TMI Blog2000 (6) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... tive in the field of environment protection, The third petitioner was a professor of the Bombay University who takes keen interest in environment protection. The fourth petitioner was director and labour advisor in Siemens. The fifth petitioner is a businessman and a founder member of the Mumbai Grahak Panchayat. The sixth petitioner is an executive in an international bank in Bombay and the seventh petitioner was a senior manager of the State Bank of India and later consultant to the World Bank. The first respondent is the State of Maharashtra the second respondent is the Municipal Corporation of Greater Bombay and the third respondent is the Commissioner thereof. The fourth respondent is the Union of India. The fifth respondent is the appropriate authority under section 269UA of the Income-tax. Act, 1961. The sixth respondent is the original owner of plot bearing R. S. Nos. 416 and 417 (part) situated at Byramji Jijeebhoy Road, Bandra (West), which land is the subject-matter of this writ petition. The seventh respondent is a builder and the transferee of the land described hereinabove. The eighth respondent was the Minister of Revenue in the Government of Maharashtra at the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s down to the Mahim Bay and there is a large tract of open land which now has been encroached upon and dotted by numerous unauthorised structures, though continued to be shown as green area in the sanctioned and revised development plan for H-West ward of Mumbai. The first sanctioned Development Plan of Greater Bombay (H-West ward) was sanctioned on September 14, 1964. In this development plan, about 53,000 square yards from R. S. No. 6 and about 18,000 square yards from C. S. Nos. 416 and 417, representing the eastern slope, were reserved for garden. The remaining land, including the plot which is the subject-matter of the writ petition, was to be in the residential zone. The development plan also incorporated a loop comprising a 120 feet wide development plan road skirting the edge of the peninsula. This loop was conceived as a part of the larger arterial road under the plan. The southeastern portion of this loop was to join the Western Express Highway at the corner of Ali Yavar Jung bridge. The northern portion of this 120 feet road was aligned along with the existing road known as Carter Road and was to lead right up to Borivali running parallel to Swami Vivekanand Road and L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting full extension of the garden reservation to cover the concerned plot. This was done despite the objection of the owner, the sixth respondent. By another general body resolution passed on March 14, 1974, the garden and in return the sixth respondent was left free to develop the remaining plot without any claim on floor space index of the surrendered 7,000 square yards portion of the concerned plot. The modification made in the proposal was challenged by the present petitioners vide Misc. Petition No. 463 of 1974, before this court. This miscellaneous petition came to be dismissed by this court. Appeal No. 82 of 1979 carried thereagainst was dismissed by this court. Review Petition No. 8 of 1985 moved to review the decision of this court was also dismissed by this court. Thereafter, the petitioners filed a Special Leave Petition No. 17376 of 1985 in the Supreme Court contending, inter alia, that : (a) the mandatory directions under section 37(1) of the Maharashtra Regional Town Planning Act were not followed, and (b) that the second general body resolution passed by the Bombay Municipal Corporation was bad in law and void. On July 26, 1978, the sixth respondent obtained from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 9, 1988, the Supreme Court of India dismissed Special Leave Petitions Nos. 17376 and 17377 of 1985, and Civil Appeal No. 2537 of 1985, and categorically rejected all the contentions urged before it. The Supreme Court observed : "19. The above grounds of challenge to the order of exemption granted to respondent No. 5 have all been considered by the High Court in its judgment disposing of the review applications. The petitioners have not challenged the judgment on review applications. The petitioners are only interested in seeking that sufficient area is kept reserved for a park or recreation ground for the benefit of the members of the public. They are not, in our opinion, concerned-with the question as to the legality or otherwise of the exemption granted by the Government to respondent No. 5 under the Urban Land Ceiling Act. A copy of the draft revised development plan has been produced before us by Mr. Desai, learned counsel appearing on behalf of respondent No. 5. We are satisfied that the question whether or not sufficient quantity of land has been kept reserved for park and recreation ground has been adequately considered and taken into account by