Bangalore Development Authority vs CIT and Others

Mrs. B.V. Nagarathna, J.—In this writ petition the petitioner-Bangalore Development Authority has challenged the order dt. 21-11-2006 passed by the first respondent and has sought a declaration that respondent Nos. 1 and 2 have no authority to put trie C.A. site measuring 52x80 mtrs. situated at Gayatridevi Park Extension, Bangalore, for public auction and other incidental reliefs.

It is the case of the Bangalore Development Authority (hereinafter referred to as BDA that it is the absolute owner in possession and enjoyment of the C.A. site measuring 52x80 mtrs. (4,160 sq. mtrs.) situated at Gayatridevi Park Extension Layout and that the said C.A. site is formed in Sy. No. 2 of the Rajamahal Village which was acquired by way of agreement as per section 26 of the City Improvement Act, 1945 (hereinafter referred to as 1945 Act) for formation of Gayatridevi Extension Layout and has been reserved as civic amenity site in the improvement scheme adopted under the said Act. The said Act was repealed by virtue of section 76 of the Bangalore Development Authority Act, 1976 (hereinafter referred to as BDA Act) and the scheme prepared under the repealed enactment is deemed to have been prepared under the new enactment. It is the further case of the petitioner that vast extents of land in Sy. No. 2 of Rajamahal Village was acquired by the City Improvement Trust Board (CITB) i.e., the land measuring 18 acres 10 guntas was handed over by the father of fthe third respondent to the junior engineer, CITB, which is evident from the letter dt. 22, 23-8-1966. The C.A. site measuring 52x80 8mtr. forms an integral part of 18 acres 10 guntas of land described in the letter dt. 22,23-8-1966. That the land was handed over to CITB and was acknowledged by a sketch drawn on 9-8-1965. In the comprehensive development plan of CITB the said C.A. site has been earmarked for a pubic park. When the matter stood thus, the second respondent issued a public notice on 22-3-1993 in Kannada daily newspaper "Praavanr on 26-3-1993 stating that the said C.A. site would be auctioned in a public auction to be held on 29-3-1993 at 11 a.m. Being aggrieved by the said public notice, the petitioner filed Writ Petn. No. 8753 of 1993 before this court. The said writ petition was disposed of by order dt. 16-2-2000, reserving liberty to the petitioner to file objections, if any, along with documents to prove its title and directed the respondent authorities to consider the objections of the petitioner herein after affording an opportunity of hearing and then take appropriate action in the matter. Till such decision was taken, the respondent authorities were directed not to dispose of the property in any manner. In pursuance of the said order, the petitioner submitted a detailed reply on 13-4-2000 which was considered along with the reply filed by respondent No. 3 on 14-8-2000. The petitioner also filed additional objections and submitted additional documents and filed written arguments to show that respondent No. 3 had no manner of right, title and interest in the C.A. site in question.

After hearing the petitioner and the third respondent and after considering the spot inspection, the first respondent overruled the objections filed by the petitioner and passed an order dt. 21-11-2006 which is marked as Annex. L to the writ petition. The said order is in challenge in this writ petition.

I have heard the learned counsel for the petitioner and the learned senior counsel for respondent Nos. 1 and 2.

It is contended on behalf of the petitioner that the perusal of the impugned order dt. 21-11-2006 would give an impression that the respondent authority has decided a question of title, when the only question that had to be gone into was whether the property could be sold in a public auction by the second respondent-TRO pursuant to the orders made for recovery of arrears of income tax fi/om the 3rd respondent. Therefore, he submits that when this court retrained the matter to the first respondent for reconsidering the issue,/ first respondent was to consider the objections filed by the petitioner find that an order could not have been made in a manner wherein virtually title has been conferred in favour of the third respondent. He further; Submits that in view of the order passed by the first respondent, the petitioner is not in a position to initiate any civil action against the third respondent in order to assert its right, title and interest as well as possession insofar as the C.A. site is concerned. In the circumstances, he subrpits that the order impugned has to be set aside.

