1992 (8) TMI 2 - SC - Income Tax

Whether interest should be paid to the owner of an immovable property who has entered into an agreement to sell the same - where such a seller has raised no objection or obstruction either to the purchase of his property by an order u/s 269UD or to the completion to the agreement of sale entered into by him but is unable to get the purchase price by reason of the said order & the stay order or orders passed by a court interest at an appropriate rate can if equity so requires be paid to him

Summary

Issues:
Interpretation of an interim order in a civil writ petition regarding the sale of property. Determination of payment of balance amount under an agreement of sale due to legal complications. Calculation of interest on the purchase price in different scenarios.

Interpretation of Interim Order:
The Supreme Court heard an appeal against an interim order from the Delhi High Court related to the sale of a property under a formal agreement. The appellant, one of the vendors, faced challenges due to legal proceedings initiated by the first respondent and the Central Government. The appellant sought payment of the balance amount under the sale agreement but was denied relief by the High Court's order. The Court acknowledged the appellant's predicament and the inability to complete the sale due to external factors.

Payment of Balance Amount:
The appellant, in urgent need of funds to acquire another property, was caught in a situation where she couldn't proceed with the sale to the first respondent or to a third party due to legal obstacles. The Court recognized the appellant's cooperation in the sale process and her willingness to comply with the agreements. However, due to uncertainties regarding the legal proceedings and the property's value appreciation, the Court refrained from directing immediate payment of the balance amount to the appellant.

Calculation of Interest:
Considering the fluctuating property prices and the appellant's financial strain, the Court modified the impugned order. It directed that if the Government upholds the purchase order, they must pay the appellant the purchase price with 15% interest per annum. Conversely, if the purchase order is set aside, the first respondent must pay the appellant interest at 20% per annum on the balance amount. The Court emphasized that the payment of interest in such cases should be determined based on the specific circumstances and the seller's cooperation in the sale process.

General Principle on Interest Payment:
The Court clarified that the decision to pay interest to a property owner, unable to complete a sale due to legal interventions, and the applicable rate must be assessed case by case. The Court highlighted that if the seller cooperates with the sale process and faces financial losses due to legal orders or stays, equity may require the payment of interest at a suitable rate. The judgment concluded without any specific order regarding the costs of the appeal.