Asgarali Haji Abdulali vs C.M. Betgeri and others

Dr. B.P. Saraf, J.—By this writ petition, the petitioner has challenged the order dated February 17, 1993, passed by the appropriate authority under sub-section (1) of section 269UD of the Income Tax Act, 1961, (for short, "the Act"). By the said order, the appropriate authority has ordered the purchaser of the immovable property in question by the Central Government in exercise of the powers u/s 269UD of the Act.

The agreement of sale in the instant case was made by the petitioner on December 20, 1991, and statement in Form No. 37-I along with the said agreement was filed before the appropriate authority on December 31, 1991. The agreement related to the transfer of shop No. 2A, Machinery House, 11A, Burjorji Bharucha Marg, Bombay-23, along with five shares of Rs. 50 each bearing distinctive Nos. 91 to 95 under share certificate No. 20 issued by Machinery Premises Co-operative Society Ltd. As per the statement, the apparent consideration for transfer of the said immovable property is Rs. 24,51,000.

After receipt of the statement in Form No. 37-I, on February 26, 1992, the appropriate authority passed on order u/s 269UD(1) of the Act in respect of the above property. The said order was challenged by the petitioner before this court by filing a writ petition which was numbered as Writ Petition No. 633 of 1992. Following the decision of the Supreme Court in C.B. Gautam Vs. Union of India and Others, , the said writ petition was disposed of by this court by order dated December 16, 1992. By the above order of this court, the matter was remanded to the appropriate authority to decide it afresh in the light of the directions contained in the judgment of the Supreme Court in C.B. Gautam Vs. Union of India and Others, . In terms of the directions of the Supreme Court contained in the said decision, it was also made clear by this court that the statement in Form No. 37-I submitted by the petitioner on December 31, 1991, shall be treated as if it was submitted on the date of the order of this court, i.e. December 16, 1992.

Thereafter, the appropriate authority gave opportunity of hearing to the petitioner on the lines indicated by the Supreme Court and by its order dated February 17, 1993, for the reasons recorded in writing which form an integral part of the said order by way of annexure, held that it was a fit case for exercising the pre-emptive right of purchase by the Central Government u/s 269UD(1) of Chapter XX-C of the Act. Accordingly, an order was passed u/s 269UD(1) of the Act. It is this order of the appropriate authority which is challenged by the petitioner in the present writ petition. The challenge is mainly on two grounds. Firstly it is contended that during the pendency of the earlier writ petition before this court, by an agreement dated August 11, 1992, the petitioner has rescinded the earlier agreement for sale dated December 20, 1991, which was the subject matter of the statement in Form No. 37-I filed before the appropriate authority. In that view of the matter, according to the petitioner, the earlier agreement of sale did not survive thereafter and the statement filed by it in Form No. 37-I on December 31, 1991, was no more available for consideration and disposal by the appropriate authority. The second challenge is factual. The contention of the petitioner is that what was intended to be sold was only the shop premises and the right to use a loft was not the subject matter of the agreement of sale, whereas the authorities, for the purpose of finding out the market value of the property in question, erroneously also took into account the value of the said loft. The order of the appropriate authority, according to the petitioner, is vitiated on that count itself.

We have carefully considered both the contentions of the petitioner. We do not find force in any of them. So far as the first submission is concerned, it may be observed that the judgment of the Supreme Court has to be read as a whole and the observations and directions contained therein are to be considered in the light of the controversy that had come up before the Supreme Court for determination. It is clear from a reading of the judgment of the Supreme Court in C.B. Gautam Vs. Union of India and Others, , that it did not quash the entire proceedings emanating from the statement in Form No. 37-I. It was the order passed u/s 269UD(1) of the Act which has been set aside on the ground that no adequate opportunity had been given to the assessee before passing the same. It was in that view of the matter that the case was remanded to the appropriate authority to decide if afresh after giving proper opportunity to the aggrieved parties in the light of the observations made by it. The direction that the statement in Form No. 37-I originally filed should be treated as having been filed on the date of the judgment of the Supreme Court and in cases pending before the High Court from the date of disposal of the cases by the High Courts was intended only to get over the hurdle of the period of limitation of two months prescribed in section 269UD(1) for the purpose of passing an order under that section and for no other purpose. It is clear from the following observations of the Supreme Court in paragraph 41 of the judgment [1993] 1 SCC 110 (see C.B. Gautam Vs. Union of India and Others, ) :

