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Judgment
R.S. Mohite, J.—This is a petition filed by Plaza Diamond Properties (P) Ltd., (hereinafter referred to as the "petitioner") seeking to quash and set aside an auction notice dt. 3rd Sept., 2007 published by the Chief CIT-II in the ''Times of India'' dt. 10th Sept., 2007. By the impugned notice the IT Department seeks inter alia to sell an immovable property located at 391, Dr. D.B. Marg, Mumbai-400004. The petitioner claims to be the company which owns the aforesaid property consisting of a cinema hall on the ground floor and mezzanine floor and a balcony with a screen and projector room above the mezzanine floor, in the building known as "Swastik Cinema Building" together with land underneath admeasuring about 821.74 sq. mtrs., being C.S. No. 1266 in Girgaum division. This property in respect of which the petitioner claims to be the owner is more particularly described in Exh. A to the petition and is hereinafter referred to as the "suit property".
The chronology of the facts which lead to the filing of the present petition are as under:
(a) The petitioner company acquired freehold rights in respect of the suit premises pursuant to a consent decree dt. 3rd Aug., 1983 passed by this Court in Suit No. 810/1983. At the time of the purchase, a company by name "Sharma Properties (P) Ltd.," held leasehold rights and they had sub-let the suit premises in favour of another company by name of "Swastik India (P) Ltd." The consent decree dt. 3rd Aug., 1983 therefore, provided that the sale was subject to the indenture of sublease dt. 30th April, 1982 and also subject to another agreement dt. 30th April, 1982 entered into between Sharma Properties (P) Ltd., and the sub-lessee Swastik India (P) Ltd., inter alia for construction of the foyer for the said Swastik India (P) Ltd. A copy of the consent decree under which the petitioner obtained ownership rights in respect of the suit premises is annexed at Exh. B to the petition. The copy of the indenture of sublease dt. 30th April, 1982 between Sharma Properties (P) Ltd. and Swastik India (P) Ltd., is annexed at Exh. C to the petition.
(b) That after the petitioner obtained ownership rights, by an indenture of modification dt. 19th Feb., 1986 executed between the petitioner and the aforesaid sub-lessee [Swastik India (P) Ltd.], the rights of Swastik India (P) Ltd., were modified and their right of 9 renewals w.e.f. 30th April, 1982 was changed and reduced to only 1 renewal for a period of 10 years. The relevant portion of Clause 2 in the indenture of modification dt. 30th April, 1982 which pertains to the right of renewal was as under:
...to hold the demises premises unto the lessee for the term of 10 years commencing from the 30th day of April, 1982 with an option to the lessee to renew the lease for a further period of ten years by giving notice as hereinafter provided....
(c) It is the case of the petitioner that in view of the indenture of modification referred to hereinabove, the indenture of sublease dt. 30th April, 1982 came to an end by afflux of time on 30th April, 1982 [sic-1992]. That even though the sub-lessee i.e. Swastik (India) (P) Ltd. had the right of one further renewal of 10 years, they did not exercise such right. Further there was no document, either registered or unregistered, extending the lease for a further period of 10 years after the expiry of the term of 10 years on 30th April, 1992. The said lessee i.e. Swastik (India) (P) Ltd. however, continued in illegal and unlawful possession and paid monthly compensation till 30th June, 1997.
(d) That, without the knowledge and consent of the petitioner, shareholders of Swastik (India) (P) Ltd. agreed to sell their shareholding to a company named "Film Waves Enterprises" for a sum of Rs. 4 crores and by their letter dt. 30th March, 1997 they notified the IT authorities by filing Form 37-1, as required under Chapter XX-C of the IT Act. Thereupon the IT Department appointed a valuer for the valuation of the suit premises and the valuer valued the suit premises at Rs. 10,65,67,580.
(e) Consequently, the IT authorities decided to exercise their right of pre-emptive acquisition of the shares of Swastik (India) (P) Ltd. and accordingly, by an order dt. 27th June, 1997, passed u/s 269UD of the IT Act, the Central Government exercised the option to purchase the shareholding of Swastik India (P) Ltd., from the shareholders of Swastik India (P) Ltd., for the consideration of Rs. 4 crores.
(f) Consequent to the aforesaid order dt. 27th June, 1997, on 7th July, 1997 then shareholders of Swastik India (P) Ltd., handed over physical possession of the suit premises to the IT Department and obtained a receipt as evidence of having handed over the possession.
(g) That, after the passing of the order u/s 269UD the IT authorities learnt about indenture of modification dt. 19th Feb., 1986 and realised that Swastik India (P) Ltd., did not have any right, title and interest in the suit premises. They, therefore, stopped the payment of the cheques amounting to Rs. 4 crores which they had issued in favour of the shareholders of Swastik India (P) Ltd.
