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Judgment
P. Sathasivam, J.—The order of pre-emptive purchase passed by the Appropriate Authority, Income Tax Department under Chapter XX-
C of the Income Tax Act, 1961, is under challenge in these appeals.
The above writ appeals are directed against the common order of the learned single Judge dated 31.03.1997 made in W.P. Nos. 4584 and
4700 of 1993, in and by which the learned Judge, after rejecting all the contentions urged by the petitioners, confirmed the order of pre-emptive
purchase made by the Appropriate Authority in respect of property at No. 51, Ist Main Road, Gandhi Nagar, Adyar, Chennai 600 020.
The petitioner in W.P. No. 4584 of 1993, viz., M/s. Ashok Leyland Finance Ltd., Chennai 18, is the appellant in W.A. No. 487 of 1997. The
petitioner in W.P. No. 4700 of 1993, P. Nataraja Sastry is the appellant in W.A. No. 495 of 1997.
Brief facts necessary for the disposal of the above appeals are as under:
M/s. Ashok Leyland Finance Limited, petitioner in W.P. No. 4584 of 1993, (hereinafter referred to as ""the Company"") is a Company
incorporated under the Companies Act, 1956 and engaged in hire-purchase and leasing business. On 30.04.1990, the petitioner entered into an
agreement with one P. Nataraja Sastry (petitioner in W.P. No. 4700 of 1993) for development of the property situate in No. 51, Ist Main Road,
Gandhi Nagar, Adyar, Chennai 20, measuring a total extent of 5 grounds and 1050 sq.ft. for a sum of Rs. 30,81,700/-. The Company and the
said Nataraja Sastry submitted a statement in Form No. 37-I of the Income Tax Act, 1961 (in short ""the Act"") on 02.05.1990 to the first
respondent - Appropriate Authority, Income Tax Department. Then, the first respondent passed an order dated 13.07.1990 acquiring the
property and requesting the transferor to handover the property within 15 days from the date of order. Nataraja Sastry (hereinafter referred to as
the petitioner"") filed a writ petition (W.P. No. 12608 of 1990), questioning the order passed by the first respondent on the ground that no
opportunity was given before passing the order. In the meantime, the Supreme Court in C.B. Gautam Vs. Union of India and Others, held that, if
the authority passed non-speaking order without giving an opportunity, that would amount to violation of the principles of natural justice. In
consequence of the said Judgment of the Supreme Court, this Court set aside the order impugned therein with a direction to the first respondent to
hear the matter afresh after giving opportunity to the transferor and transferee and pass a speaking order. Pursuant to the same, the first respondent
issued a show cause notice to the petitioner. The petitioner sent a reply to the said show cause notice and after considering the reply as well as
hearing the arguments advanced by the counsel for the petitioner, the first respondent passed the impugned order dated 23.02.1993, holding that it
is a fit case for acquiring the property under Chapter XX-C of the Act. Questioning the said order, both the Company and the petitioner filed
W.P.Nos.4584 and 4700 of 1993 respectively, on various grounds.
On behalf of the first respondent, Member of the Appropriate Authority filed a counter affidavit explaining their position. It is stated that the
Appropriate Authority considered all relevant aspects, including the value of the property sold next to it, guideline value of the State Registering
Authority and the law declared by the Supreme Court in C.B. Gautam Vs. Union of India and Others, , and after affording opportunity to the
petitioner and the Company, exercising the right of pre-emptive purchase under Chapter XX-C of the Act, the impugned order of purchase was
passed.
The learned single Judge, after finding that the stand taken by the Appropriate Authority, viz., there had been substantial under-valuation by the
petitioner, which was in excess of 15% of the market value, rejected all the contentions and finally, dismissed both the writ petitions; hence, the
present writ appeals.
Heard Mr. P.S. Raman and R. Krishnamurhty, learned senior counsel for the respective appellants and Mrs. Pushya Sitaraman, learned senior
standing counsel for the Income Tax Department.
