38. The learned counsel for the plaintiffs relied upon thedecision of the Apex Court in Ahmedabad Municipal Corporation ofthe City of Ahmedabad Vs. Haji Abdul Gafur Haji Hussenbhaireported in A.I.R. 1971 S.C.1201 wherein the plea raised by thepurchaser that there was bonafide purchase for value was accepted.But on a thorough reading of the judgement, it could be seen thatit is not helpful to the plaintiffs. The case went up to theSupreme Court on a suit initiated by the court auction purchaserand the court auction purchaser, when threatened by themunicipality with a notice of distress warrant for the arrears ofthe municipal tax filed the suit for declaration that he was theowner of the property purchased in good faith in the court sale.The Supreme Court has thoroughly discussed the evidence adduced onboth sides and the conduct of the parties to come to a conclusionthat the purchaser had no notice of the charge in the property forthe arrears of the municipal tax, that in spite of his bestefforts to verify whether there was any tax due, he was notinformed about the arrears and the municipal corporation was notactive in recovering the arrears. The subject-matter of theproperty in that suit had vested with the official receiver, asthe owner became insolvent and the official receiver sought thepermission of the court to pay the tax arrears to the municipalcorporation. But subsequently the receiver had stated to thecourt that he did not possess sufficient funds to pay the tax tothe municipal corporation and sought the direction of the court.The insolvency court also gave certain directions. The Apex Courthas also found from the evidence that the purchaser in fact madeenquiries from the receivers about the tax for the property butthe receiver did not give any intimation. Therefore, it wasviewed in that case that the purchaser could not have expectedthat the receiver, would not have paid tax to the municipalcorporation. The Apex Court considering the conduct of theparties with reference to the prudence or negligence makes thefollowing observation:-"Now the circumstances which by a deemingfiction impute notice to a party are based onhis wilful abstention to enquire or search,which a person ought to make or, on his grossnegligence. This presumption of notice iscommonly known as constructive notice.Though originating in equity this presumptionof notice is now a part of our statute and wehave to interpret it as such. Wilfulabstention suggests conscious or deliberateabstention and gross negligence is indicativeof a higher degree of neglect. Negligence isordinarily understood as an omission to takesuch reasonable care as under thecircumstances it is the duty of a person orordinary prudence to take. In other words it https://hcservices.ecourts.gov.in/hcservices/ is an omission to do something which a reasonable man guided by considerations whichnormally regulate the conduct of humanaffairs would do or doing something whichnormally a prudent and reasonable man wouldnot do. The question of wilful abstention orgross negligence and, therefore, ofconstructive notice considered from thispoint of view is generally a question of factor at best mixed question of fact and lawdepending primarily on the facts andcircumstances of each case and except forcases directly falling within the threeexplanations, no inflexible rule can be laiddown to serve as a straight-jacket coveringall possible contingencies. The question onehas to answer in circumstances like thepresent is not whether the purchaser had themeans of obtaining and might with prudentcaution have obtained knowledge of the chargebut whether in not doing so he acted withwilful abstention or gross negligence. Beinga question depending on the behaviour of areasonably prudent man the courts have toconsider it in the background of Indianconditions. Courts in India should,therefore, be careful and cautious in seekingassistance from English precedents whichshould not be blindly or too readilyfollowed".In that case a regular suit was filed by the purchaser himself andthe Apex Court has thoroughly considered the entire evidencerelating to the conduct of the purchaser to hold that in spite ofhis best efforts to find out from the receiver with regard to thetax for the property he could not get the details from thereceiver and therefore he could not be blamed for the non-paymentof the tax and he was protected by the proviso to Section 100 ofthe Transfer of Property Act 1882. 39. Whereas in this case as pointed out above it is not evenpleaded by the plaintiffs that they have made any enquiryregarding the sales tax arrears of their vendors. It is pertinentto point out that the plaintiffs have not even pleaded in theplaint that they were not aware of the sales tax arrears payableby S.V.Traders, Kancheepuram and Kasthuri and Company. It is alsopertinent to point out that P.W.1 in his evidence has not evenstated that he was not aware of the sales tax arrears due fromS.V.Traders, Kancheepuram and Kasthuri and Company, but he hasonly deposed that he was not aware that T.P.Narayasamy had to paysales tax. But unfortunately no such averment has been made inthe plaint and therefore this evidence of P.W.1 cannot be lookedinto. In this case there is absolutely no evidence on the side ofthe plaintiffs to discharge the initial burden. That being so thecontention of the learned counsel for the appellant that the https://hcservices.ecourts.gov.in/hcservices/ plaintiffs have discharged their initial burden cannot be accepted. But on the other hand P.W.1 in his cross examinationhas categorically admitted that he did not enquireT.P.Narayanasamy about the sales tax arrears. Therefore, theomission on the part of the plaintiffs to enquire with theirvendors regarding their sales tax arrears amounts to negligence ontheir part and also it will amount to wilful abstention. In thiscase the plaintiffs had the means of obtaining the necessaryinformation and the plaintiffs with prudent caution might haveobtained knowledge of the charge and therefore the failure ontheir part to make necessary enquiries with their vendors willamount to wilful abstention or gross negligence and therefore itcould be held that the plaintiffs have constructive notice. 