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TMI Blog2002 (12) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement with the appellants on April 27, 1989, agreeing to sell Leila Lean's 1/3 undivided share in the property. The two other sisters appointed the appellants as their power of attorney holders. In their capacity as the power of attorney holders the appellants sold demarcated portions of the property to nominees of the appellants by eight separate agreements executed and registered between April 28, 1989 and May 31, 1989. On June 1, 1989, Chapter XX-C of the Act which statutorily provides for the compulsory purchase by the Central Government of immovable properties in certain cases of transfer came into force in the State of Andhra Pradesh. The Chapter was introduced in an effort to curb tax evasion by undervaluation of the property sold. The substance of the provisions of Chapter XX-C which are relevant for the determination of the issues raised in this appeal are briefly considered. Section 269UC places conditions on the transfer of immovable property valued at over Rs. 5 lakhs. The conditions include (a) that an agreement for transfer must be entered into between the intended transferor and the intended transferee at least four months prior to the intended date of transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am, representing the estate of Leila Lean, filed a joint statement under section 269UC in Form No. 37-I which is the prescribed form under the Act in respect of Leila Lean's share in the premises. The consideration for the sale was stated to be Rs. 15,33,333.33. The date of the agreement of transfer was given as March 13, 1988. The Appropriate Authority did not accept the statement. By its order dated August 23, 1989, it refused to act on its basis stating that the statement was premature and invalid because the property belonged to a non-resident and the approval of the Reserve Bank of India was required for alienating the same. According to the appropriate authority, no such approval having been taken the transferor was not empowered to dispose of the property. It was said in the order: "Therefore we are unable to issue either a purchase order under section 269UD(1) or issue a no objection certificate under section 269UL(1). The statement furnished in Form No. 37-I is filed. The transferor/transferees are however free to come up before the Appropriate Authority after the above defect is cured, if they are so advised." This order dated August 23, 1989 (hereafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, this court, inter alia, directed that in all cases where the orders under section 269UD were invalid consequent upon this court's decision, and were the subject matter of challenge in writ proceedings, the statement in Form No. 37-I submitted would be treated as if it were submitted on the date of the disposal of those proceedings and the Appropriate Authority could if it so thought fit issue a show cause notice within a period of two months calculating the commencement of the period under the proviso to section 269UD(1) from that date. It was also made clear that as far as completed transactions were concerned, i.e., where after the order of compulsory purchase under section 269UD(1), possession had been taken and compensation paid and accepted by the owner without protest, nothing said in the judgment would invalidate such purchases. The appellants' first writ petition was disposed of by the High Court on February 16, 1994. In view of this court's decision in C.B. Gautam's case [1993] 199 ITR 530, the first purchase order under section 269UD(1), dated August 31, 1989, was quashed. The Appropriate Authority was directed to give an opportunity to the appellants of being hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt disposing of the first writ petition, the Appropriate Authority had failed to consider the issue. According to the appellants, it was settled by this court in Appropriate Authority v. Tanvi Trading and Credits (P.) Ltd. [1991] 191 ITR 307, that the Appropriate Authority was bound to either pass an order for purchase under section 269UD or issue a no-objection certificate under section 269UL. It could not question the title of the vendor. Since it was not in dispute that the Appropriate Authority had done neither within the prescribed period, it is contended by the appellants that the Appropriate Authority could not extend the period of limitation for issuing a compulsory purchase order on such basis. It is contended that merely because a second statement in Form No. 37-I has been filed by the parties beyond that period, it would not operate as a waiver either in law or in the facts. It was emphasised that the first statement in Form No. 37-I was a valid statement and had been filed on June 15, 1989. The period for exercising the power under section 269UD(1) had expired on August 31, 1989. Since no decision was taken to purchase the property then, the Appropriate Authority was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents have submitted that it was not open to the appellants to impugn the second purchase order on the ground that the first purchase order had been issued beyond the period of limitation. The respondents say that in their writ petition in challenge to the first order, the appellants had never raised this issue. The issue was raised for the first time in answer to the show cause notice issued prior to the second purchase order. It was also submitted that the Appropriate Authority had considered the issue and had negatived it. According to the respondents, the appellants had accepted