TMI Blog1998 (11) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, 2436/98, 4611/97, 4612/97. 2.2. Rajdhani Estate Promoters Developers Association, is an association of builders and estate developers established in the year 1970 and registered under the Societies Act, 1860, is the writ petitioner in CWP 2441/97. 3. All the petitioners are builders engaged in developing landed property and thereafter allotting plots, flats, houses, shops, etc. to the prospective buyers. To illustrate the nature of activities undertaken, we will briefly set out the facts of sample cases in the succeeding paragraphs. There may be variations in the matter of dates or details but those variations in the individual cases are not significant. What is of significance is the nature of activity and the transactions entered into by the several petitioners. 4. In CWP No. 1735/97, the respondent No. 2 made an application on 13th June, 1996 in the proforma prescribed by the petitioner M/s Ansal Properties and Industries Ltd. for allotment of a residential flat of a built up area of 350 sq. yds. (approx.). The allotment having been finalised, an agreement was entered into between the respondent No. 2 and the petitioner on 5th Nov., 1996. The price agreed upon is R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th June, 1996 which date is much prior to the date of agreement mentioned in Form 37-I. It is also mentioned in the schedule of the agreement enclosed with the form that Rs. 3,83,203 was paid with application of allotment and a further sum of Rs. 3,83,203 was paid within 60 days, thereof. This indicates that the transaction with reference to the identification of the property as also the rate of payment and schedule of payment was finalised much prior to the alleged date of agreement mentioned in Form 37-I. It is the considered view of the Appropriate Authority that since the major terms and conditions of the transaction were finalised on 13th June, 1996, the Form 37-I should have been filed within 15 days thereof. Since this was not so, the form is treated as belated form. Further, in absence of any power of condonation of delay, the form has to be treated as not maintainable." 5. In CWP 4160/97 M/s DLF Universals Ltd. have developed a residential apartment complex in Qutub Enclave, Gurgaon (Haryana). On 12th July, 1996, the respondents No. 2, 3, 4 made an application for allotment of a residential apartment undertaking to sign and execute the Apartments Buyers Agreement on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y usually on two grounds (i) non-furnishing of information in respect of cost of acquisition as required by column 12 and (ii) non-filing of Form 37-I within 15 days of application for allotment consequent upon such defects being held fatal by the Appropriate Authority, Form 37-I is termed as defective and deemed never to have been filed. A specimen copy of such order has been filed. 7. Without burdening this judgment with details of the facts of the several cases, it would suffice to note the relevant features generating the issues arising for decision. The intending vendors are all builders. They are engaged in the business activity of developing plots/complexes residential, office or both. The schemes are advertised; in many a cases at a point of time when the scheme of construction is only on papers. The intending buyers finalise their deals by inspecting the plans and such details thereof as can be made available. The area, dimensions, plans and layouts, even the cost, are all tentative which achieve a finality only on the plan materialising by completion of the construction and at that state while documenting actual transfer of the property, the actual description/details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty" means - (i) any land or any building or part of a building, and includes, where any land or any building or part of a building is to be transferred together with any machinery, plant, furniture, fittings or things, such machinery, plant, furniture, fittings or other things also. Explanation-For the purposes of this sub-clause "land, building, part of a building, machinery, plant, furniture, fittings and other things" include any rights therein; (ii) any rights in or with respect to any land or any building or a part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein) which has been constructed or which is to be constructed, accruing or arising from any transaction whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other AOP or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease of such land, building or part of a building; (f) "transfer",- (i) in relation to any immovable property referred to in sub-cl. (1) of cl. (d), means transfer of such property by way of sale or exchange or lease for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties. (4) Where it is found that the statement referred to in sub-s. (2) is defective, the Appropriate Authority may intimate the defect to the parties concerned and give them an opportunity to rectify the defect within a period of fifteen days from the date of such intimation of within such further period which, on an application made in this behalf, the appropriate, authority may, in its discretion, allow and if the defect is not rectified within the said period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the appropriate, authority may, in its discretion, allow and if the defect is not rectified within the said period of fifteen days, or as the case may be, the further period so allowed, then not withstanding anything contained in any other provision of this Chapter, the statement shall be deemed never to have been furnished" 269UD. Order by Appropriate Authority for purchase by Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary reference would be made whenever required. 