9911796707
TMI Blog1991 (8) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 269UL(1) of the Income-tax Act, 1961. The petitioner, a company registered under the Companies Act, is carrying on a business of developing immovable properties, among others. In the course of its business, the petitioner-company entered into an agreement on August 29, 1990, with respondents Nos. 3 and 4 herein. Respondent No. 4 was the owner of a property comprising 14 grounds and 496 sq. ft. in the registration district of Thousand Lights, Central Madras, which forms part of a larger extent of land derived by him in terms of a family partition in 1967. The land derived by respondent No. 4 was leased out to respondent No. 3 for a period of 30 years with an option to renew it for a further period of 30 years till 2027. An agreement was entered into on March 22, 1980, between respondent No. 3 and respondent No. 4, whereunder the third respondent agree to purchase the land in question and the entire consideration was paid by respondent No. 3 to one Balasubramanian on his own behalf and on behalf of his minor son, B. Srinivasan, after obtaining the orders of the court in 0. P. No. 209 of 1981, on the file of the Principal City Civil Court, Madras. However, the sale deed was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first respondent on June 28, 1990. The first respondent started making enquiries and especially by letter dated July 24, 1990, requested the parties to the agreement to state whether the property proposed to be transferred is hit by the provisions of the Tamil Nadu Urban Land (Ceiling and Regulation) Act, 1978, for which a reply was sent on August 8, 1990, stating that the property is not hit by the provisions of the Act, Thereafter, on August 17, 1990, the first respondent issued a letter to the petitioner and respondents Nos. 3 and 4 stating that they had examined Form No. 37-I statement filed on June 28, 1980, along with the agreement dated June 27, 1990, and that they again find themselves unable to act on the documents filed by the parties for the reasons stated in the said letter and one of the objections related to the consideration. On receipt of the above letter, it is alleged that, even though the particulars called for by the first respondent were irrelevant, in order to finalise the transaction, the petitioner and respondents Nos. 3 and 4 agreed to enter into a fresh agreement on August 29, 1990. A fresh statement in Form No. 37-I was filed on August 30, 1990. The fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... srs Mount Plaza Builders Private Limited, that agreement is cancelled. Further, in the letter returning the agreement, it was pointed out that, in view of the liabilities exceeding Rs. 3 crores to the Indian Overseas Bank, the bank should have been shown as a party in the consideration. The agreement dated June 27, 1990, was also returned. The consideration as stated in the agreement has been qualified as the built up area on an estimated basis of Rs. 2.22 crores. It is important to mention that when a property is being transferred, there must be a certainty both about the subject-matter of the transfer and the consideration therefor. The parties had intentionally introduced several uncertainties in the following. 1. The F. S. I. that is likely to be sanctioned. 2. The approved plan of the proposed construction with specifications for each stage. Without the above requirements, it will be impossible to find out the monetary value of the constructed space that is to be given to the vendor in exchange for a certain amount of land. The petitioners' contention that it would not be possible in the circumstances to secure an approved plan in so far as the transferees did not propose to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration or the terms of the agreement. Learned counsel states that the first respondent cannot say whether the agreement is a valid one or not and so far as the parties have entered into an agreement under the provisions of the Act, the first respondent has to grant a "no objection" certificate or proceed to purchase the property under the provisions of the Income-tax Act and that, under sub-sections (2) and (3) of section 269UL of the Income-tax Act, 1961, such an obligation is cast on the Department. Apart from that, learned counsel argues that no order for acquisition by way of pre-emptive purchase can be passed beyond two months and relies for this upon the decision of Division Bench of this court in Government of India v. Maxim A. Lobo [1991] 190 ITR 101. Per contra, Mrs. Nalini Chidambaram, learned senior counsel appearing for the Income-tax Department, contends that a look at the agreement would show that it is a void agreement in that it is void for uncertainty and points out that unless there is a valid agreement, the authorities cannot proceed to act under the provisions of the Income-tax Act. Learned senior counsel states that the first requisite under Chapter XX-C is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease of such land, building or part of a building ; Section 269UC of the Act places certain restrictions on transfer of immovable property which is to the following effect : "269UC. (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, no transfer of any immovable property of such value exceeding five lakh rupees as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub-section (2) at least three months before the intended date of transfer..... 3. Every statement referred to in sub-section (2) shall, (i) be in the prescribed form, (ii) set forth such particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e argument of Mrs. Nalini Chidambaram, learned senior counsel appearing for the first respondent, that the first respondent can go into ) the validity of the agreement which has been entered into between the parties. It is for the parties to the agreement to go through the transaction and the Department cannot have any say in the matter. If, on the other hand, the Income-tax Department feels that the agreement entered into between the parties is fishy, it is always open to the Department to make a pre-emptive purchase. Unfortunately, on the facts of this case, the Income-tax Department is taking an attitude which, in my view, is wholly arbitrary. A reading of the various provisions of Chapter XX-C clearly shows that the first respondent has no jurisdiction at all to pass such an order. Kanakaraj J. had occasion to consider the scope of the provisions of Chapter XX-C of the Act in Naresh M. Mehta v. Appropriate Authority [1991] 188 ITR 585 (Mad) and the learned judge held that the law of pre-emption is bordering on a law of acquisition of property and must be strictly construed. The learned judge categorically held that if an application is made under section 269UC of the Act and if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 269UD, the appropriate authority is empowered, for reasons to be recorded in writing, to make an order for purchase by the Central Government of such immovable property at an amount equal to the amount of the apparent consideration. This clearly shows that it confers on the Central Government a right to purchase any property covered by Chapter XX-C for the same consideration for which it is proposed to be transferred. The Central Government has the first option to purchase. As such, if the appropriate authority is not satisfied about the consideration shown in the agreement, a duty is cast upon him to make an order of suo motu purchase stating the reasons therefor. In my view, the appropriate authority cannot acquire any property arbitrarily or whimsically but only after stating the reasons which can withstand the tests in a court of law. Section 269UL states that no registering officer shall register any document unless a "no objection" certificate is obtained from the appropriate authority. As such, if the first respondent is not willing to grant a "no objection" certificate, the only course open to the first respondent is to make a pre-emptive purchase. I am not able ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pies of the clearance of the competent authority stating that the property is not hit by the Tamil Nadu Urban Land (Ceiling and Regulation) Act. Suddenly, the impugned order came to be passed on October 22, 1990, which has been received by the petitioner and respondents Nos. 3 and 4, on October 31, 1990. In Government of India v. Maxim A. Lobo [1991] 190 ITR 101, a Division Bench of this court held that, before passing an order under section 269UD(1) of the Act, at least hearing is to be given to the party who is likely to be affected by the order proposed to be passed and the order passed without giving an opportunity of being heard would be in flagrant violation of the rules of natural justice. The above principle laid down by the Division Bench squarely applies to the facts of this case. On this ground also, the impugned order has got to be set aside. In the result, the writ petition will stand allowed and the impugned order is quashed. Normally, I would have been inclined to remit the matter to the first respondent for a fresh hearing. But, taking note of the fact that the statutory time limit had run out for the first respondent to make a pre-emptive purchase, a direction is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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