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Judgment
M.N. Rao, J.—As all the six writ petitions are interconnected, they are disposed of by this common order.
The writ petitions concern the legality of two pre-emptive purchase orders in References Nos. AA/(Hyd)/07/(14) 09 of 1991-92 and AA/(Hyd)/07/(15) 09 of 1991-92, both dt. 23rd Sept., 1991, issued by the Appropriate Authority, IT Department, under s. 269UE(2) of the IT Act, 1961, in respect of the premises bearing No. 5-9-1112/1 and 2, Church Road, Gunfoundry, Hyderabad. In respect of both the premises the owner, Smt. Abidunnissa Begum, entered into two agreements of sale. With regard to premises No. 5-9-1112/1, the agreement of sale stipulated a consideration of Rs. 12,20,000 and with regard to premises No. 5-9-1112/2, the consideration stipulated in the agreement of sale was Rs. 15,80,000. The vendor as well as the two vendees informed the IT authorities in Form No. 37-I about the transactions for the purpose of obtaining clearance certificate. At that stage, the Appropriate Authority passed the two impugned orders on 23rd Sept., 1991, under s. 269UD(1) of the IT Act, 1961 for purchasing the premises in question, without issuing notice or affording an opportunity to the vendor, vendees and other persons interested.
The petitioner in Writ Petn. No. 12942 of 1991 is the tenant in occupation of the premises bearing No. 5-9-1112/1 in which he is carrying on business in crockery. The petitioner in Writ Petn. No. 14293 of 1991 is a registered club, which has been located in the premises bearing No. 5-9-1112/2 since 1972. The petitioners in Writ Petns. Nos. 16196 and 16185 of 1991 are the transferees under the two agreements of sale, dt. 3rd July, 1991.
Mr. K. Subrahmanya Reddy, learned senior counsel, has advanced leading arguments in Writ Petn. No. 12942 of 1991. He submits that although s. 269UD in Chapter XX-C of the IT Act, under which the impugned orders are passed, does not incorporate the principles of natural justice, none the less it is obligatory on the part of the Appropriate Authority, before passing an order of pre-emptive purchase, to hear the vendor, the vendee and also other persons interested like the tenants.
Without seriously disputing this proposition, in view of the decision of the Supreme Court in C.B. Gautam Vs. Union of India and Others, Mr. S. R. Ashok, learned standing counsel for the IT Department, submits that inasmuch as the transferor (the owner of the premises) has accepted the consideration without raising any objections, the transferees and the tenants are not entitled to be heard.
The Abids Recreation Club, the tenant of one of the premises in question and the petitioner in Writ Petn. No. 14293 of 1991, has instituted OS No. 5208 of 1991 in the Court of the Fifth Assistant Judge, City Civil Court, Hyderabad, for permanent injunction against the IT authorities restraining them from interfering with its possession. An interim injunction was granted, it is stated before us, in IA No. 981 of 1991, which was subsequently vacated. It is the case of the Department that possession of the premises occupied by the Abids Recreation Club was taken over on 30th Oct., 1991. But, learned counsel for the Club, Mr. R. Vijayanandan Reddy, says that possession was not handed over by the Club and its things are still there in the premises and the appeal filed against the interim order is still pending.
Writ Petns. Nos. 15382 of 1991 and 231 of 1992 were filed by the owner of the premises seeking a direction to the Appropriate Authority to pay the consideration for the pre-emptive purchase. An interim order was passed by this Court on 28th Sept., 1992, in WPMP No. 11488 of 1992 in Writ Petn. No. 15382 of 1991 and WPMP No. 11487 of 1992 in Writ Petn. No. 231 of 1992 directing the Appropriate Authority to deposit the consideration in the Unit Trust of India, but the interest shall not be withdrawn either by the Department or the owner. The case of the owner - petitioner in these two writ petitions - is that if she did not receive the consideration and invest the same in the Unit Trust of India before 30th Sept., 1992, she would be subjected to capital gains; under a scheme in vogue, if any sale consideration arising out of disposal of immovable property was deposited in the Unit Trust of India, the same would not be liable to capital gains tax.
In C. B. Gautam vs. Union of India (supra) s. 269UD fell for consideration before the Supreme Court. One of the questions considered by the Supreme Court was whether the principles of natural justice - giving of notice and affording reasonable opportunity of being heard to the person affected - must be complied with before a pre-emptive purchase order was effected. The Supreme Court observed :
"The observance of the principles of natural justice is the pragmatic requirement of fair play in action. In our view, therefore, the requirement of an opportunity to show cause being given before an order for purchase by the Central Government is made by an Appropriate Authority under s. 269UD must be read into the provisions of Chapter XX-C. There is nothing in the language of s. 269UD or any other provision in the said Chapter which would negate such an opportunity being given."