"The next question is as to the consequence to follow. In view of the fact that the object of the provisions of Chapter XX-C is a laudable object, namely to counter evasion of tax in transactions of sale of immovable property we consider it necessary to limit the retrospective operation of our judgment in such a manner as not to defeat the acquisitions altogether. We find that if the original time-frame prescribed in Chapter XX-C is rigidly applied it would not be possible for the appropriate authority concerned to pass an order u/s 269UD(1) at all in respect of the property in question. In order to avoid that situation and, yet to ensure that no injustice is caused to the petitioner, we order, in the facts and circumstances of the case, that the statement in Form No. 37-I submitted by the petitioner as set out earlier shall be treated as it were submitted on the date of the signing of this judgment."

It may be noted that the Supreme Court did not direct the parties to file fresh statements in Form No. 37-I nor did it give an option to them to file or not to file the same. The statement earlier filed in Form No. 37-I was treated as having been filed by the parties with all consequences thereof. This was done with a view to protect the pending acquisition proceedings and to stall all possible attempts by interested vendors to defeat the acquisitions altogether by taking shelter behind the decision of the Supreme Court. It is also clear that the Supreme Court was conscious of the delay that would be caused in the final disposal of the matters in view of the pendency of the controversy before the Supreme Court and the High Court and with a view to undo the hardship that might be caused to the owners of properties if too wide a meaning is given to the deemed date of filing of the statements in Form No. 37-I, directed that in case any order for compulsory purchase is made, the Central Government shall pay to the intending seller the amount of apparent consideration plus interest at the rate of nine per cent. per annum from the date from which the impugned order was made. This is clear from paragraph 42 of the above judgment of the Supreme Court in C.B. Gautam Vs. Union of India and Others, , which is in the following terms :

"We realise that if an order for compulsory purchase of the property is made hereafter the intending vendor will suffer to some extent by reason of the fact that he will get the purchase amount several years after the time he would have got it had the impugned order been held to be valid. But on the other hand, however he would have retained the possession of the property in question. Taking into account these factors and taking note of the fact that the immovable properties in urban areas have gone up steeply in value during the last few years, we direct that in case an order for compulsory purchase is made, the Central Government shall pay to the intending seller the amount of the apparent consideration plus interest at nine per cent. per annum from the date the impugned order was made."

It is thus clear that the Supreme Court itself has taken note of the impugned order and taken the date of that order as the relevant date for the purpose of paying interest to the owner of that property at nine per cent. per annum in addition to the apparent consideration. Had the Supreme Court taken a mechanical view in the matter, there was no question of directing the Central Government to pay interest from the date of the impugned order inasmuch as the consideration would have become payable only if passed after the fresh order of pre-emptive purchase, if any, and not from the date of the impugned earlier order which had been set aside by the court. The Supreme Court on the other hand, took the date of the impugned order as the date relevant for the purpose of payment of interest to the owners of the property in addition to the apparent consideration. This direction was only to meet the ends of justice. It is clear from the clarification made by the Supreme Court in paragraph 43 that it was not intended that the owners of the property should take undue advantage of the judgment of the Supreme Court following which an opportunity of hearing has been given to them by the appropriate authority. It is in this connection that it was clarified in paragraph 43 as follows in C.B. Gautam Vs. Union of India and Others, :

"......... as far as completed transactions are concerned, namely where after the order for compulsory purchase u/s 269UD of the Income Tax Act, 1961, was made and possession has been taken over, compensation paid to the owner of the property and accepted without protest, we see no reason to upset those transactions and hence, nothing we have said in the judgment will invalidate such purchases. The same will be the position where public auctions have been held of the properties concerned and they are purchased by third parties. In those cases also nothing which we have stated in the judgment will invalidate the purchases."

