Encumbrances more than market value
1 year ago
I have purchased a industrial property at Rs 35 lac in a bank auction under Sarfasaei Act where in bank declared in auction notice encumbrance of payables to electricity board (Rs.18 lac), Grampanchayat (Rs.2.5 lac), Coop IND estate Rs.6 lac, sales tax Rs 220 lac, excise Rs.385 lac. However, market value of property Rs 80 lac as per Govt valuer. My query is whether I am liable to pay more than market value to the said creditors. Supreme court has observed in AI Champady case in 2009 that encumbrance more than market value does not constitute encumbrance. Please advise.
You are not supposed to pay more than the amount fixed in the bid /auctioned amount.
Thanks and Regards
Simi Paul
Anonymous
Replied 1 year ago
However, sales tax authorities has encumbrance on the land registered on 7/12. Hence, they refuse to give NOC for transfer of plot to my name unless I pay their dues which are much more than plot value.
Anonymous
Replied 1 year ago
I am relying on Supreme court decision in case of AI Champady where they observed that encumbrance which diminishes value of asset to negative does no more remain encumbrance.
Nobody is suppose to pay more than bid amount. Further the bid amount cannot be less than dues on such property.
Anonymous
Replied 1 year ago
How one can bid if bid value is equal to dues from tax defaulter which are more than 10 times the market value of asset ?
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