TMI Blog2000 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... the description is given as 1/3rd share/interest in the property known as Leilazar bearing No. 8-2-349, Road No. 3, Banjara Hills, Hyderabad, with the boundaries specified therein. The approximate extent of land in which the late Leila D. Lein had 1/3rd share is mentioned to be 7,100 sq. metres. The order in question passed on May 20, 1994, was preceded by an order passed on November 28, 1989, under the same provision, viz., section 269UD(1), which was amended by an order dated December 28, 1989. The earlier order dated November 28, 1989, was challenged by the same petitioners in Writ Petition No. 17315 of 1989. The constitutional validity of the provisions of Chapter XX-C was mainly in issue in that W. P. Following the judgment of the Supreme Court in C. B. Gautam v. Union of India [1993] 199 ITR 530 and the amended provisions introduced by Parliament to give effect to that judgment, the Division Bench by its order dated February 16, 1994, allowed the writ petition on the short ground that before passing the order of pre-emptive purchase under section 269UD(1) opportunity of hearing was not afforded to the petitioners or the transferors. The following is the operative part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... void the tax and, therefore, passed the order under section 269UD(1) which is assailed in this writ petition. To appreciate the contentious issues, we have to go into the catalogue of events starting with the agreement of sale entered into on March 13, 1988, by Leila D. Lein and her two sisters with the petitioners herein for the sale of residential property-H. No. 8-2-349, Road No. 3, Banjara Hills, known as "Leilazar" approximately measuring 7,100 sq. metres for the total sale consideration of Rs. 46,00,000 out of which a sum of Rs. 1,20,000 was paid on the date of agreement. On July 7, 1988, Mrs. Leila D. Lein passed away. An executor was appointed. The executor for the estate of Leila D. Lein appointed a G. P. A, who was, inter alia, authorized to dispose of the disputed property. On April 27, 1989, the power of attorney holder, Sri Armugham (R-5), entered into a fresh agreement of sale with the petitioners herein in respect of the undivided interest of Mrs. Leila D. Lein in confirmation of the original agreement entered into on March 13, 1988, subject to the same terms. Soon thereafter, i.e., on April 28, 1989, and on May 31, 1989, the two sisters of Leila D. Lein executed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gst the three sisters and each of their shares was specifically identified as per the plan enclosed. The extent of land sold by the two sisters, the details of sales effected by the sisters together with the extents sold were mentioned in the affidavit. However, the date of oral agreement and the Source of knowledge of the deponent of the affidavit (R-5) have not been disclosed in the affidavit. This affidavit formed the basis for an amendment order passed under section 269UJ on December 28, 1989, by the appropriate authority. By the amendment order, firstly, the house number was rectified. Secondly, the boundaries were given for the one-third share of property held by the late Leila D. Lein in the premises known as "Leilazar" with H. No. 8-2-349. The northern boundary is shown as "common road" and the eastern boundary is given as the property falling to the share of late Mrs. Kripa Devi (Leila's sister) and sold to four parties. The western and southern boundaries are referred to as "private property". The events that followed later, i.e., filing of the writ petition and disposal thereof broadly in the light of Gautam's case [1993] 199 ITR 530 (SC), have already been adverted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mity with the directions of the Supreme Court in Gautam's case [1993] 199 ITR 530. It is the contention of learned counsel for the Revenue that the period of limitation under the proviso to section 269UD(1) shall be reckoned from that date. It is no longer open to the petitioners to contend that the initial order passed under section 269UD on November 28, 1989, is invalid or barred by limitation, more so when such order has been quashed by the High Court. It is only the fresh order passed after the remand by the High Court that survives for judicial scrutiny, according to learned counsel for the Revenue. In reply to this contention, learned counsel for the petitioners draws our attention to the following observations immediately after the direction that Form No. 37-I must be deemed to have been filed on the date of the judgment. "This is without prejudice to the contentions of the petitioners raised in the writ petition including the contention that filing of the form second or third time, as the case may be, was only pursuant to the directions of the appropriate authority and that no valid order of pre-emptive purchase under Chapter XX-C can be made by the appropriate authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now, let us see whether the order dated November 28, 1989, passed under section 269UD read with the order under section 269UJ is, but for the contravention of principles of natural justice, a valid order passed within the time limit set out in the proviso to section 269UD. The thrust of the argument of learned counsel for the petitioners is on the legality of the order passed under section 269UJ amending the first schedule to the impugned order by describing the property by boundaries. It is the contention of learned counsel for the petitioners that the order under section 269UD goes beyond the scope of the agreement of sale in respect of which a statement is required to be filed under sub-section (3) of section 269UC. That is why the original order passed under section 269UD on November 28, 1989, rightly referred to the subject-matter of the property to be purchased as one third undivided interest in the building and the adjacent land. An order under section 269UJ could not have been passed on December 28, 1989, purporting to amend the schedule of property so as to convert the undivided interest into an earmarked divided property. Such power of amendment does not fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69UJ provides for amendment of the order passed under Chapter XX-C either suo motu or otherwise in order to rectify the mistake apparent from the record. An obvious instance of the exercise of the power of amendment under section 269UJ is to be found in the first part of the order dated December 28, 1989. The building number which was wrongly given was rectified by substituting the figure "8" for "3". The second part of the order purports to amend the first schedule to the order dated November 28, 1989, by adding the boundaries which, according to the appropriate authority, "have since been ascertained". In the amended order, reference to one third share of Leila D. Lein in the property known as "Leilazar" has been retained. But, it is followed by specification of boundaries. Thus, the one-third share of the transferor has been identified by metes and bounds. Whether the one-third share agreed to be sold to the petitioners could be transformed into a specific divided property while passing the pre-emptive purchase order under section 269UD(1) is one aspect which we shall deal with a little later. The other question is whether by amending the schedule to the order in the manner in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifference in the facts. The ratio of the decision in Mahendra Mills Ltd.'s case [1975] 99 ITR 135 (SC), can be discerned from the following passages : "If the Income-tax Officer's finding with regard to the closing stock for assessment year 1959-60 was relevant to and part of the 'record of appeal', the Tribunal's decision which superseded that finding was equally so within the contemplation of section 35 of the Act." Earlier, it was observed : "Thus, to the extent of ascertaining the closing and opening stock positions, the two assessments telescoped into each other. Indeed, it was on this basis that the Appellate Assistant Commissioner had by his decision dated June 30, 1965, allowed the assessee's appeal regarding assessment year 1960-61. The Tribunal's finding, that the value of the closing stock for assessment year 1959-60 should be Rs. 5,89,439 had completely replaced the Income-tax Officer's finding in regard to that fact with effect from the date of the Income-tax Officer's order relating to assessment year 1959-60." It is on those peculiar facts, their Lordships of the Supreme Court held that the subsequent decision of the Tribunal regarding the value of closing st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein cannot be said to be incorrect. Hence, the occasion to invoke the power under section 269UJ to amend the order does not arise. At the same time, the first order passed under section 269UD can stand and remain valid even without the order of amendment under section 269UJ. Coming to the second purchase order passed after remand, no doubt, the specification of boundaries is not in strict conformity with the agreement and the statement and that on first look, it may appear that the portion of the order in Schedule I specifying the boundaries should be expunged. But, the fact remains that by the date of passing the second section 269UD order, the identification of the property representing the share and interest of Leila D. Lein had become a fait accompli. From the affidavit of the fifth respondent (GPA), it became crystal clear that the other two sisters having had equal share with Leila D. Lein sold specific and earmarked portions of property by various sale deeds. The area sold, the name of the buyer, the sale price, sale deed number were all furnished in the affidavit. It was signed by the vendee's representative. Six sale deeds executed by and on behalf of her two sister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority, the