TMI Blog1991 (8) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... sed an order on January 24, 1991, directing the purchase of the said immovable property by the Central Government and holding that the property has vested in the Central Government. The consideration for sale was Rs. 1,55,00,000. In and by the agreement, a sum of Rs. 50,00,000 was received as an advance from the transferee on the date of the agreement. It was further stipulated that a further advance of Rs. 55,00,000 shall be paid within ten days from the date of receipt of the no objection certificate, and that the remaining sum of Rs. 55,00,000 shall be paid at the time of registration of the sale deed or within one year from the date of the agreement, whichever is earlier. The appropriate authority held that the provision pertaining to discounting the apparent consideration was available in-respect of absolute sale of immovable property and, accordingly, arrived at the discounted value of consideration at Rs. 1,50,17,084. This was as against the apparent consideration of Rs. 1,55,00,000 stated in the agreement for sale. The appellant authorised the Chief Commissioner of Income-tax to pay Rs. 50,00,000 to the transferee, being the advance received by him. The Chief Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is a sine qua non for the exercise of power under section 269UD, an opportunity ought to have been afforded to the appellant to put forth its say. Failure to give such opportunity is violative of the principles of natural justice. The definition of "apparent consideration" contained in clause b of section 269UA of the Act does not enable to arrive at a discounted value as far as sale is concerned ; it will apply only to leases. Assuming without admitting that there is a possibility of arriving at a discounted value even for sale, there are no specific dates in the agreement for sale. Unless and until, therefore, there is a specific date or dates, the discounted value cannot be arrived at. After payment of advance of Rs. 50,00,000 the further advance of Rs. 50,00,000 was to be paid within ten days from the date of receipt of the no objection certificate. One is not certain as to the date on which the appellant could expect the no objection certificate. Then again, the balance of Rs. 55,00,000 is to be paid at the time of registration of the sale deed or within one year from the date of agreement, whichever is earlier. This again is not a specific date. Therefore, there was no ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discounted value of such consideration, it cannot apply to a case of sale. Even otherwise, there are no specific dates as seen from clauses 1.3 and 1.4 of the agreement for sale. The two dates in the said clauses are hypothetical and, therefore, there is no scope for arriving at the discounted value. Under section 269UG(1), proviso, the authorisation is only for the deduction of the liability of any person entitled to consideration. This means that the transferor, in the instant case, is a trust, and the trust as seen from Form No. 37-I is not an assessee. What has been deducted is the liability of the beneficiary. If the beneficiary is not entitled to receive the consideration, it will be illegal in law to deduct the liability of the beneficiary. This proviso contains three elements : (i) the tendering of consideration amount must be to the transferor ; (ii) it must be pursuant to an order of the appropriate authority, and not any one else ; in the instant case, it is the Chief Commissioner of Income-tax who orders so, and he is not thought of under this section, and (iii) this could be only after intimation. Therefore, if these three elements are not satisfied, the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms, he has not done so. But, even then, where it is illegal, it would not matter as laid down in Goparanjan Dube v. Arbitrator, AIR 1976 Orissa 118; Gian Chand Dhawan v. Union of India, AIR 1976 Delhi 83 and Karnail Singh v. State of Punjab, AIR 1983 P 160. The fact that the appellant asked for a higher amount and accepted lower amount would not mean waiver of a right as laid down in Kamalpur (Assam) Tea Estate Pvt. Ltd. v. Superintendent of Taxes [1989] 175 ITR 142 (Gauhati). Mr. H. Raghavendra Rao, learned counsel for the Revenue, resting his case on acquiescence, refers us to the circumstances under which the appellant-transferor came to accept the payment of Rs. 97,67,233 as detailed in the statement of objections. Thereafter, he refers to Form No. 37-I wherein it is stated in the column of particulars of the transferor thus : "Messrs. Vidyavathi Kapur Trust, a private trust having its office at Rex Theatre Building, No. 12, Brigade Road, Bangalore-560 001, represented by its trustees : (1) Mrs. Vidyavathi Kapur, (2) Mr. Mohanlal Kapur". While passing on the receipt on February 28, 1991, for Rs. 97,67,233 there was absolutely no protest at all. As a matter of fact, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... draws our attention to section 148(2) of the Act. The said section requires "recording of reasons". If those reasons are recorded in the file, that would be enough. There is no necessity to communicate those reasons and the leading authority on this is S. Narayanappa v. CIT [1967] 63 ITR 219 (SC). The dictum laid down therein has been approved in a number of cases, viz., S. Narayanappa v. CIT [1967] 63 ITR 219 (SC) (sic), Madhya Pradesh Industries Ltd. v. ITO [1970] 77 ITR 268 (SC), 84 ITR 6 (sic), ITO v. Nawab Mir Barkat Ali Khan Bahadur [1974] 97 ITR 239 (SC), Ajantha Industries v. CBDT [1976] 102 ITR 281 (SC), ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC), Dr. Partap Singh v. Director of Enforcement [1985] 155 ITR 166 (SC), Indian Oil Corporation v. ITO [1986] 159 