TMI Blog2000 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... wards the end of 1990 is yet to reach finality. The property in controversy is a double storied building bearing Nos. 775 to 809 situated at Old Taluk Cutchery Road, Bangalore. It consists of shops presently in the occupation of tenants. Vidyavati Kapoor Trust represented by Mohan Lal Kapoor entered into an agreement with Rajatha Trust represented by Shivakumar on November 28, 1990 for sale of the said property for a consideration of Rs. 1,55,00,000. When the transferor and the transferee jointly submitted application in the prescribed form to the appropriate authority under section 269UC of the Act, action for preemptive purchase, of the property was taken by the appropriate authority. The authority being prima facie satisfied that the property has been under valued with a view to evade tax initiated action for preemptive purchase of the property by the Central Government by the order dated January 24, 1991. The appropriate authority directed that the property be purchased by the Central Government at a discounted value of Rs. 1,50,17,084. The proposed transferor and transferee challenged the said order in Writ Petitions Nos. 5614 and 6655 of 1991 before the Karnataka High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verruling of the impugned judgment by the Constitution Bench in C. B. Gautam's case [1993] 199 ITR 530 (SC), this appeal should not be allowed and the transaction should remain unaffected. We may, however, observe that whatever remedy is available to the alleged purchaser for recovery of the amount, if any, paid by him, would remain unaffected by this decision. Accordingly, the appeal is allowed. No costs." After the two writ petitions filed by the transferor and the transferee were dismissed by the single judge of the High Court, the Central Government, in whom the property vested in pursuance of the order passed by the appropriate authority under section 269UD read with section 269UE of the Act, put up the property for auction sale. In the sale notice it was recited, inter alia, that the property which is to be sold under lot No. 6 is free from encumbrances except that it is occupied by tenants. In the auction held on June 28, 1991, K. V. Shivakumar who is one of the trustees of Rajatha Trust gave the highest bid of Rs. 2,77,00,000. The bid was accepted. The auction purchaser deposited 25 per cent. of the bid amount, i.e., Rs. 47,01,000. The balance amount was to be paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the appropriate authority under section 269UD(1) of the Act and seeking a writ of mandamus to the Chief Commissioner of Income-tax, Bangalore, to issue "no objection" to the petitioner and the proposed transferee since the property in question has revested with the transferor. The proposed transferee, Rajatha Trust, represented by its trustee K. V. Shiva Kumar, also filed Writ Petition No. 34820 of 1996 in the Karnataka High Court seeking similar reliefs. On the petitions filed by the writ petitioners for transfer of the writ petitions, this court by order dated July 24, 1998, transferred the two writ petitions to this court. The cases are numbered as Transfer Cases Nos. 22 and 23 of 1998. The appeals arising from the two special leave petitions and the two transfer cases have been tagged together for hearing. Chapter XX-C comprising section 269U to 269UO deals with purchase made by the Central Government of immovable property in certain cases of transfer. While Chapter XX-A applies to transfers made up to September 30, 1986 ; this Chapter applies to transfers made after that date, Under the provisions power is conferred on the Central Government to purchase any property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty 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 269 UE will be read down so that if the holder of an encumbrance or a lessee is in possession of the property and under the agreement to sell the property, it is not provided that the sale would be free of such encumbrances or leasehold interests, the encumbrance holder or the lessee who is in possession will not be obliged to deliver possession of the property to the appropriate authority or any person authorised by it and the provisions of sub-section (3) also would not apply to such persons." Summing up its conclusion this court gave certain directions in relation to completed transactions as well as matters pending before the courts or other authorities. The relevant portion of the judgment reads : "This brings us to the question of relief. We find that the order for compulsory purchase under section 269UD(1) of the Income-tax Act which was served on the petitioner on the night of December 15, 1986, has been made without any show-cause notice being served on the petitioner and without the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition transferred is allowed to the extent aforestated. Considering the facts and circumstances of the case, there will be no order as to costs." This court overruled the decision of the Karnataka High Court in Vidyavathi Kapoor's case [1992] 194 ITR 584 and affirmed the decision of the Madras High Court in Government of India v. Maxim A. Lobo [1991] 190 ITR 101 (Mad). Subsequently on an application filed by the Union of India for certain clarifications and directions, this court passed an order of clarification in the form of a further direction which is reported in [1993] 199 ITR 530, 562 (SC). After disposal of the appeal by this court setting aside the judgment of the High Court relying on C. B. Gautam's case [1993] 199 ITR 530 the appropriate authority gave an opportunity of hearing to the parties and disposed of the matter afresh by the order dated November 28, 1996. From the order it appears that the appropriate authority has complied with the direction in the order passed by this court and has dealt with the matter in the light of the principles decided in C. B. Gautam's case [1993] 199 ITR 530 (SC). From the discussions in the order it is also clear that the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me being in force as the appropriate authority has ordered the purchase of the Schedule property, no claim by the transferees shall lie against the transferors for the reason of such transfer being not in accordance with the agreement for the transfer of the impugned property entered into between the transferors and the transferees." Shri S. Ganesh, learned counsel appearing for the appellant, raised the contention that in view of the order of this court setting aside the judgment of the High Court the property in question revested in the transferors and, therefore, the entire proceeding should have been started de novo instead of merely giving a notice of hearing to the parties. Referring to the transfer cases learned counsel appearing for the petitioner contended that the appropriate authority committed an error in adopting a discounted value of the property and fixing its apparent consideration at Rs. 1,50,17,084 as against the consideration of Rs. 1,55,00,000 specified in the agreement between the parties. He further contended that from the discounted value a sum of Rs. 2,49,851 stated to be due towards arrears of income-tax and wealth-tax in the case of Mohanlal Kapoor was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the fresh order to be passed by the appropriate authority. In the order passed by the appropriate authority the working out of the discounted value of the apparent consideration of Rs. 1,55,00,000 and the deductions made towards advance received by the transferor from the transferee and the amount outstanding against Mohanlal Kapoor were set out. From the discussions in the orders passed by the appropriate authority it is clear that notice of the discounted value and the deductions proposed to be made were given to the transferor. The transferor raised no objection against the discounted value or the deduction made. Indeed, the transferor expressed its willingness to accept the balance amount of consideration. Accordingly, a sum of Rs. 97,67,233 was paid to Vidyawati Kapoor Trust by cheque. On receipt of the amount the transferor delivered possession of the property. From the record it appears that the respondents stated before the authority that the alleged mistake in adjusting the tax arrears of Mohanlal Kapoor from the consideration payable to Vidyawati Trust could be sorted out between the Department and the transferor. It also appears from the record that Mohanlal Kapo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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