TMI Blog2019 (2) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that DDA was not entitled to raise any demand of unearned increase from the writ petitioner - petition dismissed. Whether writ petitioner was entitled to get refund of conversion charges deposited by it? - Held that:- In sub-section (1) of Section 269UE in place of words “free from all encumbrances” the words “in terms of the agreement for transfer referred to in sub-section (1) of Section 269UC” have been inserted. When the Sale Deed was executed in favour of the auction-purchaser above amendment in Section 269UE sub-section (1) had already been inserted. The vesting of property in Central Government when is in terms of agreement for transfer referred to in subsection (1) of Section 269UE at the time of execution of Sale Deed, the statutory mandate has been reflected in Clause 3 - Clause 3 of the Sale Deed cannot be ignored nor can it be held that said Clause has to give way to Clauses 1 and 2 of Sale Deed. While finding out the tenor of grant as reflected in Sale Deed, the provisions of sub-section (1) of Section 269UE as amended by Finance Act has also to be taken note of. Thus, on true construction of Sale Deed, it is clear that all rights, titles and interests were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d conditions as he deems fit and the lessee was under an obligation to pay 50% unearned increase of the market value of the plot (i.e. the difference between the premium paid and the market value) of the residential plot at the time of sale, transfer, assignment, or parting with the possession. 2.2 On 29.09.1988, Shri Trilochan Singh Rana entered into an agreement to sell the said property to M/s Ocean Construction Industries Pvt. Ltd. The application in Form 37-I for sale of the said property was filed on 06.10.1988 under Section 269UD of Income Tax Act, 1961 seeking NOC from the Appropriate Authority, Income Tax Department. Later, an order under Section 269UD(1) of the Income Tax Act, 1961 was passed by the Appropriate Authority for compulsory acquisition of the property at ₹ 76,00,000/- on 13.12.1988. 2.3 Thereafter, the DDA (Finance Member) vide letter dated 12.01.1989 required the Chief Commissioner (Tech.) Income Tax Department, Central Revenue Building, New Delhi, to pay an amount towards unearned increase to the extent of ₹ 17,88,114.55. The Chief Commissioner, Income Tax Department vide his letter dated 30.01.1989 remitted a cheque for ₹ 17,86,420/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed these appeals. 3. We have heard Shri Aman Lekhi, learned Addl. Solicitor General for the DDA. Shri Dhruv Mehta, learned senior counsel has appeared for M/s. Karamdeep Finance Investment (I) Pvt. Ltd. We have also heard learned counsel for the Union of India. 4. Shri Aman Lekhi, learned Addl. Solicitor General submits that both the learned Single Judge and Division Bench erred in setting aside the demand raised by the DDA of unearned increase. It is submitted that admittedly the property in question was leasehold property leased out to Shri Trilochan Singh Rana. The interest of Shri Trilochan Singh Rana was acquired under Chapter XXC of the Income Tax Act, 1961. In the auction notice which was issued by the competent authority, the leasehold rights of the property were sought to be put for auction. The writ petitioner could not have purchased in auction anything more than the leasehold rights. The depositing of conversion charges by the writ petitioner itself indicates that the understanding was that they have purchased in auction only the leasehold rights. The view of the High Court that the unearned increase is liable to be paid only in case of voluntary transfer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Sale Deed which refers to terms of agreement for transfer dated 29.09.1988 between transferor and M/s. Ocean Construction Industries is not compatible with Clauses 1 and 2 and hence has to give way to the Clauses 1 and 2. He submits that Sale Deed read as a whole clearly indicates that what was sold was absolute right. 7. Shri Aman Lekhi making his submission in rejoinder contends that condition of the auction of the property under which the writ petitioner was declared the highest bidder itself mentions that what was proposed to be sold was leasehold rights. He has referred to auction notice and submits that mention of leasehold rights with regard to present property in question and mention of an absolute right with regard to certain other properties clearly indicates that in the auction notice what was proposed to be transferred was leasehold rights of the property in question. He further submits that the principle of merger is inapplicable since necessary conditions of merger are not fulfilled in the present case. The Income Tax Department which acquired the property was not in the capacity of lessor, hence, the condition is not fulfilled. He submits that conveyance deed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale, transfer, assignment or parting with the possession, the amount to be recovered being fifty percent of the unearned increase and the decision of the Lessor in respect of the market value shall be final binding. 