9911796707
TMI Blog1993 (9) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner challenged the impugned order and the constitutional validity of Chapter XX-C of the Act by filing this petition on June 15, 1988. This court on June 20, 1988, issued rule nisi and an interim order staying the delivery of possession of the said property in pursuance of the impugned order and further proceedings pursuant to the said order. This court also restrained the petitioner and respondent No. 3 from effecting any change in the nature of the said property or alienating the same during the pendency of the petition. Thereafter, the third respondent sought modification of the said interim order, for a direction either to the petitioner or to respondents Nos. 1 and 2 to pay her the balance consideration of Rs. 31 lakhs. In the application for such modification she stated that she had entered into an agreement for sale of the said property as she was in dire need of funds and as she desired to acquire suitable alternative property ; that she expected to obtain the entire sale price within the time specified in the agreement ; that in view of the stay granted by this court, neither the petitioner nor the first and second respondents were paying the balance of sale cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the said section 269UD of the Act, must be read into the provisions of Chapter XX-C. It was held that where an order under section 269UD(1) was passed without giving an opportunity to the affected parties and without recording the reasons in the order that was communicated to the affected parties, the order was bad in law and was liable to be set aside. In the instant case, it is not in dispute that the impugned order was passed by the appropriate authority without giving an opportunity to the affected parties to show cause against the proposed purchase. The impugned order does not also contain any reason as to why the appropriate authority decided to purchase the property. Hence, following Gautam's case [1993] 199 ITR 530 (SC), the impugned order dated May 30, 1988, has to be held as bad in law. Consequently the impugned order is hereby quashed. The third respondent (owner) filed an application on January 7, 1993 (I. A. II) seeking a direction to either the petitioner or the second respondent to pay interest to the third respondent on the balance amount of consideration at the rate of 24 per cent. per annum from the date of interim order (June 20, 1988) to the date of paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable on account of the purchase price by respondent No. 1, interest at 20 per cent. per annum. The interest in either eventuality will be calculated right from the day the impugned interim order was made by the Delhi High Court. We may clarify that whether interest should be paid to the owner of an immovable property who has entered into an agreement to sell the same which cannot be completed by reason of an order of purchase under section 269UD of the Income-tax Act, 1961, and at what rate, will have to be decided in the facts and circumstances of each case. All that can be observed by way of a general principle is that where such a seller has raised no objection or obstruction either to the purchase of his property by an order under section 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 and the stay order or orders passed by a court, interest at an appropriate rate can, if equity so requires, be paid to him." In Gautam's case [1993] 199 ITR 530 (SC) payment of interest to the owner is dealt with in the following manner (at page 562 ) : "We realise that if an order for compulsory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of Gautam's case [1993] 199 ITR 530 (SC) and the matter is being remitted back, there need not be any direction in regard to payment of interest ; (b) the condition precedent for the applicability of Rajalakshmi's case [1993] 201 ITR 681 (SC) was that the owner should not have raised any objection or obstruction to the purchase of property ; in the present case, the third respondent had challenged the order of pre-emptive purchase in the Madras High Court by filing a writ petition and, therefore, she was not entitled to any interest. In view of these rival contentions, it becomes necessary to consider whether any directions regarding interest have to be issued. It may be true that in Rajalakshmi's case [1993] 201 ITR 681 (SC), possession of portion of the property was given to the intending transferee. But, the reasons which prompted the Supreme Court to hold that the owner is entitled to interest On the balance sale price' were : (a) that the owner had not delayed and defeated the compulsory purchase ; (b) that the prices of immovable properties have shot up continuously in the last few years and if the property is now sold in the open market, it would fetch a much highe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication was rejected, she filed an appeal against the order rejecting her application for payment and that was also rejected and the civil petition filed by her was also rejected. Not being able to get any relief in this court which had consistently taken the view that stay could not be vacated at the instance of the owner, she filed a writ petition in the Madras High Court in April, 1990, having regard to the fact that the Madras High Court had taken a slightly different view in regard to the interim order of stay. Further proceedings in pursuance of the impugned order were stayed by the Madras High Court between January 24, 1992, and January 12, 1993, at the instance of the third respondent. The order of compulsory purchase was stayed in this proceeding at the instance of the intending purchaser on June 20, 1988, and the said order continued to be in force till now. Merely because the third respondent, out of desperation, filed a writ petition in the Madras High Court and obtained an order of stay for a limited period, it cannot be held against the third respondent, particularly in view of the fact that the period of stay obtained by the third respondent merely overlaps the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This principle is equally applicable whether ultimately the purchaser is the Central Government or the intending purchaser under the agreement of sale. Having regard to the facts and circumstances of the case and the principles laid down by the Supreme Court, I feel that the rate of interest should be nine per cent. per annum. The interest rate should have been higher, but forthe fact that the third respondent continues to hold possession of the property. In this context, it is also useful to refer to the following observations made by K. Shivashankar Bhat J., in regard to interest, in a Division Bench judgment of this court in Mangalore Chemicals and Fertilisers Ltd. v.Deputy Commr. of Commercial Taxes [1993] 89 STC 265, 274 : "There is no reason to understand that while enacting the, InterestAct, 1978, Parliament intended to deprive the court exercising an equitable jurisdiction, of the power to award interest, which it had earlier.In CIT v. Deepchand Kishanlal [1990] 183 ITR 299, this court while construing the provisions of the Income-tax Act, 1961, held at page 309that interest is compensatory in nature and a person deprived of the use of his money, is normally entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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