TMI Blog1992 (7) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government. These disputed deductions are (a) Rs. 35,333 ; and (b) Rs. 1,02,062. In order to appreciate the controversy centring round the two disputed amounts, it is necessary to note a few introductory facts : As noted earlier, the petitioner was the owner of the aforesaid property. He had entered into an agreement of sale dated October 30, 1991, with Messrs. Manipal Saubhagya Nidhi Limited (purchaser) for the sale of the said property for a consideration of Rs. 17,75,000. The purchaser had paid to the petitioner on execution of the agreement a sum of Rs. 4,50,000 as earnest money. The said agreement was registered with the Sub-Registrar, Ahmedabad, at Sr. No. 27198 on October 30, 1991. As per Chapter XX-C of the Act, a provision is made for purchase by the Central Government of immovable property in certain cases of transfer. In this Chapter are found section 269U to section 269UO. These provisions confer a statutory right of pre-emption on the Central Government to purchase any immovable property which is sought to be sold by the seller to the purchaser on an apparent consideration of the amount mentioned in the agreement of sale provided the prescribed value of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in any other law or any instrument or any agreement for the time being in force, and for reasons to be recorded in writing, make an order for the purchase by the Central Government of such immovable property at an amount equal to the amount of the apparent consideration of The said order of the appropriate authority is annexed at annexure to the petition. When this petition was originally filed in this court, the order was challenged on the ground that it had become infructuous and incompetent as the amount to be paid to the petitioner or seller by the Central Government was not paid within the requisite time and, therefore, the appropriate authority was required to return the property to the petitioner as it stood revested in the petitioner. But that challenge was given up at the time when this petition was moved for admission and the challenge in this petition was confined only to the aforesaid two disputed amounts which are deducted by the appropriate authority from the total amount held payable to the petitioner, as per section 269UC(1) read with section 269UD(1). The liability to make payment flows from section 269UF(1), which provides that, where an order for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lines, it was contended by Mr. Shah, that deduction of Rs. 1,02,062 as per clause 14 of the agreement of sale is equally illegal and de hors the aforesaid relevant provisions and hence the respondents are required to be directed to restore these amounts to the petitioner with interest at the rate of 18 per cent. from January 31, 1992, as that was the date on which the impugned decision effecting such deductions was rendered by the appropriate authority. This prayer has been engrafted in this petition as prayer No. A(1) by way of an oral amendment which has been granted by us. Learned counsel for the respondents could not effectively challenge the request for such oral amendment as made by Mr. Shah for the petitioner as it was purely an off-shoot of the main contentions in the petition which centres round the aforesaid illegal deductions for the consideration of which this petition was admitted to final hearing by a speaking order of the Division Bench of this court on April 1, 1992. On the other hand, it was submitted by Mr. Shelat, learned standing counsel for the Revenue, that both the deductions are legally well sustained. So far as the first deduction of Rs. 35,333 is concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use 14 of the agreement to sell, while computing the apparent consideration for the purpose of sections 269UD(1) and 269UF(1) ? We shall deal with these points seriatim : Point No. 1.-So far as the deduction of Rs. 35,333 is concerned, it is necessary to note the relevant chronology of the events. The date of agreement to sell is October 30, 1991. The said agreement is annexed as annexure-A to the petition, As per clause 1 of the said agreement, the price of the immovable property sought to be sold by the petitioner to the vendee including the land and the superstructure is fixed at Rs. 17,75,000. As per clause 2 of the agreement, the purchaser, i.e., the vendee, is said to have paid to the vendor, namely, the petitioner, on execution of the agreement, a sum of Rs. 4,50,000 as earnest money on the same day, i.e., October 30, 1991. As per clause 3 of the agreement, the balance amount of sale consideration payable to the vendor (petitioner) shall be paid by the purchaser to the vendor. The sale was to be completed within one month on receipt of the certificate under section 269UL of the Act as noted earlier. Thus, on October 30, 1991, out of the total sale consideration, only Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of consideration for such statutory purchase of pre-emptive nature an amount equal to the amount of consideration to the seller, namely, the petitioner, whose proposed voluntary transfer of his property has got intercepted by the thrust of this statutory provision and the exercise of power thereunder by the concerned authority. If that is so, submits Mr. Shah, the apparent consideration as mentioned in the document has to be paid by the Central Government to the petitioner and the appropriate authority has no power to deduct anything from the said amount of apparent consideration. He placed reliance on the relevant paragraphs 1, 2 and 3 of the agreement of sale. It was submitted by Mr. Shah that the apparent consideration is Rs. 17,75,000 and nothing less. On the other hand, Mr. Shelat for the Revenue submitted that the amount which is to be paid by the Central Government to the seller is the amount of apparent consideration and, in order to determine that amount, the appropriate authority has to keep in view the definition of the term "apparent consideration" which reads as under; "269UA.(b) 'apparent consideration',- (1) in relation to any immovable property in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discounted value of such deferred consideration, as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf by statutory rules. As noted earlier, rule 48-I of the Income-tax Rules, which is in Part X-C, dealing with purchase of immovable properties under Chapter XX-C, provides that the rate of interest for determination of the discounted value of consideration under sub-clause (1) or sub-clause (2) of clause (b) of section 269UA shall be 8 per cent. per annum. In the present case, the agreement of sale provides for deferment of payment of part consideration to the petitioner to the tune of Rs. 13,25,000 and this payment of consideration is permitted to be deferred till February 29, 1992, as seen earlier. Till that date, liberty was available to the purchaser to pay up the balance amount of Rs. 13,25,000. Therefore, that part of the consideration mentioned in the agreement which could be paid by the purchaser up to February 29, 1992, had to be subjected to the process of discounting by 8 per cent. per annum as laid down by the last part of the definition of the term "apparent consideration" occurring in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the discount would begin, for the deferred part