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Issues Involved:
1. Whether the appropriate authority can require a tenant in lawful possession to vacate the property under section 269UD(1) of the Income-tax Act. 2. Whether a tenant is liable to surrender possession under section 269UE(2) of the Act and can be forcibly evicted under section 269UE(3). 3. Whether payment of the sale price to the owner can be withheld until vacant possession of the entire property is obtained by the Central Government. Detailed Analysis: Re: Points (a) and (b): The tenant claimed to be in lawful possession of the first floor portion of the property under a lease extended by mutual consent up to May 10, 1994. However, the lease was not registered, making the tenant only a monthly tenant under section 107 of the Transfer of Property Act. Section 269UE(1) of the Income-tax Act provides that upon an order of purchase under section 269UD(1), the property vests in the Central Government in terms of the agreement for transfer. The proviso to this section allows the appropriate authority to declare any encumbrance or leasehold interest void if it is created to defeat the provisions of Chapter XX-C. Section 269UE(2) mandates that the transferor or any person in possession must surrender the property within 15 days of the service of the purchase order. However, the proviso protects bona fide lessees or encumbrance holders, allowing them to continue in possession if their lease or encumbrance is not declared void. The Supreme Court in C. B. Gautam v. Union of India [1993] 199 ITR 530 held that the property would vest in the Central Government subject to bona fide encumbrances or leasehold interests, except for monthly tenancies, which lose protection under rent control laws upon such vesting. In this case, the appropriate authority was aware of the tenant's possession but did not declare the lease void. The tenant was not a party to the agreement of sale, which provided for vacant possession. The court held that the tenant, being a bona fide monthly tenant, could not be summarily evicted under section 269UE(2) and (3). The appropriate authority should have clarified the position regarding vacant possession before passing the order of purchase. Re: Point (c): The agreement of sale stipulated that the balance sale price of Rs. 20 lakhs was payable only upon delivery of vacant possession. The court held that the appropriate authority could withhold this amount until vacant possession was obtained. The owner was only entitled to the advance payment of Rs. 6,50,000. The court noted that the owner's predicament was due to his own actions, as he had agreed to deliver vacant possession without securing it from the tenant. Conclusion: 1. The tenant is entitled to continue in occupation of the first floor portion as a tenant under the Central Government. The tenant cannot be summarily evicted under section 269UE(2) and (3) but can be evicted under the Public Premises Act or other applicable laws. 2. The order of purchase dated March 29, 1993, is upheld, but the direction for delivery of possession is quashed concerning the tenant. 3. The owner is entitled to Rs. 6,50,000 now, and the balance of Rs. 20 lakhs will be payable upon obtaining vacant possession. If the amount is deposited in the State Bank of India, the owner cannot withdraw Rs. 20 lakhs until vacant possession is obtained. The Central Government is entitled to interest on this amount from the date of deposit to the date of obtaining vacant possession. Order: The writ petition is allowed on these terms, and the petitioner is awarded costs of Rs. 1,000 from the respondents.
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