Main grounds of challenge:
(i) The subject property has been compared with Malar Hospitals'' property by the Appropriate Authority, which is not a fit property to be
compared with the subject property;
(ii) The existence of long-standing tenants in the property has not been properly considered;
(iii) The loss of original title deeds of the property has not been properly considered;
(iv) The order of Appropriate Authority relies on two other comparative sale instances, for which notice was not given to the petitioner; and hence,
it is against the principles of natural justice;
(v) The guideline value of the property has not been properly considered;
(vi)The purchase order stands abrogated under Sections 269UG and 269UH of the Act, as the apparent consideration has neither been tendered
to the vendor, nor deposited with the Appropriate Authority by the Central Government within 30 days from the date of the order; and
(vii) A subsequent sale deed in 1992 by Malar Hospitals'' on the same road at a lower rate was not taken note of by the Appropriate Authority
and the same may be considered by this Court.
The learned senior standing counsel appearing for the Income Tax Department met all the contentions by placing relevant materials.
Before considering the various contentions, it is useful to refer the relevant provisions of the Act. Chapter XX-C of the Act relates to Purchase
by Central Government of Immovable Properties in certain cases of Transfer. Section 269UD enables the Appropriate Authority to order
purchase by Central Government of immovable property. As per Section 269UE, where an order under Sub-section (1) of Section 269UD is
made by the Appropriate Authority, such property shall on the date of such order vest in the Central Government. Section 269UF speaks about
consideration for purchase of immovable property by Central Government. Section 269UG mandates that the amount of consideration payable u/s
269UF shall be tendered to the person or persons entitled thereto within a period of one month from the end of the month in which the immovable
property concerned is vested in the Central Government under Sub-section (1), or, as the case may be, Sub-Section (6) of Section 269UE, failure
to comply with above said provision, Section 269UH makes it clear that the order to purchase the immovable property by the Central Government
made under Sub-section (1) of Section 269UD shall stand abrogated and the immovable property shall stand re-vested in the transferor after the
expiry of the aforesaid period. With these provisions, let us consider the submissions made by both parties.
At the foremost, let us consider whether the adjacent property, viz., Door No. 52, Ist Main Road, Gandhi Nagar, Adyar, Chennai 20 (Malar
Hospitals'' property) which had been taken for comparison is a fit property for comparison. According to the Appropriate Authority, the
documents relating to the adjacent property (Malar Hospitals'' property), which was taken into consideration is a sale agreement dated
01.08.1989, under which the land measuring about 15120 sq.ft. (approximately 6.3 grounds) was transferred for a consideration of Rs. 68 lakhs.
Based on the time schedule agreed for the payment of sale consideration, the value of the apparent consideration, as discounted under Rule 48I
came to Rs. 66,15,529/-, that is to say Rs. 10.39 lakhs per ground. According to the Appropriate Authority, in the light of the land rate at Rs.
10.39 lakhs per ground as per the sale agreement dated 01.08.1989, as the date of agreement of sale in the instant case is 30.04.1990, the
Appropriate Authority added 9% thereof for the in between period of nine months and fixed the market value at Rs. 11.33 lakhs per ground. The
Appropriate Authority has further stated that the extent of land under transfer in the instant case being 88% of 5 grounds and 1050 sq.ft., namely,
4.785 grounds, the fair market value as on 30.04.1990 would come to 4.785 x Rs. 11.33 : Rs. 54.21 lakhs. It is the claim of the Appropriate
Authority that against the estimated fair market value of the property at Rs. 54.21 lakhs, the value of apparent consideration (after discounting) in
the instant case is mentioned Rs. 30,52,891/-, which is nearly 77.60% of the estimated fair market value. Accordingly, the Appropriate Authority
has concluded that as the fair market value exceeded the apparent consideration by more than 15%, it raised a presumption that there was under-
statement of sale consideration in the agreement of sale with a view to evade ""tax"". Pursuant to such conclusion, a show cause notice was issued
for appearance of the petitioner on 18.02.1993. The petitioner filed a written submission before the Appropriate Authority highlighting various
aspects. The very same objections projected before the Appropriate Authority and the learned single Judge were highlighted before us.
Learned senior counsel for the appellants mainly contended that the market value of the property also depends upon the Floor Space Index
(FSI) deriving from the said property. It is highlighted that the adjacent property measuring an extent of 6.3 grounds was purchased by M/s. Malar
Hospitals'' under registered Document No. 4110/89 dated 14.12.1989 for the purpose of constructing a multi-storey Hospital complex and at the
time of sale itself, both the vendor and the purchaser, M/s. Malar Hospitals'' were well aware of the scope of development to be made on the
property and now the building standing on that property (seven storey hospital complex) is a testimony to the fact that FSI in excess of 2.5 times
was achieved, which vendor and the vendee would definitely have been aware even at the initial stage of negotiation.