(h) On the payment of Rs. 4 crores being stopped as aforesaid, the shareholders of Swastik India (P) Ltd. filed a writ petition being Writ Petn. No. 1887 of 1997. During the pendency of this petition, by an order dt. 12th Dec., 1997 the Court directed the appropriate authorities to deposit with the prothonotary and senior master Rs. 4 crores and the amount was invested in a nationalised bank. Further, pending the petition the Appropriate Authority was restrained from taking further steps in the matter. On 24th Dec., 1997 the Appropriate Authority (IT Department) passed an order u/s 269UJ of the IT Act, 1961 withdrawing from the acquisition on the ground that on expiry of the lease on 30th April, 1992, there was no renewal by a registered deed.
(i) Later, by yet another order dt. 12th Feb., 1998 the Appropriate Authority vacated its earlier order passed u/s 269UJ, when the interim order of this Court was pointed out to them. Thus the acquisition was revalidated.
(j) Writ Petn. No. 1887 of 1997 came to be heard and finally disposed of by this Court, by its judgment and order dt. 21st Oct., 2002. This Court held that nothing had prevented the Appropriate Authority from passing fresh orders withdrawing from the acquisition after obtaining permission from the Court. It was also held that the point raised by the Department i.e. that the lease was less than 12 years required adjudication u/s 269UJ and without any such adjudication the Court could not permit the Department to raise the point in the writ petition, particularly there was no order passed by the Department u/s 269UJ. That, if the Department, after having permission, had passed any fresh order u/s 269UJ withdrawing from the acquisition, the petitioners could have challenged the same. It was further recorded in the judgment that there was no suppression of material facts from the IT authorities. All relevant documents were produced before the Appropriate Authority. Even the valuation report indicated that the lease subsisted on expiry of 10 years. This Court thus allowed the writ petition and directed the respondents to forthwith pay amount of Rs. 4 crores to the petitioners. A direction was given to the prothonotary and senior master to encash the FD and pay the entire amount including interest upto the date of encashment to the petitioners. We are informed that this amount has already been handed over to the petitioners in Writ Petn. No. 1887 of 1997. It would be appropriate to note that the present petitioners were not parties to the aforesaid Writ Petn. No. 1887 of 1997.
(k) In 2005, the petitioners filed a writ petition being Writ Petn. No. 3154 of 2005 in this Court for a direction against the respondents to handover possession of the suit premises to the petitioners. By its judgment and order dt. 21st March, 2006, a Division Bench of this Court dismissed the petitioners'' writ petition after observing that the proper course would be to take recourse to take appropriate remedy in civil law.
(l) Subsequently, by their notice dt. 10th Oct., 2006 the petitioners to the respondents, called upon the respondents to handover vacant and peaceful possession of the said property and since this was not done, we are informed that a suit for eviction has been filed by the petitioners in the Court of Small Causes against the respondents for recovery of the suit premises.
(m) The record also indicates that being aggrieved by the judgment and order of this Court dt. 21st Oct., 2002, the IT authorities filed a review petition [being Review Petn. (L) No. 4 of 2006], but by an order dt. 7th Dec, 2006, this Court was pleased to dismiss the notice of motion for condoning the delay in filing the review petition and also dismissed the review petition simultaneously by making certain observations on merits thereby confirming the order dt. 21st Oct., 2002.
(n) In this background, on 3rd Sept., 2007 the impugned notice for sale of the suit premises came to be published in Times of India dt. 10th Sept., 2007 at the behest of the IT authorities and this has given rise in the filing of the present petition.
On perusing the record and in the aforesaid circumstances, we find that the petitioners have clearly acquired right of ownership in respect of the suit premises. When this right was acquired, Swastik India (P) Ltd. who is respondent No. 4 in this petition, was the sub-lessee. The rights of Swastik India (P) Ltd., were modified by the indenture of modification dt. 19th Feb., 1986. The order u/s 269UD related to the acquisition of the shareholding of Swastik India (P) Ltd. and thus the Union of India stands in the shoes of Swastik India (P) Ltd. i.e. respondent No. 4.
The impugned notice however, seeks to sell the suit premises which are of the ownership of the petitioners. In our view, this cannot be permitted as respondent Nos. 1, 2, and 3 were never the owners of the suit premises.
In the circumstances, petition will have to be allowed and the same stands allowed in terms of prayer Clause (a).
We, however, make it clear that the IT authorities will be at liberty to take any proceedings or steps in relation to their acquired assets and rights in accordance with law. We also make it clear that any observations made in the judgment and order is only for the purpose of deciding this writ petition and will not be taken into account by the Small Causes Court while deciding the pending suit on its own merits.