2002 Supreme(SC) 1281

2003(1) Supreme 94
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
Ruma Pal & B.N. Srikrishna, JJ.
Hans Raj Agarwal & Anr. -Appellants
versus
Chief Commnr. of Income Tax & Ors. -Respondents
Civil Appeal No. 2121 of 2001
Decided on 20-12-2002
Counsel for the Parties :
For the Appellant : Joseph Vellapally and L. Nageswara, Sr. Advocates, G. Ramakrishna Prasad, K.V. Ramakrishna, Jayanth Muthuraj, K.C. Sudarshan and Mohd. Wasay Khan, Advocates.
For the Respondents : T.L.V. Iyer, Sr. Advocate, Rajiv Tyagi and B.V. Balramdass, Advocates.
For the Intervenor : Avadh Behari Rohtagi, Sr. Advocate, S.S. Rana, Bimal Bhaskar, Mrs. B. Rana and Ms. Manu Lall, Advocates.

IMPORTANT POINT
High Court has correctly rejected the appellants writ application challenging the 2nd purchase order under Section 269 UD of Income Tax Act, 1961. All grounds of challenge are either not sustainable in law or on facts. The appeal was thus dismissed with costs.

Headnote:(i) Income Tax Act, 1961-Chapter XX-C Scheme - Section 269UC - Conditions on the Transfer of Immovable Property valued at over Rs. 5 lakhs - Form 37-I - Compulsory purchase by Govt. under Section 269UD by purchase order-Vesting of property under Section 269UF by tendering or depositing consideration under Section 269UG-Failure to tender or deposit resulting in revesting under Section 269UH-Certificate of No objection under Section 269UL(2)-Rectification of mistakes under Section 269UJ.

       Held : On 1st June 1989, Chapter XX-C of the Act which statutorily provides for the compulsory purchase by the Central Government of immovable properties in certain cases of transfer came into force in the State of Andhra Pradesh. The Chapter was introduced in an effort to curb tax evasion by under valuation of the property sold. The substance of the provisions of Chapter XX-C which are relevant for the determination of the issues raised in this appeal are briefly considered. Section 269UC places conditions on the transfer of immovable property valued at over Rs. 5 lakhs. The conditions include (a) that an agreement for transfer must be entered into between the intended transferor and the intended transferee at least four months prior to the intended date of transfer, (b) the reduction in writing of the agreement in the form of a statement by each of the parties or by any of them acting for the other, (c) the statement being furnished to the Appropriate Authority within a prescribed period and in the prescribed form. After the receipt of the statement under Section 269 UC then notwithstanding anything contained in any other law or instrument or agreement, the Central Government or the Appropriate Authority can make an order under Section 269UD for the purchase by the Central Government of such immovable property at an amount equal to the amount of apparent consideration. Under the proviso to Section 269 UD(1), no order of purchase, "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 269-UC in respect of such property is received by the Appropriate Authority . Where an order for the purchase of any immovable property is made under sub-section (1) of section 269UD the property vests in the Central Government and under Section 269-UF, the Central Government "shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration. The amount of consideration payable under Section 269-UF is required to be tendered to the person or persons entitled thereto within a period of one month. If there is any dispute as to who is entitled to the amount of consideration or if the person entitled to receive the amount of consideration does not consent to receive it, the Central Government is required to deposit the amount of consideration with the Appropriate Authority within the same period. (Section 269-UG). If the Central Government fails to either tender or deposit the amount then under Section 269-UH the order under Section 269-UD would stand abrogated and the immovable property shall stand re-vested in the transferor after the expiry of the aforesaid period. If the Appropriate Authority decides not to make an order under sub-section (1) of Section 269-UD or if the order stands abrogated under Section 269-UH, "the Appropriate Authority shall issue a certificate of no objection referred to in sub-section (1) or, as the case may be, sub-section (2) and deliver copies thereof to the transferor and the transferee. [Section 269UL(3)] (Paras 3, 4, 5 and 6)

       (ii) Income Tax Act, 1961-Chapter XX-C-First purchase order under Section 269UD(1)-Challenged under Article 226 Constitution on ground that it was in violation of natural justice and unconstitutional-Allowed following 1993(1) SCC 78-(See para 13)-2nd purchase order passed after issuing notice and hearing parties for directing the compulsory purchase of Leila Lean s property by the Central Government-In SLP Supreme Court allowed auction sale by interim order-Second purchase order challenged on ground that the first purchase order was issued beyond period of limitation, that the second purchase order was not in terms of agreement for sale nor statement in form 37-I, that Government defaulted in tendering or depositing the purchase money and that there was a complete transfer of property to appellants-Whether rightly rejected by High Court on respondent s submissions? (Yes).

