TMI Blog1996 (7) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner is referred to as the land owner and the second party as the developer. The property which is the subject-matter of acquisition has been described as including "a pucca residential house of the owner with sheds and structures and land appertaining thereto" measuring more or less four kathas and fifteen dhoors of land with buildings and structures constructed thereon as more particularly given in the Schedule to the agreement. It has also been stated that the said property under the agreement also includes residential house and land and garden appertaining thereto belonging to the land owner, i.e., the petitioner. It is then stated that "the developer approached the land owner to develop the said property at costs, risks and responsibility of the developer". For the purpose of development, the owner is to deliver vacant possession of the property to the developer within a period of one month from the date of sanction of plans by the Patna Regional Development Authority and permission by the income-tax authorities in Form No. 37-I as prescribed under rule 48L of the Income-tax Rules per requirement of section 269UC of the Act. The agreement runs into numerous details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he development of the property is complete as aforesaid, then as per the terms, conditions and other stipulations, as may be there in the agreement and the approved plan or otherwise, the developer shall be entitled to allot from out of the developer's share of sixty per cent. of the saleable built up area subject, however, to the exclusion of forty per cent. of the saleable built up area as earmarked for the owner of the said property, to such party or parties as the developer in its discretion thinks fit with the consent and approval of the owner and to receive and realise the prices in respect of the allotment and sale of such tenements and to appropriate the same and to transfer, as and when developed, part or part of the said building from time to time, to one or more proposed co-operative societies or bodies corporate of the purchasers of tenements and for the purpose aforesaid the owner hereby authorises the developers to do, if required, all acts, deeds, matters and things at the cost and expenses of the developer. (4) The developer has been given the right to mortgage its share of the constructed saleable area of the building complex with proportionate right and interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to the parties. The appropriate authority by order dated February 22, 1995, passed under section 269UD(1) of the Act directed purchase of the property by the Central Government. The operative portion of the order reads as under : " 9. We have considered the replies of the transferor and transferee but are not in a position to allow any further time as limitation shall expire on February 28, 1995. Parties have not disputed on the valuation of land of the instant property. We are, therefore, of the view that the parties have no other grounds to offer on our proposed action under Chapter XX-C of the Income-tax Act. Since there is wide difference between the declared apparent consideration and the F.M.V. of the portion of land going to the developer's share we are of the opinion that this is a fit case where right of pre-emptive purchase should be exercised under Chapter XX-C of the Income-tax Act. We, accordingly, order for purchase of the property at an apparent consideration of Rs. 12,47,620, after the transferor hands over 60 per cent. of the land area to the Department. 10. The Schedule of the property is given below: Schedule of property. All that piece and parcel of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 94-95/1923, dated February 23, 1995, by the Appropriate Authority, Lucknow, the possession of 60 per cent. of the said land and double storeyed-building at Rajendra Path, Patna, has been taken over by the undersigned Shri H. Mitra, Valuation Officer, Unit I, Income-tax Department, Patna, the authorised representative of the Appropriate Authority, Income-tax Department, Lucknow, today the 1st March, 1995. Taken over (Sd.) H. Mitra, Valuation Officer, Income-tax Department, Patna, Unit-I, (Authorised representative of Govt. of India). " Section 269UA defines 'immovable property'---clause (d), 'transfer'---clause (f) and 'apparent consideration'---clause (b). If we refer to these definitions, it would appear to us that Chapter XX-C encompasses in itself all types of immovable properties and their transfers keeping in view the object of inserting this Chapter in the Act. We do not think it is necessary for us to go into the question if the transaction in question involves any unaccounted money. We have only to refer to the provisions of this Chapter to see if the order under section 269UD is valid with reference to the immovable property, its transfer and the apparent conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has the effect of transferring or enabling the enjoyment of such property. " It may not be necessary to refer to the definition of apparent consideration when the argument before us revolved round the question "if there was transfer of immovable property" involved in the case. Chapter XXC does not appear to be a complete code in itself as reference has been made to section 53A of the Transfer of Property Act. The provisions of the Partition Act are also relevant as we will presently see. However, for the purpose of definitions of "immovable property" and "transfer" of property we need not refer to the provisions of the Transfer of Property Act. To understand the rival contentions we may also usefully refer to clause (c) of sub-section (3) of section 14 of the Specific Relief Act which is as under : " 14. Contracts not specifically enforceable.