petitioners proceeded on the basis that an extent of 2,830 sq. yds. had fallen to the remaining one third share of Leila D. Lein. On the other hand, in para. 13(v) of the affidavit in writ petition, it is stated as follows : "On the merits of the matter, it had been submitted that the entire area which was the subject-matter of the agreement dated March 13, 1988, measured 7,100 sq. metres. Out of this, two-thirds have been sold away and third parties were put in possession. What remained with the petitioners was one-third of the property. This part suffered from several disadvantages." True, the affidavit filed by the fifth-respondent on which the appropriate authority acted did not spell out the details of oral partition, i.e., the date of partition, and whether it took place during the life time of Leila D. Lein. On that account, we cannot discard the partition nor can we hold that the appropriate authority did not have material before it to believe the partition. The facts stated above speak for themselves and indubitably lead to an inference of partition and demarcation and identification of the specific portions of property that fell to the share of each one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention advanced by learned counsel for the petitioners is that it is only the first statement filed in June, 1989, which can be acted upon and it is with reference to this statement that the limitation has to be computed. If the appropriate authority for any reason is not in a position to exercise the option to purchase the property within the time limit prescribed, the no-objection certificate under section 269UL ought to be issued. It is not open to the appropriate authority to require a fresh statement to be filed and to proceed to take further action on the basis of such second statement. The invalidity or unenforceability of the agreement is not a legitimate ground for insisting on filing of the second statement. This is the substance of the argument of learned counsel. The factual background for advancing such argument may be recapitulated. The statement in Form No. 37-I in June, 1989, was "filed" by the appropriate authority as per its communication dated August 23, 1989. The said communication reads as follows : "It is observed that the original owner, Mrs. Leila D. Lein, passed away on July 7, 1988, and her estate is being administered by the executor Shri B. K. Reddy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Reserve Bank's approval that was obtained in the interregnum. In Smt. Jaspal Kaur v. Union of India [1998] 232 ITR 87, a Division Bench decision of the Delhi High Court, R. C. Lahoti J., speaking for the Bench succinctly summarised the principles culled out from various decisions on the implications of a statement filed on the basis of an illegal or unenforceable agreement. We quote the principles so laid down : "(i) When there is a proposal for sale, the appropriate authority has only two options available to it--(i) either to purchase the property by exercising the right under section 269UD ; or (ii) if it is not inclined to purchase the property, to issue a no objection certificate. There is no third option open (IOL Ltd. v. S.C. Prasad [1996] 217 ITR 52 (Bom) ; Appropriate Authority v. Naresh M. Mehta [1993] 200 ITR 773 (Mad); Kelvin Jute Co. Ltd. v. Appropriate Authority [1990] 185 ITR 453 (Cal) ; Ramanlal B. Pandya v. Union of India [1998] 230 ITR 454 (Kar) and Ghaziabad General Industries Pvt. Ltd. v. Appropriate Authority [1997] 227 ITR 884 (All)). (ii) The time limit of two months specified in section 269UD(1), first proviso (within which the appropriate authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriate authority and filed the second statement voluntarily and having kept quiet for nearly five years, it is not open to the petitioners to raise the bogey of the invalidity of the second statement or the communication which preceded it. The petitioners and respondent No. 5 by their conduct must be deemed to have waived their right to question the action of the appropriate authority as rightly contended by learned standing counsel for the Revenue. The petitioners are estopped from raising this issue at this distance of time in the second round of litigation after the entire transaction has been completed and the consideration paid to the transferor. The conduct and laches on the part of the petitioners would disentitle them to any relief under article 226 of the Constitution on the ground that the second statement should not have been processed further. The last question to be considered is about the valuation. It is the contention of learned counsel for the petitioners that comparable instances of sale furnished by the petitioners were not taken into account and more over, the remaining land that has fallen to the share of Leila D. Lein suffered from certain disadvantages a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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