Bombay High Court
Ghatla Village vs The Appropriate Authority on 23 December, 2011
Bench: J.P. Devadhar, A.A. Sayed
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IN THE HIGH COURT OF JDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2134 OF 2010
Pandharinath Bhikaji Telge
"Vithal Niwas" Plot No.565
Ghatla Village, Ghatla Road,
Chembur, Mumbai-400 071 ... Petitioner
Vs.
1.The Appropriate Authority
constituted under Chapter XXC
of the Income Tax Act, 1961,
Mittal Court, A-Wing, 3rd floor,
Nariman Point-400 021
2. Union of India,
through Ministry of Finance,
North Block, New Delhi-110001
3. M/s Sunkrish Developers
17, Sai Commercial Building,
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Govandi Station Road,
Govandi, Mumbai-400 088 ...Respondents
WITH
WRIT PETITION NO. 2135 OF 2010
Dattaram Bhikaji Telge
"Vithal Niwas" Plot No.565
Ghatla Village, Ghatla Road,
Chembur, Mumbai-400 071 ... Petitioner
Vs.
1.The Appropriate Authority
constituted under Chapter XXC
of the Income Tax Act, 1961,
Mittal Court, A-Wing, 3rd floor,
Nariman Point-400 021
2. Union of India,
through Ministry of Finance,
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North Block, New Delhi-110001
3. M/s Sunkrish Developers
17, Sai Commercial Building,
Govandi Station Road,
Govandi, Mumbai-400 088 ...Respondents
WITH
WRIT PETITION NO. 2191 OF 2010
M/s Sunkrish Developers
17, Sai Commercial Building,
Govandi Station Road,
Govandi, Mumbai-400 088 ..Petitioner
Vs.
1.The Appropriate Authority
constituted under Chapter XXC
of the Income Tax Act, 1961,
Mittal Court, A-Wing, 3rd floor,
Nariman Point-400 021
2. Union of India,
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through Ministry of Finance,
North Block, New Delhi-110001
3. Dattaram Bhikaji Telge
"Vithal Niwas" Plot No.565
Ghatla Village, Ghatla Road,
Chembur, Mumbai-400 071 ..Respondents
WITH
WRIT PETITION NO. 2192 OF 2010
M/s Sunkrish Developers
17, Sai Commercial Building,
Govandi Station Road,
Govandi, Mumbai-400 088 ..Petitioner
Vs.
1.The Appropriate Authority
constituted under Chapter XXC
of the Income Tax Act, 1961,
Mittal Court, A-Wing, 3rd floor,57
Nariman Point-400 021
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2. Union of India,
through Ministry of Finance,
North Block, New Delhi-110001
3. Pandharinath Bhikaji Telge
"Vithal Niwas" Plot No.565
Ghatla Village, Ghatla Road,
Chembur, Mumbai-400 071 ..Respondents
Mr. J.D. Mistri, Sr. Advocate with Aasifa Khan i/by Mannandir & Co.for the
Petitioner in all petitions.
Mr. Abhay Ahuja with Ms. Suchitra Kamble for the Respondent Nos. 1 and 2
in all petitions.
CORAM : J.P. DEVADHAR AND
A.A. SAYED, JJ.
JUDGMENT RESERVED ON 2nd AUGUST, 2011
JUDGMENT PRONOUNCED ON 23rd DECEMBER, 2011
JUDGMENT (PER A.A. SAYED, J.)
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1. The challenge in the above petitions, is to two orders - both dated
23rd October, 2009, passed by the Appropriate Authority, Mumbai, under
section 269UD(1) of the Income Tax Act, 1961 ('IT Act' for the sake of
brevity). By the said orders, it was held that the difference between the fair
market value and apparent consideration in respect of the subject property
is more than 15%, and therefore, it was a fit case of pre-emptive purchase
by the Central Government under section 269 UD (1) of the IT Act.
2. Pandharinath, the Petitioner in Writ Petition No. 2134 of 2010 and
Dattatram, the Petitioner in Writ Petition No. 2135 of 2010, are brothers
and the owners (hereinafter collectively referred to as owners) of one half
undivided share each of Plot No. 565 of Suburban Scheme III of Chembur,
CTS No. 1554-A, Vithal Niwas, Ghatla Village, Ghatla Road, Chembur,
Mumbai-400 0071 totally admeasuring about 890.80 sq. metres of land,
with structure thereon (hereinafter referred to as 'the said property'). The
brothers were apparently not in good terms. Pandharinath was in exclusive
use and occupation of the eastern portion of the existing structure on the
said property, whereas Dattaram, the western portion. Both Dattaram and
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Pandharinath separately entered into agreements described as 'Development
Agreement' dated 20th April 1994 and 17th May, 1994 respectively with
M/s. Sunkrish Developers (hereinafter referred to as Transferee) to develop
and transfer the said property in respect of their undivided share on terms
more particularly set out therein. The Transferee has also challenged the
aforesaid two impugned orders (Writ Petition Nos. 2191 and 2192 of 2010).
Respondent No.1 is the Appropriate Authority under Chapter XX-C of the IT
Act, 1961 and Respondent No.2 is the Union of India through Ministry of
Finance. Inasmuch as the petitions raise common questions of facts and law,
they are being disposed of by this common judgment.
3. The events relate back to the year 1994 when Pandharinath and
Dattaram entered in two separate agreements as indicated above. Under the
said agreements, the said property was to be developed at the cost of the
Transferee as per the proposed building plans annexed to the agreements.
Each of the owners was to get an ownership flat admeasuring 988 sq. ft.
built up area as shown in the plan annexed to the agreements. An amount
of `6 lacs was to be adjusted towards construction costs of the flat out of the
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lump sum consideration of ` 26 lacs to be paid by the Transferee in
instalments, as per the payment schedule mentioned in the agreements. The
providing of the flat was stated to be the essence of the contract. The
specifications, amenities and facilities to be provided in the flat were
enlisted in the Second Schedule to the agreements. It was agreed that
within one month from the grant of Intimation of Disapproval in respect of
the proposed building or within six months from the date of agreement,
whichever is earlier, the owners were to hand over vacant physical
possession of the property to the Transferee. The said agreements
contemplated completion of the development and handing over the flats to
the owners within 18 months from the grant of commencement certificate.
The Transferee was however, during the interregnum, required to provide to
each of the owners an alternate rent free two-bed room accommodation in
Chembur area as approved by the owners, in the region of `4,000/- per
month. It was further agreed that upon completion of construction of the
building, the conveyance be executed in favour of the proposed Society
which would be formed. Upon execution of the agreements, Pandharinath
and Dattaram (alongwith Transferee) separately submitted Form 37-I (as
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contemplated under the IT Act/Rules) together with a copy of their
respective agreements.