12. In the IT Rules, 1962, Part X-C was added incorporating rules relating to purchase of immovable properties under Chapter XX-C. Rule 48L provides as under : "48L. Statement to be furnished under s. 269UC(3).- (1) The statement required to be furnished to the Appropriate Authority under sub-s. (3) of s. 269UC shall be in Form No. 37 -I and shall be signed and verified in the manner indicated therein by each of the parties to the transfer referred to in sub-s. (1) of that section on by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties. (2) The statement in Form No. 37-I shall be furnished, in duplicate, to the Appropriate Authority- (a) before the 30th day of October, 1987, in a case where the agreement for transfer is entered into before the coming into force of Chapter XX-C in the areas comprised in the "Bangalore Metropolitan Region", and "Ahmedabad Urban Development Area" and the areas comprised in the city of Ahmedabad, as referred to in the notification of the Government of India in the Department of Revenue No. S.O. 835(E), dt. 21st Sept., 1987; (b) before the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o solemnly declare that what is stated above and in the annexure (including the documents) accompanying such annexure), to the extent it relates to the respective party, is correct and complete to the best of their knowledge and belief. Each party further declares that he is competent to sign this agreement and verify its content. Transferor(s) . Transferee (s) ..................................... . ..................................... ather's/Husband's name . Father's/Husband's name ANNEXURE Particulars of the agreement for transfer of immovable property 1. Particulars of the transferor (s) : 2. Particulars of the transferee(s) 3. Particulars of the property sought to be transferred : (i) (a) Area of vacant land (b) Area of land occupied by the superstructure (c) Total land area (ii) Floor-wise plinth areas (iii) Plant and machinery (iv) Furniture and fixtures attached (v) Other assets (vi) Area of car-parking space (vii) Area of terrace, if any (viii) Permissible floor area ratio/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was the prolification of the black money evident in the transfer of immovable properties which persuaded the Parliament to enact Chapter XX-C. One way of tackling problem of tax evasion thought fit was to confer on the Government the pre -emptive right to acquire any immovable property undergoing a transfer for consideration above a certain value. The assumption of the powers by the Central Government to purchase immovable properties in certain cases of transfer thus has the object of inducing the transferors and transferees to declare full amount of consideration in the agreement for transfer. The provisions of Chapter XX-C do not provide for compulsory acquisition of immovable property but merely enable the Central Government to purchase a property which has already offered for sale since the transferee does not suffer any inconvenience in this process there is no provision for a solatium. 15. It is also relevant to note that Chapter XX-C is not in any manner intended to prohibit or even regulate the right to transfer immovable properties under the general law. The provisions have been introduced solely for the purpose of guarding the economic interest of the State and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for the subsequent rights and obligations conferred or cast on the parties under s. 269UL. The registration authority cannot register any document at variance with the apparent consideration recited in the proforma agreement. No objection certificate contemplated by sub-s. (3) of s. 269UL is also to be based on the proforma agreement. 16.3. There are two yet other vital clues supporting the plea that agreement for transfer in the prescribed proforma is something different from a private agreement for transfer between the parties. Property in Central Government vests in those terms which are stated in the agreement for transfer referred to in sub-s. (1) of s. 269UC i.e., the proforma agreement. Under s. 269UM no claim by the transferee shall lie against the transferor by reason of transfer in favour of the Central Government being not in accordance with the private agreement entered into between the parties. 16.4. Clause (14) of Form 37-I requires the private agreement for transfer of the said property being filed along with Form No. 37-I if such private agreement be in writing. 17. We see merit in the submission of the learned counsel for the petitioners. For the sak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before the Appropriate Authority within fifteen days of signing thereof. The Act nowhere prescribes for a proforma agreement being drawn up, entered into and signed by the parties within a period of 15 days from the date of private agreement between the parties. Sub-s. (3) of s. 269UC provides inter alia for the time being prescribed by rules within which statement referred to in sub-s. (2) i.e., the proforma agreement Form 37-I is to be furnished to the Appropriate Authority. The period of 15 days in r. 48L(2) has to be read in the light of the Act. The time-limit of 15 days has been prescribed in exercise of the power conferred by the Act. The rule cannot be so read as to calculate the limitation from the date of any agreement other than the one entered into in Form 37-I. Else the rule itself would be ultra vires the rule-making authority of Central Government. If the Act does not prescribe a limitation nor does it expressly delegate the power to do so, limitation cannot be prescribed by rules. 