---... (3) Notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub-section (1), the court may enforce specific performance in the following cases :---. . . (c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land : Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein, but they have not considered the right to use the common areas. That apart, one can look to the transaction from the eyes of the petitioner as owner as well as the third respondent, the developer. The owner says that he has a plot of land on which there exists an old dilapidated building. He wants to construct a building thereon after demolition of the old structure but he has no money. He talks to the developer who agrees to construct the building on behalf of the owner and in the name of the owner. The developer agrees to invest the money but does not want the money back as the owner has no such money to pay back to the developer for the investment made by him. So the arrangement is that after the construction is complete the developer will get 60 per cent. of the constructed area and also interest in the land underneath with right to use common areas. The owner will execute the sale deed in that respect either in the name of the developer or any of his nominees only after construction is complete. Now, the developer also does not have all the money for investment. So it is also agreed between the parties that the developer shall be able to get money after mortgagin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the cost of construction incurred by the developer exceeds that stipulated in the agreement. It could be that such a clause (clause 26) did not exist. The cost of construction as mentioned in the agreement, therefore, could not be made a base to arrive at the fair market value of the 60 per. cent. interest of the petitioner in the land underneath the property. Under the agreement, therefore, the petitioner had a right to acquire 40 per cent. interest in the building complex to come up apart from his retaining that much interest in the land. In these circumstances, it is difficult to see as to how there is a transfer of immovable property falling under sub-clause (i) of clause (f). Now, if we may analyse the definition of immovable property as falling in clause (d)(ii) of section 269UA of the Act, what the agreement envisages is (i) the right in or with respect to the plot ; (ii) a part of the building which is to be constructed ; and (iii) the transaction is not by way of sale, exchange or lease. Then under clause (f) which defines transfer, the transaction in question would fall within sub-clause (ii) as in relation to immovable property as defined above to mean the doing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent. undivided interest in the land. One may ask if such a situation is envisaged under Chapter XXC. This Chapter is not concerned with a situation like the present one. There is no bar to the acquisition of an undivided share in a property. If the property cannot be partitioned it will be sold as provided in the Partition Act. As a matter of fact, the order is not only for handing over 60 per cent. of the land area but also 60 per cent. of the double-storey-building measuring 11,342 sq. ft. which is already standing there. The owner under the agreement did not agree to sell any portion of the built up area presently existing on the property. As a matter of fact, under the agreement the developer is to demolish the existing structures and buildings and on demolition such of articles and things at the choice of the owner shall be delivered to him. The cost of demolition is also to be borne by the owner, i.e., the petitioner. Now, in pursuance of the impugned order, the Valuation Officer as per his report dated March 1, 1995, of faking over possession recorded that he had taken over "the possession of 60 per cent. of the said land and double-storey-building at Rajendra Path, Patn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... title of the petitioner and how could his title become doubtful merely on filing the present writ petition. Mr. Rastogi, in support of this submission of his, referred to the decision of the Andhra Pradesh High Court in Mrs. Sooni Rustam Mehta v. Appropriate Authority, Income-tax Department [1991] 190 ITR 290, and to the following observation : " Therefore, in our view, even a dispute as to the validity of the provisions of the Act relating to compulsory acquisition or a challenge to the vesting order could raise a dispute as to the 'entitlement' of the person to receive consideration within the period mentioned in sub-section (1) of section 269UG and, therefore, the authorities will be justified in not tendering the amount but in depositing the same under sub-section (3) of section 269UG, before the appropriate authority. The view we have taken is similar to the view taken by a Division Bench of the Madras High Court in R. Padma v. Appropriate Authority, I. T. Department [1990] 185 ITR 269. For all the aforesaid reasons, we hold that as along as the writ petition filed by the petitioners challenging the provisions of the Act is kept pending and is not withdrawn or disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 269UD(1) has to be made within three months of the receipt of the statement referred to under section 269UC of the Act. This is another mandatory provision. Considering the proceedings before the appropriate authority and the time limit under which order is to be made, we do not think the petitioner, the land owner or even the third respondent, the developer, was not granted sufficient opportunity objecting to the proposed acquisition of the property. Rules of natural justice, it has been repeatedly said, cannot be put in a straight-jacket. There is no violation of the rules of natural justice in the present case. Thus, though we hold that the provisions of Chapter XXC would apply to the nature of the agreement for transfer of immovable property called the development agreement in the present case, there has been violation of the provisions of section 269UE(3) and 269UG(1) of the Act falling under this Chapter. The order under section 269UD(1) is itself bad as it purports to acquire property which is not exactly the subject-matter of the agreement and then that property is sought to be vested in the Central Government under section 269UE(6) of the Act. We would, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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