As pointed out earlier, it is the opinion of the Appropriate Authority that the value of the land (Malar Hospitals'') which was worked out at Rs.
10.39 lakhs per ground is applicable to all adjacent properties. As rightly pointed out by the learned senior counsel for the appellants that the value
of a property should be assessed taking into account the prospective developmental scope of the said property. It was pointed out before the
Appropriate Authority, the learned single Judge and before us that in respect of the property at No. 52, the FSI in excess of 2.5 times was
ultimately achieved. Further, it is pointed out that if the market value of the property is Rs. 10.39 lakhs per ground, when it fetches FSI in excess of
2.5 times, then, the value of the same property will be only at 6.234 lakhs per ground, when it offers FSI in excess of 1.5 times. It is also pointed
out that the subject property measuring an extent of 5.4375 grounds has leading dimensions in which the shorter side is under ""30 mts"" (100 feet).
It is their claim that this factor alone shows that the existing site would not lend itself for developing a multi storey building upon it fetching a higher
FSI.
The Development Control Rules (DCR) of Chennai Metropolitan Development Authority (CMDA) is very specific about the provisions for
multi-storey building with FSI from 1.50 to 2.75 times in excess. The pith and substance of the objection of the appellants against the comparison
with the adjacent property, viz., M/s. Malar Hospitals'', is that FSI is excess of 2.5 times was achieved in the Malar Hospitals'' property, whereas
only FSI in excess of 1.50 times is applicable to the instant case. Therefore, according to them, the comparison is not fair. It is also projected that
inasmuch as the multi-storey construction beyond 1.5 FSI would not be possible in the instant case, the price was negotiated accordingly.
It is not in dispute that FSI does play a crucial role in the determination of market value of properties. It is also not in dispute that under the
DCR of CMDA, there are several criteria laid down covering the permissible FSI, such as land use zone in which the property is situated, road
width, size of the plot, frontage, etc. There is no dispute that both the lands viz. properties at Door Nos. 51 and 52 are on the same First Main
Road, Gandhi Nagar, Adyar, Chennai 20. As far as the size of the properties is concerned, the property at Door No. 51, i.e., the subject property
is about 5.44 grounds, whereas the adjacent property at door No. 52 with which comparison is made is about 6.3 grounds. It is also not in dispute
that the frontage available in the instant case is 90 feet, while the adjacent property with which comparison was made has a frontage of 102 feet.
Further, both the properties are situated in Mixed Residential Zone fetching the same FSI of 1.5. As rightly argued by the learned senior counsel
for the appellants, the advantages found in the adjacent property are not available to the subject property. The claim of the appellants that the
purchaser of the adjacent property had in their mind to construct building for hospital and thereby achieving FSI in excess of on 2.5 times, and
hence they offered higher price. On the other hand, such advantages are not available to the subject property. Further, as admitted by the
Appropriate Authority, the frontage of the subject property is only 90 feet, whereas in the adjacent property the same is 102 feet. All these
relevant aspects, though available before the Appropriate Authority, were not properly considered. Likewise, the learned single Judge did not
consider those relevant facts when the adjacent property (52 Ist Main Road, Gandhi Nagar, Adyar, Chennai 20) was compared with the property
in question. The objection of the appellants with regard to comparison of the adjacent property at No. 52, Ist Main Road, Gandhi Nagar, Adyar,
Chennai 20, with the subject property is well founded.