In Rambai Manjanath Nayak and others Vs. Union of India and others, Chapter XX-A of the IT Act, which was later substituted by Chapter XX-C came up for consideration. One of the questions decided by the Supreme Court was whether a tenant was entitled to notice when a pre-emptive purchase order was made by the IT Department. The Supreme Court, answering the question in the affirmative, held :
"The requirement of notice to the person in occupation of the property and every person interested in the property is obviously for the reason that all such persons including those having interest merely in possession are considered to be persons interested in the acquisition proceeding. Section 269E enables all such persons to make objections against the acquisition of the immovable property on publication of the notice and the Competent Authority is required by s. 269F to hear and decide those objections on merits, stating the reasons for the decision in writing, before making the final order for acquisition of the property. Obviously, a tenant in possession, of whatever nature, has this opportunity."
In Swaran Singh and others Vs. State of Punjab and others, , a case arising under the East Punjab Holdings (Consolidation & Prevention of Fragmentation) Act (1948), the question whether tenants are entitled to be heard by the authorities while deciding a dispute of title between two rival claimants, fell for consideration. The Supreme Court ruled :
"Though the dispute as such was regarding the title between the proprietors and the panchayat, the appellants at least come in the category of tenants having interest in the suit land in which case they do come within the meaning of ''interested parties'' and the proviso to s. 42 comes into operation and consequently an order passed without notice to them to appear becomes invalid."
Having regard to the aforesaid precedents, we are inclined to hold that the tenants and the transferees are entitled to notice before an order is passed under s. 269UD(1) of the IT Act.
Mr. S. R. Ashok, learned standing counsel for the IT Department, relying on certain observations occurring in C. B. Gautam''s case (supra) contends that the transferees and the tenants are not entitled to notice and hearing. The following are the observations on which learned counsel placed reliance :
"We may clarify that, as far as completed transactions are concerned, namely, where, after the order for compulsory purchase under s. 269UD of the IT Act was made and possession has been taken over, compensation was 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 above observations, in our considered opinion, do not apply to this batch of cases. These writ petitions were filed as far back as in 1991 and the aforesaid judgment of the Supreme Court in C. B. Gautam''s case (supra) was rendered on 17th Nov., 1992, and 27th Nov., 1992. The above observations only imply that completed matters cannot be resurrected. We cannot interpret the observations as affecting the rights of the parties in respect of the matters which are pending adjudication in the Courts.
Even with regard to Writ Petn. No. 14293 of 1991, filed by the Abids Recreation Club, the alleged possession was taken only on 30th Oct., 1991, i.e., prior to the judgment of the Supreme Court in C. B. Gautam''s case (supra). The right of the Club, therefore, to be heard, cannot be denied.
Merely because the owner of the premises has accepted the consideration from the IT Department and has not chosen to question the orders of pre-emptive purchase, it cannot be said that the other persons interested, namely, the tenants and the transferees will lose their right of making a representation to the concerned authority. What will be the outcome of such a representation is a matter outside the purview of this batch of writ petitions.
In the result, the two impugned orders are set aside and Writ Petns. Nos. 16196, 12942, 16185 and 14293 of 1991 are allowed. Within two weeks from the date of receipt of a copy of this order, the Appropriate Authority under Chapter XX-C of the IT Act shall issue notices to the petitioners in the above four writ petitions and within two weeks from the date of receipt of notices, the petitioners shall submit their objections.
So far as Writ Petns. Nos. 231 of 1992 and 15382 of 1991, filed by the owner of the premises, are concerned the Appropriate Authority has already deposited the consideration amount in the Unit Trust of India as per the directions of this Court and interest is not permitted to be withdrawn by the Department as well as the owner of the premises. In the event the Appropriate Authority, after hearing the objections of the petitioners in the aforesaid four writ petitions, comes to the very same conclusion and sustains the pre-emptive orders of purchase, the consideration in the form of deposit in the Unit Trust of India shall stand transferred to the owner and she will also be entitled to withdraw the interest. In the event of the Appropriate Authority dropping the proposal to effect pre-emptive purchases, the same should be made subject to the condition that the transferees-petitioners in Writ Petns. Nos. 16185 and 16196 of 1991 reimburse the IT Department by depositing the entire sale consideration, after issuing thirty days notice.
Writ Petns. Nos. 231 of 1992 and 15382 of 1991 are accordingly closed with the above directions. No order as to costs.