The main legal point established in the judgment is that an order under s. 269UD(1) of the IT Act must be passed after giving an opportunity to the affected parties and recording the reasons. The court also clarified the procedural requirements and the payment of interest at nine per cent. per annum on the balance amount of apparent consideration.

R.V.Raveendran, J.

1. The third respondent is the owner of property bearing No. S-7, 5th Main Road, 4th Block, Jayanagar, Bangalore (hereinafter referred to as "the said property"). She entered into an agreement of sale on 19th Feb., 1988, with the petitioner agreeing to sell the said property for a consideration of Rs. 33 lakhs and received an advance of Rs. 2 lakhs. The balance of sale consideration was to be paid within six months. THE petitioner as the intending transferee and the third respondent as intending transferor filed a statement under s. 269UC of the IT Act, 1961 (for short, "the Act"), in Form No. 37-I in regard to the intended transfer. The Appropriate Authority, IT Department, passed an order on 30th May, 1988 (hereinafter referred to as "the impugned order"), under s. 269UD(1) of the Act ordering pre-emptive purchase of the said property.

2. The petitioner challenged the impugned order and the constitutional validity of Chapter XX-C of the Act by filing this petition on 15th June, 1988. This Court on 20th June, 1988, issued rule nisi and an interim order staying the delivery of possession of the said property in pursuance of the impugned order and further proceedings pursuant to the said order. This Court also restrained the petitioner and respondent No. 3 from effecting any change in the nature of the said property or alienating the same during the pendency of the petition. Thereafter, the third respondent sought modification of the said interim order, for a direction either to the petitioner or to respondents Nos. 1 and 2 to pay her the balance consideration of Rs. 31 lakhs. In the application for such modification she stated that she had entered into an agreement for sale of the said property as she was in dire need of funds and as she desired to acquire suitable alternative property ; that she expected to obtain the entire sale price within the time specified in the agreement; that in view to the stay granted by this Court, neither the petitioner nor the first and second respondents were paying the balance of sale consideration; that consequently she was prevented from performing her part of the contract in regard to an agreement entered into by her for purchase of another property and she was being put to great hardship. The said application for modification was rejected by order dt. 14th Sept., 1988. The appeal (W. A. No. 1667 of 1988) filed by the third respondent against the rejection of her application was also rejected by order dt. 24th Nov., 1988. The third respondent sought review of the appellate order by filing C. P. No. 42 of 1989 which also came to be dismissed on 15th March, 1989. Thereafter she took up the matter before the Supreme Court in S. L. P. No. 12951 of 1989. By order dt. 14th Aug., 1991, special leave was granted and the appeal was numbered as Civil Appeal No. 3305 of 1992 and the same was disposed of on 14th Aug., 1992, by the following order :

"In view of our direction in civil appeal arising out of S. L. P. (C.) No. 15036 of 1988, the impugned order is set aside and the application for interim relief is remanded to the High Court for disposal according to law in the light of our decision. The appeals are accordingly disposed of. No order as to costs."

[Note : S. L. P. (C.) No. 15036 of 1988 referred to in the said order is the case of Rajalakshmi Narayanan vs. Margaret Kathleen Gandhi, subsequently reported in .

The third respondent thereafter challenged the impugned order by filing a separate writ petition in the Madras High Court on 22nd April, 1990 (W. P. No. 5093 of 1990). An interim order of stay of further proceedings in pursuance of the impugned order was granted on 24th Jan., 1992. However, on 12th Jan., 1993, the said writ petition was dismissed as withdrawn.

Subsequently the constitutional validity of Chapter XX-C of the Act was considered by the Supreme Court in C. B. Gautam vs. Union of India. That case was treated as a test case is regard to the several petiti