the High Court. In the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed plot. This order of the Minister of State was challenged in this court by Writ Petition No. 1432 of 1983 which was permitted to be replaced by Writ Petition No. 1822 of 1983. This order was set aside by this court on the ground that bias had been alleged against the said Shri Chandrakant Tripathi and that proper hearing had not been given to the petitioners, who were objectors to the development permission. By an order made on December 8, 1983, by Smt. Sujata Manohar J. (as her Lordship then was), the appeal was revived before the Minister of State for a fresh hearing. At this stage, the eighth respondent heard the appeal. During the hearing of the appeal, the second petitioner in the present writ petition and his advocate were heard in support of the objections. The eighth respondent made an order on February 4, 1984, partially allowing the appeal of the sixth respondent under section 47 of the Maharashtra Regional Town Planning Act. The eighth respondent made the following order : "Appeal partly allowed. Due to north-south and east-west proposed 120 ft. wide development plan roads land is divided in three parts, viz., Block A, Block B on south towards west of north-south D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r development of plots as per plans submitted by the appellants be granted by the M. C., B. M. C., subject to the conditions mentioned above. No orders as to costs each party to bear its own costs." This order was consonant with the exemption order under section 20 of the Urban Land Ceiling Act and also made some realignment of the 120 feet development plan road as a result of which three distinct plots : (a) one comprising the Fort ; (b) one comprising the garden measuring about 7,000 square yards to be made available to the Municipal Corporation of Greater Bombay, and (c) one comprising a plot where the hotel could be constructed, were constituted. The order of the Minister of State for Urban Development made on February 4, 1984, under section 47 of the Maharashtra Regional Town Planning Act was again challenged in Writ Petition No. 704 of 1984, before this court. A Division Bench of this court found no merit in the writ petition and dismissed the writ petition by its judgment and order dated April 27, 1984. This decision of the Division Bench of this court was challenged before the Supreme Court of India by Civil Appeal No. 2537 of 1985. The Supreme Court by its common jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that the Government of India have no comments to offer in the matter". He also requested that the final decision in the matter may kindly be intimated to his Department for record. By another letter dated November 30, 1981, the Government of India had stated that the Department of Environment, Government of India, had sought for detailed information of the present status of the Bandra Land's End's developmental activity and that there was no implied directive to hold up any action proposed by the State Government on any pending issue, that it has been brought to the Government's notice by Enjay Estate Private Limited that construction on plots of land owned by them was being held up on account of the Government's enquiry. The letter advised that the State Government should settle the question expeditiously and send a report to the Department at an early date. When Smt. Maneka Gandhi was in-charge of the Ministry of Environment, she had an occasion to visit Bandra Land's End. This gave rise to another round of objections before the fourth respondent. This also resulted in a meeting being held with the Chief Minister of the Government of Maharashtra on May 3, 1990, wherein se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tee's recommendation in the matter about the status of the concerned plot was accepted by the first respondent, Government of Maharashtra. The committee of secretaries, however, recommended deletion from the adjoining garden reservation C. T. S. No. 922 which was already covered by a slum. The committee's recommendation was also based on the suggestions from the third respondent who had suggested some changes in the network of 120 feet wide development plan roads. These changes were accepted and incorporated in the final sanctioned development plan on May 7, 1992. By an application dated February 17, 1979, the sixth respondent (Enjay Estates Private Limited) applied to the State Government for a no objection to the transfer of the concerned plot, which was exempted land under the Urban Land Ceiling Act exemption order dated July 25, 1978, to the ninth respondent (Enjay Hotels Private Limited) on the ground that the sixth respondent was proposed to be amalgamated into the ninth respondent. By an order dated February 7, 1980, the State Government conveyed its no objection to the transfer of the exempted taken land to Enjay Hotels Private Limited with which