4. The Appropriate Authority issued show cause notices to Pandharinath
and Dattaram as well as the Transferee requiring them to show cause as to
why an order under section 269UD (1) of the Income Tax Act should not be
passed for the pre-emptive of the said property by the Central Government,
as according to the Appropriate Authority there was significant
undervaluation of the said property. The Valuation Report along with three
sale instances as Annexure 'A' thereto, was annexed to the aforesaid notices.
In the case of Pandharinath, after making adjustments as reflected in the
table hereinbelow, the rate per sq.ft FSI under the agreement was worked
out by the Valuation Officer at `932/- as follows:
Particulars Amount
Total consideration `26,00,000/-
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Amt. adjusted against ` 6,00,000/-
the const. cost of the flat to be
given
Apparent consideration `20,00,000/-
Deferred value (on account of `18,68,430/-
instalments)
Liability: Construction Cost ` 6,00,000/-
Rent for 18 Months @
Rs.4000/-pm ` 72,000/-
Credit:
Scrap value ` 25,950/-
Net Consideration ig `25,14,480/-
Area of Land
Total Land Area 445.4 sq. mtrs.
Total FSI available 3596 sq.ft.
890.80 X10.764X1/2 X0.75
FSI available to the Developer 2698 sq.ft.
FSI rate per sq.ft. (built up) ` 932/-
5. So far as Dattaram's case is concerned, there was a slight difference
in the FSI rate per sq. ft as worked out by the Valuation Officer, because of
the difference in the agreement dates and quantum of earnest money,
which resulted in a difference in the deferred value of the instalment
amount. The rate per sq. ft. FSI as per the agreement was worked out in the
case of Dattaram as follows:
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Particulars Amount
Total consideration `26,00,000/-
Amt. to be adjusted against ` 6,00,000/-
the const. cost of the flat to be
given
Apparent consideration `20,00,000/-
Deferred value (on account of `18,70,340/-
instalments)
Liability: Construction Cost ` 6,00,000/-
Rent for 18 Months @ ig
Rs.4000/-p.m. ` 72,000/-
Credit:
scrap value ` 36,630/-
Net Consideration `25,05,710/-
Area of Land
Total Land Area 445.4 sq. mtrs.
Total FSI available 3596 sq.ft.
890.8 X10.764X1/2 X0.75
FSI available to the Developer 2698 sq.ft.
FSI rate per sq.ft. (built up) ` 929/-
6. In response to the said show cause notices, the Transferee filed
written submissions. As per the calculation given by the Transferee the rate
per sq. ft. of FSI of the said property after making adjustments came to `
1,017/-. Four sale instances were cited by the Transferee to show that the
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rate of the said property as per agreement was the fair market rate
prevailing at the relevant time.
7. On 30th August 1994, the Appropriate Authority by two separate
orders rejected the contentions and sale instances quoted by the Petitioners
and concluded that keeping in view the size of the plot, its location, defect
free title of the land, its future potential and the rate of sale instances
quoted in the show cause notices, which ranged between ` 1,476/- per sq.
ft. to ` 1,749/-per sq. ft., the estimated market value of the property was of
` 1,200/- per sq. ft. of FSI as against ` 932/- (in case of Pandharinath)
and ` 929/- (in case of Dattaram) under the agreements and the total
value was worked out to ` 32,37,600/- ( FSI 2698 sq. ft. X 1,200) in case of
each of the owners. It further held that since the difference between the fair
market value and apparent consideration is more than 15%, it fit case for
pre-emptive purchase by the Central Government under section 269 UD(1)
of the IT Act. In the case of Pandharinath, the consideration payable by the
Central Government was stated to be `18,68,430/-, and in the case of
Dattaram, `18,70,340/-. The Appropriate Authority vide its letters dated
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30th August, 1994, which was sent alongwith acquisition orders, also called
upon owners to submit the original title deeds/documents etc. relating to
the said property within 6 days and to hand over the possession of the
property within 15 days from the receipt of the letter. It was stated in the
said letters that upon passing of the orders dated 30-08-1994, the property
vests in the Central Government and that on failure to comply, action would
be taken as per provisions of Section 269UE(2) and (4).
8. Aggrieved by the orders dated 30th August, 1994 passed by the
Appropriate Authority, Pandharinath and Dattaram jointly filed a Writ
Petition being W.P. No. 2110 of 1994 on 14-9-1994. By an order dated
22-9-1994 the Division Bench of this Court granted interim relief in the
following terms:
"Only interim relief granted is, Department will not auction the
property after obtaining the possession"
This order was not subjected to challenge by either of the parties.
9. On 28-09-1994, the Appropriate Authority informed the owners
and Transferee that since they had failed to handover vacant possession of
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the property in time the apparent consideration of the property is deposited
in Appropriate Authority's P.D. Account.
10. By letter dated 30th September, 1994, the owners through their
Advocates informed the Appropriate Authority that pursuant a summons
being issued under section 131 of IT Act, the original title deeds of property
had already been handed over on 27th September, 1994 to Shri Pradeep
Sharma, the then Deputy Commissioner of Income Tax, and informed the
Appropriate Authority that they were ready and willing to hand over
physical possession of the said property subject to the Central Government
complying with the terms and conditions of the agreements which the
Transferee was required to comply with. The Appropriate Authority
addressed a letter dated 11th October, 1994 to the owners, the material
portion which is reproduced hereinbelow:
"As regards the question of possession, I have been directed
to state as under:
Members of Appropriate Authority discussed the question of
possession of the property with reference to the purchase order,
Court's order, terms of Agreement for transfer and letter of the
transferor. The Transferor has represented that he will give
possession of the property, as per the terms of transfer on
alternate accommodation being provided to him. The Members of
the Appropriate Authority decided that the transferor should give
a letter confirming the possession of the Department on the
property and that he is staying there till he has provided an
alternate accommodation.
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Since the matter is in dispute in writ petition before the
High Court and the auction is stayed, the members Appropriate
Authority considered that the payment for the purchase to the
transferor will be released after the High Court's final order in the
writ proceedings. "
11. By letter dated 9th November, 1994, the owners called upon the
Appropriate Authority to take possession of the said property by complying
with the terms and condition of the agreements which the Transferee was
required to comply with and pay the purchase price that was required to be
paid to them within one month from the date of passing of the orders and
further stated that there was no dispute regarding title to the property or to
the persons who should receive the payment. The owners, by their letter
dated 9th January, 1995 agreed to give a letter confirming that the
Appropriate Authority is in notional possession of the property as against
the Appropriate Authority confirming the compliance of the obligations
under the agreements and once again asked the Appropriate Authority to
take possession of the said property and make payments of the purchase
price to them. Matters stood at that and during the pendency of the writ
petition, the owners continued to remain in possession of the property and
the purchase price remained deposited with the Appropriate Authority,
which amount was later invested in Term Deposits.
