NCLT Rules Auction Buyers Cannot Escape Municipal Property Tax Dues On ‘As Is Where Is’ Liquidation Sales
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…
Mumbai's National Company Law Tribunal (NCLT) has ruled that auction buyers of properties sold during liquidation cannot escape their responsibility to pay municipal property taxes, even if the purchase was made under "as is where is" conditions. The decision was announced on September 22, 2026, in a case concerning Unit No. 3, Ground Floor, Multi-storied Building, SEEPZ, Marol Industrial Area, Andheri East, which Indojewel Jewellery Pvt Ltd acquired through an e-auction during the liquidation of Panache Exports Pvt Ltd.
The company had purchased the property for ₹5.31 crore and paid the full sale price, receiving a sale certificate on August 16, 2023. However, the Brihanmumbai Municipal Corporation (BMC) had demanded ₹86.58 lakh in property taxes, arguing that the dues were owed prior to the liquidation date of September 23, 2022, and thus could not be collected from Indojewel after the company had already been dissolved.
Indojewel challenged this claim in the NCLT, asserting that the property was sold in a "as is where is" condition, meaning the buyer should not be held responsible for any unpaid dues. The company also pointed out that the BMC had already filed its own claim of ₹8.21 lakh before the liquidator. However, the Tribunal rejected this argument, emphasizing that Section 212 of the Mumbai Municipal Corporation Act, 1888 creates a statutory first charge on the property for any outstanding property tax dues.
The Tribunal clarified that the municipal authority has the right to enforce this charge, even if the municipal authority itself has already lodged a claim during the liquidation proceedings. The court held that the auction purchaser, in this case Indojewel, should have conducted thorough due diligence before bidding, as the sale documents explicitly stated that any statutory dues affecting the transfer of the property would be the responsibility of the purchaser.
The NCLT dismissed Indojewel's application, ruling in favor of the BMC and confirming the municipal authority's statutory first charge over the property for the unpaid property tax dues.
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