9911796707
TMI Blog2004 (4) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ion fixed was beyond the stipulated amount, the parties appear to have filed Form No. 37-I before the Appropriate Authority in accordance with the provisions of Chapter XXC of the Income-tax Act, 1961, for permission to complete the transaction in terms of the agreement. The Appropriate Authority upon consideration of the said request issued a notice to the parties to the agreement proposing to pre-emptively purchase the property in question under section 269UD of the Income-tax Act and calling upon the parties to show cause why an appropriate order to that effect be not made by it. The appellant-purchaser of the property submitted a reply to the said notice which was considered by the authority while making an order under section 269UD(1) of the Act. In the order made by it, the Appropriate Authority recorded a finding to the effect that, while the agreement entered into by the parties intended to transfer the property at the rate of Rs. 213 per sq. ft., the market value of the said property was around Rs. 400 per sq. ft. The Appropriate Authority while saying so drew a comparison between the sale consideration settled by the parties on the one hand and the sale of similar other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the meantime been filed by the appellant herein before this court challenging the validity of the order of pre-emptive purchase made by the Appropriate Authority under section 269UD of the Income-tax Act. The petition came up for hearing before our esteemed Brother, V.K. Singhal J., who by his order dated May 27, 1999, dismissed the same holding that the supervisory jurisdiction exercised by this court under articles 226 and 227 of the Constitution did not extend to substituting the opinion of the court for that of the Appropriate Authority on matters involving appreciation of relevant evidence and material. Relying upon the judgment of the Supreme Court in Appropriate Authority v. Smt. Sudha Patil [1999] 235 ITR 118, the court held that interference with the order passed by the Appropriate Authority would be justified only in cases where the Appropriate Authority had failed to consider some material that was relevant or taken into consideration, material that was extraneous or irrelevant or in cases where the finding recorded by the authority was without any evidence whatsoever The case at hand was not in the opinion of the learned single judge one where interference could on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... title to do so. None of these contingencies having arisen in the instant case, deposit of the sale consideration by the Central Government before the Appropriate Authority was not proper nor even a substantial compliance with the provisions of section 269UG of the Act. In cases where the amount of consideration was not paid or deposited in accordance with the provisions of section 269UG, the provisions of section 269UH would become operative to re-vest the property in question in the transferor upon the expiry of the statutory period prescribed for making the payment or deposit as the case may be. The consequence flowing from non-compliance with the requirements of section 269UG had, therefore, according to learned counsel resulted in abrogation of the order of pre-emptive purchase and revesting of the property in the transferor. The fact that the property had in the meantime been sold in a public auction did not according to learned counsel make any material difference as any such sale or transfer was subject to the result of the writ petition that was pending before the learned single judge of which the present appeal is only a logical extension. It was submitted that the writ j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o sell executed between the appellant on the one hand and respondent No. 3 on the other entitled the appellant to the property in question free of all encumbrances whatsoever. In the course of the proceedings before the Appropriate Authority, however, it was noticed that the property was not actually free from any encumbrance and that Sri Sheshadri had claimed and was in occupation of the same as a tenant. The said Sri Sheshadri had, as noticed earlier, claimed the right to continue as a tenant in the property under the Central Government. In the light of the law declared by the Supreme Court in C.B. Gautam's case [1993] 199 ITR 530, argued learned counsel, the consideration referred to in the sale agreement would represent the value of the encumbrances also. This would imply that the seller had to separately satisfy and settle all claims qua the property including the one made by Sri Sheshadri. Since, however, no such settlement was reported to the Appropriate Authority and since a dispute regarding the entitlement of the owner to receive the amount was implicit in the objections raised by Sri Sheshadri, the only option which the Central Government had in the circumstances was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in the Central Government under sub-section (1), or, as the case may be, sub-section (6) of section 269UE. The property in question had vested in the Central Government on March 23, 1993, i.e., the date on which the order of pre-emptive purchase was made by the Appropriate Authority. The period of one month referred to in section 269UG had, therefore, to be calculated from March 31, 1993. In other words, the Central Government was in terms of section 269UG required to tender the apparent consideration as determined by the Appropriate Authority on or before April 30, 