12. The aforesaid Writ Petition No. 2110 of 1994 came up for final
hearing in 2008-09 and further affidavits came to be filed by the parties.
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The Division Bench of this Court after considering the submission of the
parties vide its Judgment dated 15th June, 2009 held that the orders dated
30th August, 1994 passed by the Appropriate Authority under section
269UD(1) of the Act cannot be sustained. The Division Bench observed that
the transactions referred and relied upon by the Petitioners and more
particularly transaction No.3 were not properly considered by the
Appropriate Authority. The Division Bench further observed that the
Appropriate Authority appears to have not taken into consideration three
transactions which were relied upon by the Appropriate Authority in the
show cause notice and that it is difficult to accept the contention taken in
the affidavit filed by Mr. M.P. Ahuja, Assistant Commissioner of Income Tax
on 25-2-2009, that those transaction were not relied upon. It was noted that
as per calculation made by the Appropriate Authority, the apparent
consideration is about `932/- per sq. ft. of FSI and if 15% is added therein
this come to `1,072/-. On the other hand, as per calculation of Petitioners
the consideration was `1,017/- per sq. ft. of FSI and if 15% is added
thereto, it comes to `1,170/- and therefore the difference between the fair
market price fixed by the Appropriate Authority and the apparent
consideration with an addition of 15% is not much. The Appropriate
Authority should have given valid reasons and data to as to how the market
value could be ` 1,200/- sq. ft. The Division Bench observed that the
Appropriate Authority had given conflicting and contrary findings in respect
of net apparent consideration and the fair market value to be paid by the
Government to the Petitioners as according to the show cause notice it was
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stated to be ` 18,68,430/-, whereas according to the Valuation Report it
worked out to ` 25,14,480/-, which showed non application of mind. In the
circumstances, the Division Bench set aside the impugned orders dated 30th
August, 1994 passed by the Appropriate Authority and remanded the matter
for fresh hearing and granted liberty to the parties to rely on any additional
material. Directions were also given that the matter shall be decided within
a period of 4 months from the date of appearance of the Petitioners.
13. After remand, in the 2nd round of hearing, the owners filed
detailed submission dated 10th August, 2009. No new instances were relied
upon by the either of the parties. After hearing the Petitioners, on 23rd
October, 2009, the Appropriate Authority again passed the two orders for
pre-emptive purchase under section 269UD(1) of the IT Act, which are
impugned in the above petitions. It was recorded in the orders that the
payment will be made by the Central Government in accordance with the
provisions of Section 269UF(1) read with section 269UG (1) of the IT Act
within the stipulated period subject to the owners complying with the
conditions under section 269UE(2) of surrendering or delivering possession
of the property to the Appropriate Authority within 15 days of the service of
the said order.
14. Being aggrieved by the orders dated 23rd October, 2009, initially the
owners jointly filed Writ Petition No.1210 of 2010. The said writ petition
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was allowed to be withdrawn with liberty to file two separate petitions.
Thereafter, the aforesaid petitions came to be filed by the owners as also
the Transferee.
15. Mr. Mistri, Learned Senior Counsel for the Petitioners made the
following submissions.
(i) that under the agreements each of the owners was to receive a
sum of ` 26,00,000/- and one flat admeasuring 988 sq. ft. in the newly
constructed building and the owners were only required to pay `
6,00,000/- being the costs of construction of the flat and the land was to be
transferred to a Co-operative Housing Society. For the purpose of
determining the apparent consideration and the rate, the Appropriate
Authority ought to have considered the market value of flat of 988 sq.ft. and
not the construction cost of the flat. The rate per sq.ft. FSI of ` 932/- (in
case of Pandharinath) and ` 929/- ( in case of Dattaram) adopted by the
Appropriate Authority to decide whether the property was fit to purchase
under Chapter XX-C was therefore erroneous;
(ii) that there was a conflict as regards the net apparent
consideration and the fair market value to be paid by the Government to the
owners as reflected even in the order dated 15th June, 2009 of the Division
Bench of this Court;
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(iii) that the Appropriate Authority has not tendered the payment
within the stipulated time as required under Section 269 UH of the I.T. Act
and that the amount was deposited by the Central Government in the P.D.
Account of Appropriate Authority prior to the passing of the impugned
orders, cannot be considered as a valid deposit under Section 269 UG(1)
and there was no tender as required under the law made by the Appropriate
Authority to the owners and, therefore, the impugned orders stand
abrogated. Under Section 269 UG the Appropriate Authority can deposit the
amount in the P.D. Account only when a dispute arises as to apportionment
of consideration [Section 269UG(2) ] or the person entitled to receive the
consideration refuses to accept the payment or if there is any dispute as to
the title to receive the amount of consideration [Section 269UG(3)];
(iv) that the mere fact that the Petitioners did not give possession of
the subject property would be no reason for the Appropriate Authority not
to tender the amount to the owners and that no such condition has been
stipulated under Section 269 UG of the I.T. Act. In any event, the owners
had shown their willingness to give possession of the said property upon the
Appropriate Authority complying with the obligations of the Transferee
under the Agreement including providing an alternate rent free
accommodation as provided in the agreements;
(v) that the three sale instances relied upon by the Appropriate
Authority are not comparable with the said property and the details
provided in respect of the said instances of the Appropriate Authority were
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false and incorrect as set out in a separate chart produced before this Court
by the Petitioners;
(vi) that the sale instances given by the Petitioners were comparable
to the said property and ought to have been accepted and that the
Appropriate Authority has wrongly sought to distinguish and ignore the sale
instances given by the Petitioners;
(vii) that the Appropriate Authority failed to comply with the terms
and conditions of the agreements including providing alternate rent free
accommodation.
16. In support of his submissions the learned Senior Counsel has relied
upon the following judgments:
(i) Chand V. Raheja Vs. Union of India (1996) 7 SCC 175.
(ii) Parasrampuria Estate Developers P. Ltd. V. Members of Appropriate
Authority, 282 ITR 110.
(iii) Union of India Vs. Madhusudan Das, 254 ITR 581.
(iv) Madhusudan Das Vs. Appropriate Authority, 223 ITR 353.
(v) Hotel Mardias Pvt. Ltd. Vs. Union of India, 220 ITR 94.
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(vi) Appropriate Authority Vs. Tanvi Trading Trading and Credits P.
Ltd., 191 ITR, 307.
(vii) Tanvi Trading & Credits P. Ltd. Vs. Appropriate Authority, 188
ITR 623.