       Held (on limitation) : We are of the opinion that the respondents submissions are entirely acceptable and the High Court had correctly rejected the appellants writ application. It is really unnecessary, in this case, to consider whether the filing order dated 23rd August 1989 was void or merely irregular. We will assume for the purpose of argument that the filing order of the Appropriate Authority refusing to exercise its power under Section 269UD(1) or 269UL(3) was illegal being in contravention of the law as laid down in Tanvi s case (supra). The appellants could have challenged such refusal. They chose not to do so till today. Instead they voluntarily filed a fresh statement in Form 37-I. The necessary implication was according to the parties, to the first statement, that it was not a proper one. The fact remains that a second statement in form 37-I had been filed by parties and they requested the Appropriate authority to act on the second statement. The transferor who was a party to the second statement has never contended that the second statement was not valid nor have the appellants either before the High Court or before us contended otherwise. There is no question of the Appropriate Authority having extended the time under the first proviso to Section 269-UD nor did it do so. Whatever the reason for their doing so, it was the appellants and transferor s act of filing a fresh statement under Section 269-UC which gave rise to a fresh period of limitation. Under the first proviso to Section 269UD(1) time is to be computed from the receipt of "the statement" under form 37-I. In this case, "the statement" was the second one. It was open to the Appropriate Authority, in such circumstances, to act on the second statement and pass the compulsory purchase order within a period of two months from the receipt of that statement. The first compulsory purchase order could not, in the circumstances, be said to be invalid on this ground. (Para 25)

       Held further : Besides, the appellants challenge to first purchase order dated 28th November, 1989 does not really survive after the disposal of the first writ petition. When the first writ application was disposed of on 16th February, 1994, the High Court had quashed the first order issued under Section 269-UD(1) on the basis of the Supreme Court s decision in C.B. Gautam (surpa). The language is unequivocal and unqualified. It said:

       "The impugned order in F.N.AA/ Hyd/9/68/11/89-90 dated 23-8-1989 on the filing of the 1st respondent herein be and hereby quashed."

       There is no appeal from this order. If the first purchase order has been set aside without protest, the appellants present grievance that the first purchase order is otherwise invalid is ill founded. C.B. Gautam s directive that the statements in form 37-I were to be deemed to have been filed on the date of the disposal of pending writ petitions did not make a distinction between the orders under Section 269UD(1) which were invalid because of non-compliance with natural justice alone and those which were also otherwise assailable. Having quashed the purchase order, the High Court had also directed, as has been quoted above, that the from 37-I filed by the appellants would be deemed to have been filed as on that date. No doubt, the High Court records that the deeming fiction as to the date of the filing of the statement was without prejudice to the appellant s contention that the first purchase order was passed beyond the period of limitation. However, in preserving the appellants right, the High Court directed the Appropriate Authority to determine the contention in keeping with the decision in C.B. Gautam s case. And as we have already held that in the light of the decision in C.B. Gautam s case, the appellants challenge to the first purchase order was misconceived. (Paras 26, 27 and 28)

       Held (on subject matter of the agreement for sale) : The appellants challenge to the second purchase order on the ground that it directed the purchase of something which was not the subject matter of the agreement for sale or the Form 37-I statement is also unacceptable. The appellants cannot dispute that the shares of the three owners of the premises had been demarcated prior to the second purchase order in November 1989, if not even prior to the filing of the first statement under Section 269 UC. In that statement in describing the property of Leila Lean, under the heading Persons in occupation of the property sought to be transferred and details thereof, it was said Vacant . Under the heading Persons interest in the property and in consideration specifying their shares and basis thereof, it was said Self-full . The nature of interest or right proposed to be transferred was described as Absolute and Ownership property. There was no reference to the undivided interest of the sisters therein. Secondly, in the several sale deeds executed by the appellants themselves, as the general power of attorney holders of the two sisters of Leila Lean between April and May 1989 they had said in the recital portion in each of the sale deeds:

       "And whereas, the said land and building have fallen to the share of Mrs. Kripa Devi in oral partition effected amongst the three sisters."