Enjay Estates Private Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k it necessary to burden this judgment with the history of all the interlocutory proceedings. In our view, the facts recited hereinabove, would be broadly sufficient to deal with the contentions urged before us in support of the writ petition. The petition raises a number of contentions some of them quite diffusely, and alleges contravention of different provisions of various statutes on the part of the sixth and the ninth respondents in the construction of the hotel. We may mention here in passing that this long drawn out litigation in "public interest", which has spanned about two decades, has seen a multi-starred hotel being constructed on the concerned plot, which has been completed, become operational and is functioning in full swing. The petitioners have, however, continued with the spate of their litigations with unmitigated zeal. Bona fides of the litigation : At the outset, it is contended by Mr. Tulzapurkar, learned counsel for the sixth and ninth respondents, that this is not a bona fide public interest litigation at all. It is urged that it is nothing but harassment and vindictive action on the part of the petitioners under the garb of public interest litigation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oed the lurking doubt expressed by Khalid J. in Sachidanand Pandey's case, AIR 1987 SC 1109 : "Is there something more than what meets the eye in this case?" On the material presented to us, we are unable to say that the litigation before us is not bona fide, though it does appear to us that the petitioners have been unduly persistent to the point of being odious in the pursuit of this case. As to the arguments based on res judicata and constructive res judicata, we shall deal with them when we take up for consideration the specific contentions. We shall, for the nonce, give the petitioners the benefit of doubt and assume that the petition is intended to be a bona fide public interest litigation, albeit pursued with misguided zeal. We would, however, like to add for the record that public interest litigation, even if pro bono publico initially, if it persists beyond the limits of tolerance, loses its halo and becomes oppressive and turns into persecution interest litigation. Such appears to be the present case. Legal contentions : The petitioners urged a number of contentions which were diffused and unstructured. We have gathered them as best as we can and the contentions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic authorities to decide and the final say in such matters should normally not come within the purview of judicial review. In Dahanu Taluka Environment Protection Group v. Bombay Suburban Electricity Supply Co. Ltd. [1991] 2 SCC 539, the Supreme Court observed with respect to judicial review as under : "The limitations, or more appropriately, the self-imposed restrictions of a court in considering such an issue as this have been set out by the court in Rural Litigation and Entitlement Kendra v. State of U. P. [1986] Supp. SCC 517 and Sachidanand Pandey v. State of West Bengal [1987] 2 SCC 295, The observations in those decisions need not be reiterated here. It is sufficient to observe that it is primarily for the governments concerned to consider the importance of public projects for the betterment of the conditions of living of the people on the one hand and the necessity for preservation of social and ecological balances, avoidance of deforestation and maintenance of purity of the atmosphere and water free from pollution on the other in the light of various factual, technical and other aspects that may be brought to its notice by various bodies of laymen, experts and public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction does not contravene the CRZ-II Regulations. Hence, we see no violation of sub-clause (v) of clause 2 of 1991 CRZ notification, In fact, by the notification dated July 9, 1997, sub-clause (viii) has been completely substituted and the activity of construction of the Bombay Municipal Corporation Sewerage Purification Plant is wholly permitted thereunder. In our view, sub-clause (ix) of clause 2 of the CRZ notification has no application at all. Sub-clause (xiii) of clause 2 of the notification uses the expression "except as permissible under the notification". In our view, if the construction activity is permitted under any other part of the notification, then the prohibition contemplated by clause 2, sub-clause (xiii) is not attracted. (b) Contravention of the Urban Land (Ceiling and Regulation) Act, 1976, and the exemption thereunder We are, therefore, not inclined to accept the contention that there is any violation of the exemption order under the Urban Land (Ceiling and Regulation) Act or the conditions stipulated therein. (c) Contravention of the provisions a the Maharashtra Regional and Town Planning Act, 1966. We agree with the contention