TMI Blog1994 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... an agreement for sale, which was executed on March 7, 1991, and was got registered with the Sub-Registrar, Jaipur-2, Jaipur, on March 7, 1991. The petitioner-company parted with an amount of Rs. 8 lakhs 50 thousand on March 7, 1991, vide pay order in favour of respondent No. 4 before the Sub-Registrar at the time of the registration of the agreement of sale by way of an advance. It is also the case of the petitioner-company that respondent No. 4, as a security against the payment of Rs. 8.50 lakhs, gave the possession of certain portion of the aforesaid property as detailed in Schedule 'A' and the petitioner took possession of the said portion on March 7, 1991, and is in possession of the said portion of the property, about which the sale agreement was entered into and executed. According to the petitioner, the important salient terms of agreement of sale in brief are as under: (i) That the humble petitioner shall be entitled to use, occupy, hold and enjoy the portion described in Schedule 'A', but shall not be entitled to make any new construction in the said portion till registration of sale deed of the property ; (ii) That respondent No. 4 shall continue to remain in possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) That respondent No. 4 shall hand over the original gift deed dated November 2, 1957, to the humble petitioner at the time of registration of the sale deed and any claim by any other person shall be non est in law. If on account of defective title the humble petitioner is divested of ownership or possession, then respondent No. 4 shall reimburse with compensation; and (ix) That house tax, land and building tax, other taxes, if any, shall be paid by respondent No. 4. Stamp duty, registration fees and other expenses for execution and registration of sale deed shall be at the cost of the humble petitioner. A copy of the agreement dated March 7, 1991, has been annexed with the writ petition as annexure 'A'. Chapter XX-C entitling purchase by the Central Government of immovable properties in certain cases of transfer was inserted in the Income-tax Act by the Finance Act, 1986, with effect from October 1, 1986, vide Notification No. S. O. 480(E), dated August 7, 1986. The provisions of this Chapter have been made applicable to Delhi, Greater Bombay, Calcutta Metropolitan Area and Madras Metropolitan Planning Area. The provisions of this Chapter XX-C were also made applicable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No. 3 was received by registered post on June 5, 1991, requiring the petitioner and respondent No. 4 to show cause on or before June 20, 1991, as to why prosecution proceedings should not be launched against them under section 276AB of the Act. This show-cause notice dated June 3, 1991, has been filed with the writ petition as annexure "E". The petitioner sent a telegram dated June 14, 1991, requesting respondent No. 2 to issue no objection certificate under section 269UL(3) of the Act, which was followed by a letter of confirmation dated June 14, 1991, but no reply or any other communication was received. At this juncture, the present writ petition was filed before this court on June 17, 1991, during vacation and on June 19, 1991, the vacation judge while directing that this writ petition involving challenge to the validity of the provisions of the Income-tax Act be laid before the Division Bench in the first week of July, 1991, ordered that no further action be taken against the petitioner in pursuance of the show-cause notice dated June 3, 1991, annexure "E". On July 17, 1991, the writ petition was admitted and notices were directed to be issued and the writ petition was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as understatement of consideration as well, that the notice had been issued to comply with the principles of natural justice, that after committing an offence the petitioner cannot get the certificate under section 269UL(3), the respondent has acted in accordance with law, that the petitioner after committing an offence and transferring the property, could not have submitted an application in Form No. 37-I, that the petitioner is not entitled to any no objection certificate and the petitioner has no enforceable right and is, therefore, not entitled to any relief. Shri N. M. Ranka, senior advocate, appearing on behalf of the petitioner, has not addressed any argument on the question of the constitutional validity of the provisions of Chapter XX-C of the Income-tax Act, 1961, and rightly so because the constitutional validity of the same has already been upheld by the Supreme Court. It was also stated by Shri N. M. Ranka during the course of arguments that D. B. Writ Petitions Nos. 6162 of 1990, 6163 of 1990, 6164 of 1990, 6165 of 1990, 6210 of 1990, and 6211 of 1990 have already been dismissed as withdrawn or not pressed as in these writ petitions the validity of the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act after submission of Form No. 37-I. Form No. 37-I is the bedrock or foundation for exercise of the option under section 269UD(1) or in the alternative for issuance of a no-objection certificate. Any agreement inter se the parties, i.e., the petitioner, and respondent No. 4 is not to be recognised for Chapter XX-C. Such agreement is only for the parties inter se. Any condition contrary to the provisions of law would be void ab initio and inoperative and Chapter XX-C does not recognise such terms and conditions. The terms and conditions contained in Form No. 37-I alone are recognised and such terms and conditions are binding on the transferor as well as the transferee. None