40. We have to point out that the fact that the plaintiffsmarked Ex.A-46 through D.W.7 will itself show that they hadknowledge about the sales tax arrears of their vendors. It is notthe case of the plaintiffs anywhere that Ex.A-46 was obtained bythem from their vendors or from some other source after filing ofthe suit. Therefore, we have to hold that the plaintiffs are notbonafide purchasers without notice.41. Now the issue whether S.V.Traders, Kancheepuram is apartnership firm or a proprietory concern has to be considered.It is pertinent to point out that D.W.1 through whom Exs.B-1 andB-2 were marked was a last grade Government servant in the officeof the Deputy Commercial Tax Officer. Similarly D.W.2 throughwhom Exs.B-3 and B-4 were marked was a peon in the Office of theDeputy Commercial Tax Officer, Kancheepuram. In their crossexamination, D.Ws.1 and 2 have stated that T.N.Subash is the ownerof S.V.Traders, Kancheepuram and much reliance has been placed onthis by the Trial Court to come to the conclusion thatS.V.Traders, Kancheepuram is a proprietory concern. The trialcourt ought not to have attached too much importance on suchtestimony of D.Ws.1 and 2 since both of them are Last GradeGovernment Servants, whose services have been utilised by theDeputy Commercial Tax Officer only for the purpose of service ofExs.B-1 to B-4 and they could not be expected to know about theconstitution of S.V.Traders, Kancheepuram. The trial court hasobserved that there is no evidence to show that the signature inEx.B-26 is that of T.P.Narayanasamy and on the face of it it seemsto be a fraudulent one and has further observed that the signatureof T.P.Narayanasamy in Exs.B-14 and B-26 differ. In this contextit has to be pointed out that the signature of T.N.Subash found inEx.B-26 has not been disputed. Similarly the submission of Ex.B-26 to the Sales Tax Department is also not disputed. But thesignature of T.P.Narayanasamy alone is disputed. Even assumingfor a moment that T.P.Narayanasamy had not signed in Ex.B-26, thestatement contained in Ex.B-26 cannot be denied by T.N.Subash andas such the above said observations made by the trial court inrespect of Ex.B-26 are erroneous. The plaintiffs themselvescontended before the Tamil Nadu Sales Tax Appellate Tribunal (MainBench, Madras-1) that the firm S.V.Traders, Kancheepuram was apartnership concern and as evident from Ex.B-36, the tribunal hasobserved that the details of documentary evidence give support for https://hcservices.ecourts.gov.in/hcservices/ the acceptance of the stated partnership. If Ex.B-26 is considered in the light of the contentions put forth by theplaintiffs before the tribunal, it could be seen that Ex.B-26 isnot a fradulent document as observed by the trial Court. Furtherwe also compared the signature of T.P.Narayanasamy in Ex.B-26 withhis admitted signatures in the sale deed-Ex.A-1 to satisfy as towhether the observation made by the trial court has got any basis.But we are satisfied, on a comparision of the signatures, thatthere is no variation between the admitted and disputed signaturesand we hold that the signature in Ex.B-26 is that ofT.P.Narayasamy only. Therefore, the observation of the trialcourt regarding Ex.B-26 is erroneous and without any basis. Thereis overwhelming evidence available on record to hold thatS.V.Traders, Kancheepuram is not a proprietory concern but it isonly a partnership firm consisting of T.P.Narayanasamy and his sonT.N.Subash.42. The Learned Single Judge after considering at length thecontents of Exs.A-46, B-15, B-24, B-25, B-26, B-27 and B-36 hasrightly observed that the conclusion of the trial court thatS.V.Traders was proprietory concern cannot be sustained and thetrial court failed to consider the material portions and thedocuments placed by the defendants in the form of documents. TheLearned Single Judge has also rightly observed that a perusal ofthe pleadings of both the parties as well as the evidence clearlyshows that the plaintiffs were very well aware of the sales taxarrears from 1973-74 and knowing fully well they have purchasedthe property from T.P.Narayanasamy. The Learned Judge on aperusal of the entire oral and documentary evidence has furtherheld that T.P.Narayanasamy and his son T.N.Subash in order toescape from the tax liability after knowing that there was adefault committed by them and a charge has been created as perSection 24 of the Act, with the fraudulent intention sold the onlyproperty in favour of the plaintiffs. Therefore, we see no reasonto interfere with the findings recorded by the Learned SingleJudge and we concur with the findings.43. In the result, the Letters Patent Appeal fails and thesame is dismissed. However, there will be no order as to costs.Consequently, the connected CMP is closed.srkSd/Asst.Registrar/true copy/Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To1. The Subordinate Judge,Thirupathur+ one cc to Mr. V. Raghavachari, Advocate sr no. 43624+ one cc to the Special Government Pleader sr no. 43282BV(CO)NM(09.10.2006)Pre-Delivery Judgement inL.P.A. No.100 of 1999 andC.M.P.No.8470 of 1999