1993. That the apparent consideration determined by the authority was Rs. 14,20,130 is not disputed nor is it disputed that the said amount was deposited by the Central Government on April 30, 1993. The only question that remains to be examined is whether this deposit was a sufficient compliance with the requirements of section 269UG. The appellant's contention precisely speaking is that the law requires the amount of apparent consideration to be tendered to the person or persons entitled to receive the same, deposit of such consideration with the Appropriate Authority being permissible only in situations envisaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them not to tender consideration under sub-section (1) of section 269UG of the Act but to make deposit under section 269UG(3). The claimant had in that case challenged the order passed by the Appropriate Authority apart from challenging the vires of the provisions under which the order was made. The court held that so long as the challenge to the validity of the order and the legal provisions was pending in the court, the petitioner had no right to receive the amount of consideration especially when recovery of the amount may become difficult if the writ petitions were to succeed. The word "dispute" was thus given a wide meaning so as to cover even such cases in which there was no rival claimant. Reference may at this stage be made to the Constitution Bench decision of the Supreme Court in C.B. Gautam v. Union of India [1993] 199 ITR 530. The constitutional validity of Chapter XX-C of the Income-tax Act, 1961, was assailed in the said case. One of the contentions urged before their Lordships was that the legislation envisaged vesting of the property in the Central Government free of all encumbrances. This provision it was argued would work unfairly and unreasonably against those w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that section do not present any difficulty because the vesting in the Central Government would be subject to such encumbrances and leasehold rights as stated earlier." The court then proceeded to deal specifically with encumbrances in the form of tenancies whether monthly or long-term. In so far as monthly tenancies were concerned, their Lordships dealt with a situation where the agreement to sell does not provide for vacant possession or the determination of monthly tenancy and declared that in any such cases, the tenancies would continue even after the pre-emptive order of purchase is made in favour of the Central Government. The court however clarified that in cases of monthly tenants continued after the making of such orders of purchase, the tenants under the Central Government would lose protection of the relevant rent laws not because the Income-tax Act provides for the same but because the relevant rent control legislations do not apply to the properties owned by the Central Government. We are not in the instant case, dealing with a situation where the encumbrance in the form of a tenancy qua the property in question has to pass on to the Central Government. We are on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property and, notwithstanding anything contained in any other law for the time being in force, such liability may be enforced against the transferor or such other person. This provision makes it amply clear that in the case we have just referred to, the encumbrance-holder or the holder of the leasehold rights could claim the fair value of his encumbrance or the leasehold interest out of the amount paid on account of the purchase price to the owner of the immovable property acquired by the Central Government under section 269UD." Reverting back to the facts of the instant case, the tenancy over the property in the present case was an encumbrance which was not supposed to pass on to the Central Government in the light of the stipulation contained in the agreement which was to the following effect: "2. That the vendor assures the purchaser that the Schedule property is free from all encumbrances, court attachments, minor litigations, etc., over the schedule property and shall hand over vacant possession of the schedule property at the time of registration of the sale deed." The property was to pass on to the Central Government just as it was to pass on to the appellant-purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equirement prescribed by law in the instant case so as to result in an abrogation of the purchase in terms of section 269UH of the Income-tax Act. There is considerable merit even in the alternative submission made by Mr. Seshachala. The property in question has since been put to public auction and has been sold in favour of respondent No. 4 for valuable consideration. The sale has, as noticed earlier, taken place nearly eight years ago. In C.B. Gautam's case [1993] 199 ITR 530 (SC) and so also in Shatabadi's case [2001] 251 ITR 93 (SC), their Lordships of the Supreme Court had declined to interfere with the transactions that had already been finalised whether pursuant to public auctions or otherwise. To the same effect are the decisions of this court relied upon by Mr. Seshachala. Even otherwise, the writ jurisdiction of this court has to be exercised having due regard to the subsequent developments that may have materially changed the circumstances of a given case. It is fairly well settled that just because there is an irregularity or even an illegality in the passing of an order does not necessarily mean that a writ court must intervene to set right the error. Whether or not t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
