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TMI Blog2003 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... situated at Mathura Road, New Delhi. In terms of clause II(6), there is a restriction for sale, transfer, assignment or parting with the possession of whole or any part of the industrial plot except with the previous consent in writing of the lessor and the lessor has the right to impose such terms and conditions as thinks fit including the right to recover unearned increase of 50 per cent. Clause II(7) further provides that the right to recover 50 per cent. of the unearned increase and pre-emptive right to purchase the property as mentioned in the sub-lease deed shall apply equally to an involuntary sale or transfer whether it be by or through an executing or insolvency court. A firm, Gurcharan Singh Sethi and Sons, owed its dues to respondent No. 1, Commissioner of Income-tax, and the property was attached by the said respondent for recovery of income-tax arrears and an open auction was announced for the said plot No. A-35 measuring 5,300 sq. yds. by the Tax Recovery Officer with the auction scheduled for September 18, 1981. The said advertisement is as under: "Golden opportunity Public auction Industrial plot No. A-35 at Mohan Co-operative Industrial Estate, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect: "Certificate of Sale of Immovable Property Office of the Tax Recovery Officer-XX, Vikas Bhavan, New Delhi. Dated: 30-1-82. This is to certify that Shri R. K. Dhingra (HUF), Smt. Kaushalaya Devi Dhingra, W/o. Late Shri Bhim Sein Dhingra, Shri Vijay Krishan, S/o. Shri Ram Dass Shastri, Shri Inder Kumar S/o. Shri Nand Lal and Shri Ravinder Kumar, S/o. Shri Nand Lal of C-66, Kirti Nagar, New Delhi, have been declared the joint purchasers having 1/5th share each at the sale by public auction on the 18th day of September, 1981, of the undermentioned immovable property in execution of certificate No. 101698/2 dated January 24, 1977, forwarded by the Income-tax Officer, Special Circle-VIII, New Delhi, for recovery of arrears from Gulab Singh Sethi and Sons, 53, Najafgarh Road, New Delhi, and that the said sale has been duly confirmed by the T. R. O.-XX, and became absolute on the 19th day of October, 1981. Specification of property : A-35, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi. Given under my hand and seal at 30th day of January, 1982. (Sd.) S. N. Balconi, Tax Recovery Officer-XX, New Delhi." A reading of the aforesaid certificate, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Recovery Officer stating that the Department had agreed to pay the unearned increase. The said letter is as under: "Sub: Plot No. A-35, Mohan Co-operative Industrial Estate. Sir, Please refer to the correspondence resting on our office letter No. F.15. (25-MCIE)73/LSB/SL/10916 dated 19-3-1982, 23-3-1982, 8-4-1982, 4-5-1982, 21-12-1982, 11-6-1984, 26-2-1985, 16-11-1988, 22-6-1989 ; in response to your letter No. TRO/XX-81-82 dated 3-2-1982. In this connection I am to state that it was agreed by your Department to pay the amount of unearned increase to the DDA after settling with the sub-lessee, Shri Puran Singh. The matter has been got examined in detail and it is concluded that since the burden of covenant runs with the land, therefore, the present sub-lessee is liable to pay the amount of unearned increase. The present sub-lessee has come forward for transfer of the sub-lease hold rights in his name, which can be allowed only on payment of the unearned increase. You are, therefore, requested to arrange the payment of the unearned increase along with interest at 18 per cent. per annum either through the department or the present sublessee, so that the case can be settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the duty of respondent No.1 to have got the property mutated in favour of the petitioner by clearing whatever dues, if any, payable to respondent No.2. A reference has also been made to the proceedings of the Lok Adalat when the petitioner on February 13, 2001, had suggested that it was willing to deposit the sum of unearned increase but without interest with respondent No. 2-DDA with liberty to get the amount recovered from respondent No. 1. However, this was not acceptable to the DDA which wanted interest also to be paid. In the writ petition, the petitioner has denied the liability to pay unearned increase since the sale was by an auction by the income-tax authorities and the sale was made by the President of India who is also the perpetual lessor of the plot. A reference has also been made to the fact that the petitioner has not been able to construct on the property and, on the one hand, the property was not being mutated in the name of the petitioner, while, on the other hand, respondent No.2 had issued a public notice that if the construction was not completed on the plots including the plot in question by June 30, 2001, the said respondent would proceed to cancel the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of unearned increase should be settled with the sub-lessee, Shri Puran Singh Sethi, directly and that they were not liable to pay the unearned increase. The contents of the said letter are as under: "Please refer to your office F. No. 15(28-NC)(E)/73/ K B/LSB(1) dated February 25, 1985, on the above subject. In this connection your attention is invited to this office letter No. TRO-XX/1982-83/02 dated February 14, 1983 addressed to Shri Kailash Chandra, Asstt. Housing Commissioner (CS), Delhi Administration, Land and Building Department, New Delhi, vide which it was stated that you should settle your