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TMI Blog2024 (11) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... within 5 years from date of acquisition. Any such action would result in withdrawal of the capital gain exemption benefit. Thus, the subject bonds issued by the Respondent fall within the category of long-term specified assets , in terms of notification dated 8th June, 2017 issued by the Ministry of Finance, and as defined in Section 54EC of the Act to mean any bond, redeemable after five years and issued on or after the 1st day of April, 2018 . The long term specified assets/bonds can be redeemed only after 5 years from the date of the issuance due to the lock-in period under Section 54EC of the Act as amended by Section 21 of the Finance Act, 2018. Furthermore, this information with regard to the lock-in period is mentioned in Clause 13 of the information memorandum issued by the Respondent regarding the subject bonds. In the opinion of the Court, having regard to the statutory scheme and the terms and conditions of the subject instrument, the Petitioner s request for cancellation or redemption, cannot be accepted. The funds raised through the 54EC bonds are specifically intended to support Respondent s financial objectives. The Object of the Issue of the PFC Capital Gain Tax Exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, do not create any enforceable right and cannot be adjudicated under Article 226 of the Constitution. - HON'BLE MR. JUSTICE SANJEEV NARULA For the Petitioner Through: Mr. Kirti Uppal, Senior Advocate with Mr. Shekhar Kumar, Advocate and Petitioner in person. For the Respondent Through: Mr. Apoorv Kurup, CGSC with Mr. Gurjas Singh Narula, Ms. Niomi Mittal, Ms. Nidhi Mittal, Ms. Gauri Goburdhan, Mr. Arnav Mittal, Ms. Jaya Choudhary and Mr. Shuray Agarwal, Advocates. JUDGMENT SANJEEV NARULA, J. (Oral): 1. The Petitioner, Mr. Rakesh Kumar Saini, a practising Advocate of this Court, sold his residential property bearing No. (GF) House No. 2/13-A, Jangpura-A, Delhi-110014. He claims that he was advised to invest the sale proceeds in bonds [ PFC bonds ] issued by the Respondent - Power Finance Corporation in order to avail the benefit of capital gains tax exemption under Section 54EC of Income Tax Act, 1961 [Act] . He was led to believe that if he used the capital gains from the sale of his residential property to purchase another property, he would not qualify for the capital gains tax exemption under Section 54 (1) of the Income Tax Act. 2. Following this advice, the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent emphasized that, under the terms governing these bonds, the Petitioner could only redeem the invested funds upon the bonds reaching maturity. Aggrieved by this refusal, the Petitioner filed the present writ petition, seeking a mandamus directing the Respondent to cancel the bonds and refund the invested amount after deducting any secretarial or administrative expenses incurred by the Respondent. 7. Mr. Kirti Uppal, Senior Counsel for the Petitioner, argues that Mr. Saini has no intention of deriving any benefit from the PFC bonds. In fact, when Mr. Saini noticed that he had received a dividend payment of INR 53,705 from the Respondent, he promptly returned the same to them via a NEFT dated 2nd August, 2024. Moreover, Mr. Uppal further asserts that should the Respondent genuinely incur any damage or interest shortfall on account of premature cancellation of the bonds, Petitioner is willing to compensate them for such losses. However, considering Petitioner s urgent need for funds, the bonds should be cancelled prematurely and invested amount refunded. 8. Mr. Uppal contends that, according to the scheme governing the PFC bonds, the Respondent corporation includes a disclaimer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can an advance be taken on security of such bond within 5 years from date of acquisition. Any such action would result in withdrawal of the capital gain exemption benefit. 12. Thus, the subject bonds issued by the Respondent fall within the category of long-term specified assets , in terms of notification dated 8th June, 2017 issued by the Ministry of Finance, and as defined in Section 54EC of the Act to mean any bond, redeemable after five years and issued on or after the 1st day of April, 2018 . The long term specified assets/bonds can be redeemed only after 5 years from the date of the issuance due to the lock-in period under Section 54EC of the Act as amended by Section 21 of the Finance Act, 2018. Furthermore, this information with regard to the lock-in period is mentioned in Clause 13 of the information memorandum issued by the Respondent regarding the subject bonds. The said clause stipulates as under: 13) Certain Issue Highlights: ii) Lock in period of 5 (five) years (No transfer/premature redemption is permitted). The Bonds will automatically redeem after expiry of five years. 13. As noted above, the Petitioner, Mr. Saini transferred an amount of INR 48 lakhs to the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is beyond the scope of this Court, particularly under the writ jurisdiction under Article 226 of the Constitution, to modify or rewrite the conditions stipulated for allocation of bond. 15. Mr. Kirti Uppal, places reliance in Major Amandeep Singh v. University of Delhi, to contend this Court under Article 226 of the Constitution has the power to mould reliefs in order to meet the ends of justice. He urges that in the peculiar facts and circumstances, notwithstanding the lack of any specific right of the Petitioner, this Court may still grant the reliefs sought. However, as persuasive as this argument may seem, the Court is of the view that the judgment in Major Amandeep Singh does not apply to the present case. Upon issuance of the bonds to the Petitioner, the rights and obligations of both parties are governed by the specific terms of the financial instrument. Neither party can alter the same unilaterally. Any attempt would not only contravene the contractual terms, but would also be against the statutory purpose underlying the bond scheme. 16. Although not expressly argued, and only vaguely alluded to, the Petitioner s claim for cancellation appears to stem from an alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X
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