11. We have already noticed above that original lessee Trilochan Singh Rana entered into agreement of sale with M/s. Ocean Construction Industries Pvt. Ltd. dated 29.09.1988 to transfer the rights for a consideration of ₹ 76,00,000/-. Exercising power under Section 269UD of Income Tax Act, 1961, appropriate authority passed a purchase order dated 13.12.1988 of the property in question. After the aforesaid purchase order an amount of ₹ 17,86,240/- towards payment of unearned increase was paid to the DDA by Income Tax Department. After the aforesaid purchase order, auction notice dated 20.03.1989 was issued giving details of the properties, which included the property in question. In pursuance of the auction notice, the writ petitioner gave highest bid and was declared auction purchaser for an amount of ₹ 1,08,05,000/-. The writ petitioner paid the full amount and was delivered the possession on 25.04.1989. Sale Deed was also executed in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat DDA was not entitled to raise any demand of unearned increase from the writ petitioner. We, thus, do not find any merit in the appeal filed by the DDA, which deserves to be dismissed. Issue No.2 13. The submission, which has been much pressed by learned counsel for the writ petitioner is that, what was sold to writ petitioner by Sale Deed dated 25.09.1997 was absolute rights with all rights and interests in the property. The sale in favour of writ petitioner was not sale of leasehold rights rather it was for all rights, title and interests, hence writ petitioner acquired freehold rights. It is submitted that application for conversion of leasehold rights into freehold rights and deposit of the amount on the said application by writ petitioner was under bonafide mistake. He submits that in the writ petition, the petitioner has alternatively prayed for refund of the amount paid for conversion. 14. Learned counsel for the petitioner has relied on Clauses 1 and 2 of the Sale Deed, which are to the following effect:- 1. That in pursuance of the said auction and consideration of the sum of ₹ 1,08,05,000/- (Rs. One Crore Eight Lakh and Five Thousand only) already p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these minerals which had been excluded specifically by Clause 16 of the earlier lease, Mr Jha has arrayed in his aid several well established principles of construction. The first of these is that the intention of the parties to a document of grant must be ascertained first and foremost from the words used in the disposition clause, understanding the words used in their strict, natural grammatical sense and that once the intention can be clearly understood from the words in the disposition clause thus interpreted it is no business of the courts to examine what the parties may have said in other portions of the document. Next it is urged that if it does appear that the later clauses of the document purport to restrict or cut down in any way the effect of the earlier clause disposing of property the earlier clause must prevail. Thirdly it is said that if there be any ambiguity in the disposition clause taken by itself, the benefit of that ambiguity must be given to the grantee, the rule being that all documents of grants must be interpreted strictly as against the grantor. Lastly it was urged that where the operative portion of the document can be interpreted without the aid of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty No. B-6, Friends Colony Mathura Road, New Delhi. This is a lease hold residential plot measuring 195.097 sq. Mt. together with buildings and structure thereon and fixtures and fitting therein 34.20 lacs 2. Property No. 14, Block A-2, Safdarjung Development Area, New Delhi. This is a lease hold residential plot measuring (725 sq. yds.) with a double storeyed building. The Ground Floor consists of drawing dining bed room, kitchen and a garage. The First Floor consists of 3 bed rooms, 3 bath rooms, store and a lobby over the garage. There are 2 floors each having a servant room W.O. and a cocking verandah. 1.08 crores 3. Property No. A-8/23, Vasant Vihar, New Delhi. This is a lease hold residential plot N. 23 in Street No. A-8 in the lay out plan of Vasant Vihar of the Government Servants Cooperative. House Building Society Ltd., and measuring 150 Sq. yds alongwith the super structure build thereon. (Covered area 1350 Sq. Ft). 36.60 Lacs 4. Property bearing House No. E- 444 (Ground Floor), Greater K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rana were only lease holders. Thus, they could best transfer their right, which was conferred to them by the Indenture dated 18.03.1970. Learned counsel for the writ petitioner has submitted that Clause 3 being clearly contradictory to Clauses 1 and 2 has to give way to earlier clauses in the Sale Deed. He has placed reliance on judgment of this Court in Radha Sundar Dutta Vs. Mohd. Jahadur Rahim Ors., AIR 1959 SC 24. In Paragraph Nos. 11 and 13, following was laid down:- 11. Now, it is a settled rule of interpretation that if there be admissible two constructions of a document, one of which will give effect to all the clauses therein while the other will render one or more of them nugatory, it is the former that should be adopted on the principle expressed in the maxim ut res magis valeat quam pereat . What has to be considered