(viii) Jethamal Mohanlal Khivansara V. Union of India, 272 ITR 143.
(ix) Mrs. Kailash Suneja Vs. Appropriate Authority, 231 ITR 318.
(x) Shrichand Raheja Vs. S.C. Prasad (Appropriate Authority), 213
ITR 33.
The Ld. Senior Counsel also pointed out the meaning of the word "tender"
as appearing in Black's Law Dictionary - Seventh Edition to mean an
unconditional offer of money or performance to satisfy a debt or obligation.
17. Mr. Ahuja, learned Counsel for the Respondents, on the other hand
submitted as under :
(i) that the entire valuation has been done in accordance with the terms of
the agreement and in accordance with the Income Tax Act and the Rules
framed thereunder;
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(ii) that all the three instances cited by the Appropriate Authority are
comparable for the reasons given in the tabular remarks column submitted
to this Court on behalf of the Respondents;
(iii) that the four instances cited by the Petitioners were not comparable
and that out of the four instances, sale instance Nos. 2 and 4 were not
pressed by the Petitioners themselves;
(iv) that the Appropriate Authority had arrived at the fair market value of
the flat at `1,200/- per sq. ft of FSI after substantial discount of
comparable sale rates and after considering all relevant material and
hearing the parties;
(vi) that the High Court may not exercise an appellate power while
examining the correctness of the conclusions arrived at by the Appropriate
Authority;
(v) that if two views were possible, the High Court would not substitute its
own conclusion for that of the Appropriate Authority;
(vi) that Section 269 UH has no application to the facts of the present case
in as much as the owners, though obliged, failed to hand over possession of
the subject property under Section 269 UE (2) of the Income Tax Act and
the Appropriate Authority had offered to make payment of the apparent
consideration within one month subject to the owners delivering possession
of the said property;
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(vii) that in any event, the amount has been deposited by the Appropriate
Authority as required under the provisions of the Act. In the instant case,
under Section 269 UG (3), it was not necessary for the Appropriate
Authority to tender the apparent consideration and it was open to them to
deposit the same in the P.D. Account as there was a dispute as to the title.
The expression "title" used in Section 269 UG (3) would include
"possession" which was required to be given by the owners to the
Appropriate Authority and, therefore, there was no question of any
abrogation as suggested by the Petitioners.
In support of his submissions the learned Counsel has relied upon the
following judgments :
(i) Appropriate Authority Vs. Smt. Sudha Patil, 235 ITR 118.
(ii) Union of India Vs. Shatabdi Trading and Investment P. Ltd., 251 ITR
93.
(iii) Smt. Vimla Devi G. Maheshwari Vs. S.K. Laul, 208 ITR 734.
(iv) Mrs. Sooni Rustam Mehta Vs. Appropriate Authority 190 ITR 290.
(v) Special Land Acquisition Officer (1) Bombay and Bombay
Suburban District V. Natverlal Jamnadas Muni AIR 1968
Bombay 31.
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(vi) Sarju Prasad Saha Vs. The State of U.P., AIR 1965 SC 1763.
The Ld. Counsel also invited our attention to Wharton's Concise Law
Dictionary to submit that the expression "title" would include "possession"
within its ambit.
18. We have given our anxious consideration to the rival contentions.
Valuation and Apparent Consideration
Valuation
19. Under the agreements, the consideration was fixed at `26,00,000/-.
Each of the owners was to be provided a flat admeasuring 988 sq ft (built-
up) on ownership basis in the proposed new building. Out of the
consideration of `26,00,000/-, a sum or `6,00,000/- was to be adjusted
towards the cost of construction of the flat, at the time of giving possession
of the flats to the owners. Thus, in the transactions there were broadly two
constituents involved in terms of benefit to the owners for giving up their
interest in the said property. Firstly, the owners were to receive an amount
of `20,00,000/- (`26,00,00/- minus `6,00,000/-). And secondly, they were
to receive a flat each, which obviously would have significant value
attached to it. In other words, over and above the amount of `20,00,000/-
which each of the owners were to get in hand, they were to be provided
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with a flat. As per the impugned orders, the amount payable to
Pandharinath was stated to be `18,68,430/- and `18,70,340/- to Dattaram,
after making necessary adjustments in the figure of `20,00,000/-. However,
the question that begs an answer, particularly from the perspective of the
owners, is - what happened to the flat which the owners were to be
provided under the Agreements?
20. It is contended on behalf of the Respondents that the Central
Government is not in the business of construction and development. Even
assuming that the Central Government was not in a position and therefore
not required to provide the flats as per the terms and conditions of the
agreements, surely, if the Appropriate Authority has exercised the power of
pre-emptive purchase, they were required to compensate the owners in
terms of the value of the flats which were to be provided to them under the
agreements. There was a fair value attached to the ownership flats which
were to be handed over to the owners upon construction of the proposed
building, and it can by no means be said that if the order for pre-emptive
purchase were passed, it would result in the rights of the owners to the
compensation for the value of the flats being destroyed or even diminished
in any manner.
21. On perusal of the report of the Valuation Officer, it is seen that in the
rate calculation, the total consideration is shown as ` 26,00,000/- and out
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of this amount, ` 6,00,000/- is shown as "Amount adjusted against
construction cost of flat to be given". Thus, ` 6,00,000/- is adjusted on the
premise that a flat was to be given to each of the owners. However, the
Valuation Reports are silent so far as the market value of the flats are
concerned.
22. In the transactions as it stood, the owners would have benefited
much more in terms of what they would receive as consideration inasmuch
as they were to receive a flat by paying merely the cost of construction of
the flat as against the market value of the flat which would naturally be
much more than the value of the cost of construction of the flat. Had the
market value of the flat taken into account, the value would work out to
much more than ` 26,00,000/-, and the possibility of that figure
matching up to the estimated fair market rate per sq.ft. FSI of ` 1,200/-
adopted by the Appropriate Authority based on the Valuation Report,
cannot be ruled out. There was therefore, a lacuna in the valuation of the
property and the Valuation Reports are flawed to that extent. We therefore
find merit in the contention of the Ld. Sr. Counsel that in working out the
valuation, the market value of the flats are not taken into consideration.
23. Section 269UA(b)(2)(iii) of the IT Act which defines 'apparent
consideration' of immovable property falling under sub-clause (ii) of clause
(d) of section 269UA(d) to mean - in cases where the consideration for the
27 WP2134andothers.sxw
transfer consists of a thing or things and a sum of money, the aggregate of
the price that such thing or things would ordinarily fetch on sale in the
open market on the date on which the agreement for transfer is made, and
such sum.
24. In our opinion, there was thus an inherent flaw in the valuation of the
said property by the Valuation Officer and even the Appropriate Authority
has mechanically accepted the valuation and on this count alone the
impugned orders would stand vitiated.