claim of unearned increase with the sub-lessee, Shri Puran Singh Sethi, directly. It was' further informed that since it was an involuntary sale, having not been made by the sub-lessee but by the Tax Recovery Officer by a public auction, as per the provisions of Part III of the Second Schedule to the Income-tax Act, 1961-for recovering the outstanding dues covered by the Recovery Officer Certificate and further as the L and DO as one of the interested parties to the property did not make any application under rule 60 of I. T. C. P. Rules for setting aside the impugned sale so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property was being sold in pursuance of attachment proceedings and the attachment is, thus, covered under the requirement of an involuntary sale or transfer as contained in clause II(7) and the unearned increase is liable to be paid. It is submitted that the unearned increase is liable to be paid to the DDA before the mutation is carried out and, thus, no mutation could be carried out or no objection certificate issued till the amount is paid to the DDA. Learned counsel for respondent No.1 tax authorities initially sought to contend that the petition filed by the petitioner herein is not maintainable in view of the fact that the petitioner entity did not purchase the property. It may, however, be noticed that the petitioner has been communicating with the tax authorities and managing director of the company is Shri Raj Kumar Dhingra, who had initially participated in the auction on behalf of R. K. Enterprises, though subsequently the sale certificate was issued in the name of five persons with one-fifth share each including Shri R. K. Dhingra (HUF). This aspect, in my considered view, is not really material in view of the submission recorded on the initial date of hearing itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of previous and the subsequent sale. It is, however, relevant to note that the Division Bench took note of the terms and conditions of the sale. The payment of unearned increase was provided in the proclamation of sale itself in the first auction and since the maximum bid was below the reserved price, the highest bid was rejected and a second auction was conducted. The material difference was that the corresponding clause, relating to unearned increase being paid by the purchaser in addition to the bid money, was changed to the same being borne by the Income-tax Department on behalf of the owner. This change was stated to be a somewhat incorrect representation in view of the clarification having been received from the DDA that no unearned increase was payable in terms of the lease deed in view of the transaction being a case of first sale. It is, thus, the contention of learned counsel for respondent No.1 that the liability towards unearned increase can be either of the petitioner or the DDA should recover the same from the original perpetual lessee, but respondent No.1 cannot be burdened with this liability as it only stepped into the shoes of the original sub-lessee when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is stated that the claim of unearned increase should be settled with the sub-lessee. In fact, the plea was taken therein that the perpetual lessor did not make any application for setting aside the impugned sale. There is no doubt that the judgment of the Division Bench in Bansal Contractors (India) Ltd.'s case [2000] 241 ITR 97 (Delhi) has been passed with reference to the provisions of section 2690D of the said Act, which deals with compulsory acquisition. In the said case, the property was vested with the President of India and thereafter the sale deed was executed. It was, thus, held by the Division Bench that there could not be any question of past liability being paid by the purchasers since once the property vests in the Government, the subsequent purchasers cannot be subjected to the liabilities de hors the terms of the sale deed. In the present case also, even the sale certificate issued does not mention any liability towards the unearned increase and rightly so, since that was not a condition of the auction. Thus, there can be no question of burdening the petitioner with the said liability. As far as the plea of learned counsel for respondent No.1 based on the ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter se liability of the respondents, but the writ petition has been filed by the petitioner aggrieved by imposition/demand of the said liability on the petitioner. In view of the aforesaid emerging facts, I am inclined to follow the path adopted in Sujan Singh Oberoi's case [2003] 264 ITR 728 (Delhi). It would not make a difference that in the said case there was a specific provision for payment to be made by the vendor in case demanded by the DDA. This is so since the absence of any stipulation to fix the liability on the purchasers in the auction notice would also result in a consequence where the liability cannot be fastened on the purchasers. In so far as the plea of learned counsel for respondent No.1 is concerned, that the obligation to pay should not be affixed on the said respondent, but on the sub-lessee, this is a matter to be sorted out inter se the respondents. In view of the demand of unearned increase by respondent No. 2-DDA, it was for respondent No.1 to take out appropriate proceedings to challenge the decision and the matter to be decided and/or adjudicated between respondents Nos. 1 and 2 for which the petitioner cannot be made to suffer. If respondent No.1 w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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