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IN THE HIGH COURT OF BOMBAY
M.L. Pendse S.M. Jhunjhunuwala, JJ.
Shrichand Raheja and others.... Petitioners.
Versus
S.C. Prasad and others.... Respondents.
Writ Petition Nos. 862 797 of 1994, decided on 28/29-9-1994.
Advocates appeared :
S.H. Doctor with D.J. Khambatta i/b M/s. B. Munim and Co., for petitioners in W.P. No. 862 of 1994.
M.I. Sethna with R. Ashokan, J.P. Deodhar and Smt. S. Bhattacharya, for respondent Nos. 1 to 4 and 7 in W.P. No. 862 of 1994 and for respondents in W.P. No. 797 of 1994.
R.A. Dada with J.J. Bhatt, F. Devitre and Smt. Snehal Paranjpe i/b M/s. Federal and Rashmikant, for respondent Nos. 5 and 6 in W.P. No. 862 of 1994 and for petitioners in W.P. No. 797 of 1994.
It must be borne in mind that while exercising writ jurisdiction, the High Court is not sitting in appeal over the order passed by the Appropriate Authority. It is conscious that the exercise is only to ascertain whether the order is passed by relying upon extraneous or irrelevant material. It not permissible to reassess the material and the order cannot be disturbed unless it is found that the order suffers from serious infirmity, bordering on perversity. The order does not suffer from any infirmity and the conclusion is not required to be disturbed in exercise of writ jurisdiction.
CONTRACT ACT; 1872 Sections 4 & 8
See Income Tax Act, 1961-Sections 269-UG & 269-TH.
Section 115.
See Income Tax Act, 1961-Sections 269-UG & 269-UH.
Section 269-UD-Property-Plea of under valuation of whether correct.
Held, the High Court closely scrutinised the impugned order and in our judgment, the Authority has reached the conclusion by taking into consideration all relevant factors. The contention of Shri Doctor that the Authority has drawn upon six sale instances referred to in the show-cause notice and all are of ready ownership flats is not accruate. The flat in Tahnee Heights, Jai Bhawani and Purab Apartments had an advantage of sea view and the flats in Jai Bhawani and Purab Apartments are occupied by wealthy Jain community because the societies prescribe that the flats should be occupied by people who are purely vegetarians, The counsel submitted that the Jai Bhawani and Purab Apartments had advantage of a temple close by and which is special attraction for Jains and that is why the value of the flats is more than normal. The Counsel submitted that the flats situated in Shantinagar, Shahnaz and Shivner are in buildings which are very close to the subject property but the flats in those buildings are not comparable instances because the flats are situated in high rising buildings and the flats are well decorated. It was claimed that the flats in these buildings are on the elevated position and it would not be possible in respect of the flats which can be constructed in the building to be erected on the subject property. In the first instance the instances in respect of ready flats cannot be considered as comparable instances to determine the fair market value of open land. Secondly, the instances referred to by the Authority are not comparable because of various other factors. The assumption of the Counsel that the authority has relied upon the sale instances quoted in the show-cause notice for arriving at fair value of the property in question is not correct. The Authority has pointed out in paragraph 6 of the order that the purpose of quoting sale instances in the show-cause notice is just to show the trend of the fair market value in the vicinity of the subject property. The Authority made it clear that the subject property is not identical with the properties given in the instances. The Authority further observed that the transferees are bound to put the property to maximum exploitation by building a most modern and good building to set the maximum price. The Authority took into consideration the price range of Rs. 15,000/- to Rs. 17,000/- per sq. ft. of built up area in the locality. The perusal of the order of the Authority leaves no manner of doubt that the Authority has not relied upon the sale instances cited in the show-cause notice in the respect of ready flats to arrive at the price of the property in question. Reference was made to those instances only to indicate the potentiality of the property. Held that judgment the conclusion reached by the Appropriate Authority in the facts and circumstances of the case, cannot be faulted with.
Section 269-UD (1).
See Constitution of India, Articles 226, 227 .
Section 269-UD (1)-Property option to purchase it-Plea of it under valuation.
Defective notice regarding propertys measurement under sale than actually available-Creeping of error alone not invalidate final order passed after objections consideration.
Sections 269-UG and 269-UH-Contract Act, 1872-Sections 4 and 8. Purchase order-Price properly tendered in time-Clerical not invalidate the order.
Sections 269-UG and 269-UH-Evidence Act, 1872-Section 115-T. P.
Act, 1882-Section 54.
The transferees have given up the rights to challenge the order by their conduct in accepting amount of Rs. 2/- crores from the transferrors which was paid as part consideration. It was urged that on receipt of the amount of Rs. 2/- crores, the agreement automatically came to an end and consequently the transferees have no interest left in the property and the impugned order cannot be questioned. The third limb of the argument is that the transferors have given up the right to challenges the purchase order on the ground that the Central Government failed to tender the amount within stipulated period. It was urged that as the transferors have given up the contention that the purchase order stands abrogated, it is not open for the transferees to agitate that contention. It is not possible to accede to the submission of the Counsel that the petition at the behest of the transferees is not maintainable.
