Pending Writ Petition cannot be Clog on Title: Bombay HC rejects Claim of  Recovery of Tax by MIDC [Read Order]

Rejecting the claim of Maharashtra Industrial Development Corporation (MIDC), on recovery of tax the Bombay High Court observed that a pending writ petition cannot possibly be a clog on the title.

The Applicant, RVS Global Solutions Pvt Ltd, identified a few properties which they are contemplating to acquire and because of the colossal and inordinate delay caused by MIDC at every stage at least two properties which were identified by the Applicant for being acquired for carrying out their business therefrom have already been sold.

The prayer of the petitioner is that the Court may be pleased to direct the Respondents to delete and/or relax and/or dispense with the condition (d) from the transfer order. The relevant condition reads as: “d) Transferee cannot transfer or create third party interest in the demised plot in any manner till disposal of the Writ Petition.”

The Court of Justices Neela Gokhale andG. S. Patel, noted that the argument of Prashant Chawan, the Counsel for the Respondents for Maharashtra Industrial Development Corporation (“MIDC”) that if the Petitioner is allowed to dispose of the property, MIDC will have no recourse for recovery of tax.

The Bench further observed that the argument has no appeal because if there is a tax payable on the transaction that the Petitioner proposes, and we note that the Petitioner is proposing to take a larger property within MIDC itself, then undoubtedly that tax would have to be paid depending on where the incidence of tax falls.

The Counsel for the respondents further clarified that the concern is not about past dues, but about any incidence of tax on what the Petitioner now proposes.

The Court opined that “If that is so, then clause (d) is entirely unjustified. It says nothing at all about tax liabilities. It only attempts to block the Petitioner from transacting the property because of the pendency of this Writ Petition. That is surely unreasonable, because the fact that this Writ Petition is pending cannot possibly be a clog on title.”

The Bench concluded by noting that “For the present, we dispose of the Interim Application by holding and directing that clause (d) will not apply or operate and will not prevent the Petitioner from transacting the property.”

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