Next it is contended that the Appropriate Authority has not considered the instances of long standing tenant in the subject property. In support
of the above contention, appellants have submitted a copy of letter dated 31.08.1989 received from the tenant, viz., Animal Welfare Board of
India signed by its Secretary Mr. M. Sureshkumar addressed to Mr. Nataraja Sastry. The said letter was placed before the Appropriate
Authority. The learned senior counsel for the petitioners pointed out that the said letter clearly shows the efforts taken by the Statutory Body for
housing its office and in that letter the State Government was also requested to provide accommodation. It is also highlighted that the appellants
were able to pressurise the Animal Welfare Board to vacate the premises and the petitioner/P. Nataraja Sastry, on obtaining possession, arranged
for demolition of existing superstructure. The application for demolition of existing structure was submitted to the Competent Authority -
Corporation of Madras in December, 1989. The Corporation, after scrutinising the said application, issued demolition advice by proceedings
dated 15.12.1989. The petitioner/P. Nataraja Sastry also remitted demolition charges on 19.12.1989. The copies of demolition advice and challan
for remittence were placed before the Appropriate Authority. Though on the date of agreement the subject property was free from tenancy as seen
from Column 3 of 37-I statement dated 02.05.1990, the claim of the appellants regarding various efforts into evicting the tenant, viz., Animal
Welfare Board from the premises in question, we are of the view that though the said aspect is not a primary factor, but it is one of the relevant
factor to be considered while arriving at value of the property.
It is the claim of the appellants that the loss of original title deeds of the property has not been properly considered by the Appropriate
Authority as well as the learned single Judge. It is the case of the appellants that the property in question was mortgaged in Indian Bank, Madras
and after the redemption of mortgage, the said Bank did not return the original title deeds relating to the property and the bank informed that the
title deeds had been lost, but refused to admit the same in writing. It is also brought to our notice that the said property had got entangled in the
litigation with ""Daily Thanthi"". In support of the fact that the Indian Bank had lost the title deeds of the property in question, it is brought to our
notice that a public notice calling for claims in respect of the property from any person having charge, mortgage, etc. issued in ""The Hindu"" dated
09.08.1989 and ""Daily Thanthi"" on 11.08.1989 and no claim was received by the petitioner, P. Nataraja Sastry. It is also true that the
encumbrance certificate produced for the period from 01.01.1959 to 08.06.1989 does not reveal any existing encumbrance over the property.
Though the Appropriate Authority concluded that in view of the legal opinion giving clean chit as to the title, despite loss of title deeds, it cannot be
accepted that mere loss of title deeds should decrease the value of the property, the fact that the petitioner/vendor was not having original title
deeds at the time of transaction is a relevant factor and undoubtedly, it would have the bearing on the price, as well as the mind of the intending
purchaser. Though the Appropriate Authority and the learned single Judge considered this aspect, loss of title deeds of the property in question is
one of the relevant factors, undoubtedly, it would diminish the value of the property.
Learned senior counsel for the appellants next pointed out that the Appropriate Authority relied on two other comparative sale instances at the
time of passing the final order. Admittedly, notice regarding the said sales was not given to the appellants, hence it is against the principles of natural
justice. It is not in dispute that in the show cause notice dated 03.02.1993, the authority has referred only to the adjacent property, viz., Door No.
52, Ist Main Road, Gandhi Nagar, Adyar, Chennai 20 (Malar Hospitals'' property). While passing the final order, the authority relied not only the
said adjacent property, but also two other properties, viz., door No. 47, Ist Main Road, Gandhi Nagar, Adyar, Chennai 20 and door No. 12, Ist
Main Road, Kasturibha Nagar, Adyar, Chennai 20. In the order of the Appropriate Authority, the adjacent property viz., 52, Ist Main Road,
Gandhi Nagar, Adyar, Chennai 20, was chosen as the most appropriate and relevant by virtue of its location, as the immediate adjacent property
next to the subject property in question, but absolutely there is no reference as to other two properties situate at First Main Road, Gandhi Nagar
and Kasturbha Nagar respectively. In para 7.1 of the order, the Appropriate Authority has taken note of all the three instances, including the Malar
Hospitals'' property for comparison with the subject property. In the same paragraph, the Appropriate Authority, after adverting to the details
regarding the properties at Door No. 47, Ist Main Road, Gandhi Nagar, and No. 12 Ist Main Road, Kasturbha Nagar, arrived at a conclusion
that in the instant case the price at Rs. 6.38 lakhs per ground, is below 15% margin fixed by the Supreme Court. It is clear from the above order of
the Appropriate Authority that, particularly, para 7.1 and 7.2, the said Authority heavily relied on the other two properties which were admittedly
not mentioned in the show cause notice. In such circumstances, as rightly pointed out by the learned senior counsel for the appellants, the
appellants were not given opportunity to ascertain the details of those properties, which were discussed and considered by the Appropriate
Authority. It is a relevant aspect affecting the principles of natural justice and we are of the view that both the Appropriate Authority and the
learned single Judge have failed to consider the grievance of the appellants on this aspect.