of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enge to the permission granted to the sixth and the ninth respondents by the State Pollution Control Board. (i) Contravention of the provisions of the Maharashtra Regional and Town Planning Act, 1966, and the Development Control Regulations for Greater Bombay, 1991 : The Bombay Municipal Corporation having followed consistently the practice of extending the development permission from time to time if the initial construction commenced within a period of one year of the first grant of development permission, the development permission extended from time to time in the case of the sixth and the ninth respondents cannot be said to be illegal on that count. (j) Contravention of the Development Control Regulation No. 59 : Thus, looked at from West or East, it cannot be' held that the height restriction in the Development Control Regulation No. 59 would apply or that the planning authority erred in not making the height restriction applicable. The planning authority was justified in looking at the development plan while considering the application for development permission made by the sixth and the ninth respondents. Looked at from this point of view also, there was no error in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares to be issued on amalgamation would exceed Rs. 10 lakhs. Hence, the company court was deliberately misled into sanctioning a fraudulent scheme of amalgamation. In view of the seriousness of the allegation, we have extensively heard Mr. Sethna, learned counsel who appeared for the fifth respondent-appropriate authority, on the issue, apart from counsel for the petitioners and the sixth and the ninth respondents. We may straightaway dispose of the contention that the amalgamation was intended to circumvent the provisions of Chapter XX-C of the Income-tax Act. Amalgamation of the sixth respondent with the ninth respondent was mooted for the first time in the year 1979 in the letter dated September 17, 1979, by which the sixth respondent applied for permission of the Government of Maharashtra to amalgamate with the ninth respondent. The Government of Maharashtra made an order on February 7, 1980, indicating its no objection to the transfer of the land, which was exempted by the Government's order dated July 26, 1970, to the ninth respondent consequent upon the amalgamation provided that the shareholders of the sixth respondent continued to hold shares in the same proportion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder : "(11) In consideration of the transfer of assets, and liabilities of the transferor-company in favour of the transferee-company in terms of this scheme, the transferee-company will issue and allot, 7,227 (seven thousand two hundred twenty-seven only) equity shares of Rs. 100 (rupees one hundred only) each at par and credited as fully paid up to the members of the transferor-company whose names are recorded in the register of members, or their respective heirs, executors, administrators, legal representatives or successors as may be recognised by the board of directors of the transferee-company on a date, to be fixed by the directors of the transferee-company." While printing clause (11) of the scheme of amalgamation, the share exchange ratio was not mentioned therein. It is explained in the affidavit of Colabawalla that the words "for every one share of the transferor-company" were accidentally omitted by the typist operating the computer who followed the method of cut and paste and, since the same computer file was used, wherever the clause 11 of the scheme was retyped and printed out, the same error continued and was not noticed by any one. The amalgamation petitions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange ratio is 7,227 equity shares of Rs. 100 each to be issued as fully paid-up by the transferee-company (i.e., Enjay Hotels Private Limited) for one equity share of Rs. 100 each fully paid of the transferor-company (i.e., Enjay Estates Private Limited). Also, the transferee-company has not increased its authorised share capital. The existing authorised share capital of the transferee-company is Rs. 5,00,00,000 divided into 5,00,000 equity shares of Rs. 100 each and upon the scheme of amalgamation being approved by the Bombay High Court necessary increase in authorised share capital shall be made." This letter is annexed at exhibit "2" to the said affidavit of Colabawalla. Thus, even before the company petitions came up for consideration before the court, the position regarding the share exchange ratio was clearly placed on record and intimated to the Department of Company Affairs by the sixth and the ninth respondents. It is, therefore, contended by the said respondents that there were no mala fides or intention to misrepresent facts or play a fraud upon the company court as contended, since the share exchange ratio was clearly spelt out in the communication addressed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their