The expression 'free from all encumbrances' in section 269 UE(1) of the Income Tax Act, as it stood on the date of the disputed notification of auction sale, was ultra vires of Article 14 of the Constitution of India.

D. P. SARKAR-II, J.

( 1 ) THE stay petition arises out of an injunction order passed by the learned trial judge, 13th Bench, City Civil Court, Calcutta in Title Suit No. 1705 of 1989 leading to F. M. A. No. 525 of 1990. The stay petition has been filed by the defendant-appellants against the plaintiff-respondent No. l and others.

( 2 ) THE facts, in short, leading to this appeal are as follows:--it is undisputed, that the suit property is premises No. 9, Weston Street, Calcutta. It was leased out originally by Ram Protap Chamaria in favour of the Lipton India Limited by an indenture dated 21st March, 1925. In course of time, the said property by way of a decree of partition came to the plaintiff-respondent No. l namely Aloke Kumar Chamaria who executed a deed of modification to favour of the Lipton India Limited by a fresh indenture dated 29th December, 1973. Thus, the 40% of Alok Kumar Chamaria's undivided interest in the disputed property was leased out to Lipton India Limited. On 2nd February, 1979 Alok Kumar Chamaria transferred undivided 10% of his right, title and interest of the said property to his wife, i. e. the respondent No. 3.

( 3 ) ON 26th April, 1979 and 1st June, 1983, Alok Kumar Chamaria by two separate documents transferred his undivided 40% right, title and interest in question to M/s. Parijat Investment Limited i. e. the respondent No. 2. On 6th January, 1989 a form i. e. 37-I was filed under section 269 UC of the Income Tax Act of 1961 read with Rule 48l of the Income Tax Rules before the appropriate authority. That form was signed by M/s. Lipton India Limited, Alok Kumar Chamaria, Smt. Prativa Chamaria and M/s. Parijat Investment Limited as transferors and M/s. Consolidated Consultancy Services Private Limited as the transferee in respect of the disputed premises i. e. 9, Weston Street, Calcutta. There was one agreement for head lease between Alok Kumar Chamaria, Smt. Prativa Chamaria, M/s Parijat Investment Limited and M/s. Consolidated Consultancy Services Private Limited intending to transfer the leassors interest for Rs. 60,00,000/- and the other agreement was between M/s. Consolidated Consultancy Services Private Limited and M/s. Lipton India Limited proposing to transfer the leasee's interest for a sum of Rs. 1. 80 crores. On receipt of this return the Income Tax Authority passed an order under section 269 UD (1) of the Act and exercised the option to purchase only the lessee's interest i. e. the interest of M/s. Lipton India Limited on behalf of the Central Government for an apparent consideration of Rs. 1,74,90,375/ -.

( 4 ) ON 19th April, 1989 Deputy Commissioner (special) Range--12, Income Tax Department informed the Chief Commissioner of Income Tax that several crores of rupees were due and outstanding as Income Tax from M/s. Lipton India Limited and the Chief Commissioner was requested to pay that apparent consideration amount of Rs. 1,74,90,375/-towards discharge of the tax liability of M/s. Lipton India Limited and accordingly, the said amount was attached under section 226 (3) of the Income Tax Act and ultimately the said consideration amount was paid for liquidation of the Income Tax dues from M/s. Lipton India Limited. Thereafter on 17th May, 1989 Central Government took possession of the property.

( 5 ) SUBSEQUENTLY, the Income Tax Department issued a notification for auction sale of the disputed property along with other properties and published in the daily newspaper 'the Telegraph' on the 19th August, 1989. The said notification was challenged by the plaintiff-respondent No. l in the Title Suit in question before the learned judge, XIII Bench, City Civil Court, Calcutta, inter alia, on the ground that the Indenture of lease executed in favour of M/s. Lipton India Limited on 21st March, 1995 as modified by the subsequent Deed dated 29th December, 1973 contains a clause namely Clause No. 7 to the effect that prior permission of the lesser would be required in order to transfer, ass

Click Here to Read the rest of this document