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TMI Blog2001 (4) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... short "DBR"). Presently, the subject property is under the occupation of DBR. It appears that DBR has filed a declaration under the Urban Land (Ceiling and Regulation) Act, 1976, showing the subject land as belonging to it and later the said land was excluded from the hands of the heirs of Chenai family by the Special Officer and Competent Authority under the provisions of the Urban Land (Ceiling and Regulation) Act, 1976. It, further appears that in the hands of DBR the Special Officer and the Competent Authority held that 16 acres of land protected under section 4(11) of the Urban Land (Ceiling and Regulation) Act and the balance of 6.5 acres was declared as excess out of the land in the bands of DBR. Against the said determination made by the Special Officer and the Competent Authority, a writ petition is filed in this court and the same is pending. Since the DBR stopped paying the annual lease amount of Rs. 1,000 from 1992 and commuted default in Payment of rent to respondent No. 2, respondent No. 2 has filed the suit O. S. No. 120 of 1995 in the court of the Fourth Additional Judge, City Civil Court, Hyderabad, for eviction of DBR and the said suit is currently pending. In ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied at Rs. 4.60 crores as indicated above. Subsequent to the filing of Form No. 37-I, respondent No. 1 by its notices under section 269UC(4), dated January 25, 1999, and dated February 24, 1999, required the petitioners to file non-encumbrance certificates and municipal tax receipts and parent deeds. These formalities were complied with by the petitioners on February 11, 1999, and March 9, 1999. Subsequently, an order was received from the first respondent on August 26, 1999, stating that the case is closed as non est. The order dated August 26, 1999, reads "Government of India, Office of the Appropriate Authority, Income-tax Department, & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial company under the provisions of the SICA, and the issue is pending before the BIFR. The permission of the BIFR is to be obtained before any assets of DBR Mills Ltd. are alienated. In view of the above, it has been decided to close the case as non est. You are advised to file a fresh Form No. 37-I as and when the litigation pending is finalized, and after obtaining the permission of the BIFR. Yours faithfully, (Sd.) B. Arulappa, Deputy Commissioner of Income-tax(Hq), C/o. Appropriate Authority, Bangalore." Hence, this writ petition assailing the legality and validity of the above order of the Appropriate Authority. Sri Y. Ratnakar, learned counsel for the petitioner would contend that the first respondent-authority was not justified in closing the case and lodging Form No. 37-I filed for a no objection certificate and that if the Central Government does not want to purchase the property because of the pending litigations between the second respondent and the DBR, the only course open to the Central Government would be to issue the no abjection certificate. Learned counsel would maintain that the first respondent authority has only two options, viz., eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed. No costs." It is very clear and evident from the above declaration of the apex court that whenever Form No. 37-I for obtaining a no abjection certificate by the parties is filed, the Appropriate Authority has two options, viz., either to grant a no abjection certificate or to order purchase of property by the Central Government. Chapter XX-C containing sections 269U to 269UO was inserted by the Finance Act, 1986, providing for purchase by the Central Government of immovable properties in certain cases of transfer in replacement of the provisions of Chapter XX-A containing sections 269A to 269S, relating to acquisition of immovable properties in certain cases of transfer to counteract tax evasion. Chapter XX-C was introduced in view of the Long-term Fiscal Policy (LTFP) announced by the Central Government because the provisions of Chapter XX-A had miserably failed in achieving the objective and containing the mischief of tax evasion by way of transfer of immovable properties. In appreciating the question whether the reason given by the first respondent-Appropriate Authority in the impugned order could be valid and legal ground, this objective behind the Chapter XX-C should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain clarifications in respect of certain points. After reply was received, the Appropriate Authority by order dated December 11, 1995, held that in view of the prohibition of section 6 of the Tamil Nadu Urban Land Ceiling Act the agreement dated September 7, 1995, to transfer the entire land, including the excess vacant land shall be deemed to be null and void and in that view of the matter, the Appropriate Authority could not effectively exercise its powers with regard to pre-emptive right to purchase the subject property. This court referred to its earlier decision in Appropriate Authority v. Tanvi Trading and Credits P. Ltd. [1991] 191 ITR 307 (SC), which approved the decision of the Delhi High Court (see [1991] 188 ITR 623) as follows (page 446 of 230 ITR) : 'Sub-section (4) was inserted in section 269UC by the Finance Act, 1995, with effect from july 1, 1995. Section 269UC, as it stood before the said amendment of 1995, came up for consideration before the various High Courts. In Tanvi Trading and Credits P. Ltd. v. Appropriate Authority [1991] 188 ITR 623, a Division Bench of the Delhi High Court has considered the provisions contained in sections 269UC, 269UD and 269UL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation made in this behalf. The said provision in subsection (4) of section 269UC envisages a defect which can be removed/ rectified within the period of fifteen days or the further period which is given by the Appropriate Authority. A defect regarding the legality and validity of the agreement which renders the agreement void and unenforceable cannot be rectified. Since a defect which cannot be rectified was not within the contemplation of the Legislature in enacting sub-section (4) of section 269UC a defect regarding the legality or validity of the agreement would not fall within the ambit of the said provision. The objects and reasons of the Bill which was enacted as Finance Act, 1995, also do not give an indication that by inserting sub-section (4) in section 269UC Parliament intended to confer a power on the Appropriate Authority to go into the legality or validity of the agreement'." In Ramanlal B. Pandya v. Union of India [1998] 230 ITR 454, the Karnataka High Court held : "I find considerable force in the submission of learned counsel for the petitioners that it was not permissible for the second respondent to pass the impugned order for the reasons set out in the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the parties, I am of the view that Mr. Mitra was right in his submission that section 269UD of the Act does not confer any authority, power or jurisdiction to the Appropriate Authority to go into the question of title of the writ petitioners in respect of the property in question which is sought to be sold on the basis of the agreement for sale." In IOL Ltd. v. S. C. Prasad [1996] 217 ITR 52, the Bombay High Court held: "It is necessary to reiterate that it is not open to the Appropriate Authority constituted under section 269UB of the Act to travel beyond the jurisdiction conferred under section 269UD of the Act. The Appropriate Authority can only make an order of purchase for the Central Government or issue a no abjection certificate. It is not open to the Appropriate Authority to declare the agreement non est." In Tanvi Trading and Credits P. Ltd, v. Appropriate Authority [1991] 188 ITR 623, the Delhi High Court held : "As we read section 269UD, it is clear that the only right which it confers on the Appropriate Authority is to enable it to make an order for purchase of the immovable property at a amount equal to the amount of the apparent consideration. Furtherm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reason given by the Appropriate Authority to reject the application in Form No. 37-I is not tenable and since there are no other reasons given by the Appropriate Authority to reject the application and in the light of the judgment of the Supreme Court in DLF Universal Ltd. v. Appropriate Authority [2000] 243 ITR 730, we think that it is a fit case where a direction shall go to the respondent-Appropriate Authority to issue a no abjection certificate. In the result and for the foregoing reasons, the writ petition is allowed with no order as to costs. The impugned order bearing No. AA/Hyd/1(85)/ 4 of 1998-99, dated August 26, 1999, of the first respondent-Appropriate Authority is quashed. A direction shall issue to the first respondent-Appropriate Authority to issue a no abjection certificate to the petitioners in respect of 22.5 acres of land situated at Elichibaiguda, Bakaram, Hyderabad, in File No. AA/HYD/I(85)/4 of 1998-99, dated August 26, 1999, to enable the said property to be transferred by the second respondent in favour of the petitioners subject to the petitioners performing prescribed formalities, if any. That rule nisi has been made absolute as above. &n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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