of them can back out of the terms incorporated in Form No. 37-I. Annexure "A" when read as a whole and construed reasonably is an agreement for sale simpliciter. Overriding and omnipotent statutory powers have been conferred by the statute requiring the transferor or any other person in possession to hand over possession and the property vests free from all encumbrances on the making of an order under section 269UD(1) by the appropriate authority. The transferor becomes entitled to receive the apparent conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Ltd. v. Appropriate Authority [1992] 198 ITR 270 (Cal); (xii) Rajalakshmi Narayanan v. Margaret Kathleen Gandhi [1993] 201 ITR 681 (SC); and (xiii) C. B. Gautam v. Union of India [1993] 199 ITR 530 (SC). That annexure "D" has not been signed and issued by the appropriate authority. It is not an order under Chapter XX-C. The Deputy Commissioner has no power and competence. It is in violation of the principles of natural justice and void ab initio. In this regard, Mr. Ranka has placed reliance on the following cases: (i) Mount Plaza Builders Pvt. Ltd. v. Appropriate Authority [1992] 195 ITR 750 (Mad); (ii) Government of India v. Maxim A. Lobo [1991] 190 ITR 101 (Mad); (iii) C. B. Gautam v. Union of India [1993] 199 ITR 530 (SC); (iv) Union of India v. Tulsiram Patel, AIR 1985 SC 1416, page 1460 (paragraph 96). That an agreement for sale does not create any encumbrance or charge or interest in favour of the transferee in view of the provisions contained in section 54 of the Transfer of Property Act as has been held in Taherbhoy Feeda Ally v. State of West Bengal, AIR 1977 Cal 361 and in Nathulal v. Phoolchand, AIR 1970 SC 546. Lastly, it was contended by Mr. Rank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property in question by the Central Government, it could only do so by blocking public money and then litigate for possession of the property because the requirement under section 269UG is that the amount of apparent consideration payable under section 269UF has to be tendered to the person or persons entitled thereto, within a period of one month from the end of the month in which the concerned immovable property becomes vested in the Central Government under sub-section (1) or, as the case may be, sub-section (6), of section 269UE and thus in the case of purchase of the property by the Central Government it has to act fast to make the payment. 3. That in view of the application itself being incompetent and invalid, there was no question to act upon the same and it would have been a case of invalid exercise of the power to the peril of the Department itself. 4. That the petitioner has violated the law and, therefore, he is not entitled to any relief in the writ jurisdiction. Mr. Bafna has placed reliance on the case reported in [1969] 1 MLJ 281. We have considered the submissions made on behalf of both the sides. According to us, the matter has to be examined with refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transfer with the mention of apparent consideration along with the particulars of the agreement for transfer. In our considered opinion, the parties may, therefore, enter into an agreement for transfer of the immovable property for apparent consideration and may furnish the statement with regard to the property intended to be transferred under such an agreement. This means that beyond the question of mutual agreement for transfer for apparent consideration, the parties cannot act further in pursuance of such an agreement for transfer before making the statement of such transfer under Form No. 37-I. Now the question arises whether in case the parties act in pursuance of an agreement for transfer, any amount of consideration is passed on and received and possession of part of the property is also given and taken, it still remains a case of only intention to transfer and there is no transfer of any property as such? There is no gainsaying that section 269UC starts with a non obstante clause and the provisions contained in the Transfer of Property Act as such have been excluded, but in a given case for the purposes of the provisions of the Income-tax Act, whether there is a case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner prescribed therefor by law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, others than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. " The very definition of the term "transfer" as contained in section 269UA(f) read with the provisions of section 53A of the Transfer of Property Act shows that the factum of transfer has to be ascertained with reasonable certainty and in case the transferee has in part performance of the contract taken possession of the property or any part thereof, it would constitute a transfer. The petitioner himself has come with the case that possession of part of the property in question has been taken over by him in part performance of the contract. In view of this admitted factual position, there is no escape from the logical conclusion in the light of the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annexure to the statement made in Form No. 37-I disclose that the transfer has already been effected, even if the appropriate authority does not enter into the question of title, etc., it has no valid basis for the purposes of exercising its rights within the specific period and, therefore, the question of exercising such rights does not arise. If a statement in Form No. 37-I is made after crossing the stage of intended transfer and after the transfer within the meaning of the provisions under the Income-tax Act, it can safely be said that the parties by effecting the