Hidrive Finance Ltd. vs Appropriate Authority & Ors.

Delhi High Court

Hidrive Finance Ltd. vs Appropriate Authority & Ors. on 9 November, 2000

Equivalent citations: (2001) 165 CTR Del 90

Author: C Arijit Pasayat

JUDGMENT Arijit Pasayat, C. J.

Since a short point is involved, with the consent of counsel for the parties, the petition is taken up for disposal.

Challenge in this writ petition is to the order passed by the appropriate authority, Income Tax department (hereinafter referred to as `the authority) purportedly under section 269UC(4) of the Income Tax Act, 1961 (hereinafter referred to as `the Act). By the said order the authority held that transfer of the subject property without obtaining the requisite no-objection certificate (hereinafter referred to as `NOC) from the authority is void in terms of the provisions of sub-section (2) of section 269UK read with sections 269UK(1) and 269UA(2)(f)(1) of the Act. The statement filed in Form 37-1 on 23-4-1999, was held to be not maintainable in law as it was in respect of a void transaction and was not to be acted upon.

2. Brief reference to the factual aspects would suffice:

On 9-10-1989, an agreement to sell was entered into by the petitioner and Mr. Pradeep Narang, respondent No. 3, in respect of plot No. B, at 101, New Friends Colony, New Delhi (hereinafter referred to as `the subject property), for a total sale consideration of Rs. 85 lakhs. On the said date, another agreement to sell was also executed between J.K. Industries Ltd. and Smt. Satwant Narang, mother of respondent No. 3, by which plot No. A, at 101, New Friends Colony, New Delhi was agreed to be sold to J.K. Industries Ltd. Statement in the prescribed Form 37-I under section 269UC of the Act was filed on 20-10-1989, by petitioner and respondent No. 3. On 15-12-1989, the authority held that both the plots A and B being contiguous have to be considered together and are not separable. Therefore, no NOC in terms of section 269UC of the Act was issued, inter alia, on the ground that part of land was covered by the Urban Land (Ceiling and Regulation) Act, 1976 (hereinafter referred to as `the Land Ceiling Act) and, therefore, the application was premature. It appears that Smt. Satwant Narang filed CWP 47/90 against the said order and by judgment, dt. 14-12-1990, in the said case (reported as Mrs. Satwant Narang v. Appropriate Authority (1991) 92 CTR (Del) 163, Authority was directed to issue NOC in respect of plot No. A. Representations, praying for reconsideration of the matter, were filed on 7-3-1994 and 13-4-1994, as according to petitioner, law applicable was settled by the Apex Court in Appropriate Authority & Anr. v. Tanvi Trading & Credits (P) Ltd. & Ors. . On 26-9-1994, authority informed the petitioner that no amendment could be made to the previous order dated 15-12-1989, after expiry of six months. A suit was filed on 10-11-1994, for declaration and for mandatory injunction for issuance of NOC. Authority filed its written statement and raised objection about maintainability of the suit. Later on, suit was withdrawn. By Act No. 15 of 1999, the Land Ceiling Act was repealed with effect from 22-3-1999. On 23-4-1999, petitioner again requested the respondent to reconsider the matter in view of repeal of the Land Ceiling Act and to give fresh consideration to Form 37-I already on record. Another application in the said form was also filed. On 17-6-1999, authority issued notice under section 269UC(4) of the Act indicating objection about maintainability of the fresh application. After hearing the parties, by impugned order, dated 29-7-1999, authority rejected the statement as not maintainable. In the meantime, action for prosecution under section 276AB has been initiated. Prayer in the writ petition is to quash the aforesaid order, dated 29-7-1999; for direction to the authority to issue the NOC and to nullify proceedings under section 276AB.

3. It is the stand of the petitioner that two options are available to the respondent under the scheme of the Act when statement in Form 37-I is submitted before it. Two options, according to him, are (a) issue NOC, or (b) make pre-emptive purchase of the property. According to learned counsel for respondent No. 1 basic feature of the transaction was possession of property notwithstanding absence of NOC or even before the consideration of Form 37-I application, which was filed afresh. This, according to him, was a fraud on the statutory provisions and being illegal, authorities are justified in declining to issue the NOC.

4. In order to appreciate the rival submissions, it is necessary to take note of the provisions of the Act. They are sections 269UC, 269UD and 269UK. They read as follows :

"296UC-(1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, no transfer of any immovable property in such area and of such value exceeding five lakh rupees, as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor and the person to whom it is proposed to be transferred (hereinafter referred to as the `transferee) in accordance with the provisions of sub-section (2) at least four months before the intended date of transfer.

(2) The agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties.

(3) Every statement referred to in sub-section (2) shall :

(i) be in the prescribed form ;

(ii) set forth such particulars as may be prescribed; and

(iii) be verified in the prescribed manner;

and shall be furnished to the appropriate authority in such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties.