Now, let us consider the claim of the appellants that the guideline value of the property was not considered by the Appropriate Authority as
well as learned single Judge. It is true that if we consider the guideline rate applicable to the area in question, the value mentioned in the sale
agreement cannot be said to be unreasonable. However, as rightly observed by the Appropriate Authority, the guideline value is for the purpose of
registering the document and the same cannot be considered as the market value/real value of the property prevailing on the relevant date. In such
circumstances, we are of the view that the grievance of the appellants relating to non-consideration of guideline value of the property cannot be
accepted.
The learned senior counsel for the appellants highlighted that subsequent sale deed of the year 1992 by the very same Malar Hospitals'' on the
same road at a lower rate may be considered by this Court. In fact, a petition in WAMP. No. 1755 of 2006 was filed u/s 151 read with Order 41
Rule 27 of the Code of Civil Procedure, praying this Court to accept a copy of the sale deed, registered as document No. 3658/1992 as
additional evidence. As stated earlier, the main ground for rejection of the consideration mentioned in the sale agreement dated 30.04.1990 is that
the sale agreement dated 01.08.1989 in respect of Malar Hospitals property situated at No. 52, Ist Main Road, Gandhi Nagar, Adyar, Chennai
20 reflected a higher sale consideration of 10.39 lakhs per ground compared to the subject transaction, viz., Rs. 6.38 lakhs per ground. Though it
was argued on behalf of the petitioners before the Appropriate Authority and before the learned single Judge that the properties were not
comparable and that the requirement of the purchaser would determine the sale consideration, such argument was rejected by both the
Appropriate Authority as well as the learned single Judge. It is brought to our notice that, the petitioner recently come to know about the sale deed
of the year 1992 registered subsequent to the subject transaction. The said sale deed was registered as document No. 3658/1992 in respect of
another property in the same area situated at 55, Ist Main Road, Gandhi Nagar, Adyar, Chennai 20, and the said property was purchased by
Malar Hospitals. In the said sale deed, the sale consideration is shown as Rs. 6.09 lakhs per ground. By pointing out the said document it is argued
that the said sale deed is relied upon only to demonstrate the fact that the sale consideration mentioned in respect of the property at No. 52 Ist
Main Road, Gandhi Nagar, Adyar (Malar Hospitals'') would not reflect the actual price in that area at the relevant point of time and that the
property at No. 52 (Malar Hospitals'') itself is incapable of being compared with subject property. As rightly pointed out, it can be found from
document No. 3658/1992 that in respect of the property on the same road purchased three years after the subject transaction, the sale
consideration is only stated to be Rs. 6.09 lakhs per ground. In the light of the subsequent transaction referred to above which reflects a lesser sale
consideration, the appellants'' contention regarding the consideration mentioned in the sale deed in question has to be accepted. It is relevant to
note that the petitioner has contended that the Appropriate Authority took into consideration an incomparable property (Malar Hospitals'') for
comparison. We are also satisfied that the sale deed of the year 1992 gives a true picture of the market value in the area in question. We accept
the contention of the appellants with reference to the transaction that took place in 1992, which is also relating to a property adjacent to the
property in question. Hence, we allow WAMP. No. 1755 of 2006.
Finally, let us consider whether the purchase order stands abrogated under Sections 269UG and 269UH of the Act, as the apparent
consideration has neither been tendered to the vendor nor deposited with the Appropriate Authority by the Central Government within 30 days of
the order as stipulated in those provisions.
269UG. Payment or deposit of consideration
(1) The amount of consideration payable in accordance with the provisions of Section 269UF shall be tendered to the person or persons entitled
thereto, within a period of one month from the end of the month in which the immovable property concerned becomes vested in the Central
Government under Sub-section (1), or, as the case may be, Sub-section (6), of Section 269UE : Provided that if any liability for any tax or any
other sum remaining payable under this Act, the Wealth-tax Act, 1957 (27 of 1957), The Gift-tax Act, 1958 (18 of 1958), the Estate Duty Act,
1953 (34 of 1953), or the Companies (Profits) Surtax Act, 1964(7 of 1964), by any person entitled to the consideration payable u/s 269UF, the
appropriate authority may, in lieu of the payment of the amount of consideration, set off the amount of consideration or any part thereof against
such liability or sum, after giving an intimation in this behalf to the person entitled to the consideration.