of the consideration, from the date of the agreement itself. That is the mandate of the Legislature. If Mr. Shah's contention is accepted, the said provision will have to be rewritten by deleting the words "on the date of" and by substituting the words "mentioned in", That exercise is not open to the court. Hence, on the interpretation of the relevant provisions of the definition of "apparent consideration" contained in section 269UA(b); it must be held that when payment of part of the consideration is deferred to the date of the agreement of transfer, then the discounted value of the deferred part of the consideration has to be determined from the date of the agreement in the light of the rate of interest fixed by rule 48-1 of the Rules and that is precisely what has been done by the appropriate authority. Consequently, the deduction of Rs. 35,330 from the total consideration mentioned in the agreement of sale cannot be found fault with. Such deduction is contemplated by the statutory scheme as discussed earlier and is not contrary to or de hors it. The first point for consideration, therefore, has to be answered against the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance of Rs. 13,25,000 was to be paid by the purchaser to the Vendor at the time of the execution of the document of sale within the time contemplated by clause 3 of the agreement. But, according to Mr. Shelat, clause 14 of the agreement also is a part and parcel of the agreement a d if it throws light for finding out the agreed consideration Underlying the transfer, then the said clause cannot be ignored as that clause also can be said to be indicating the consideration and that way it can be said to be specified in the agreement for transfer. It, therefore, becomes necessary to have a look at clause 14 of the agreement of sale which reads as under: "14. All the costs such as typing, stamp and registration fees and legal fees to the lawyer for the sale deed shall be borne in equal share by the 'vendor' and the 'purchaser'." It, therefore, becomes clear that all the costs such as typing, stamp and registration fees and legal fees to the lawyer for the sale deed had to be borne in equal share by the vendor and the purchaser. Relying on this clause 14 of the agreement, it was submitted by Mr. Shelat for the Revenue that, even if the cost of typing and legal fees for execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt operative portion of paragraphs 1, 2 and 3 only, and it has nothing to do with the latter paragraph 14, which deals with a miscellaneous item of costs of execution of the sale deed, and provides a mode by which they are to be borne. They deal with a separate contractual obligation undertaken by the vendor vis-a-vis the purchaser and they do not project backwards in the field of fixation of consideration for the said transaction. It is also interesting to note that clause 14 of the agreement would operate only in the contingency wherein the Central Government decides not to purchase this property and a certificate to that effect is issued by the appropriate authority under section 269UL(3), only then the question of meeting the costs of execution of sale deed by the vendor in favour of the purchaser, pursuant to the agreement, would assume importance. That stage was never reached. It was a future contingency which was contemplated by clause 14 of the agreement. It has nothing to do with the question of fixation of the total consideration for the sale of the immovable property under the agreement. But, even that apart, it cannot be said that clause 14 specified any part of conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion fees could be said to be specified at the time of execution of the agreement when the future execution of the sale deed was still in embryo, and mere future contingency. It must, therefore, be held that clause 14 does not specify any part of consideration for the transfer so as to get covered by the sweep of the first part of the definition "apparent consideration" as submitted by Mr. Shelat and, consequently, the appropriate authority had no power, authority or jurisdiction to deduct the amount of Rs. 1,02,062 from the total amount of apparent consideration of Rs. 17,75,000 on the supposition that in future if the sale takes place, the petitioner would have been out of pocket to the extent of Rs. 1,02,062 as 50 per cent. of the total registration fees and stamp duty. On such hypothetical basis, such deduction could not have been effected by the appropriate authority. The said deduction is found to be totally de hors and ultra vires the relevant provisions of the statutory scheme as examined by us hereinabove. We may also in this connection refer to one submission of Mr. Shah for the petitioner. He states that, if the Revenue's contention is right and clause 14 is to be given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down that the statement to be furnished to the appropriate authority under sub-section (3) of section 269UC shall be in Form No. 37-I. When we turn to Form No. 37-I, we find that the statement of transfer of the immovable property furnished under section 269UC has to mention the total apparent consideration for the transfer of the property in words as well as in figures. It is easy to visualise that when such apparent consideration is to be mentioned in words as well as in figures by the concerned parties to the agreement to sell as per the aforesaid statutory provision, the parties have to mention the consideration in words as well as in figures on the date on which the property was agreed to be transferred and that never contemplated a future contingency that had to take place as per clause 14 when the sale deed was likely to be executed in the future after the entire gamut of sections 269UC, 269UD and 269UE was undergone. It is, therefore, found that the relevant scheme contraindicates the contention of learned counsel for the Revenue that the future cost of registration and stamp duty that the vendor had agreed to bear up to 50 per cent. vis-a-vis the purchaser could be legall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore this court that he was confining his challenge in the petition only to the aforesaid two deductions and in the light of that stand taken by the petitioner this court directed the respondent-authorities to pay up the balance amount as per the impugned order to the petitioner within seven days, and so far as the disputed two amounts of Rs. 35,330 and Rs. 1,02,062 are concerned, no direction for payment to the petitioner was made at that stage as that dispute had to be resolved at the time of the final hearing of this petition. Mr. Shelat contended for the Revenue that till April 1, 1992, the petitioner was not willing to receive this amount under the order and only after April 1, 1992, he showed his willingness to receive the balance amount and to agitate and get the decision of this court on the disputed amounts. Therefore, till today no occasion arose for the Revenue to pay up the disputed amount to the petitioner and, therefore, the respondents may not be saddled with interest on the disputed amount which has been found to be payable by the respondents to the petitioner by our present order. We find considerable force in the contention of Mr. Shelat for the Revenue, that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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