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2000 Supreme(Cal) 63
High Court Of Calcutta
Y. R. Meena, G. C. De
APPROPRIATE AUTHORITY OF INCOME-TAX - Appellant
Versus
VYSYA BANK LTD. - Respondent
M. A. T. 300 Of 1998
Decided On : 02/03/2000
ANINDA MITRA, D.BASAK, J.P.KHAITAN, MANOJ TIVARI, R.N.BAJORIA, SANJIB BANERJI, SANJOY GANORIA
The vendor is entitled to interest on the outstanding balance of amount for the period till the balance amount is paid, if equity so requires.
Headnote:
INCOME-TAX ACT, 1961 - SECTION 269UD - INTEREST ON DELAYED PAYMENT - ENTITLEMENT OF VENDOR - PRINCIPLES.
Fact of the Case:
The Vysya Bank Ltd. had entered into two agreements with Delite Housing Corporation for the purchase of flats. The appropriate authority passed orders of purchase under Section 269ud of the Income-tax Act, 1961, in both cases. The orders were set aside by the learned trial judge. The bank had paid 95% of the consideration in respect of both agreements and possession of the flats was handed over to the bank. The remaining 5% was payable at the time of execution of the conveyances.
Finding of the Court:
The court held that the vendor was entitled to interest on the outstanding balance of amount for the period till the balance amount is paid. The court also held that the rate of interest and the period for which it is payable depends upon the facts of each case.
Issues: Whether the vendor is entitled to interest on the outstanding balance of amount for the period till the balance amount is paid?
Ratio Decidendi: The court relied on the Supreme Court judgments in Rajalaxmi Narayanan v. Margaret Kathleen Gandhi and C. B. Gautam v. Union of India. In Rajalaxmi Narayanan's case, the court held that where a seller has raised no objection or obstruction to the purchase of his property by an order under Section 269ud of the Income-tax Act and is unable to get the purchase price by reason of the said order and the stay order or orders passed by a court, interest at an appropriate rate can, if equity so requires, be paid to him. In C. B. Gautam's case, the court held that when the payment is delayed on account of acquisition proceedings under Chapter XX-C, interest should be paid to the seller and how much the rate of interest and for what period the interest is payable depends upon the facts of that case.
Final Decision: The appeal was dismissed and the cross-appeal of the vendor was allowed in part. The court directed the Government to pay interest to the vendor at the rate of 12% from October 1, 1994 to July 22, 1998, on the amount of Rs. 29,32,597.
( 1 ) THIS appeal has been directed against the judgment and order of the learned single judge dated December 24, 1997. (Vysya Bank Ltd. v. Appropriate Authority of Income-tax [1998] 233 ITR 560 ). The appeal was listed several times. None appeared for the appropriate authority.
( 2 ) HEARD learned counsel for the respondents. Perused the impugned judgment. The learned single judge has set aside the order of the appropriate authority on the ground that no reasonable opportunity has been given to the vendor and vendee and there are several discrepancies in the proceeding before acquisition of the property in terms of Section 269ud (1) of the Income-tax Act, 1961. The learned single judge has specifically emphasised on the decision in the case of C. B. Gautam v. Union of India.
( 3 ) DURING" the course of the argument before the learned single judge, learned counsel Dr. Pal on behalf of respondent No. 1 also prayed that the matter be remitted to the appropriate authority to give fresh opportunity to the vendor and vendee. This prayer of Dr. Pal was also rejected following the judgment of this court in the case of Dwarkanath Chatterjee v. Union of India [1995] 213 ITR 470, taking the view that the period of limitation to pass an order of purchase of any immovable property as provided for in the first and second proviso to the said section create an embargo on the appropriate authority, by the Legislature, to pass an order for purchase under the said section after the expiry of the period of limitation and Section 5 of the Limitation Act not having been made applicable to the aforesaid provision of the Act, the appropriate authority loses its jurisdiction to exercise its power under the said section after the expiry of the aforesaid period. The appeal was listed several times but none appeared for the appropriate authority/appellant. Considering the finding of the learned single judge that no reasonable opportunity has been given for the acquisition of the property as required under Section 269ud, we find no merit in the appeal.
( 4 ) WHEN the appeal was admitted respondent No. 7 was allowed to file cross-objection, regarding his claim of interest required to be paid for the period, possession has been taken but consideration has not been paid to the vendor. Learned counsel for the vendor placed reliance on the decision in the case of Rajalakshmi Narayanan v. Margaret Kathleen Gandhi, and the decision in the case of Appropriate Authority v. Smt. Sudha Patil.
( 5 ) LEARNED counsel for the Vysya Bank, Shri Bajoria, submits that there was an agreement and the purchaser bank, i. e. , the Vysya Bank Ltd. has paid the consideration as per agreement. Therefore, only five per cent. is now left to be paid. Under the agreement that will be paid at the time of completion of conveyance and on that amount, the interest is payable under the agreement itself, by the bank. None appeared for the authority or Government.
( 6 ) THE relevant facts in this regard are that the bank had agreed to purchase from Delite under two agreements, one dated April 21, 1994, and other dated May 27, 1994, 16 flats under construction at premises No. 250, Nelaji Subhas Chandra Bose Road, Tollygunge, Calcutta-700 047, for the purpose of providing residential accommodation to its officers who came on transfer for serving at its branches at Calcutta. As required by the provisions of Chapter XXC of the Act, the bank and Delite filed Form No. 37-1 in respect of each of the two agreements for issue of "no objection certificate" for the said transfers. The appropriate authority, however, passed the orders of purchase under Section 269ud of the Act in both the cases. The order in respect of the first agreement was passed on July 29, 1994, and that in respect of the second agreement on September 28, 1994, both were set aside by the learned trial judge.
( 7 ) THE said agreements dated April 21, 1994, and May 27, 1994, in Parts of annexure "a" thereto, re
