Calcutta High Court rules auction buyers must clear property tax before sale under KMC Act. Property tax is a statutory first charge. | The Legal Observer

The Calcutta High Court clarifies that unpaid property taxes must be cleared before auction sales, binding buyers under statutory obligations.

Auction Purchasers Cannot Escape Tax Liabilities, Rules Calcutta HC

In a significant judgment impacting real estate transactions and municipal tax recovery, the Calcutta High Court has ruled that property tax constitutes the first charge on a property, and any auction purchaser is legally bound to clear such dues before sale.

The bench clarified that where laws like Section 232 of the Kolkata Municipal Corporation Act, 1980 create a statutory charge, the liability transcends ownership and directly attaches to the property itself.

The Court observed that, “Where a statutory first charge is created on the property, the purchaser acquires the property subject to such charge, even if purchased through auction.” This position reinforces the doctrine that public dues, especially municipal taxes, take precedence over private claims or transactional rights in property transfers.

This ruling not only clarifies the legal obligations of auction buyers but also empowers municipal bodies like the Kolkata Municipal Corporation (KMC) in recovering dues efficiently. The judgment echoes the principles upheld by the Supreme Court in previous cases affirming that statutory dues cannot be wiped out merely by a change in ownership.

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