report dated July 10, 1992, as well as by the Regional Director for Company Affairs in his letter dated September 25, 1992. The board of directors of the ninth respondent, by the resolution dated May 31, 1994, increased its authorised capital from Rs. 5,00,00,000 to Rs. 75,00,00,000 divided into 7,50,00,000 shares of Rs. 10 each by splitting its shares of Rs. 100 into 10 shares of the face value of Rs. 10 each. The ninth respondent thereafter submitted to the Registrar of Companies Form No. 5 and Form No. 23 on May 31, 1994, and paid the filing fees of Rs. 21,00,000 (rupees twenty one lakhs only) for registration of the said forms. Copies of the said forms are placed on record at exhibits "3" and "4" to the said affidavit of Colabawalla. The ninth respondent then issued 7,22,70,000 equity shares of Rs. 10 each aggregating to Rs., 72,27,00,000 to the shareholders of the sixth respondent in accordance with the exchange ratio of 7,227 equity shares against one equity share of the sixth respondent held on the record date. A copy of the return of allotment under section 75(1) of the Companies Act, 1956, dated July 18, 1994, in Form No. 2 filed with the Registrar of Companies ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Co., chartered accountants, on behalf of the ninth respondent. The appropriate authority had also called the ninth respondent for a hearing which was held some time in June, 1994. Even in the affidavit of Prayag Jha dated October 17, 1994, in which the omission in clause (11) of the amalgamation scheme has been highlighted and detailed reference has been made to the order of the company court, issuance of shares by the ninth respondent and so on, there is no prayer made that the order of amalgamation be set aside or reviewed or recalled, nor were any steps taken by the fifth respondent to set aside the amalgamation order on the ground of misrepresentation, suppression of facts or fraud, as contended before this court. It is contended by learned counsel for the sixth and the ninth respondents that neither the appropriate authority (fifth respondent) nor any one else could challenge the order dated February 3, 1993, at this point of time. In the alternative, it is contended that the appropriate authority is estopped from doing so since it had taken no step at any point earlier and allowed the shareholders to alter their position to their detriment. The reliance placed on the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to the amalgamation order would stand restored. This would mean that the sixth respondent would continue to be the owner of the property and entitled to exercise the benefits on all terms already granted to it. There would be no question of considering the impact of Chapter XX-C of the Income-tax Act, 1961, since there would be no amalgamation and no transfer. Thus, the end result would continue to be the same, namely, that the construction on the concerned plot would be valid if it was not otherwise invalid. Looked at from any point of view, the validity of the amalgamation order is, therefore, wholly immaterial and irrelevant in the submission of learned counsel. We are inclined to agree. Though we have examined the issue at length, from the material on record, it is not possible to hold that the amalgamation order dated February 3, 1993, was in any way vitiated. Much less are we in a position to say that the construction put upon the concerned plot by the sixth and the ninth respondents is illegal for the said reason. (1) Application of Chapter XX-C of the Income-tax Act, 1961: The petitioners have by an amendment to the writ petition made on November 16, 1992, prayed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Limited, transferee (the sixth respondent) and Enjay Hotels Private Limited, transferor (the ninth respondent) for discussions. Written submissions were filed by the sixth and the ninth respondents through their auditors, K. K. Ramani and Co., on June 2, 1994, and June 17, 1994. Ramani and Co. also filed certain documents along with their submissions and by a letter dated June 17, 1994, Ramani and Co., had admitted that as on that date they were not in a position to submit the audited statements of accounts of the ninth respondent as the same had not been finalised. The fifth respondent urges that even a situation of amalgamation of one company with the other would result in transfer of immovable property within the meaning of Chapter XX-C and, therefore, such a transfer would require a no objection certificate from the appropriate authority under the provisions of Chapter XX-C since the value of the land in question exceeded rupees ten lakhs which stood transferred from the sixth respondent to the ninth respondent as a consequence of the amalgamation order. Though it is the contention of the fifth respondent that such a transfer would be covered by the provisions of Chapter XX- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h