TMI Blog1992 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was entered into between the petitioners and respondent No. 6 under which the petitioners agreed to purchase 40 kathas of the premises together with building and out-houses free from all encumbrances but subject to the requisition. The portion of the premises agreed to be purchased by the petitioners has been described as lot `A' in the agreement and the portion of the premises retained by respondent No. 6 has been described as lot `B'. The purpose of purchase of lot `A' was to construct flats. In terms of the agreement, the petitioners were required : (1) to provide a common passage for free access to the portion of the premises retained by respondent No. 6 (lot B). (2) to construct free of cost for respondent No. 6, a total constructed area of 5,000 sq. ft. in one building containing ground floor, first floor and second floor in lot B with all fixtures such as, doors, grills, sanitary fittings, electrical wirings, etc., within three years from the date of the sanction of the plan at a cost of Rs. 10 lakhs. (3) to pay a sum of Rs. 73 lakhs by way of consideration ; Rs. 1 lakh simultaneously with the execution of the agreement, Rs. 31 lakhs within one month of the sanctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot conclusive and that the brokerage did not form part of the apparent consideration. It was further held that the amount of Rs. 73 lakhs being payable in instalments over a number of years in real terms after discounting the value of future payment would amount to Rs. 62,25,086. The computation for arriving at the discounted value of the cash consideration has been set out in an annexure to the impugned order. It appears that a discounting rate of eight per cent. has been adopted. As far as the construction of 5,000 sq. ft. on lot 'B' was concerned, the appropriate authority have accepted the value put in the agreement on such construction, namely, Rs. 10 lakhs. The sum total of the effective consideration, according to the appropriate authority, therefore, worked out to Rs. 72,25,086. It is recorded in the impugned order that the matter had been referred to the executive engineer to value lot 'A'. The executive engineer, upon a comparison with a transfer of 11 kathas of land with an old building thereon at 56, Gariahat Road, under an agreement dated February 2, 1987, for Rs. 56 lakhs came to the conclusion that the rate per katha of lot 'A' would be Rs. 3.20 lakhs per katha. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. All the applications have been heard and are being disposed of by this judgment. Two preliminary objections have been raised by the respondent authorities. It has been stated by them that 59 writ petitions had been filed challenging various purchase orders passed earlier by the appropriate authority in Bombay, Calcutta, Delhi and Madras. All 59 cases were transferred to the Supreme Court of India which passed the following order in Civil Writ Petition No. 2821 of 1986 : Union of India v. C. B. Gautam on May 4, 1987 : "Having regard to the other cases pending in the different High Courts, we do not think it is necessary to transfer these cases to this court. We think the purpose will be served if the final disposal of those cases is stayed. The High Courts will be at liberty to dispose of any interlocutory application filed before them. " It has been urged by the respondent authorities that, in view of the order of the Supreme Court, the application could not be entertained by this court. It is also submitted that the disposal of the application of the petitioners as well as of the brokers will be contrary to the order passed by the Supreme Court. It has also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debar High Courts from a consideration of petitions on ground other than the constitutional validity of Chapter XX-C is also borne out by the decisions of the various High Courts and the Supreme Court itself. In the case of Rusi Jehangir Jeejeebhoy v. O. D. Mohindra [1990] 185 ITR 636, a Division Bench of the Bombay High Court determined a writ application filed by persons claiming to be in occupation of premises in respect of which an order had been passed under section 269UD(1) of the Act. The Division Bench dismissed the application on the ground that the writ petitioners had no right to the premises. In disposing of the application, the Division Bench observed (at page 637) : "Reliance was placed by Mr. Dwarkadas on the fact that some petitions challenging the aforesaid provisions are at present pending in the Supreme Court. Since we have come to the conclusion that the petitioners, on their own showing, have no rights in the suit premises, the pendency of the petitions in the Supreme Court on the question of the validity of the said provisions of the Act has no bearing on the facts of the present case." (emphasis supplied). It is clear, therefore, that the Bombay High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t petitioner had no locus standi to question the order of the appropriate authority made under, section 269UD(1) of the Act. This decision was rendered on June 20, 1991. For the reasons aforesaid, I hold that there is no bar to this court disposing of the writ application relating to the proceedings under section 269UD(1) of the Act without going into the question of the constitutional validity of the provisions in Chapter XX-C of the Act. The contention of the respondent authorities to the effect that the determination of the grounds of challenge not arising out of the vires of the provisions of Chapter XX-C would lead to an impossible situation by reason of the provisions of rules 41 to 43 and 48 of the Rules of this High Court relating to applications under article 226 of the Constitution does not bear scrutiny. If the writ application is allowed on the basis of the limited grounds raised, the rule nisi would be made absolute as prayed for in terms of rule 42. If, on the other hand, the court is not satisfied with the merits of the petitioners' contentions, the court will disallow the writ petition on the grounds stated and adjourn the matter until the disposal of the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenged as being invalid. The writ petitioners have a right in respect of the property although they may not have a right in the property. The next two decisions cited by the respondent authorities, namely, Corporation of Calcutta v. Dhirendra Nath Sen, AIR 