       Apart from the repeated references to an oral partition in the recital portion of the each deed, the deeds also recite that the property sold under each deed consisted of a specified area "as detailed in the schedule and the plan annexed". The boundaries were given and demarcated on the plan in respect of each of the sisters share which was indicated on the plans forming part of the sale deeds. Apart from this, the vendor represented by the general power of attorney holder, namely the said Armugham, had filed an affidavit affirming the fact of the oral partition giving in detail the demarcated portion of the premises which was owned by Leila Lean. The Appropriate Authority had also inspected the premises prior to issuing the purchase order and had found that the property was in fact demarcated as recorded in the order under Section 269UD(1). The reason why the share of Leila Lean has been mentioned as undivided in the agreement of sale dated 13th March 1988 has been explained by the appellants themselves in the eight sale deeds executed by them between April and May 1989 as:

       "Though the property had already been divided equally among the three sisters through an oral partition and share of each sister was delineated in the plan, as the agreement holders wanted to buy the entire said property for redevelopment, all the three sisters executed a single agreement of sale."

       In other word, the oral partition had taken place before the agreement of sale. For the Appropriate Authority to have issued the purchase order in respect of the undivided share, in these circumstances, would mean not only the disruption of the established state of fact but also a reopening of the appellants title to the divided portions of the premises which had been purchased by them or by their nominees. In any event, it does not lie in the appellants mouths to contend in the face of these facts that Leila Lean s share was at any material time in fact undivided. (Paras 29, 30 and 31)

       Held (after case law on oral partition) : Apart from all this, the second purchase order directed the purchase of, 1/3 share/interest in the property known as Lilazar bearing No. 8-2-349, Road No. 3, Banjara Hills, Hyderabad . Although the purchase order goes on to describe the 1/3 share/interest with reference to its boundaries, this would not serve to invalidate the first portion of the order. (Para 34)

       Held (on complete transfer) : The appellants submission that they were transferees within the meaning of S.2(47) of the Income Tax Act is equally unsustainable. Whether there was a transfer or not would depend on whether the appellants had, in part performance of the agreement for sale dated 13th March 1988, taken possession of Leila Lean s property. In each of the eight such sale deeds executed by the appellants of the share of the two sisters of Leila Lean in April/May, 1989, it is recorded that the vendor was full and absolute owner and possessor of the property conveyed and that the vendor has handed over vacant possession to the vendee . In other words, the appellants or their nominees who were the purchasers of the property conveyed took possession of demarcated portions of the premises pursuant to the eight deeds of sale and not prior thereto. There is no such document which would show that the appellants had ever taken possession of Leila Lean s share. Besides the question is essentially one of fact and the High Court expressly records that:

       "Although a contention has been raised in the writ petition that the agreement was given effect to and transferees, were put in possession even before the date Chapter XX-C was made applicable to the State of Andhra Pradesh, the same has not been pursued before us."

       Having given up the case before the High Court, the appellants cannot be permitted to reopen the issue at this stage. (Paras 35 and 36)

       Held : On the question of valuation, the Appropriate Authority has in great detail considered the several instances of the sale which had taken place on or about the time that the agreement of sale was executed on 31st March 1988. Apart from the sale instances, the location of the property, its frontage and accessibility were considered by the Appropriate Authority which after physical inspection came to the conclusion that the consideration for which Leila Lean s property had been sold was under-stated. The High Court has affirmed this valuation We see no reason to disturb the finding of fact on the basis of material before us. We cannot also be oblivious to the fact that the property which the appellants had agreed to purchase at Rs.15,33,333/- in 1988 was agreed to be purchased by the intervenor in 2000 at Rs. four crores and five lakhs. (Para 37)

       Held (on default in payment) : The final submission of the appellants that the Central Government had not deposited or tendered the amount within the time required under Section 269-UF read with Section 269-UG(1) is an issue of fact which has been raised for the first time by the appellants before this Court and is liable to be rejected on this ground alone. Nevertheless, we may note that the deposit had been made by the Central Government on 22nd December 1989 within one month from the first purchase order and in any case prior to the second purchase order. Admittedly the payment has been received by the transferor without any protest whatsoever. (Para 38)

       Held finally : We, therefore, dismiss the appeal with costs. (Para 39)