The above directions and clarifications contained in the judgment of the supreme Court make it abundantly clear that the deemed date of filing of the application is only to get over the hurdle of the period of limitation prescribed for passing the order. Even the Revenue has not been allowed to take any advantage of it and it has been asked to pay interest at the rate of nine per cent. per annum in addition to the apparent consideration from the date of the impugned order. In such a situation in our opinion, it is not open to the petitioner to come up and say that because the earlier order passed by the appropriate authority was set aside by the Supreme Court, and following the same in the case of the petitioner by the High Court, the petitioner was free to make any arrangement he liked to defeat the acquisition proceedings altogether. Such action is not only contrary to the tone and tenor of the judgment of the Supreme Court and the directions contained therein but also goes counter to the scheme of the Act itself. It may be observed that u/s 269UK of the Act, there is a specific restriction on the revocation or alteration of the agreement for the transfer of the immovable property in respect of which a statement has been furnished u/s 269UC except in the conditions mentioned therein. It is not the case of the petitioner that its case falls in any of those exceptions. Under such circumstances, the petitioner cannot get out of the legal restriction contained in section 269UK of the Act by the adopting the device of rescinding the agreement during the pendency of the writ petition. In view of the foregoing discussion, we do not find any merit in the first submission of the petitioner.

As regards the second submission which relates to the loft area being part of the property which is the subject matter of sale, we find that this matter has been discussed at length by the appropriate authority and all relevant facts related to it have been set out in detail in its order dated February 17, 1993, passed u/s 269UD of the Act. The appropriate authority has considered all aspects of the matter and only on a careful consideration of the same has come to the conclusion that the loft area was part of the shop premises which was the subject-matter of the agreement of sale and that the objection of the assessee was an afterthought and unfounded. It has rightly observed that on transfer of the five shares, the intending transferor ceased to be a member of the society and thereby lost his right to occupy the premises situated in the machinery house including the loft premises. There is an elaborate discussion in paragraphs 7 and 8 of the reasons recorded by the appropriate authority in this regard. It is on the basis of the material on record that it has arrived at a finding of fact that the loft area was an integral part of shop No. 2A, which was the subject matter of agreement dated December 20, 1991, and as such there is no basis or justification to contended that it was wrongly considered for the purpose of ascertaining the real consideration. It has also been pointed out by the appropriate authority that the petitioner who is the transferor had never contended at any point of time anterior to the date of passing of the earlier order u/s 269UD(1) on February 26, 1992, that the loft area was not included in the shop premises which was the subject matter of the agreement dated December 20, 1991. It was only after the order had been passed, that by an application dated March 12, 1992, an objection was sought to be raised on that account. On a careful perusal of the order we find that the appropriate authority has come to its conclusion by proper application of mind to all relevant facts before it. Under the circumstances we find no justification to interfere with the same.

For the reason stated above, we do not find any merit in the writ petition and the same is therefore, dismissed at the admission stage itself.

Learned counsel for the petitioner submits that the taking over a possession of the premises by the appropriate authorities may be stayed for some time. Considering the prayer we direct that the possession of the shop premises shall not be taken over for six weeks from today on condition that the petitioner shall not part with the possession of the said premises or in any manner dispose of the same or create any third party right in respect of the said property. Certified copy be expedited.

Counsel for the parties agree that in view of the time granted to the petitioner the date of payment of consideration to the petitioner in pursuance of the impugned order may also be extended to a date two weeks after the expiry of the above period of six weeks. By consent of the parties, it is ordered accordingly.

No order as to costs.