against the total shareholding of 1,000 shares of different members of the transferor-company, meaning thereby that the entire assets of the transferor-company would stand transferred to the transferee-company at the cost of Rs. 7,22,700. Since the substratum of the transferor-company was only one asset, which was its land holding, and since it was not carrying out any other substantive business, it would mean that the assets of the transferor-company stood transferred for a consideration of Rs, 7,22,700 to the transferee-company. Since the "apparent consideration" indicated in the amalgamation order was much below rupees ten lakhs, the authority thought that it had no jurisdiction to entertain the case. Consequently, there was no occasion for the sixth and the ninth respondents to point out to the company court while sanctioning the scheme of amalgamation under section 394 of the Companies Act as to whether a no objection certificate had been obtained from the competent authority. The said A. Kumar also pointed out that, despite the misrepresentation in clause (11) of the scheme, the sanctioning order of the company court dated February 3, 1993, makes it clear that the considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic interest litigation might open up a Pandora's box, but, having regard to the chequered history and the meandering course of this litigation, we would prefer to exorcise this spectre once and for all instead of allowing it to haunt different courts from time to time. Hence, the extra effort on our part, overruling the preliminary contention of Mr. Tulzapurkar. At the outset, we notice that there was no impediment in the way of the fifth respondent-appropriate authority from taking action under Chapter XX-C of the Income-tax Act, for no court had restrained it from acting. It is the firm belief of the fifth respondent that it gets no jurisdiction to act under section 276AB, unless a declaration under Form No., 37-I was filed. Thus, the inhibition, if any, arose from the view of the statute taken by the appropriate authority and not on account of any external circumstances. It is urged for the sixth and ninth respondents that before a petition is entertained under section 394 of the Companies Act for sanctioning the amalgamation of a scheme, the court under section 394A of the Act is required to give notice of such application to the Central Government and take into consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time. The prescribed form of declaration is Form No. 37-I. Section 269UD of the Income-tax Act empowers the appropriate authority to make an order for the purchase by the Central Government of the immovable property involved. Upon such an order being passed, the property vests in the Central Government by virtue of section 269UE. Failure to file a declaration in Form No. 37-1 is declared to be an offence under section 276AB. The efforts of the fifth respondent were concentrated on emphasising the term "apparent consideration" defined in section 269UA. This expression, in relation to immovable property, is separately defined with respect to incidents of sale, exchange, lease, rent,. The term "transfer" is also defined in clause (f) of section 269UA in wide and general terms. Put in a nutshell, the argument of the appropriate authority is that the transaction. by which the two companies, namely, the sixth and the ninth respondents were amalgamated, amounted to a "transfer" within the meaning of clause (f) of section 269UA and that the "apparent consideration" for the transfer was the consideration indicated in clause (11) of the scheme itself and it being far in excess of rupees t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 269UA. Further, the process by which the land in question stood vested in the transferee-company by virtue of the amalgamation order, would not answer the description of "immovable property" within the meaning of clause (d)(ii), nor does it answer the description of "transfer" as defined in clause (f)(ii) of section 269UA of the Income-tax Act. (See in this connection Sailendra Kumar Ray v. Bank of Calcutta Ltd. [1948] 18 Comp Cas 1 (Cal) and Sahayanidhi (Virudhunagar) Ltd. v. A.R.S. Subrahmanya Nadar [1951] 20 Comp Cas 214 (Mad) [FBI and Telesound India Ltd., In re [1983] 53 Comp Cas 926 (Delhi)). In Sailendra Kumar Ray's case [1948] 18 Comp Cas 1, the Calcutta High Court held that in a situation of amalgamation even if it can be said that there was a transfer of asset, the transfer was not by way of an assignment but by the order of the court backed up by the force of a statutory provision and by operation of law. In Sahayanidhi's case [1951] 20 Comp Cas 214 (Mad) [FB], the Madras High Court reiterated this proposition. In Telesound's case [1983] 53 Comp Cas 926 (Delhi), it is held that as amalgamation has its origin in a statute and is statutory in character, the transfer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XX-C