The main legal point established in the judgment is that the tenant is entitled to continue in occupation of the first floor portion of the property as a tenant under the Central Government, and the Central Government is entitled to evict the tenant from the first floor portion in accordance with law. The owner is entitled to receive Rs. 6,50,000 now, and the balance of Rs. 20 lakhs will be payable only when the Central Government obtains vacant possession of the entire premises.

R.V.Raveendran, J.

1. The third respondent is the owner of premises bearing Nos. 23-24, S.B.I. Senior Officers' Colony, Koramangala, III Block, Bangalore. The first petitioner is the tenant in respect of the first floor of the said premises having taken it on lease from the third respondent. For convenience the third respondent and first petitioner will (hereinafter be referred to as the "owner" and the "tenant"). The second petitioner is an employee of the first petitioner who is in occupation of the said first floor portion (hereinafter referred to as the "tenanted portion"). According to the tenant, the lease was originally for a period of four years from May 10, 1985, and by mutual consent, it has been extended up to May 10, 1994.

2. The owner entered into an agreement dated January 21, 1993, with one Mr. Krishna Kapila agreeing to sell the entire property for a consideration of Rs. 26,50,000 and received Rs. 6,50,000 as advance. The agreement provided that the owner shall the property free from all encumbrances, lines, attachments, charges of claims and shall deliver vacant possession of the entire property to the purchaser, at the time of registration of the sale deed, against payment of the balance sale price.

The owner and the intending purchaser filed a statement under section 269UC of the Income-tax, 1961 (hereinafter referred to as "the Act") in Form No. 37-I on January 28, 1993, in regard to the proposed transfer with the appropriate (second respondent). In column 3 of the annexure to the said statement, the transferor is required to mention the details of the persons in occupation of the property sought to be transferred. In the said column, the owner showed that only he was in occupation of the property. The fact that the tenant was in occupation of the first floor portion was not disclosed. However, in the statement of additional information furnished on February 12, 1993, the owner disclosed that the first floor was leased to the tenant, but reiterated that he will give vacant possession of the entire property at the time of registration of the sale deed.

3. The appropriate authority by letter dated March 8, 1993, informed the tenant that the statement in Form No. 37-I filed by the owner did not disclose that any portion of the property was tenanted and that the agreement of sale provided for delivery of vacant possession of the entire property at the time of registration of the sale deed; that when the members of the appropriate authority inspected the property, the owner informed them that the tenant will vacate the property at the time of the sale; and that if an order of purchase was passed under section 269UD(1) of the Act, the property would vest in the Central Government and all the persons in occupation will have to surrender and deliver vacant possession of the property within 15 days of service of such order of purchase. In view of the above, the tenant was called upon to file its objections on or before March 22, 1993. It appears that the tenant sent a reply dated March 18, 1993, stating that it was in a position to vacate the premises.

4. The appropriate authority passed an order of purchase in favour of the Central Government (first respondent) on March 29, 1993, under section 269UD(1) of the Act (annexure "A"). The said order recites that notices were issued to the transferee and to the tenant; that a reply dated March 18, 1993, was received from the tenant on March 19, 1993; that under clause 5 of the agreement, the owner had undertaken to deliver vacant possession of the property at the time of registration of sale which was to take place on or before April 30, 1993; and that, consequently, in accordance with the provisions of section 269UE(2), the transferor or any other person who is in possession of the property should surrender and deliver possession of the property to the appropriate authority. A copy of the said order and the notice dated March 29, 1993, under section 269UE(2) of th