TMI Blog1994 (10) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... March 10, 1994, to transfer development rights in respect of part of the property to respondent No. 5. The earnest money agreed to be paid under the agreement was Rs. 1,15,00,000 and the balance consideration of Rs. 10,36,00,000 was to be paid within five months from the date of signing of the agreement, with a grace period of one month, subject to the following formalities being complied with : (a) obtaining of clearance from the appropriate authority under section 269UL(3) of the Income-tax Act, 1961 ; (b) making out a marketable title to the property free from encumbrances, charges and/or claims and free from all reasonable doubts. The making out of title marketable shall not include the obtaining of permissions/clearances from the urban land ceiling authorities and the sanction of plans from the Bombay Municipal Corporation. In pursuance of the agreement, the petitioners and the transferees filed Form No. 37-I before the appropriate authority constituted under Chapter XX-C of the Income-tax Act, on March 15, 1994. By an impugned order, the appropriate authority held that the proposed transfer, being in violation of the law of the land, is void ab initio and, therefore, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther observed that the appropriate authority is not conferred with jurisdiction to determine the right or title to the property. The Division Bench observed that the appropriate authority can exercise jurisdiction as conferred by the Act and shall not enter into enquiry which is de hors or extraneous to the provisions of the Act. The unreported decision of the Division Bench (since reported in [1995] 216 ITR 110) reiterates the view taken in Almeida's case [1992] 197 ITR 609 (Bom). It is unfortunate that in spite of the decisions of the Division Benches of this court, the appropriate authority is still passing orders declaring that the agreements are non est. The assumption of the authority that the agreement is in violation of the provisions of the Urban Land (Ceiling and Regulation) Act is eqaally erroneous. Section 20 of the Urban Land (Ceiling and Regulation) Act inter alia, provides that the Government may, by order, exempt any vacant land in excess of the ceiling limit subject to such conditions, if any, as may be mentioned in the order and upon issuance of such order, such vacant land would be exempted from the provisions of Chapter X of the Act. The petitioners had appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract of purchase was entered into with the knowledge of the parties that the purchaser will be in possession of lands in excess of the ceiling under section 5 of the Bombay Tenancy and Agricultural Lands Act. The purchaser instituted proceedings in the court for a decree for specific performance of the agreement and for the possession of the land. The trial court dismissed the suit holding that the agreement if enforced would result in the transgression of the provisions of the Bombay Tenancy and Agricultural Lands Act. The High Court reversed the decree of the trial court and the Supreme Court upheld the decree holding that the provisions of section 23 of the Contract Act were not attracted as the consideration of the agreement was not unlawful and there was no provision in the Act which expressly or by implication forbids a contract for sale of agricultural lands. The Legislature had merely declared that the lands in excess of the ceiling shall be under the disposal of the Government. The Supreme Court further observed (at page 1360) : " An agreement to sell land does not under the Transfer of Property Act, create any interest in the land in the purchaser. By agreeing to pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only make an order of purchase for the Central Government or issue a no objection certificate. It is not open to the appropriate authority to declare the agreement non est. Shri Sethna submitted that as the appropriate authority had failed to exercise the jurisdiction, proceedings should be remanded back to the appropriate authority to rectify the mistake as prescribed under section 269UJ of the Act. The submission is devoid of any merit and the request cannot be accepted for more than one reason. In the first instance, the provisions of section 269UJ confer power upon the appropriate authority to rectify any mistake apparent from the record and the power does not enable the authority to pass fresh orders. The power of rectification cannot be equated with the power of passing fresh orders for failure to exercise jurisdiction. The provisions of Chapter XX-C prescribe a time bound programme. The transferor or transferee is required to submit the agreement along with Form No. 37-I within a fortnight from the date of the agreement to the appropriate authority. The appropriate authority is required to determine whether a no objection certificate should be granted or a purchase order in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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