1973 Cal 506 and Rusi Jehangir Jeejeebhoy v. O. D. Mohindra [1990] 185 ITR 636 (Bom), also do not deal with the question of locus standi to file a writ petition. Both the decisions turned on the finding that the writ petitioners did not have the right claimed. This brings us to the decision in Rajata Trust's case [1992] 193 ITR 220, in which the Karnataka High Court appears to have held that the transferee could not challenge the order of the appropriate authority for purchase of the immovable property by the Central Government under section 269UD. The facts of that case are somewhat different from those which are being considered by me. An agreement had been entered into with respondent No. 3 in that case by which the writ petitioner was to purchase immovable property. Out of the total consideration for the purchase, namely, Rs. 1,55,00,000, Rs. 50,00,000 had been paid by the transferee. A statement in Form No. 37-I was fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khan v. CWT [1986] 162 ITR 888 ; AIR 1987 SC 522, 527). Shorn of the imprimatur of the Supreme Court, the decision of the Division Bench in the case of Rajata Trust [1992] 193 ITR 220 (Kar) is merely of persuasive value as far as this court is concerned. The reasoning in Rajata Trust's case [1992] 193 ITR 220 (Kar), however, does not persuade me to hold that a transferee of property sought to be purchased under section 269UD does not have any right to move an application under article 226 challenging the order under section 269UD. At the outset, the ground that the transferee had acquiesced in the order under section 269UD and thus had no locus standi to challenge the order under section 269UD, is not available in this case and, to that extent, the decision in Rajata Trust's case [1992] 193 ITR 220 (Kar) is distinguishable. Before considering the remaining reasons of the Karnataka High Court, it is necessary to consider the law relating to the question as to who can apply under article 226. In the case of Calcutta Gas Co. (Proprietary) Ltd. v. State of West Bengal, AIR 1962 SC 1044, the High Court at Calcutta had rejected the writ petition filed by the Calcutta Gas Co. The wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee also Bombay Dyeing and Manufacturing Co. Ltd. v. State of Bombay, AIR 1958 SC 328). The following observations of the Supreme Court in Gadde Venkateswara Rao v. Govt. of Andhra Pradesh, AIR 1966 SC 828, are also apposite (at page 833) : ".....the petitioner who seeks to file an application under article 226 of the Constitution should be one who has a personal or individual right in the subject-matter of the petition. A personal right need not be in respect of a proprietary interest." (emphasis supplied). The principle which emerges from these decisions is that the existence of a legal right is the foundation of the exercise of jurisdiction under article 226. The legal right must be directly and substantially invaded or be in imminent danger of being so invaded before the writ petitioner can approach the court. But such a legal right need not necessarily be a legal right in property. The writ petitioner may not have any right in the property but may yet have a right which is affected for the purpose of maintaining an application under article 226. The salient point of enquiry is what is the nature of the right Which is being claimed. The concept of locus standi is therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under section 54 of the Transfer of Property Act and various rulings of the Supreme Court. Thus, we conclude that the appellant has no locus standi" The Division Bench has ignored the fact that there may be other rights which may be affected by an order under section 269UD. In this case, the writ petitioners have entered into an agreement with respondent No. 6. If the order of the appropriate authority impugned in these proceedings stands, the writ petitioners' agreement will stand culminated. The writ petitioners would be deprived of the valuable right of purchasing the property in question, a right which has been recognised and is protected under section 40 of the Transfer of Property Act, 1882, and the Specific Relief Act, 1963. That apart, Chapter XX-C itself recognises that the transferee may have an interest in the property. For example, under section 269UD, the appropriate authority is required to cause a copy of its order under sub section (1) to be served on the transferor, the person in occupation, the transferee, and on every other person whom the appropriate authority knows to be interested in the property. The last category is descriptive of the first three. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder article 226. Reliance has been placed on the decision of Chief Constable of the North Wales Police v. Evans [1982] 3 All ER 141, 154-155 (HL) and State of U. P. v. Lucknow Development Authority, AIR 1984 SC 997 (sic). The deletion of the value of the construction to be made for the brokers by the appropriate authority from the apparent consideration was correct. In fact, respondent No. 6 had not challenged the order of the appropriate authority at all. Even at the hearing, respondent No. 6 had supported the order of the appropriate authority. Reliance has been placed on the decision in CIT v. Ganesh Builders [1979] 116 ITR 911, 924 (Bom) in this connection. (3) In any event, the method of calculation followed by the appropriate authority was correct. (4) The right exercised by the appropriate authority was not right of pre-emption. The law of pre-emption was limited to the right of an adjacent owner or a co-owner. In passing an order under section 269UD(1) of the Act, the appropriate authority was merely acting in the manner prescribed to unearth black money and to discourage transactions relating to immovable property involving the use of black money. The principles o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntially to the decision itself. The petitioners have relied upon several decisions relating to the ambit of the court's powers of scrutiny under article 226. The consideration of those decisions is not necessary as I find in the cases cited by the respondents sufficient support for the petitioners' contention. Having settled the scope of enquiry, the facts of the case may be considered. The court will have to determine whether the appropriate authority has acted within the four corners of the statutory provisions in passing the impugned order under section 