Apparent Consideration
25. In Pandharinath's case, in the Valuation Report the amount of `
20,00,000/- which was to be paid in instalments by the Transferee, is
shown as consideration and the amount of `18,68,430/- has been arrived
at by taking the discounted value of `20,00,000/- in view of Section
269UA(b) of the IT Act and Rule 48(I) of the IT Rules. In the said amount
of `18,68,430/-, the cost of the construction of flat of ` 6,00,000/- and
further sum of ` 72,000/- (18 months rent @ ` 4,000/- per month) are
added. This figure comes to `25,40,430/- ( `18,68,430/- +`6,00,000/- +
28 WP2134andothers.sxw
`72,000/- = `25,40, 430/-). From this amount of `25,40,430/-, `25,950/-
is deducted, being the scrap value @ ` 30/- per sq.ft. for 865 sq. ft. area of
the existing structure, which comes to `25,14,480/- (`25,40,430/- minus
`25,950/- =`25,14,480/-). The net consideration is accordingly shown as
`25,14,480/- in the Valuation Report.
26. Thus, on the basis of this figure of ` 25,14,480/-, the rate of per sq.ft
FSI has been worked out as `932/- (`25,14,480/- divided by 2698 sq.ft.).
Though, in the Valuation Report, the net consideration was shown as
` 25,14,480/-, in the show cause notice issued by the Appropriate Authority
and its order dated 30-08-1994 (before remand), the consideration payable
by the Central Government is incorrectly stated to be ` 18,68,430/-.
27. The Division Bench, therefore, in its order dated 15th June 2009 in the
earlier Writ Petition, whilst remitting the matter back to the Appropriate
Authority, in paragraph 12 observed thus:
"12. The impugned orders also revealed that in respect
of the share of Petitioner No. 1 - Dattaram, the Appropriate
29 WP2134andothers.sxw
Authority worked out the consideration payable by the Central
Government to Rs 18,70,340/-. He observed out out of the
amount of consideration of Rs. 20 lakhs, Rs. 4 lakhs were paid
as earnest money and payment of remaining Rs. 16 lakhs was
deferred and, therefore, discounted value of the deferred
payment was worked out at Rs. 14,70,340/-. By making
addition of Rs. 4 lakhs already paid, he determined the
consideration to Rs. 18,70,340. In the case of Petitioner No. 2 -
Pandharinath, the amount of Rs. 1 lakh was paid as earnest
money and payment of balance amount of Rs. 19 lakhs was
deferred. The discounted value of the deferred payment was
worked out at Rs. 17,68,480/- By adding Rs. 1 lakh already
paid, the consideration payable by the Central Government was
worked out at Rs. 18,68,430 by the Appropriate Authority. As
already pointed out, as per the valuation report, net apparent
consideration of property of Petitioners Nos. 1 and 2 was
worked out at Rs. 25,05,710/- and Rs. 25,14,480/- and the
valuation report was the basis of the show cause notices. It
would show that Appropriate Authority gave conflicting and
contrary findings in respect of net apparent consideration and
the fair market value to be paid by the Government. It shows
non-application of mind by the Appropriate Authority in
passing the impugned order."
28. Section 269 UF (1) stipulates that where an order for the purchase of
any immovable property by the Central Government is made, the Central
Government shall pay by way of consideration for such purchase, an amount
equal to the amount of the apparent consideration.
30 WP2134andothers.sxw
29. We find that despite the observations of the Division Bench of this
Court as regards the non application of mind by the Appropriate Authroity,
the impugned order still maintains on one hand, that the consideration
payable by the Central Government works out to `18,68,430/-, though on
the other hand, the impugned order categorically records - "the apparent
consideration in respect of the subject property is Rs.25,14,480/- after
making necessary adjustment in the agreement price of Rs. 26,00,000/-".
Pertinently, the impugned order of the Appropriate Authority adopts the
rate of `932/- per sq. ft. FSI as worked out by the Valuation Officer. We
find that when the rate of `932/- per sq. ft. FSI has been accepted by the
Appropriate Authority on the basis of net consideration of ` 25,14,480/-,
there was no rational basis for the Appropriate Authority to reduce this
figure to ` 18,68,430/-.
30. Similarly, in Dattaram's case, we find that when the rate of `929/-
per sq. ft. FSI as per the Valuation Report has been accepted by the
Appropriate Authority on the basis of net consideration of `25,05,710/-,
there was no rational basis for the Appropriate Authority to reduce this
figure to `18,70,340/-.
31 WP2134andothers.sxw
31. In our view therefore, there was complete non application of mind on
the part of the Appropriate Authority in stating in the impugned order that
the amount payable was ` 18,68,430/- when the apparent consideration
was admittedly `25,14,480/- in case of Pandharinath and further that the
amount payable in case of Dattaram was `18,70,340/- when the apparent
consideration was admittedly `25,05,710/-.
32. Thus, in the impugned orders the amount that has been stated to be
payable to the owners and which is ultimately deposited by the Central
Government in the PD Account of the Appropriate Authority is not the
apparent consideration viz. ` 25,14,480/-, but an amount of `18,68,430/-
in the case of Pandharinath. In the case of Dattaram, the amount that has
been stated to be payable to him and which is deposited is not the apparent
consideration of ` 25,05,710/- , but an amount of `18,70,340/-.
33. This is clearly contrary to the mandate of sections 269UD(1) and
269UF(1) of the IT Act which enjoins upon the Central Govt. to pay by way
of consideration for the purchase, an amount equal to the amount of
apparent consideration. Consequently therefore the quantum of deposit
32 WP2134andothers.sxw
made by the Central Government in the PD Account of the Appropriate
Authority is not in accordance with law and the said deposit would have to
be held as invalid.
34. For the aforesaid reasons, we find that the impugned orders of the
Appropriate Authority are perverse and suffer from the vice of non-
application of mind, and on this ground also the impugned orders are
unsustainable and are liable to be set aside.
35. In Appropriate Authority Vs. Smt. Sudha Patil, (supra) relied upon
on behalf of the Respondents, the Apex Court observed as under:
"Merely because no appeal is provided for, against the order of the
appropriate authority directing compulsory acquisition by the
government, the supervisory power of the High Court does not get
enlarged nor can the High Court exercise an appellate power. On
the materials, if two views are possible, one which has been given
by the inferior Tribunal and the other which the High Court may,
on examining the materials itself, come to a conclusion, even then
it would not be possible for the High Court to substitute its
conclusion for that of the Tribunal."
