1998 (10) TMI 37 - HC - Income Tax

Issues Involved:
1. Constitutionality of Section 269UE(2) of the Income-tax Act, 1961.
2. Legislative competence of Parliament to enact laws affecting landlord-tenant relationships.
3. Applicability of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, versus the provisions of the Income-tax Act.
4. Interpretation of the Supreme Court decision in C. B. Gautam vs Union of India.
5. Applicability of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 269UE(2) of the Income-tax Act, 1961:
The petitioner challenged Section 269UE(2) as unconstitutional, arguing that it allows the Central Government to take possession of immovable property by force, which is void. The petitioner contended that this provision violates their tenancy rights under the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, which mandates eviction only on specified grounds under Section 10. The court, however, found that the Supreme Court in C. B. Gautam vs Union of India [1993] 199 ITR 530 had upheld the validity of Chapter XXC of the Act, subject to the condition that Section 269UE(1) must be read without the expression "free from all encumbrances." Therefore, the property would vest in the Central Government subject to existing encumbrances unless agreed otherwise in the sale agreement.

2. Legislative Competence of Parliament:
The petitioner argued that Parliament lacks the legislative competence to enact laws governing landlord-tenant relationships, which fall under the State Legislature's domain as per Entry 18 of List II of the Seventh Schedule to the Constitution. The court held that Chapter XXC of the Income-tax Act, which deals with the Central Government's right to pre-emptive purchase of properties, is a special enactment and thus overrides state rent control laws. The court noted that Parliament was aware of existing state rent control laws when enacting Chapter XXC, and the specific provisions for dispossession in Chapter XXC must be given effect.

3. Applicability of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960:
The petitioner claimed protection under the Tamil Nadu Rent Control Act, arguing that even buildings owned by the Central Government are not exempt from its provisions. The court found that the petitioner's lease agreement had expired in 1980, and no new agreement existed. Therefore, the petitioner's occupation was without legal authority. The court also noted that the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, which provides for eviction from Central Government premises, would exclude the application of the Tamil Nadu Rent Control Act.

4. Interpretation of the Supreme Court Decision in C. B. Gautam vs Union of India:
The petitioner relied on the Supreme Court's decision in C. B. Gautam to argue that Section 269UE(1) was unconstitutional to the extent it provided for property to vest in the Central Government "free of all encumbrances." The court clarified that the Supreme Court's decision applied to cases where the property was sold subject to encumbrances. In the present case, the sale agreement explicitly stated that the property would be sold free of all encumbrances, making the Supreme Court's decision inapplicable.

5. Applicability of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971:
The Department argued that the petitioner could not claim protection under the Tamil Nadu Rent Control Act due to the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, which defines "unauthorised occupation" and provides for eviction from Central Government premises. The court agreed, noting that the petitioner's occupation was unauthorised since the lease had expired, and the Public Premises Act would apply.

Conclusion:
The court concluded that the petitioner failed to make a case for declaring Section 269UE(2) unconstitutional and void. The writ petition was dismissed for lack of merit, and the accompanying miscellaneous petition was also dismissed.

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