269UH. Re-vesting of property in the transferor on failure of payment or deposit of consideration.
(1) If the Central Government fails to tender under Sub-section (1) of said Section 269UG or deposit under Sub-section (2) or Sub-section (3) of
the said section, the whole or any part of the amount of consideration required to be tendered or deposited thereunder within the period specified
therein in respect of any immovable property which has vested in the Central Government under Sub-section (1) or, as the case may be, Sub-
section (6) of Section 269UE, the order to purchase the immovable property by the Central Government made under Sub-section (1) of Section
269UD shall stand abrogated and the immovable property shall stand re-vested in the transferor after the expiry of the aforesaid period.
It is clear that Section 269UG of the Act mandates that the amount of consideration shall be tendered to the person entitled thereto within a period
of one month from the end of the month in which the immovable property concerned becomes vested in the Central Government. Section 269UH
of the Act makes it clear that if the Central Government fails to tender or deposit either whole or any part of the amount of consideration required
to be tendered or deposited within the period specified in Sub-section (1) of Section 269UG, the order to purchase the immovable property by
the Central Government made under Sub-section (1) of Section 269UD shall stand abrogated, and it revest in the transferor after the expiry of the
aforesaid period. The above provisions have been interpreted in various decisions.
In the case of M.P. Poddar (HUF) and Another Vs. Appropriate Authority and Another, , a Division Bench of Delhi High Court, after
considering the relevant provisions in Chapter XX-C has held that as per the Scheme of the said Chapter, even though the agreement between the
parties provides for deferred payment of consideration for transfer it is made obligatory for the Central Government to tender the entire
consideration within the stipulated period, i.e., within a period of one month from the end of the month in which the immovable property vests in the
Central Government, namely, on the date of purchase order and failure to tender the consideration within the said period results in abrogation of
the said order.
In the case of Union of India (UOI) and Another Vs. Dr. A.K. Garg and Others, , the Hon''ble Supreme Court has held that the amount u/s
269UG had to be tendered or even if there was any dispute, the same should have been deposited with the Appropriate Authority. After finding
that there is no material forthcoming to show that an offer was made before the cut-off date, viz., 30th June, 1993, accepting the stand taken by
the Delhi High Court, the Supreme Court dismissed the appeal filed by Union of India. It is therefore clear from the above said decision that even if
there is any dispute, the amount has to be deposited, failing which Section 269UH will come into operation.
In the case of Sita Cheriyan Mukerji Vs. Appropriate Authority of Income Tax and Others, , Calcutta High Court has held that, Section
269UG of the Act clearly lays down that the amount of consideration payable in accordance with the provisions of Section 269UF shall be
tendered to the person or persons entitled thereto, within the period prescribed therein, failing which the rigour of Section 269UH is squarely
attracted. The Court further held that the consequences as stipulated in Section 269UH are mandatory and inescapable.
In the case of Ashis Mukerji Vs. Union of India (UOI) and Others , a Division Bench of Patna High Court has held,
Under Section 269UH, the property revests in the transferor on failure of payment or deposit of consideration. In the present case we have found
that the payment has not been tendered in terms of Sub-section (1) of Section 269UG. The property, therefore, which had been vested in the
Central Government by virtue of order made u/s 269UD(1), that order stands abrogated and the property now revests in the transferor, i.e., the
petitioner....
In the case of Hotel Mardias Pvt. Ltd. Vs. Union of India and Others, , a Division Bench of Gujarath High Court has concluded,
Once we have come to the conclusion that the amount of consideration was not tendered within the time prescribed u/s 269UG and there was no
ground for making deposit to the appropriate authority the consequence which has been provided u/s 269(UH) would necessarily follow, namely
the order of purchase shall stand abrogated and the immovable property shall stand reverted to the transferor on the expiry of the period in which
amount was to be tendered but has not been so tendered.