33 WP2134andothers.sxw
In the said case, it was an admitted position that the apparent consideration
was less than the market value of the subject property. The Supreme Court
found that the plea of the transferor that he agreed to sell the land at a
lower price as he was in urgent need of money to defray the medical
expenses on account of kidney transplantation was duly considered but
negatived inasmuch as the transplantation was done in June, 1994, and the
agreement of sale was made in September, 1995.
Pertinently, it was observed by the Supreme Court in the said case as under:
" In the instant case, the appropriate authority did consider all
the germane and relevant materials produced before it in the
course of the proceedings and formed its opinion that there was
understatement of consideration in the agreement by an amount
more than 15 per cent of the fair market value."
36. The decision of the Apex Court in Union of India and others Vs.
Shatabadi Trading and Investment P. Ltd. (supra), is relied upon on
behalf of the Respondents to contend that proceeding arising under article
226 of the Constitution of India are in the nature of judicial review and such
34 WP2134andothers.sxw
review can be only in respect of the process of decision and not the decision
itself.
In the said case, the owner of the property did not challenge the order of
the Appropriate Authority and accepted the amount of apparent
consideration for the transfer as well as interest thereon without any protest
and did not contest the matter in the High Court. The Supreme Court also
noted that the intending purchaser had no interest in the property.
In the present case, we have concluded that there was perversity and non-
application of mind on behalf of the Valuation Officer as well as the
Appropriate Authority. All germane and relevant materials were not
considered by the Appropriate Authority and there was an inherent flaw in
the valuation. The aforesaid two judgments would therefore not be
applicable in the facts of the present case.
37. In Smt. Vimla Devi G. Maheshwari Vs. S.K. Kaul (supra), relied
upon by Learned Counsel for the Respondents, it was held by the Division
Bench of this Court:
35 WP2134andothers.sxw
"Unless the above findings of the appropriate authority acting under
section 269UD of the Income tax Act, 1961 are perverse or show a
total non-application of mind to the relevant facts, it would not be
proper on the part of the High Court to interfere with the order of
purchase."
Having come to a finding that there was perversity and non-application of
mind in passing the impugned orders, this judgment would support the case
of the Petitioners rather than that of the Respondents.
38. In the case of the Appropriate Authority Vs. R.C. Chawala, (2001) 4
SCC, 710, it was observed by the Apex Court :
"It is well known principle of Administrative Law that if the
relevant factor is ignored, the order become vitiated"
The same principle was also reiterated by the Supreme Court in the
Appropriate Authority Vs. Shashi Saigal, (2001) 5 SCC 627 wherein it
was held :
"When relevant factor has been ignored by the Appropriate
Authority, the High Court has rightly held that the order of the
Appropriate Authority is vitiated"
36 WP2134andothers.sxw
Abrogation and Re-vesting
39. The present case is governed by Chapter XX-C of the IT Act, 1961
(which has since ceased to operate from 01-07-2002).
Sub-section (1) of section 269UE provides that where an order under
Section 269UD(1) is made by the Appropriate Authority in respect of an
immovable property, such property shall, on the date of such order, vest in
the Central Government in terms of the agreement for transfer.
Sub-section (2) of Section 269UE stipulates that the transferor or any other
person who may be in possession of the immovable property in respect of
which an order has been passed under Section 269 UD(1) shall surrender or
deliver possession thereof to the Appropriate Authority within fifteen days
of the service of such order on him.
Sub-section (3) of Section 269UE provides that in the event any person
refuses or fails to comply with the provisions of sub-section (2), the
Appropriate Authority may take possession of the immovable property and
may for that purpose use such force as may be necessary.
Sub-section (4) of section 269 UE provides that notwithstanding anything
contained in sub-section (2), the Appropriate Authority may, for the
purpose of taking possession of any property referred to in sub-section (1),
37 WP2134andothers.sxw
requisition the services of any police officer to assist him and it shall be the
duty of such officer to comply with such requisition.
Section 269UF states that when an order for purchase of immovable
property is made, the Central Government shall pay by way of consideration
for such purchase, an amount equal to the amount of the apparent
consideration.
Section 269UG(1) lays down that the amount of consideration payable in
accordance with the provisions of Section 269 UF 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.
Sub-section (2) of Section 269 UG provides that notwithstanding anything
contained in sub-section (1), if any dispute arises as to the apportionment
of the amount of consideration amongst persons claiming to be entitled
thereto, the Central Government shall deposit with the Appropriate
Authority the amount of consideration required to be tendered under sub-
section (1) within the period specified therein.
Sub-section (3) of Section 269 UG provides that notwithstanding anything
contained in sub-section (1), if the person entitled to the amount of
consideration does not consent to receive it, or if there is any dispute as to
the title to receive the amount of consideration, the Central Government
shall deposit with the Appropriate Authority the amount of consideration
38 WP2134andothers.sxw
required to be tendered under sub-section (1) within the period specified
therein.
Section 269 UH provides that if the Central Government fails to tender
under sub-section (1) of Section 269 UG 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, the order to purchase the immovable
property by the Central Government made under sub-section (1) of Section
269 UD shall stand abrogated and the immovable property shall stand re-
vested in the transferor after the expiry of the aforesaid period.
40. In the present case, the following facts are not in dispute :
(i) that after passing of the impugned orders on 23-10-2009, the amount
of consideration is not tendered to the owners;
(ii) that the amount of consideration was deposited in the P.D. Account of
the Appropriate Authority by the Central Government on 28-09-1994 after
the previous orders of pre-emptive purchase were passed on 30-08-1994;
(iii) that the property on the date of the impugned orders vests in the
Central Government;
(iv) that the owners did not surrender or deliver possession of the
property to the Appropriate Authority;
39 WP2134andothers.sxw
(v) that the property was not taken possession of by force by the
Appropriate Authority and the same continued to be in possession of the
owners;
41. The question required to be considered is - if the Central Government
had failed to tender the amount payable to the owners, in the facts of the
present case, can it be said that the impugned orders has abrogated and the
subject property stood re-vested in the owners?
42. The impugned orders in the last paragraph record as follows:
"The payment by the Central Govt. will be made in accordance
with the provisions of Section 269UF(1) read with section
269UG(1) of the IT Act within the stipulated period of one
month subject to the transferor complying with the condition
u/s 269UE(2) of surrendering or delivering the possession of
the property to the Appropriate Authority or to any other person
duly authorized by it in this behalf within 15 days of the service
of this order on him".
40 WP2134andothers.sxw
43. The Appropriate Authority has thus suo moto decided not to tender
the payment of consideration unless the owners hand over possession of the
property. No reasons have been stated in the impugned orders in making
this stipulation. In our view, in the facts of the present case, there was no
such discretion vested in the Appropriate Authority and it was not
permissible for the Appropriate Authority to make the handing over
possession of the property by the owners as a condition precedent to the
tender of the payment of consideration by the Appropriate Authority, for the
reasons which we shall presently deal with.