transfer of the property or part of the property have already created a situation in which the appropriate authority has no occasion to exercise its right and as such the stage of making an order under section 269UD(1) is not even available to the appropriate authority and in fact the parties by their conduct of effecting transfer in advance seek to deprive the appropriate authority of an opportunity of exercising its option and power under section 269UD(1) and, therefore, this submission made by Shri N. M. Ranka is based on a legal fallacy and the petitioner cannot be allowed to take advantage of such a position and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble of being made certain and was void as per section 29 of the Indian Contract Act, the appropriate authority had found that the agreement to sell was a contingent contract depending upon the orders of the competent authority under the Urban Land Ceiling Act and thus the appropriate authority took objections with regard to the legility of the transaction, which had nothing to do with violation of any of the provisions of the Income-tax Act and, therefore, the Supreme Court agreed that two alternatives were open under the scheme of the legislation, i.e., either to buy the property or to issue a no objection certificate. Such is not the fact situation in the case at hand. We have come to a positive finding that the parties had effected the transfer before filing the statement in Form No. 37-I and thus the parties in the present case had violated the relevant provisions of the Income-tax Act itself and had made it well nigh impossible for the appropriate authority to pass an order for purchase of such a property under section 269UD(1), even if it wanted to pass such an order because the petitioner and respondent No. 4 in this case had acted in a manner so as to pre-empt a situation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon to decide in this case. We have gone through the decision of the Delhi High Court in Megsons Exports' case [1992] 194 ITR 225 and we find that the case has been decided on the basis of Tanvi Trading and Credits P. Ltd.'s case [1991] 188 ITR 623 (Delhi), and the case of Mrs. Satwant Narang [1991] 188 ITR 656 (Delhi). When the matter was taken to the Supreme Court, the Supreme Court dismissed the special leave petition filed by the appropriate authority in the case of Tanvi Trading and Credits P. Ltd. [1991] 191 ITR 307, as has already been mentioned hereinabove. There is no doubt that in Megsons Exports' case [1992] 194 ITR 225 decided by the Delhi High Court, the appropriate authority did not grant the no objection certificate nor did it exercise the right of pre-emptive purchase and he came to the conclusion that the agreement which had been entered into by the owner with the proposed transferee had resulted in creation of certain rights in favour of the transferee in accordance with the provisions of section 53A of the Transfer of Property Act; according to the appropriate authority, possession of the property had been handed over to the transferee and there had been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appropriate authority and, therefore, it is not an order under Chapter XX-C and that it is in violation of the principles of natural justice, has to be examined with reference to the provisions of Chapter XX-C itself. Section 269UB provides that the Central Government may constitute as many appropriate authorities, as it thinks fit and to define the local limits within which the appropriate authorities shall perform their functions under this Chapter. It has been provided in section 269UA(c) that it means the authority constituted under section 269UB to perform the functions under this Chapter. There is no basis for the contention that the Deputy Commissioner of Income-tax is not such an appropriate authority. The document, annexure "D" has been signed by the Deputy Commissioner of Income-tax as an appropriate authority and no material has been placed on record to show that he is not such an authority within the meaning of section 269UA(c) read with section 269UB and, in our considered opinion, there has been no violation of the principles of natural justice in issuing annexure "D". The question of violation of the principles of natural justice would have assumed importance onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty, cannot afford to invest the money and then invoke the provisions of section 269UE(1) and (2) for the purposes of claiming legal claim of vesting of such property and section 269UE(2) to claim and litigate that any person in possession of the immovable property shall surrender or deliver possession thereof to the appropriate authority and such litigation, the Central Government can ill afford as it cannot stop the time fixed by the statute for making the payment and, therefore, the fifth submission made by Shri N. M. Ranka also fails. We also do not agree that there is any conflict of opinion between the different High Courts. The appropriate authority functioning in the Delhi High Court may be certainly bound by the decision of the Delhi High Court rendered in Megsons Exports' case [1992] 194 ITR 225, so far as the parties to that case are concerned, but it cannot be said that there is any conflict of opinion because we have already held that the decision in Megsons Exports' case [1992] 194 ITR 225 (Delhi) is not an authority for the controversy involved in the case at hand and, accordingly, the sixth submission of Mr. Ranka that in case of conflict of opinion between diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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