19. The time of fifteen days as appointed by r. 48L is directory and not mandatory. This we say for many a reasons. The law nowhere provides that in the absence of proforma agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and certainly not contemplated by law. 21. There is no res judicata so far as filing of Form 37-I is concerned. One form having been rejected, another would be filed so long as the parties are agreeable with each other and are prepared to honour the agreement. If a new agreement could be entered into by the parties and filed before the Appropriate Authority within 15 days from the date of entering into thereof why not permit an agreement already entered into being filed, though beyond 15 days. 22. A mere delay in filing Form 37-I does not defeat the object sought to be achieved by filing thereof. On the other hand, the object is fulfilled. Excluding Form 37-I from consideration on the ground of delay would result into the transaction for transfer of immovable property being excluded from the tax-net and considered by the Appropriate Authority. On the other hand, if the form is permitted to be filed even with delay the object sought to be achieved by Chapter XX-C is fulfilled. The delay, does not make a difference. The prescribed limitation of 15 days is therefore directory. 23. These cases relate to agreement by builders. This class of agreements has certain peculiar featu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the encumbrances. The fact remains that under s. 269UD(1) the property vests in the Central Govt. in terms of the agreement for transfer referred to in sub-s. (1) of s. 269UC. 25. A review of the abovesaid provisions of law manifests the legislative intention that the agreement in Form 37-I cannot be entered into unless the situation is so ripe as to make available the prescribed particulars for being filed up in the form. Sub-s. (1) of s. 269UC contemplates the agreement for transfer being entered into at least four months before the intended date of It is also suggestive of there being a proximity of time between the date of agreement and proposed transfer. Transfer must not be a transfer in remote contemplation but a proposed transfer. A transaction between the intended buyer and the builder when merely an application for allotment has been made and allowed, is certainly not the stage contemplated by s. 269UC for filing the proforma agreement in Form 37-I. 26. It is true that immovable property as defined in cl. (d) of s. 269UA includes any rights in property which has been constructed or which is to be constructed. Meaning thereby even a property which is to be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lay down any guidelines acting on which the Appropriate Authority shall make an order for the purchase by the Central Government. In C.B. Gautam's case their Lordships have noticed departmental instructions advising the Appropriate Authority to direct such purchase if only there is a significant under-valuation of the property as evidenced by the apparent consideration being lower than the fair market value by 15 per cent or more. Similar guidelines can be issued so as to exercise the jurisdiction for directing purchase by the Central Government by finding out under-valuation by reference to the date of the first ever agreement entered into between the parties. Such executive instructions are available to be issued in the field left open by legislation. 27.3 Another anomaly which may arise is that in the event of a purchase by Central Government being ordered the amount to be tendered by way of consideration under s. 269UF for such purchase shall be an amount equal to apparent consideration specified in the proforma agreement. This price was agreed upon between the parties about 8 years before. The amount tendered by way of consideration by the Central Government shall be far b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not from the date of any other preceding private agreement between the parties. (vii) If there are agreements more than one entered into between the parties, then it is the latest of the agreements which supersedes the earlier ones which has to accompany Form 37-I when filing before the Appropriate Authority. Other agreements if relevant may be looked into by the Appropriate Authority. (viii) A defect contemplated by s. 269UC(4) is one which is capable of being cured. (ix) The stage for entering into the statutory agreement or proforma agreement in Form 37-I arises when the parties are ready to make available all the particulars contemplated by several clauses of Form 37-I consistently with the nature of the property. The date of entering into the proforma agreement must have proximity of relationship by time with the proposed transfer of property as defined in cl. (f) of s. 269UA. The test for determining proximity of relationship is the availability of the property agreed to be transferred in such status in which it is proposed to be transferred. (x) A no-objection issued by Appropriate Authority based on an agreement for transfer of property to be constructed can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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