44. The parliament, in enacting the provisions for pre-emptive purchase
which were introduced by way of addition of Chapter XX-C in the IT Act,
had clearly contemplated such situations, where inspite of the orders of pre-
emptive purchases being passed, the transferor being reluctant to hand over
possession of the property. It was therefore provided under section 269
UE(1) that upon the making of an order of pre-emptive purchase, the
property would vest in the Central Government on that date and further
provided under section 269UE(2) that the transferor shall hand over
41 WP2134andothers.sxw
possession of the property to the Central Government within 15 days of the
service of the order of pre-emptive purchase. Section 269 UE(3) provided
that upon the failure of the transferor to hand over possession of the
property, the Appropriate Authority was empowered to take forcible
possession. Section 269UE(4) is particularly relevant for our purposes. We
deem it appropriate to extract the same in its entirety hereunder:
269UE(4)-" Notwithstanding anything contained in sub-
section (2), the appropriate authority may, for the purpose
of taking possession of any property referred to in sub-
section (1), requisition the services of any police officer to
assist him and it shall be the duty of such officer to comply
with such requisition."
45. The aforesaid sub-section (4) of section 269UE thus begins with a
non-obstante clause and has an overriding effect on section sub-section (2)
which obliges the transferor to deliver possession within the prescribed
period. Sub-section (4) thus provides the course of action to be followed if
the transferor fails to hand over possession in the prescribed period. In the
present case, there were no fetters upon the Appropriate Authority at the
relevant time after passing of the impugned orders to adopt that course and
take forcible possession of the property.
42 WP2134andothers.sxw
46. Admittedly, the amount of consideration has not been tendered to the
owners, which was a mandatory requirement under Section 269UG(1). To
get over this situation, it is contended on behalf of the Respondents that
provisions of section 269UH(1), which provide for abrogation of the pre-
emptive purchase orders and re-vesting of the property to the transferor,
are attracted only if there is either failure to tender the purchase price or
failure to deposit the same with the Appropriate Authority by the Central
Government. It is submitted that in the instant case, the purchase price has
been deposited with the Appropriate Authority. It is contended that there
was a dispute as to the "title" and therefore section 269 UG(3) would be
applicable, which permits the making of the deposit, instead of tendering
the amount to the owners. The submission urged is that the expression
"title" used in section 269 UG (3) would include "possession" and since the
owners had failed to deliver possession of the property, it is to be construed
that there was a dispute as to "title". This contention on behalf of the
Respondents cannot be countenanced, as it overlooks the fact that the
expression "dispute" appearing in sub-section (3) is not in context of "title",
43 WP2134andothers.sxw
but "title to receive the amount of consideration". In the present case, it is
undeniable that there was no dispute as regards the title of the owners to
receive the amount of consideration.
47. Under sub-sections (2) and (3) of section 269 UG, it is only under
three circumstances that it is permissible for the Central Government to
deposit the amount of consideration. Firstly, when the dispute arises as to
the apportionment of the amount of consideration amongst persons
claiming to be entitled thereto; secondly, when a person entitled to the
amount of consideration does not consent to receive it; and thirdly, if there
is any dispute as to title to receive the amount of consideration.
48. In our view, in the facts and circumstances of the present case, the
conditions mentioned in sub-sections (2) and (3) of section 269UG, which
permit the Central Government to deposit the purchase price with the
Appropriate Authority (instead of tender to the owners) have not been
satisfied and, therefore, the deposit made in the P.D. account of the
44 WP2134andothers.sxw
Appropriate Authority by the Central Government was impermissible and
not in accordance with law.
49. Having come to the conclusion that the deposit made was
impermissible and not in accordance with law and considering the
mandatory provisions of tender as stipulated under section 269 UG(1), as
also the admitted position that the Central Government had not tendered
the amount of consideration to the owners, section 269 UH would clearly be
attracted in the facts of the case.
50. In Chand V. Raheja Vs. Union of India, (1996) 7 SCC 175 the Apex
Court noted as under:
" In other words the amount so paid on 1-3-1994 to the
transferors by the Central Government fell short of the total
consideration by the sum of Rs. 50 lacs only.... Learned Counsel
for the Revenue in reply submitted that the agreement between
the Transferor and Transferee enabled the retention of the
amount of Rs. 50 lacs out of the total amount of consideration
till vacant possession of the outhouses of the bungalow was also
handed over to the purchaser (transferee) and since the vacant
possession of some of the outhouses and servant quarters had
45 WP2134andothers.sxw
not been given till 18-4-1994, there was no obligation on the
Central Government to pay this amount till that date."
Rejecting the contention of the Revenue, the Apex Court held ;
" The plain language of Section 269UG(1) leave no doubt that in the
facts and circumstances of the case, as a result of non-payment of the
balance amount of Rs. 50 lacs in terms of the express requirement of
Section 269UG(1), the failure of the Central Government has resulted
in attracting Section 269 UH of the Act. Accordingly the impugned
order passed by the Appropriate Authority stood abrogated and the
property was re-vested in the transferor in terms of sub-section (1) of
Section 269UH of the Act."
51. In Parasrampuria Estate Developers P. Ltd. Vs. Members of
Appropriate Authority (Supra), the Division Bench of this Court observed
in para 10 as follows:
"Apart from the above, in the present case, admittedly, the
apparent consideration determined under the impugned order
has not been tendered to the Petitioners and the same has been
deposited in the account of the appropriate authority. The only
reason given by the Respondents for not tendering the amount is
that, on the date of purchase the building was incomplete and,
therefore, the amount has not been tendered to the Petitioners.
As held by the Apex Court in the case of Dr. A.K. Garg (2002)
256 ITR 660 (SC) it was mandatory on the part of the
appropriate authority to tender the amount of apparent
consideration within the period of limitation prescribed under
the Act. Having purchased the flat under construction, it is not
46 WP2134andothers.sxw
open to the appropriate authority to contend that there is no
obligation to tender the apparent consideration till the flat is
fully constructed.
...In view of the failure on the part of the Appropriate
Authority to tender the apparent consideration within the period
set out in Section 269UG of the Act, it has to be held that the
order passed under Section 269UD(1) of the Act stood
abrogated and the property is re-vested to the Petitioners."