therefore is whether it is possible to give effect to the clause in question, which can only be by construing Exhibit B as creating a separate Patni, and at the same time reconcile the last two clauses with that construction. Taking first the provision that if there be other persons entitled to the Patni of lot Ahiyapur they are to have the same rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes to the conclusion that their effect was merely to, restore the position as it was when the original Patni was created, and that, in consequence, the purchaser was entitled to the Patni as it was created in 1820, and that the plaintiff was entitled to the possession of the Choukidari Chakran lands as being part of the Patni. Now, it is to be observed that in deciding that the Choukidari Chakran lands granted in 1899 became merged is lot Kooly, as it was in 1820, the learned Judge did not consider the effect of the clause providing for sale of those lands as a distinct entity under the provisions of the Regulation when there was default in the payment of rent payable thereon under the deed, and that, in our opinion, deprives the decision of much of its value. In the result, we are unable to hold that the two clauses on which the learned Judges base their conclusion are really inconsistent with the earlier clauses which support the view that the grant under Exhibit B is of a distinct Patni. Nor do we agree with them that the earlier clause providing for the sale of the Chaukidari Chakran lands in default of the payment of jama, should be construed so as not to override the later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple, which has been laid down by this Court in above case. Paragraph No.3 contains the intention of the granter to transfer the rights to the writ petitioner in terms of the agreement dated 29.09.1988. Clause 3 limits and explain the rights, which were given in Clause Nos. 1 and 2 of the Sale Deed, but it cannot be said that Clause 3 is totally contradictory to Clauses 1 and 2. The three clauses have to be harmoniously construed to give effect to the intention of the granter. Furthermore, as we have noticed that auction notice provided for auction of leasehold rights, which is an important factor, which cannot be brushed aside while interpreting the Sale Deed. 23. With reference to Clause 3 in the Sale Deed a statutory provision also needs to be noticed. Section 269UE of the Income Tax Act, 1961 deals with vesting of property in Central Government. Section 269UE has been amended by Finance Act, 1993 w.e.f. 17.11.1992. Amended Section 269UE sub-section (1) is as follows: 269UE. Vesting of property in Central Government.-(1) Where an order under subsection (1) of section 269UD is made by the appropriate authority in respect of an immovable property referred to in subclause (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and Others Vs. Bibi Husn Bano and Others, (2005) 5 SCC 492. This Court in T. Lakshmipathi (supra) had examined the doctrine of merger as contained in Section 111(d). In Paragraph Nos. 14 to 17, following was laid down:- 14. The common-law doctrine of merger is statutorily embodied in the Transfer of Property Act, 1882. Section 111(d) provides: 111. Determination of lease.-A lease of immovable property, determines- * * * (d) in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right; * * * A bare reading of the doctrine of merger, as statutorily recognized in India, contemplates (i) coalescence of the interest of the lessee and the interest of the lessor, (ii) in the whole of the property, (iii) at the same time, (iv) in one person, and (v) in the same right. There must be a complete union of the whole interests of the lessor and the lessee so as to enable the lesser interest of the lessee sinking into the larger interest of the lessor in the reversion. 15. In Badri Narain Jha v. Rameshwar Dayal Singh, AIR 1951 SC 186, it was held by this Court that if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Act, 1895, nothing in the Transfer of Property Act, 1882, shall apply or be deemed ever to have applied to any grant or other transfer. The principles contained in the Transfer of Property Act have been applied while construing the Government grants as has been noticed above. But herein issue being Government grant, the principle of merger may not be of much relevance. More so, we having construed the Sale Deed as not having conveyed all rights and interests in the leasehold property, the principle of merger does not in any manner advance the claim of the writ petitioner. 28. Learned counsel for the writ petitioner has also referred to and relied on judgment of the Division Bench of Delhi High Court in M/s. Bansal Contractors (India) Ltd. Anr. Vs. Union of India and Others, 76 (1998) DLT 805. In the above case, sale of property was made in public auction after exercising the power under Section 269UD. From the judgment of Delhi High Court, it is not clear that as to whether any clause similar to Clause 3 as contained in the Sale Deed in question, was there. In absence of any such clause, interpretation put to the Sale Deed by the Delhi High Court cannot be faulted. It is fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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