(4) Where, it is found that the statement referred to in sub-section (2) is defective, the appropriate authority may intimate the defect to the parties concerned and give them an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the appropriates authority may, in its discretion, allow and if the defect is not rectified within the said period of fifteen days, or as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Chapter, the statement shall be deemed never to have been furnished.

269UD-(1) Subject to the provisions of sub-sections (1A) and (1B), the appropriate authority after the receipt of the statement under sub-section (3) of section 269UC in respect of any immovable property, may, notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force, make an order for the purchase by the Central Government of such immovable property at any amount equal to the amount of apparent consideration :

Provided that no such order shall be made in respect of any immovable property after the expiration of a period of two months from the end of the month in which the statement referred to in section 269UC in respect of such property is received by the appropriate authority:

Provided further that where the statement referred to in section 269UC in respect of any immovable property is received by the appropriate authority on or after the 1st day of June, 1993, the provisions of the first proviso shall have effect as if for the words "two months", the words "three months" had been substituted :

Provided also that the period of limitation referred to in the second proviso shall be reckoned where any defect as referred to in sub-section (4) of section 269UC has been intimated, with reference to the date of receipt of the rectified statement by the appropriate authority:

Provided also that in a case where the statement referred to in section 269UC in respect of the immovable property concerned is given to an appropriate authority other than the appropriate authority having jurisdiction in accordance with the provisions of section 269UB to make the order referred to in this sub-section in relation to the immovable property concerned, the period of limitation referred to in (the first and second provisos) shall be reckoned with reference to the date of receipt of the statement by the appropriate authority having jurisdiction to make the order under this sub-section :

Provided also that the period of limitation referred to in the second proviso shall be reckoned, where any stay has been granted by any court against the passing of an order for the purchase of the immovable property under this Chapter, with reference to the date of vacation of the said stay.

(1A) Before making an order under sub-section (1), the appropriate authority shall give a reasonable opportunity of being heard to the transferor, the person in occupation of the immovable property, if the transferor is not in occupation of the property, the transferee and to very other person whom the appropriate authority knows to be interested in the property.

(1B) Every order made by the appropriate authority under sub-section (1) shall specify the grounds on which it is made.

(2) The appropriate authority shall cause a copy of its order under sub-section (1) in respect of any immovable property to be served on the transferor, the person in occupation of the immovable property, if the transferor is not in occupation thereof, the transferee, and on every other person whom the appropriate authority knows to be interested in the property.

269UK-(1) Notwithstanding anything contained in any other law for the time being in force, no person shall revoke or alter an agreement for the transfer of an immovable property or transfer such property in respect of which a statement has been furnished under section 269UC unless, 269UK-(1) Notwithstanding anything contained in any other law for the time being in force, no person shall revoke or alter an agreement for the transfer of an immovable property or transfer such property in respect of which a statement has been furnished under section 269UC unless,

(a) the appropriate authority has not made an order for the purchase of the immovable property by the Central Government under section 269UD and the period specified for the making of such order has expired; or

(b) in a case where an order for the purchase of the immovable property by the Central Government has been made under sub-section (1) of section 269UD, the order stands abrogated under sub-section (1D) of section 269UH.

(2) Any transfer of any immovable property made in contravention of the provisions of sub-section (1) shall be void."

5. Though, it is fairly accepted by learned counsel for the revenue that in Tanvi's case (supra) and in DLF Universal Ltd. v. Appropriate Authority & Anr. and Jagdish A. Sadarangani v. Government of India it has been held that two options as indicated by the petitioner are available yet, according to him, a third option is available where provisions of the statute have been violated in essence and spirit. Strong reliance is placed on a decision of Rajasthan High Court in Rajasthan Patrika Ltd. v. Union of India & Ors. , more particularly, on the following observations:

"Therefore, in the facts of the present case, in addition to the two options which have been mentioned by the Supreme Court in Appropriate Authority & Anr. v. Tanvi Trading & Credits (P) Ltd. , we agree with Shri G. S. Bafna that third option was also available to the appropriate authority, i.e., not to act upon the invalid statement in Form No. 37-I filed by the parties after effecting the transfer and violating section 269UC(1) and the parties had thus rendered themselves liable to action for violating the provisions of the Income Tax Act. We are of the considered opinion that when the parties have violated the provisions of the Income Tax Act and have acted in a manner so as to thwart the very purpose of the provisions relating to the restrictions on transfer of immovable property and to thwart the Central Government's pre-emptive right of purchase, besides the alternatives of either purchasing or issuing a no-objection certificate, the option is also available not to act upon the statement in Form No. 37-I which is found to be violative of the provisions of the Income Tax Act and to prosecute the concerned parties by taking resort to the machinery under the Act. Mr. Ranka has failed to cite any case in which there is a direct violation of the relevant provisions of the Income Tax Act itself relating to the Central Government's right to pre-emptive purchase and the restrictions on transfer of immovable property and, therefore, none of the cited by Mr. Ranka, except the decision of the Delhi High Court in Megsons Exports v. Union of India (1992) 194 ITR (Del) are of any assistance for the purposes of the controversy, which we are called upon to decide in this case."