is not attracted to such a transfer by operation of law. This contention has substance and needs to be upheld. It is alternatively contended by counsel for the sixth and the ninth respondents that section 269UA is not intended to apply to all types of transfers, but only to some particular types of transfers as there is no reference therein to a transfer consequent upon an amalgamation scheme. Hence, it is contended that a transfer consequent upon amalgamation falls outside the sweep of section 269UA. In order to drive home this point, learned counsel drew our attention to section 2(1B) of the Income-tax Act, 1961, which defines the expression "amalgamation". Sections 45 and 47 of the Income-tax Act which deal with capital gains arising upon a transfer of a capital asset, expressly exclude a situation of amalgamation for the purposes of capital gains. Similarly, section 45 of the Gift-tax Act, 1958, provides that no gift-tax will be leviable in a situation of amalgamation. The term "amalgamation" under the provisions of the Gift-tax Act has the same meaning as in section 2(1B) of the Income-tax Act. It is, therefore, contended that, in an amalgamation, there is neither any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Government, has a distinct personality of its own and its property cannot be said to be the property of the Union of India. Hence, it is contended that by the act of amalgamation, there was no sale of any assets by the transferor-company (the sixth respondent) to the transferee-company (the ninth respondent) in the amalgamation. Thus, it is urged that there being no sale or exchange or lease of immovable property in the case of amalgamation, the transfer of the assets of the sixth respondent to the ninth respondent does not fall within the ambit of Chapter XX-C of the Incometax Act, 1961. Mr. Tulzapurkar referred extensively to the provisions of Chapter XX-C of the Income-tax Act and pointed out that the transfer on an amalgamation cannot fall within the sweep of section 269UA of the Income-tax Act even if we were to consider the extended definitions of "immovable property" within the meaning of clause (d)(ii) and "transfer" as defined in clause (f)(ii) of section 269UA for the following reasons : (a) there is no acquisition of shares by the transferee-company in the case of amalgamation and, therefore, neither is the case one of "immovable property" as defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dissolution of assets of the partnership firm, the Supreme Court held that there is no transfer of assets involved upon dissolution of the partnership and distribution of its assets. To similar effect is the view of the Supreme Court in CIT v. Dewas Cine Corporation [1968] 68 ITR 240 and CIT v. Juggilal Kamalapat [1967] 63 ITR 292. In both the judgments, the Supreme Court has taken the view that the allotment of property of the firm upon its dissolution does not amount to sale. In Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300, the Supreme Court has specifically observed that even if the assets of the dissolved firm include immovable properties, for the purposes of their allotment amongst partners they must be treated as movable property. Thus, it is contended that an amalgamation falls outside the purview of section 269UA of the Income-tax Act, 1961. It is then urged that, in order to attract the provisions of Chapter XX-C of the Income-tax Act, there must exist an "agreement" within the meaning of section 269UC of the Income-tax Act. Section 269UC speaks of an "agreement" as a final, concluded and binding agreement between the parties. The submission is that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961, should apply to an amalgamation scheme, then it would have made an express provision for such a situation. The absence of reference to an amalgamation scheme is not accidental, but intentional, since the Legislature did not intend an amalgamation scheme to be covered by the provisions of Chapter XX-C, even if there is consequential transfer of immovable property. The valuation put on the shares cannot be treated as "apparent consideration" for the purposes of transfer. If the valuation of the shares proposed to be issued upon amalgamation is below the stipulated limit, then obviously the provisions of Chapter XX-C would not apply. However, while sanctioning the scheme, the company court may modify the scheme and provide for issuance of a larger number of shares upon amalgamation. When this happens, then, for the first time, it would be the stage when the actual valuation or the consideration becomes known. Thus, the consideration would be known at the stage of sanctioning of the amalgamation scheme and it would be practically impossible for anyone to comply with the provisions of section 269UC of filing the declaration in Form No. 37-I in advance, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be a situation which could arise