TMI Blog1994 (1) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ges. This agreement along with a statement in Form No. 37-I prescribed under rule 48L of the Income-tax Rules, 1962, read with section 269UC of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was received by the appropriate authority, Madras, on March 11, 1989. Pursuant to that, in the light of the documents furnished by the parties and also in the light of the inspection report submitted by the engineers, in exercise of the powers vested under section 269UD(1) of the Act, the appropriate authority ordered on June 22, 1989, the purchase of door Nos. 109 and, 110, Anna Salai, Madras-2, by the Central Government for a sum of Rs. 26,00,000. It was also further stated that under the provisions of section 269UE(1) of the Act, the property shall vest in the Central Government free from all encumbrances from that date. Consistent with the order so passed, the appropriate authority issued a communication, enclosing a copy of the order dated June 22, 1989, to the effect that by virtue of the provisions of section 269UE(1) of the Act, door Nos. 109 and 110, Anna Salai, Madras-2, stood vested in the Central Government free from all encumbrances with effect from June 22, 1989, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner was, therefore, not entitled to any relief. In the reply affidavit filed by the petitioner, apart from disputing the stand taken by the respondent in the counter, it was pointed out that dispossession of a tenant from the premises in his occupation by reason of the vesting order free from all encumbrances, cannot counteract evasion of income-tax and wealth-tax and the pre-emptive purchase will be subject to the rights of the tenant in occupation and to say that the tenant should lose his rights and vacate the premises in 15 days is opposed to the principles of natural justice. Though elaborate arguments were addressed and our attention was also drawn to several decisions, in view of the clear pronouncement of the Supreme Court in C. B. Gautam v. Union of India [1993] 199 ITR 530, there is no need to set out the submissions of counsel in great detail or even to make a detailed reference to all the authorities referred to by counsel on both sides. However, it would be necessary to set out the facts in the decision of the Supreme Court referred to earlier, in order to appreciate the controversy arising in this case. In the case before the Supreme Court, one Jai Lal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading down is not permissible where it is negatived by the express language of the statute. Reading down is not permissible in such a manner as would fly in the face of the express terms of the statutory provisions. In view of the express provision in section 269UE that the property purchased would vest in the Central Government 'free from all encumbrances' (emphasis supplied), it is not possible to read down the section as submitted by the learned Attorney-General. In the result, the expression 'free from all encumbrances' in sub-section (1) of section 269UE is struck down and sub-section (1) of section 269UE must be read without the expression 'free from all encumbrances' with the result that the property in question would vest in the Central Government subject to such-encumbrances and leasehold interests as are subsisting thereon except for such of them as are agreed to be discharged by the vendor before the sale is completed. If under the relevant agreement to sell, the property is agreed to be sold free of all encumbrances or certain encumbrances, it would vest in the Central Government free of such encumbrances. Similarly, sub-section (2) of section 269UE will be read down so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the encumbrances or leasehold interests which would be destroyed in this manner can be said to be persons interested as contemplated in clause (e) of section 269UA. In this connection, we may refer to sub-section (5) of section 269UE which declares that nothing in the said section which deals with the vesting of property in the Central Government shall operate to discharge the transferor or any other person (not being the Central Government) from liability in respect of any encumbrances on the property and, notwithstanding anything contained in any other law for the time being in force, such liability may be enforced against the transferor or such other person. This provision makes it amply clear that, in the case we have just referred to, the encumbrance holder or the holder of the leasehold rights could claim the fair value of his encumbrance or the leasehold interest out of the amount paid on account of the purchase price to the owner of the immovable property acquired by the Central Government under section 269UD. It was urged by learned counsel for the Revenue that, in case a view is taken that the expression 'free from all encumbrances' should be struck down, it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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