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HC upholds attachment of immovable property transferred after service of recovery notice by Tax Recovery Officer

In D.S. Senthilvel  v. Tax Recovery Officer, the Petitioner had purchased an immovable property after service of a recovery notice by the TRO for recovery of arrears due under the ITL on the seller, but before the date of the attachment of the immovable property by the TRO. The Petitioner had objected to the attachment of the immovable property by the TRO by filing a writ petition to the HC on the ground of his being a bona fide purchaser of the immovable property for adequate consideration.

The HC held that the ITL contains a separate and distinct scheme of provisions for transfer of immovable property before and after the service of the recovery notice by the TRO. The ITL protects a buyer who purchases an immovable property for adequate consideration and without having knowledge of the seller’s default under the ITL, only if the purchase happens before the service of the recovery notice by the TRO. In the present case, because the purchase of the immovable property happened after service of the recovery notice, the Petitioner could not protect the validity of the purchase under the aforesaid provision of the ITL. The HC held that under the ITL, the seller loses competency to transfer immovable property after the service of the recovery notice by the TRO, and can do so only after obtaining the TRO’s permission.

In the present case, because the seller had no competency to transfer the immovable property after service of the recovery notice by the TRO, the HC held that the Petitioner could not have acquired a valid or legal title to the immovable property. The HC upheld the validity of the attachment.

However, the HC quashed the action of the TRO in declaring the transaction of purchase as void, and held that a transaction can be declared void either under the express provisions of the ITL or by a Civil Court.

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