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TMI Blog2022 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... g the writ petitioner had sought for an adjournment, obviously the Appropriate Authority could not grant one as within a day thereafter, he would loose jurisdiction to pass any orders. Thus, even if such a representation had been made, the Appropriate Authority would have not acceded to the request as he was statutorily barred from doing so. In DLF Universal Ltd. Versus Appropriate Authority [ 2000 (5) TMI 2 - SUPREME COURT] it was held that the provisions of Section 269 UD are to be strictly construed, there is no power to extend time lines stipulated in the said provision. Thus we are of the clear view that the transferors and the transferee did not have adequate opportunity to put forth their objections apart from failure to furnish the copy of the valuation report of the subject property as done by the department. The documents pertaining to the three sale instances which were referred in the show cause notice were also not provided. Therefore, it is amply clear that there has been gross violation of principles of natural justice which would be sufficient to set aside the order passed by the Appropriate Authority by allowing the writ petition. Valuation of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of tenanted properties has to be taken into consideration. This aspect has been brushed aside by the Appropriate Authority. The valuation of the property must be made by taking into consideration all relevant facts which has not been done by the Appropriate Authority. The valuation adopted by the authority has not been done in an objective manner, without reference to the materials placed by the transferors and transferee. More importantly proper and adequate opportunity was not granted to the transferors/transferee/tenant. Fair hearing is a postulate of decision making by a statutory authority exercising quasi-judicial powers. The rules of natural justice operates as implied mandatory requirement, non-observance whereof invalidates the exercise of power In Kamala (Ch.) Versus Appropriate Authority[ 1998 (11) TMI 70 - MADRAS HIGH COURT] it was held that sufficient opportunity should be given to the concerned parties and copies of relevant documents should be furnished, failure to do so was held to be gross breach of natural justice, as held in Sona Builders [ 2001 (7) TMI 3 - SUPREME COURT] In Amudha (T) Versus Members, Appropriate Authority [ 1992 (2) TMI 14 - MADR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring No. D-113, Tower Block, Saptaparni Cooperative Housing Society Limited, Ballygunge, Kolkata agreeing to lease out the said flat for a monthly rent of ₹ 4,000/-initially for a period of three years, renewable for a further period of two years. The original writ petitioner Mr. Ashwani Kapur was employed in a senior position in M/s. Stewart Hall (India) Limited and he was permitted by his employer to occupy the flat as a licensee under the company. During February 1993, Mrs. Mina Gupta and Dr. Ambar Gupta wrote to M/s. Stewart Hall (India) Limited for increase of rent by ₹ 500/- per month, agreeing that the company can continue as a tenant as long as they paid the rent on time. The company agreed to the said demand and paid increased rent of ₹ 4500/- per month from January 1, 1993 with a condition that the tenancy would continue as long as the company desired to which Mrs. Mina Gupta and Dr. Ambar Gupta agreed. As mentioned, the original writ petitioner Mr. Ashwani Kapur was occupying the flat as a licensee of the company. An agreement for sale dated 21.04.1993 was entered into between Mrs. Mina Gupta and Dr. Ambar Gupta and the original writ petitioner/license ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolation of the principles of natural justice. The valuation of the property as adopted by the Appropriate Authority was challenged as being excessive, irrationally prepared based on incorrect valuation method. Further it was contended that the rent capitalisation method should have been adopted in computing the valuation of the flat as the lease executed by the transferors in favour of the company was subsisting. It was further contended that the Appropriate Authority without any material came to an erroneous conclusion that there is a likelihood of the company to forego the tenancy right which was contrary to the statement made in the declaration and therefore such inference by the Appropriate Authority was perverse. Further the Appropriate Authority erroneously held, that the tenancy right expired on 04.08.1993 in the absence of any document or evidence to the said effect. Further the Appropriate Authority ignored the fact that the transferors were transferring the flat pending litigation between themselves and the society and the flat was mortgaged to UCO Bank and in the event, the bank was successful in such litigation the society would have to pay substantial amount and the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority. It was further submitted that the valuation adopted by the department determined the fair market value of the property at ₹ 26,35,000/-as against the apparent sale consideration of ₹ 12.98,250/- which was 118.37 % more than the apparent sale consideration. The valuation was done by relying upon three sale instances all of which are in respect of properties situated in similar localities and near to the property in question, after giving due allowance to various relevant factors. The transferors, the transferee and the company were issued show cause notices, they had filed their written submissions and the transferors/transferee were represented by counsel and after considering all the materials placed on record by the parties and upon hearing the oral submission, the pre-emptive purchase order came to be passed. Further it was contended that, after the agreement of tenancy dated 05.08.1988 there was no agreement for continuing of the tenancy for a further term of two years. However, it appears that the company wrote a letter dated 26.03.1993 to the transferors in which it is stated that rent was increased from ₹ 4000/- to 4500/- per month and the tenancy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has only questioned the quality of the encumbrances i.e. the tenancy which the Appropriate Authority was entitled to do so. With regard to the contention of the writ petitioner that valuation should be on rental basis, the Learned Single Bench held that the Appropriate Authority had doubted the tenancy itself and there were good reasons to do so. It also observes that the writ petitioner was in possession of the flat and at the time of entering into the agreement for sale, he was in employment of the company, Stewart Hall (India) Limited, but retired from service on 01.01.2007. Further the Learned Single Bench observed that the tenant company will continue to remain as such and unless the company surrenders tenancy, although it is not in possession, it will continue to remain liable for payment of rent to the owner which will be the Central Government. With regard to the decisions relied on by the petitioner to adopt the rental valuation method, the Learned Writ Court observed that those were all cases which were decided based on relevant fact situations and cannot be applied to the writ petitioner s case and accordingly by order dated 14.08.2018, the writ petition was dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with