the order of the Appropriate Authority which had "filed" the first statement in Form No. 37-I holding that it was premature and invalid. They had acted on that order and submitted the second statement without protest. The respondents contend that even if the order refusing to either pass an order under section 269UD or release under section 269UL(3) were held to be void, since the appellants had not challenged it till today, they could not do so collaterally. According to the respondents, the order was at the most wrongly passed but it could not be said that it was void. According to the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an's share pursuant to the agreement of sale dated March 13, 1988. They had entered into possession of the demarcated portions of Leila Lean's sisters' property after the eight sale deeds had been executed by the appellants on behalf the sisters and had never taken possession of Leila Lean's share. Finally, on the question of valuation, it is stated that the Appropriate Authority had considered the material on record which clearly showed that the consideration which the appellants had agreed to pay to Leila Lean or her representative did not represent the true market value of the property either in 1988 or in 1989 when the fresh agreement for sale was entered into between the executor of Leila Lean's estate and the appellants. We are of the opinion that the respondents' submissions are entirely acceptable and the High Court had correctly rejected the appellants' writ application. It is really unnecessary, in this case, to consider whether the "filing order" dated August 23, 1989, was void or merely irregular. We will assume for the purpose of argument that the "filing order" of the Appropriate Authority refusing to exercise its power under section 269UD(1) or 269UL(3) was illegal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to have been filed on the date of the disposal of pending writ petitions did not make a distinction between the orders under section 269UD(1) which were invalid because of non-compliance with natural justice alone and those which were also otherwise assailable. Having quashed the purchase order, the High Court had also directed, as has been quoted above, that the Form No. 37-I filed by the appellants would be deemed to have been filed as on that date. No doubt, the High Court records that the deeming fiction as to the date of the filing of the statement was without prejudice to the appellant's contention that the first purchase order was passed beyond the period of limitation. However, in preserving the appellants' right, the High Court directed the Appropriate Authority to determine the contention in keeping with the decision in C.B. Gautam's case [1993] 199 ITR 530 (SC). And as we have already held, in the light of the decision in C.B. Gautam's case [1993] 199 ITR 530 (SC), the appellants' challenge to the first purchase order was misconceived. The appellants' challenge to the second purchase order on the ground that it directed the purchase of something which was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs through an oral partition and share of each sister was delineated in the plan, as the agreement holders wanted to buy the entire said property for re development, all the three sisters executed a single agreement of sale." In other words, the oral partition had taken place before the agreement of sale. For the Appropriate Authority to have issued the purchase order in respect of the undivided share, in these circumstances, would mean not only the disruption of the established state of fact but also a reopening of the appellants' title to the divided portions of the premises which had been purchased by them or by their nominees. In any event, it does not lie in the appellants' mouths to contend in the face of these facts that Leila Lean's share was at any material time in fact undivided. The further submission of the appellants that an oral partition was impermissible in law is erroneous. As far back as in 1958 in Nanni Bai v. Gita Bai, AIR 1958 SC 706; [1959] SCR 479, 493, it was held: "Partition in the Mitakshara sense may be only a severance of the joint status of the members of the coparcenary, that is to say, what was once a joint title, has become a divided title though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt expressly records that: "Although a contention has been raised in the writ petition that the agreement was given effect to and the transferees were put in possession even before the date Chapter XX-C was made applicable to the State of Andhra Pradesh, the same has not been pursued before us." Having given up the case before the High Court, the appellants cannot be permitted to reopen the issue at this stage. On the question of valuation, the Appropriate Authority has in great detail considered the several instances of the sale which had taken place on or about the time that the agreement of sale was executed on March 31, 1988. Apart from the sale instances, the location of the property, its frontage and accessibility were considered by the Appropriate Authority which after physical inspection came to the conclusion that the consideration for which Leila Lean's property had been sold was understated. The High Court has affirmed this valuation. We see no reason to disturb the finding of fact on the basis of material before us. We cannot also be oblivious to the fact that the property which the appellants had agreed to purchase at Rs. 15,33,333 in 1988 was agreed to be purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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