Mumbai: The National Company Law Tribunal (NCLT), has held that an auction purchaser of a property sold during liquidation cannot avoid statutory municipal dues attached to the property, where the property was sold on an “as is where is” basis.
BMC Gets Relief In ₹86.58 Lakh Dues Case
The order copy reads, “it is important to note that, Respondent No. 1 (BMC) is a Municipal Authority established under the Mumbai Municipal Corporation Act, 1888 (“MMC Act”). Under Section 212 of the said Act, in the event of any outstanding demands or dues, the Municipal Authority has the first charge upon such asset/property…..A bare reading of the aforesaid provision makes it clear that any property taxes due under the said Act in respect of any building or land constitute a statutory first charge upon such building or land, subject to the prior payment of land revenue, if any, due to the State Government. Consequently, any transfer of such property would not extinguish or override the statutory charge created in favour of the Municipal Authority in respect of the outstanding property tax dues.”
The application was filed by Indojewel Jewellery Pvt Ltd, which had sought to avoid payment of ₹86.58 lakh in dues claimed by the Brihanmumbai Municipal Corporation (BMC). The order was pronounced on September 22, 2026.
Property Bought During Liquidation Auction
The dispute concerned Unit No. 3, Ground Floor, Multi-storied Building, SEEPZ, Marol Industrial Area, Andheri East, which Indojewel purchased through an e-auction conducted during the liquidation of Panache Exports Pvt Ltd. The company emerged as the successful bidder for ₹5.31 crore and subsequently paid the entire sale consideration. A sale certificate was issued on August 16, 2023.
Company Argued Dues Were Pre-Liquidation
Indojewel approached the NCLT after BMC raised a demand of ₹86,58,080, contending that the dues related to the period before the liquidation date of September 23, 2022, and therefore could not be recovered from it. “The applicant Indojewel Jewellery in its application maintained that the Corporate Debtor, Panache Exports Pvt Ltd was dissolved on 04.03.2025 as per the tribunal’s orders. The Respondent No. 1 (BMC), had already filed its claim before the Liquidator, and the entire claim was duly admitted. The claim was thereafter dealt with and settled by the Liquidator in accordance with Section 53 of the Code, following which the Corporate Debtor was dissolved. In these circumstances, Respondent No. 1 cannot seek recovery from the Applicant of any dues arising prior to the Acquisition Date….(so )Respondent No. 1 cannot simultaneously pursue separate proceedings for recovery of the same amount,”the application read. The company also pointed out that BMC had already lodged a claim of ₹8.21 lakh before the liquidator.
The NCLT, however, rejected the contention, noting that Section 212 of the Mumbai Municipal Corporation Act, 1888 creates a statutory first charge over the property for outstanding property tax dues. The Tribunal held that the municipal authority could enforce this charge against the property even though it had also lodged its claim during the liquidation proceedings.
The Bench further noted that the property had been sold expressly on an “AS IS WHERE IS, AS IS WHAT IS, WHATEVER THERE IS and NO RECOURSE” basis. The auction purchaser was therefore expected to conduct due diligence before submitting its bid. The sale documents also indicated that statutory dues affecting the transfer of the property would have to be borne by the purchaser.
Holding that the BMC had a statutory first charge over the property and that the auction purchaser was aware of the municipal claim, the Tribunal answered the issue in favour of BMC and dismissed Indojewel’s application.
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