Per contra, learned senior counsel appearing for the first and second respondents has drawn my attention to rule II of Sch. II pertaining to procedure for recovery of compensation (sic) u/s 222 and 276 of the IT Act, 1961 to contend that the writ petition is not maintainable. That under sub-section (6) of rule 6, it is stated any person who is aggrieved by an order made under r. 11 may Institute a suit in a civil court to establish his right, which he claims to the property in dispute subject to the result of such suit. He, therefore, submits that the petitioner would have been well advised to file a civil suit rather than to file writ petition challenged by the second respondent.

In reply, counsel for the petitioner submits that having regard to the impugned order wherein categorical findings j have been given against the petitioner even if any suit is filed by the peititioner before the competent civil court, it would be in a disadvantageous position having regard to the fact that the findings given in the impugned order would come in its way and adversely affect the right of the petitioner in the C.A. site in question. Even if a suit is to be filed by the petitioner, in that case the impugned order passed at Annex. L would have to be stayed or at any rate it cannot be given effect to until a decree is passed in the civil-suit to be instituted by the petitioner and further, the respondent authorities cannot have any right to possess the said property in the guise of making recovery of the arrears of the income tax by the third respondent.

Having regard to the rival contentions of the counsel on both sides and on perusal of the material on record, it becomes clear that there is dispute with regard to the right of the respondent-authorities to initiate any action in respect of the C.A. site in question for the purpose of recovery of income tax arrears insofar as the third respondent is concerned. No doubt, the third respondent submits that the C.A. site belongs to him and that he would have no objection if the respondent authorities put the said site for public auction for the purpose of recovery of income tax duess However, it is the contention of the petitioner that the said C.A. site cannot be made a subject-matter for recovery of income-.tax dues of respondent No. 3 in as much as it belongs to the petitioner herein and under the circumstances, when, an earlier order was passed by the first respondent, the same was challenged by the petitioner in Writ Petn. No. 8753 of 1993 before this court which was disposed of by order dt. 16-2-2000 by giving the following directions :

(i) Writ petition is disposed of in the following terms :

(ii) The petitioner is permitted to file objections, if any, along with the documents in proof of its title within two months from today;

(iii) If such objections are filed, respondent 1 before taking any action to sell the above said property in a public auction consider the objections of the petitioner after affording him an opportunity of hearing. Thereafter, it is open for respondent 1 to take appropriate action in accordance with law. Till a decision is taken respondents 1 and 2 are directed not to dispose of the above said property in any manner.

It is in the light of the aforesaid directions issued by the Court that the first respondent had to consider the matter after giving an opportunity to the petitioners herein since it has asserted its right in respect of the C.A. site in question with supporting documents and the petitioner as well as the third respondent herein were heard in the matter. The first respondent after recording the factual matrix of the case has stated as follows :

Hence, after a careful examination of all the papers and arguments proposed by the BDA, it becomes clear that at the macro level the CITB (BDA) took over almost all the portion of land in the Upper Palace Orchard and Lower Palace Orchard and in the process the CITB regarded every piece of land in that entire area has become the property under their control but at the macro level when all the papers have been examined, the proposition that the entire plot of land as part of the CITB proves otherwise as far as this cone particular piece of land (about 1 acre is concerned), I have also somewhere come across papers suggesting that the Pump House area and the surrounding portion of land have been all along kept with the Maharaja for the obvious reason and the surrounding areas of the Pump House occupied by the Chowkidars and the workers were left out in the acquisition proceedings. I also find that there is a logic to this position. The palace water supply depended on the Pump House and maintenance staff also would be required to stay in the same area. In view of this, the Maharaja would not be naive to sell off this portion of land. Besides, the WT return filed by Sri S.N. Wadiyar include this portion of land under the Palace property (land appurtenant to the Palace) which was duly accepted for several years by the IT Department, and wealth-tax assessments were also done on these assets and raising the wealth-tax dues thereon as well. Therefore, having all these facts and circumstances into consideration, I come to the conclusion that as far as the one acre plot of land is concerned, the land remains the property of the Maharaja of Mysore all these years and even the encumbrance certificate in Form No. 15 produced by the, BDA also establish that the land transferred to the Chairman, CITB is only 17 acres and 38 guntas. In effect, the TRO-III, Bangalore rightly identified the land as belonged to''the Maharaja of Mysore and was also rightly proposed for public auction to realise the tax dues from the Maharaja of Mysore. I am satisfied with my findings and I am also satisfied with the quality of opportunities given to the BDA authorities.