On April 6, 1994 Division Bench of the High Court observed that the transferors had agreed to give up the challenge to the impugned order on the ground of abrogation on receipt of Rs. 50,00,000/- from the Central Government, of the transferors did not dispute that the amount of Rs. 50,00,000/- was received and the transferors have given up the contention as regards the abrogation of the impugned order. It is contended that the issue whether purchase order stands abrogated for failure to tender amount within stipulated period is between the transferors and the Central Government and the transferees cannot challenge the purchase order on that ground. It is not possible to accede to the submission of the learned Counsel because the failure to tender the amount within stipulated period leads to consequences do not depend upon the action or concession of either the transferor or the transferee. The plain reading of the provisions of Chapter XX-C of the Act makes it clear that the purchase order stands revoked in case the amount is not tendered within the stipulated period and the issue of such abrogation cannot be settled by the transferor, conceeding that the claim in regard to abrogation will not fie pressed. In these circumstances, the preliminary objection that the transferees have no locus to maintain the petition, in view of what transpired during the pendency of this petition, cannot be accepted.
PROPERTY
Valuation of-Principles for what are.
Held, the principles to determine fair market value of the property are well settled by catena of decisions of the Supreme Court. The principles are adopted while determining the compensation payable in respect of property acquired under Land Acquisition Act. The determination is to be made on the basis of what a bypothetical purchaser willing to purchase land from the open market and prepared to pay a reasonable price would offer.
It has to be assumed that vendor is willing to sell the land at a reasonable price. While determining the price, normally the Authority has to take into account the genuine instances. The most comparable instances out of the genuine instances have to be identified on the considerations of proximity from time angle and proximity from situation angle After identifying the instances which provide the index of market value, the price reflected therein, may be taken as a norm and the value of the land in question may deduced by making suitable adjustments for the plus and minus factors vis-a-vis land under consideration by placing the two in juxtaposition.
Section 54.
See Income Tax Act, 1961-Sections 269 UG & 269 UH.
M.L. PENDSE, J.:---These two petitions filed under Article 226 of the Constitution by the transferrers and the transferees respectively, challenges legality of order dated January, 27, 1994 passed by Appropriate Authority, Bombay in exercise of powers under sub-section (1) of section 269 UD of Income Tax Act, 1961. As both the petitions are directed against the common order, it is convenient to dispose of both the petitions by common judgment. The facts which gave rise to the passing of the impugned order are as follows :
Laila Hitchens and Burjor Hormusji reporter are the executrix and executor of the last will and testament of Dinshah Jehangir Gazdar. The property in the hands of the executors is a bungalow called Modi Bungalow including outhouses situated at 89, Nepean Sea Road, Malbar Hill, Bombay. By an agreement dated October 24, 1993 the executors transferrers agreed to sell the property which admeasures 1,823.55 sq. yards on As is where is and As it is what it is basis for consideration of Rs. 19.25 crores to Rahejas. The agreement inter alia provides that on execution of the agreement, a sum of Rs. 2/- crores will be paid by the purchasers as part consideration. An amount of Rs. 7,62,50,000/- was to be paid on issuance of No objection certificate from Appropriate Authority or on February 8, 1994 whichever is later. The balance amount of Rs. 9,62,50,000/- was to be paid within three months of No objection certificate and against execution of conveyance. The agreement provides that the stamp duty and registration charges were to be borne by the transferees. The property consists of the land together with a bungalow consisting of ground, first and part second floor with outhouses at the rear side of the property and in occupation by seven employees. The agreement further provides by Clause 10 that in case the transferrers are not able to obtain vacant possession of the remaining servants quarters in the outhouse occupied, then the sale will be completed but the purchasers will retain a sum as may be mutually agreed upon but not exceeding Rs. 5,00,000/- out of the apparent consideration. The amount to be retained by the purchasers was to be paid over to the transferrers after vacant possession was secured. On the date of the agreement, out of the seven outhouses which were occupied by the employees, five were still in the occupation of the employees.
2. Chapter XX-C the Income Tax Act deals with the immovable properties to be purchased by the Central Government in certain cases of transfer. Section 269-UC inter alia provides that immovable property of such value exceeding Rs. 10,00,000/- shall not be transferred unless after the agreement of transfer is entered into and an application by the transferrer and the transferee is filed under form 37-I, before Appropriate Authority and No objection certificate issued. Rule 48-A of Income Tax Rules inter alia provides that the statement to be furnished to the Appropriate Authority under sub-section (3) of section 269-UC shall be in form No. 37-I and shall be furnished to the Appropriate Authority before the expiry of 15 days from the date on which the agreement for transfer is entered into. Section 269-UD prescribes that the Appropriate Authority on receipt of the statement in accordance with form 37-I, may make an order for purchase by the Central Government of such immovable property for an amount equal to the amount of apparent consideration. The proviso sets out that no such order shall be made after the expiration of a period of three months from the end of month in which the statement is received by the Appropriate Authority. The ambit of the enquiry before the Appropriate Authority came up for consideration before the Supreme Court and the principles to be followed are led down in the decision reported in 1993 I.T.R. 530 (C.B. Gautam v. Union of India and others)1.
3. On October 25, 1993 the transferrers and the transferees filed statement before the Appropriate Aut
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