A mere agreement for sale does not create any interest in or charge on the property, and therefore, an agreement holder has no locus standi to challenge the order of the appropriate authority under section 269UD(1) of the Income-tax Act.

S. Mohan, C.J.

1. The short facts leading to the appeal are as under :

The appellant entered into an agreement with the third respondent for the purchase of an immovable property herein described as Mohan Buildings situated at Nos. 775 to 809, Old Kacheri Road, Chickpet, Bangalore. The agreement is dated November 28, 1990. The appellant, the transferee, and the third respondent, the transferor, jointly filed a statement in Form No. 37-I prescribed by the rules framed under the Income-tax Act, 1961 (hereinafter referred to as the "Act"), with the appropriate authority on November 30, 1990.

2. The appropriate authority passed an order on January 24, 1991, under section 269UD(1) of the Act. We will now extract the relevant portions of the order :

"Thus, a significant point in the agreement is that the transferee agrees to purchase the property with the 46 existing tenants and that taking vacant possession is restricted only to the portion occupied by the transferor itself. On payment of the second instalment of Rs. 50 lakhs, the transferor has to permit development of the property and grant necessary power of attorney in favour of Shri K. V. Shivakumar, trustee of the transferee. The nomination clause of the agreement states that, on payment of full consideration, the transferor has to execute a sale deed in favour of the transferee or its nominees. The agreement also contemplates payment of liquidated damages and right of specific performance by the parties to the agreement, in case of breach. The aggrieved party has the option to terminate the agreement and claim and recover liquidated damages of Rs. 15,50,000 being 10% of the consideration from the party committing breach, as an alternative to specific performance. An important stipulation in pages 10 and 11 of the agreement is that, in the event of the schedule property being purchased by the appropriate authority for the Central Government under section 269UD(1) of the Income-tax Act, the agreement of November 28, 1990 for sale of 'Mohan Buildings' between the transferor and the transferee will be treated as cancelled without any of the penal consequences contemplated in the agreement and the transferor has to refund the entire advance to the transferee forthwith.

7. Mohan Buildings is situated in the thickly populated commercial cradle of Bangalore, namely, Chickpet at OTC Road, also known as Chickpet Main Road. It covers a land area of 17,160 sft. - (1594.2 sqms.). Its dimensions are irregular. The width of the road on which the property is situated is 14.9 mts. It falls in Zone 'A' of CDP and enjoys an FAR of 1.25. The building covers an area of 2,742 sqms. It is a double storeyed commercial complex constructed in the year 1909, with lime mortar and bricks. The roofing is partly Madras terrace and partly Mangalore-tiled. All joinery works are with teakwood. No services have been provided except electricity, sanitary and water supply in a portion of the first floor. The building being 90 years old, it has outlived its normal span of life. No maintenance has been done for many years.

8. The discounted value of the extent of consideration has been worked out at Rs. 1,50,17,084. The working of the discounted value is given in schedule II appended to this order."

Accordingly, in exercise of the power vested under section 269UD(1), the appropriate authority ordered the purchase of the schedule property by the Central Government and to pay the apparent consideration of Rs. 1,50,17,084, which was the discounted value of the consideration of Rs. 1,55,00,000. Consequent to this, the property is to vest in the Central Government free from all encumbrances by virtue of the provisions of section 269UE(2). It was also ordered that the transferor or any other person who may be in possession of the property shall surrender and deliver the property to the appropriate authority within fifteen days from the date of service of notice. A copy of this order was served on both the transfero