52. In Union of India Vs. Madhusudan Das (supra), the Division Bench
of Calcutta High Court held:
"Section 269 UG of the Income Tax Act lays down that the amount
of consideration payable in accordance with the provisions of
Section 269 UF shall be tendered to the person or persons entitled
thereto. In view of the language of Section 269UG regarding
payment time stipulated therein or deposit of money in cases of
contingencies as envisaged in Section 269UG (2) and (3), the
provisions are clearly mandatory in character. Moreover the
consequences of failure to pay or tender in time or deposit in the
circumstances mentioned in section 269UG are clearly stated in
Section 269 UH of the Act, that is, the property stands re-vested in
the owner, on the expiry of the said period. Section 269UG
contemplates the contingencies when the amount of consideration
could be deposited by the Central Government with the authority
are (a) In case of any dispute as to the apportionment of the
amount of consideration amongst persons claiming to be entitled
thereto; (b) In case of the persons entitled to the amount of
consideration do not consent to receive it or if there is any dispute as
to the title to receive the amount of consideration.
47 WP2134andothers.sxw
Admittedly, there was no dispute as to the title of the joint
trustees. The joint trustees never refused, either individually or
jointly, to accept the apparent consideration amount. In fact, the
consideration amount was never tendered by the joint trustees.
The alleged deposit was made by the Central Government with the
appropriate authority on the plea that possession was not delivered
by the owners. The Central Government had no justification in not
tendering the amount to the trustees and the plea taken by them
was wholly unjustified. The Central Government could not have
deposited the amount with the Appropriate Authority and any
deposit in the absence of such contingencies was invalid and the
subject property automatically stood re-vested in the original
owner."
53.
In the case of Hotel Mardias Pvt.Lt. Vs. Union of India, (supra),
the Division Bench of Gujarat High Court observed as follows:
"The recovery of possession of the property has not been made a
ground under the statute itself for withholding the payment. On the
contrary under Section 269 UE, the appropriate authority or any
person duly authorized by the appropriate authority are empowered
to take vacant possession of the property either on surrender by the
occupants or by use of such force as may be necessary. The amount
of consideration was not tendered within the time prescribed under
Section 269UG and there was no ground for making deposit to the
appropriate authority the consequence which has been provided
under section 269UH would necessarily follow, namely, the order of
purchase would stand abrogated and the immovable property stand
reverted to the transferor on the expiry of the period in which the
amount was to be tendered but has not been so tendered."
48 WP2134andothers.sxw
54. In view of the aforesaid discussion, in the facts of the present case, it
would have to be held that the impugned orders stand abrogated and the
property stood re-vested in the owners.
55. In arriving at the aforesaid conclusion we have also considered the
judgments cited on behalf of the Respondents on this issue. In the case of
Mrs. Sooni Rustam Mehta Vs. Appropriate Authority (supra) of Andhra
Pradesh High Court, the dispute pertained to the entitlement of the person
to receive the consideration and it was held that in an such event, it would
be open to the Department not to tender the apparent consideration but to
deposit the same with the appropriate authority. In the present case, there
is no dispute to the entitlement of the owners to receive the amount of
consideration and therefore, the said judgment would not assist the case of
the Respondents.
56. In Special Land Acquisition Officer Vs. Natverlal Jamnadas
Muni, (supra), the controversy before the Single Judge of this Court, was
with regard to the word dispute used in section 30 and sub-section 2 of
49 WP2134andothers.sxw
Section 31 of the Land Acquisition Act and whether the word dispute is
construed as being applicable only when there are more than one party to
a dispute but not otherwise, the Court held that inspite of the fact that the
natural meaning of the word dispute pre-supposes two person and section
30 uses the word persons in plural it must be construed as covering the case
whether the Collector is unable or unwilling or has committed to decide
whether the sole claimant appearing before him is or is not entitled to the
property acquired and the compensation thereof. In these circumstances it
was held that the amount of the compensation has been validly deposited in
the Court to the credit of the reference under Section 18. This judgment
would have no application to the facts of the present case.
57. The decision of the Apex Court in Sarju Prasad Shah Vs. State of
U .P. (supra) was also a case under the Land Acquisition Act and on facts
which are entirely different and would have no relevance to the facts of the
present case.
50 WP2134andothers.sxw
58. We may, so as to complete the record, state that elaborate arguments
were advanced on either side as regards the sale instances cited by the
Appropriate Authority and the sale instances cited by the Petitioners.
Though we find substance in the contentions urged on behalf of the
Petitioners as regards sale instance no. 3 of the Appropriate Authority and
sale instance No. 3 cited by them, that the Appropriate Authority has
proceeded on incorrect data, we do not feel it necessary to go into that
aspect as the other grounds as discussed hereinabove are sufficient to allow
the petition. Moreover, having come to a finding that there was an inherent
flaw in the Valuation Report, this exercise, in our opinion would not be
warranted in the facts and circumstances of this case.
59. Before parting, we may refer to the decision in C.B. Gautam Vs.
Union of India 199 ITR 630, wherein, the Constitution Bench of the Apex
Court took note of the averment in the affidavit filed on behalf of the
Respondents therein. The affidavit stated that the following types of
properties should not ordinarily be purchased:
51 WP2134andothers.sxw
(a) cases of doubtful or disputed titles;
(b) transactions by and with Government, Semi-Government
Organisations, Public Sector Undertakings, Universities etc.;
(c) properties with bona fide tenancies of long standing; and
(d) properties with too many restrictions on user.
60. In the present case, there were several restrictions in the agreements
on the Transferee viz: (i) the Transferee was required to develop the
property (ii) the Transferee was required to provide each of the owners an
ownership flat of 988 sq.ft. - this condition of providing the flats was made
the essence of the contract (iii) the said flats were required to be of the
specifications, amenities and facilities as enlisted in the IInd Schedule to the
Agreements; (iv) the construction was to be completed within 18 months of
the issuance of the commencement certificate. (v) during the interregnum,
the Transferee was required to provide to each of the owner a two bedroom
rent free accommodation of 550 sq. ft. in Chembur area as approved by
them, carrying rent in the region of `4,000/- per month. (vi) after the
proposed building was constructed the conveyance was to be executed in
favour of a proposed Society to be formed.
52 WP2134andothers.sxw
61. We find that the present case was would fall in the clause (d)
mentioned in para 59 above, in view of the onerous conditions and
restrictions contained in the agreements. Pertinently, it was submitted on
behalf of the Respondents that the Central Government is not in the
business of development and construction and therefore, there was no
question of development of property and providing any such flats to the
owners. We'd only observe that the Appropriate Authority, in the facts and
circumstances of the present case, ought to have been a tad slow in its
decision to purchase the property in question and without expressing any
final opinion on this aspect, we leave it at that!
62. The upshot of the above discussion is that the Petitioners are entitled
to succeed and the petitions would have to be allowed. Rule is made
absolute in the aforesaid terms with no order as to costs. Necessary
consequences shall ensue.
(A.A. SAYED, J.) (J.P. DEVADHAR, J.)