The petitioner is aggrieved by the aforesaid observations made in the order of the first respondent in as much as the claim of the petitioner with regard to its title in the C.A. site in question is nullified and stands declared in favour of the third respondent and in view of the said declaration if any suit would be filed by the petitioner before the competent civil court would be of no relevance. However, it is necessary to have regard to the provisions of r. 11 of the Sch. II of the IT Act, which reads as follows :

Investigation by TRO.--(1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate on the ground that such property is not liable to such attachment or sale, the TRO shall proceed to investigate the claim or objection.

(2) Where the property to which the claim or objection applies has been advertised for sale, the TRO ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the TRO shall deem fit.

(3) The claimant or objector must adduce evidence to show that--

(a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or

(b) (in the case of movable property) at the date of the attachment, he had some interest in, or was possessed of, the property in question.

(4) Wherein, upon the said investigation, the TRO is satisfied that for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulted or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that being in the possession of the defaulter at the said date, it was also in his possession, not on his own account or as his Qwn property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the TRO shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale.

(5) Where the TRO is satisfied that the property was at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the TRO shall disallow the claim.

(6) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute, but, subject to the result of such suit (if any), the order of the TRO shall be conclusive.

In terms of the above provision, the subject-matter of investigation that can be made by the TRO is, when there is an objection or claim made to the title of property attached or to be auctioned or with regard to the possession of the property being with some other person who claims to be in possession. It is only with regard to the objections that first respondent can give his findings. Therefore, it would imply that the first respondent is not competent to give findings with regard to the title of the property. In the instant case, the petitioner is not only claiming possession, but also title with regard to the said C.A. site. Under sub-rule (6) of r. 11 it is clearly stated that any party who is aggrieved by an order passed, may institute a suit in a civil court to establish the right which he claims to the property in dispute, but subject to the result of such suit, if any, the order of the TRO shall be conclusive. Therefore, the petitioner herein is disabled to file a suit with regard to possession, as also with regard to title in respect, of the property in question in view of the finding with regard to title being given by the respondent authorities. Therefore if a suit is filed by the petitioner, then in that case any decree to be passed in the said suit would have to override the order that is impugned in this writ petition. Under the circumstances, the said rule states that the order passed by the TRO shall be conclusive, but it would be subject to the result of any suit, that would be filed by a person who is aggrieved by an order passed under r. 11. Therefore, the petitioner herein is at liberty to file a suit insofar as the property in question is concerned not only against the third respondent herein, but also against any such person who is claiming the said property and any decree to be passed in the said suit would override the order impugned in this writ petition. Therefore, the order impugned is kept in abeyance until the petitioner succeeds in establishing its right, title and interest as well as possession over the property in question. In order to enable the petitioner to do so, taking into consideration that there is a serious dispute regarding the site in question, it is also necessary that both the parties would have to maintain status quo insofar as the property is concerned.

In the result, writ petition is allowed in part and the order impugned is kept in abeyance until the petitioner is able to establish its right over the property in question by filing a suit before the competent court in terms of r. 11 supra or in any manner known to law, if so advised. The filing of such a suit shall be intimated to the respondent authorities.