269UD. The section requires that the order for purchase must be at an amount equal to the amount of the apparent consideration. Broadly stated, the grievance of the petitioners is that the appropriate authority has wrongly determined the apparent consideration for the transfer. "Transfer" has been defined in section 269UA(f) as follows: " `Transfer' (i) in relation to any immovable property referred to in subclause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty would involve a consideration of, firstly, the rights sought to be conveyed and, secondly, the consideration for such conveyance. Keeping this principle in view, the nature of the transaction in this case will have to be considered. As already noted, there are four kinds of transfers recognised under the provisions of Chapter XX-C, namely, sale, exchange, lease and what may be termed anomalous transfers under section 269UA(d)(ii). The transaction in question is certainly not a lease as it contemplates an absolute transfer of ownership of lot 'A'. The word It sale" has not been defined in the Act. In the Transfer of Property Act, 1882, a sale of immovable property has been defined in section 54 as transfer of ownership in exchange for a price paid or promised or part paid and part promised. The Supreme Court has, in the case of CIT v. Motors and General Stores (P.) Ltd. [1967] 66 ITR 692 held (at page 695): "The words `sale' or `sold' have not been defined in the Indian Income-tax Act, 1922. Consequently, these words have to be construed by reference to other enactments. Section 54 of the Transfer of Property Act defines `sale' as a transfer of ownership in exchange for a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Major A. U. John, AIR 1947 All 110 Unnao Commercial Bank Ltd. v. Kailash Nath, AIR 1955 All 393, do not militate against this conclusion. The respondent authorities have argued that the petitioner should not be permitted to contend that the transaction in question is not a sale on the ground that, in the statement filed in Form No. 37-I, a definite representation had been made that the transaction in question was in fact a sale, if The argument is unacceptable. The nature of the transaction cannot depend upon the manner in which it is described by any party to the transaction but will have to be determined on principles of law applicable to the facts existing. This is well-established. For example, if a party describes a transaction as hire purchase, the parties to the transaction are not estopped from proving that the real bargain was in fact a loan on the security of the goods, the true fact of the transaction being determined from the terms of the agreement considered in the light of the surrounding circumstances (see Sundaram Finance Ltd. v. State of Kerala, AIR 1966 SC 1178). Similarly, whether a document creates a licence or a lease is a question of substance to be det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be sustained. The appropriate authority has treated the proposed construction as a "thing" within the meaning of section 269UA(b)(2)(ii) and (iii). It should have addressed its mind to the market value of such construction on the date of the agreement. It has not. The second contention of the writ petitioners in this connection is also of substance. Their complaint is that the appropriate authority has ignored the construction to be made for the brokers by the transferee on account of the transferor as part of the consideration. One of the relevant clauses in the agreement in this regard is clause 13 which has been quoted earlier in this judgment. The other relevant clause is clause 12 of the agreement, the opening words of which provide as follows : "In addition to constructing a structure measuring a floor area of 5,000 sq. ft. as aforesaid at a cost of Rs. 10,00,000, the purchaser shall also pay monetary consideration being a total sum of Rs. 73 lakhs (rupees seventy-three lakhs only) to the vendor as consideration for the conveyance. " It was held by the appropriate authority that this would show that the brokerage was not part of the consideration because : (a) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit to anybody, but merely a detriment to the promisee'." (emphasis supplied). I respectfully concur with the view held by the Bombay High Court and hold that the appropriate authority has ignored this elementary principle. Secondly, the appropriate authority was bound to consider the terms of the agreement for determining the apparent consideration. The terms of any of the provisions of Chapter XX-C certainly do not support the view nor was it argued by the respondents that the appropriate authority could go behind the agreement to determine what was the apparent consideration. The authority can certainly interpret the agreement but cannot wish away the clauses contained therein. There is no absolute principle in law, as held by the appropriate authority, that the brokerage can never be the liability of the transferor. A broker is an agent. In this particular case, the nature of the functions of the brokers is like an estate agent who, in connection with the acquisition or disposal of any land or other premises, brings together or take steps to bring together the person wishing to dispose of the land or other premises and a person prepared to acquire it and to negotia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining the proposal to introduce Chapter XX-C in the Act, in which the Finance Minister has also referred to the right under that Chapter as a pre-emptive right to purchase properties. These speeches may be considered for the purpose of determining the scope of the power under section 269UD. As held by the Supreme Court in the case of K. P. Varghese v. ITO [1981] 131 ITR 597 (headnote) ". . . . the speech made by the mover of the Bill explaining the reason for its introduction can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This is in accord with the recent trend in juristic thought not only in western countries but also in India, that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible. " The appropriate authority ignored the intention of the parties in this case. The intention must be gathered from the document itself and the surrounding circumstances if the words of the agreement seem doubtful (see Vatsavaya Venkata Subhadrayyamma v. Poosapati Venkatapati Raju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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