The learned senior standing counsel for the Income Tax Department, relying on a decision of this Court in the case of R. Padma and Others
Vs. Appropriate Authority, Income Tax Department, Madras and Others, contended that if there is an order of stay at the instance of any of the
parties to the agreement of sale, the Central Government cannot be blamed for not tendering or depositing the amount. No doubt, in the
penultimate paragraph, the Division Bench has observed that in matters of this nature, whenever a stay order is obtained at the instance of any of
the parties to the agreement of sale and if there is any interdiction by the court preventing the authorities from pursuing further steps consequent to
the issue of order u/s 269UD(1), then there would be no directive from the Court to the Income Tax Department to pay the sale consideration
during the pendency of proceedings in Court.
Apart from the said decision, she also relied on the case of Sooni Rustam Mehta and Others Vs. Appropriate Authority, Income Tax
Department, , wherein the Division Bench of Andhra Pradesh High Court held that the petitioners had filed a writ petition challenging the provisions
of the Act and so long as the writ petition was pending, there was a dispute as to the entitlement of the petitioners to receive the amount of
compensation and the authorities were justified in not making deposit with the appropriate authority.
On going through the factual details, we are of the view that both the decisions relied on by the learned senior standing counsel for the Income
Tax Department are not helpful to the Department. In the Andhra Pradesh case, there is no dispute as to the entitlement of the petitioners to
receive the amount of compensation. Secondly, the decision of the Division Bench of this Court in R. Padma and Others Vs. Appropriate
Authority, Income Tax Department, Madras and Others, deals with the later part of Section 269UD(1), wherein the 5th proviso to Sub-section
(1) makes it clear that where any stay has been granted by any court against the passing of an order for the purchase of immovable property, the
said period is to be excluded. Section 269UD relates to order by appropriate authority for purchase by Central Government. But, there is no
similar proviso in 269UG(1), excluding the period of stay by the Court. In those circumstances, even if we accept that the appellants have filed writ
petitions before this Court questioning the order of Appropriate Authority, in the absence of any such saving clause, merely because the writ
petitions were pending, non compliance of 269UG(1) within the time prescribed, undoubtedly, would attract the revesting of the property in
question in favour of the transferor under Sub-section (1) of Section 269UH. We are of the clear view that u/s 269UH(1) if the payment has not
been tendered in terms of Sub-section (1) of Section 269 UG, the said order stands abrogated and the property which had been vested in the
Central Government by virtue of the order made u/s 269UD(1), stands revested in the transferor, i.e., the petitioner. To put it clear, u/s 269UH,
the property will stand revested in the transferor on failure of payment or deposit of consideration. In our case, admittedly, there is no offer or
communication regarding the deposit of amount with the Appropriate Authority. Inasmuch as the amount of consideration has not been tendered in
terms of Sub-section (1) of Section 269UG to the transferor, the order passed u/s 269UD(1) stands abrogated. In view of the admitted factual
position regarding non compliance of the above mandatory provision, the order of the Appropriate Authority is liable to be quashed on this ground
also. These aspects have not been properly considered by the learned Judge.
The analysis of various instances pointed out by the appellants clearly show that all of them are relevant factors in valuing the property. The
power vested in the authority under Chapter XX-C of the Act is a special power which is required to be exercised with great care and with almost
fairness. When the provisions enable the Government to take over any property, the authorities cannot exercise the power in an arbitrary manner.
The object for which the provision was introduced cannot be ignored. It is needless to mention that it is meant to disclose the true price for the
property brought to sale and thereby to prevent evasion of tax by parties to transaction. It is not in dispute that Chapter XX-C of the Act itself had
been deleted from the statute book with effect from 01.07.2002. Further, failure to tender or deposit the amount of consideration within the
prescribed period, the order to purchase immovable property by the Central Government under Sub-section (1) of Section 269UD shall stand
abrogated and the property shall stand revested in the transferor. Having regard to the materials before the Appropriate Authority, it is clear that
the market value of the property at the time of transaction could not be said to have been higher than the rate at which the appellants had agreed to
sell and purchase the property. We are satisfied that the learned single Judge failed to take note of all the above mentioned relevant aspects but
merely approved the order of the Appropriate Authority, which cannot be sustained on facts and on the basis of statutory provisions referred to
above.
Under these circumstances, the common order of the learned Judge dated 31.03.1997 made in W.P. Nos. 4584 and 4700 of 1993, is set aside
and the order of pre-emptive purchase passed by the Appropriate Authority, Income Tax Department, dated 23.02.1993, is quashed.
Accordingly, both the writ appeals are allowed. No costs.