the letter dated 20.07.1993. The writ petitioner stated that the tenancy is governed by The West Bengal Premises Tenancy Act, 1956 and that there is no litigation between the transferors and the tenant (Stewart Hall India Limited). Further it was stated that the tenant is the company and the transferee is in occupation of the said flat as an employee of the company as the company provides accommodation to its senior employees. The flat in question is in a cooperative housing society exclusively meant for residential purpose. Further the encumbrance on the property and the disadvantages, to be faced as the property is with the cooperative society were set out in detail and the writ petitioner stated that he is taking enormous risk in entering into such an agreement and if he is not admitted as a member of the cooperative society, it will end in long drawn litigation. It was further stated that unless the transfer is executed in his favour, he would not be entitled to apply for membership to the society. Further the writ petitioner emphasised the property is not a freehold property, it can be transferred only to eligible individuals not to any corporate body subject to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... personal hearing. In the first paragraph, it has been stated that the vendors have received the show cause notice on 26.07.1993 in the evening and had no time to prepare a reply and submit before the hearing because the hearing was fixed at 11:00 AM on 27.07.1993. The vendors reiterated the submissions made by the writ petitioner in his letter dated 20.07.1993 in response to the query raised by the Appropriate Authority in his letter dated 15.07.1993. Further it was pointed out that no documents relating to the three sale instances referred to for determining the value of the property at ₹ 28,35,000/- was enclosed along with the show cause notice. Further, the writ petitioner sought for the copy of the valuation report prepared by the officers of the department after they visited the flat in May 1993. The transferors have also pointed out that they belong to a very respectable family and the need for money was on account for medical emergency for surgery to be performed on their father who was a retired Inspector General of Police of repute. The circumstances under which the transferors took the decision to sell the property was elaborately set out as to how they were unable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement they had entered into with the prospective purchaser. Therefore, the opportunity should be adequate, reasonable and not illusory. Assuming the writ petitioner had sought for an adjournment, obviously the Appropriate Authority could not grant one as within a day thereafter, he would loose jurisdiction to pass any orders. Thus, even if such a representation had been made, the Appropriate Authority would have not acceded to the request as he was statutorily barred from doing so. In DLF Universal Ltd. Versus Appropriate Authority (2000) 243 ITR 730 (SC), it was held that the provisions of Section 269 UD are to be strictly construed, there is no power to extend time lines stipulated in the said provision. Thus we are of the clear view that the transferors and the transferee did not have adequate opportunity to put forth their objections apart from failure to furnish the copy of the valuation report of the subject property as done by the department. The documents pertaining to the three sale instances which were referred in the show cause notice were also not provided. Therefore, it is amply clear that there has been gross violation of principles of natural justice whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are all aspects which are beyond the jurisdiction of the Appropriate Authority. Therefore, in our view the decision in K.L Suneja would apply to the facts and circumstances of the case, wherein it was held that only question which the Appropriate Authority can decide is whether the property is undervalued or not; it cannot go beyond terms of the agreement; it cannot question the validity of the agreement, legality of the transaction or the title of the vendor. Thus, we are fully satisfied that the Appropriate Authority clearly breached all the above legal principles rendering the order to be wholly illegal. Thus, if the tenancy was subsisting, the Appropriate Authority was required to adopt the rent capitalisation method. In C.B.Gautam, it was argued by the revenue that if the expression free from all encumbrances if to be struck down, it would be left open to an intending seller of immovable property to undervalue the property by creating a bogus lease or bogus encumbrance and this would defeat the purpose for which chapter XX-C was introduced. Considering the said submission of the revenue, the Hon ble Supreme Court pointed out that if the lease or an encumbrance found to be bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and the apparent consideration would not take into account the value of the encumbrances on the property like mortgages and so on or the leasehold rights. It was further held that a property may be heavily encumbered and its value can be considerably depressed if it were sold subject to encumbrances. Further it was observed that it is equally well known that a property in respect of which there is a subsisting lease for a substantial period of time would fetch a comparatively low price because the purchase thereof would not carry with it the right to possession or occupation during the subsistence of the leasehold interests, in such cases, the amount of apparent consideration could be even less than the value of the encumbrances or the leasehold interests. 15. The facts pointed out in the above decisions are manifest/apparent on record in the case on hand which had been conveniently ignored by the Appropriate Authority. The specific plea of the transferors as regards the compelling circumstances to sell the property was not noted by the Appropriate Authority. The other factors which diminish the value of the property were not taken into consideration. As laid down by the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame for the first time before the Writ Court. Thus the decision is clearly distinguishable on such aspects as the parties before us had sought for the copies of the reports/documents, consistently pleaded that rent capitalisation method has to be adopted as there was a valid tenancy subsisting. The revenue placed reliance on the decision in Appropriate Authority Versus Smt. Sudha Patil and Another (1999) 235 ITR 118 (SC). This decision was with regard to the jurisdiction of this Court under Article 226/227 of the Constitution of India. As pointed out by us, when there has been gross violation of principles of natural justice and when there is a perversity in the approach of the authority, failure to take into consideration relevant materials, ignoring settled legal principles more particularly regarding the valuation of the property, undoubtedly this Court would be well justified in exercising its jurisdiction under Article 226 of the Constitution. Therefore, the decision in Smt. Sudha Patil would not render assistance to the case of the revenue considering the facts and circumstances of the case on hand. 18. The valuation of the property must be made by taking into consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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