6. It has to be noted that authority has relied on sub-section (2) of section 269UK as the foundation for the impugned order. A bare reading of the said provision makes it clear that any transfer in contravention of the provisions of sub-section (1) shall be void. Said sub-section (1) deals with two situations. Restrictions imposed are relatable to the enumerated contingencies, which are indicated in sub-section (1) itself. Therefore, there is no third category available to be considered under sub-section (2) of section 269UK. To that extent, conclusions of the authority are indefensible.

7. The Apex Court in DLF Universals case (supra) considered the effect of any infraction while dealing with power under section 269UC. In Tanvi's case (supra) the Apex Court observed that two alternatives are open in the scheme of legislature that (1) Union of India through Appropriate Authority can buy the property, or (2) in the event of a decision not to buy it, issue a NOC leaving it open to the parties to deal with the property. Sub-s. (4) of section 269UC was also elaborately considered by the Apex Court in Jagdish Sadarangani's case (supra). Though, that case related to interpretation of provisions of sub-section (4) of section 269UC, Tanvi's case (supra) was referred to and it was held that sub-section (4) which was inserted in section 269UC by Finance Act of 1995, with effect from 1-7-1995, was intended to confer power on the appropriate authority to go into the legality or validity of the agreement. Section 269UC as it stood before the amendment was considered by various High Courts and by this court in Tanvi Trading & Credits (P) Ltd. & Ors. v. Appropriate Authority & Ors. . Same was subject-matter of challenge in Appropriate Authority v. Tanvi Trading's case (supra).

8. Only right which section 269UD confers on the appropriate authority is to enable it to make an order purchasing the property at an amount equal to the amount of apparent consideration. It does not give jurisdiction to the appropriate authority to adjudicate upon legality of the transaction which is proposed to be entered into and it is not concerned with validity of the sale. There is nothing in sub-section (4) of section 269UC as conferring a power on the appropriate authority to decide the question about legality of the agreement which has been entered into by the parties and on the basis of which statement under section 269UC(2) has been submitted. What is contemplated by sub-section (4) is that in case there is a defect in the statement, which must comply with requirements of sub-section (3) appropriate authority may intimate the parties concerned about the defect and give opportunity to rectify the same within a specified time. In other words, sub-section (4) of section 269UC envisages a defect which can be removed and rectified within the stipulated time of fifteen days or such further period which may be granted by the appropriate authority. A defect regarding legal validity of the agreement which renders an agreement void and unenforceable cannot be rectified. Since a defect which cannot be rectified, was not within the contemplation of the legislature in enacting sub-section (4) of section 269UC, a defect regarding legal validity of the agreement would not fall within the ambit of the said provision.

9. View expressed by the Apex Court in Jagdish Sadarangani's case (supra) was reiterated in DLF Universal Ltd's case (supra). It was inter alia observed as follows :

"We are of the opinion that these two decisions in MOI Engineering Ltd. & Anr. v. Appropriate Authority & Ors. and Murlidhar Ratanlal Exports Ltd. v. Appropriate Authority state the correct principles which can be applied in the present cases. We have held that the statement in Form No. 37-I was in order and was furnished to the appropriate authority within the time prescribed. The appropriate authority did not make any order within three months of receipt of the said statement for purchase by the Central Government of the immovable property in question. That being the position, the appropriate authority is duty bound to issue NOC to the transfer of the property."

10. It is submitted by learned counsel for revenue that the third option has to be read into the provisions to make them meaningful. It is a well settled position in law that when the words of a statute are clear, plain and unambiguous, i.e., they are reasonably susceptible to only one meaning, the courts are bound to give effect to that meaning irrespective of the consequences. (See : Nelson Motis v. Union of India ). The rule stated by Tindal, C.J. in Sussex Peerage case (1844) 11 CL & F 85 is in the following form: "If the words of the statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do in such case best declare the intention of the law giver." The view has been taken note of and adopted in the illustrated case of Pakala Narayanaswami v. Emperor , Collector of Customs v. Digvijaysinhji Spinning & Weaving Mills Ltd. , Union of India v. Sankalchand and Dr. Ajay Pradhan v. State of Madhya Pradesh . The rule applies with full force to fiscal statutes. The intention of legislature is primarily to be gathered from the language used which means that attention should be paid to what has been said as also to what has not been said. (See Institute of Chartered Accountants of India v. Price Waterhouse AIR 1998 SC 74. Therefore, we are unable to agree with the view expressed by Rajasthan High Court.

Aforesaid being the position, order dated 29-7-1999, passed by the authority and impugned in the writ petition, cannot be maintained. The same is accordingly quashed. We direct the respondents to issue NOC within one month from today. While directing so, we make it clear that we are not expressing any opinion about the legality or otherwise of the proceedings under section 276AB of the Act, as we are of the view that presently no case has been made out for interfering with it.

Writ petition is allowed to the extent indicated.