if we accept the contention of the appropriate authority that an amalgamation is amenable to the provisions of Chapter XX-C of the Income-tax Act. Section 269UE(6) of the Income-tax Act provides that when the Central Government makes an order for compulsory purchase of the rights referred to in sub-clause (ii) of clause (d) of section 269UA, the immovable property shall vest in the Central Government and place the Central Government in the same position in relation to such rights as the person in whom such right would continue if such an order had not been made. The consequences in the case of an amalgamation are somewhat startling. This would mean that in respect of an immovable property as defined in sub-clause (ii) of clause (d) of section 269UA, the Central Government would step into the shoes of the transferee-company. This in turn means that the Central Government is required to discharge all obligations which the transferee-company would have to do. These may include obligations like issuing of shares to the shareholders of the transferor-company or taking over the transferor-company as a going concern including workers, their liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the learned single judge was virtually affirmed since an appeal thereagainst was summarily dismissed on November 24, 1994, by the Division Bench of this court). To similar effect are the observations of the Supreme Court in General Radio and Appliances Co. Ltd. v. M. A. Khader [1986] 60 Comp Cas 1013. It is, therefore, contended that, by conjuring up consequences that may arise after amalgamation, it is not open to the company court, which is the forum constituted under a special Act, namely, the Companies Act, to reject or refuse to sanction a scheme of amalgamation by reckoning factors which are non-germane and irrelevant for consideration under the provisions of sections 391 to 394 of the Companies Act. Hence, it is contended that a no objection certificate by the appropriate authority under Chapter XX-C is not a prescribed condition precedent under section 391 of the Companies Act and, therefore, is a factor wholly irrelevant, immaterial and non-germane for consideration at the time of sanctioning of the amalgamation scheme. In these circumstances, we are of the view that the contention of the petitioner, that the company court was obliged to suo motu issue a notice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection with the aforesaid transfer for over such a long period of time. (b) We can take judicial notice that several schemes of transfer are sanctioned every day by the company judge and no one seems to have seriously suggested, argued or held that Chapter XX-C of the Income-tax Act, 1961, would apply to a situation of sanction of an, amalgamation scheme. The authorities entrusted with the administration of the statute (i. e., the Income-tax Act) also do not appear to have interpreted the provisions of Chapter XX-C to mean what is being contended now before us. By the principle of contemporanea expositio, the practical manner in which the provisions, of, Chapter XX-C have been interpreted over a considerably long period need not be upset by this court, in our judgment (see in this connection Raymond Synthetics Ltd. v. Union of India [1992] 73 Comp Cas 762 (SC) and Suresh Nathan (N.) v. Union of India, AIR 1992 SC 564). (c) If this court were to accept the contention of the petitioners and interpret the provisions of Chapter XX-C in the manner suggested by the petitioners, a large number of innocent persons who have been parties to amalgamation schemes would stand exposed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the construction is complete and has resulted in a multistoreyed seven star hotel, which was conceived way back when the plans were submitted for sanction and there is no reason whatsoever to interfere with its functioning. On the other hand, he urges that the history of litigation from 1974 onwards, the repeated contentions and challenges in all available fora by the petitioners, contentions urged as to the applicability of Chapter XX-C of the Income-tax Act, 1961, taken together, suggest that there may be "something more than what meets the eye" as observed by the Supreme Court in Sachidanand Pandey's case, AIR 1987 SC 1109, 1137. There appears to be quite some legitimacy to the grievance made by learned counsel for the sixth and the ninth respondents. It appears to us that, what may have started as a bona fide public interest litigation, soon degenerated into a case of private witch-hunting. If at all the petitioners were interested in pursuing the litigation as a public interest litigation, after the observations of the Supreme Court in S. N. Rao's case, AIR 1988 SC 712 which we have reproduced above, the matter should have been put to rest. The annoying persistence with wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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