ITR 956 (SC), 159 ITR 275 (sic) etc. As a matter of fact, reasons have been recorded in the file as seen from the order of the appropriate authority dated January 24, 1991. As to when principles of natural justice need not be complied with can be gathered from Union of India v. J. N. Sinha, AIR 1971 SC 40, which was a case that arose under the Fundamental Rule 56(j). In Union of India v. Tulsiram Patel, AIR 1985 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the principle enunciated therein to be applied here. Similarly, Pushpa Devi v. Milkhi Ram [1990] 2 SCC 134 deals with this matter. In Girdhari Lal and Sons v. Balbir Nath Mathur, AIR 1986 SC 1499 and Vanguard Fire and General Insurance Co. Ltd. v. Fraser and Ross [1960] 30 Comp Cas (Ins) 13 (SC), it has been laid down as to what is the meaning of "repugnant to the context" in ascertaining the meaning of the word "insurer" ; those principles would apply to the facts of this case. Again, in CIT v. J. H. Gotla [1985] 156 ITR 323 (SC) this has been discussed. Similarly in State of Punjab v. Okara Grain Buyers Syndicate Ltd., AIR 1964 SC 669, it was observed that the court must ascertain the true intention. Learned counsel also cites Crawford's Interpretation of Laws, page 337, para 196. It was pointed out therein that the court must endeavour to make the legislative intent effective. Shri Balaganesan Metals v. Shanmugham Chetty (M. N.), AIR 1987 SC 1668, arising under the Rent Control Act and jagir Singh v. State of Bihar, AIR 1976 SC 997 are also cited in this behalf. In the appeal filed by the Revenue (Writ Appeal No. 1335 of 1991), learned counsel draws our attention to the ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no necessity to give notice. This aspect of the matter has been brought out in Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851. Similar is the decision in S. L. Kapoor v. Jagmohan, AIR 1981 SC 136. In the instant case, there is no question of any prejudice or any right being affected. Instead of selling the property to the party to the agreement for sale, the transferor is obliged to sell in favour of the Revenue for the same consideration. Therefore, no notice is necessary. Learned counsel cites Halsbury's Law of England, Vol. 48, and draws our attention to paragraph 409 wherein the position of trustees vis-a-vis the trust has been clearly discussed. As to when the liability of the trustees for tax would arise is spoken to in paragraph 616. That will have to be applied to the instant case. Mr. Srinivasan, in reply, submits that, in this case, it is clear that the deduction of the liability must be that of the person who is entitled to the consideration amount. It is the trust which is entitled to the consideration. Only if it were an assessee, that liability of the assessee could be deducted. But what has been deducted is the liability of the beneficiary. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1), any part of the consideration is not tendered within the specified period, is the transferee entitled to the no objection certificate ? (7) When the consequences of non-payment are prescribed under the statute, has the court power to extend the time for payment ? If not, what is the effect of the direction given by the learned single judge in this case ? (8) Is the transferor liable to be non-suited on the ground of acquiescence ? Point No. 1 : Section 269UD(1) reads as follows: " ( 1 ) The appropriate authority, after the receipt of the statement under sub-section (3) of section 269UC in respect of any immovable property, may, notwithstanding anything 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 apparent consideration . . . " (emphasis supplied). The right of pre-emptive purchase is made available to the Revenue notwithstanding any other law or instrument or agreement. Such a right is to be exercised for reasons to be recorded. Therefore, it is but necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Madhya Pradesh Industries Ltd. v. ITO [1970] 77 ITR 268 (SC) it is held at page 275 as follows: "In S. Narayanappa v. Commissioner of Income-tax [1967] 63 ITR 219, this court held that two conditions must be satisfied in order to confer jurisdiction on the Income-tax Officer to issue the notice under section 34 of the Act in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year, viz., (i) the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax had been underassessed, and (ii) he must have reason to believe that such 'underassessment' had occurred by reason of either (a) omission or failure on the part of the assessee to make a return of his income under section 22, or (b) omission or failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer acquires jurisdiction to issue a notice under the section. If there are in fact some reasonable grounds for the Income-tax Officer to believe that there h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the belief. Whether the facts before the Income-tax Officer were in fact true or not and whether these grounds were adequate or not is not a matter for the court to investigate at this stage." In ITO v. Nawab Mir Barkat Ali Khan Bahadur [1974] 97 ITR 239 (SC), it is observed thus (at pp. 245, 246) : "The authorities to which Mr. Manchanda referred point out that the expression 'reason to believe' occurring in section 147 of the Income-tax Act, 1961, or the corresponding section 34 of the Act of 1922, does not mean a purely subjective satisfaction on the part of the Income-tax Officer, the reasons for the belief must have a rational connection or a relevant bearing to the formation of the belief, and that the High Court under article 226 of the Constitution has power to set aside a notice under section 147 of the Act of 1961, or section 34 of the Act of 1922, if the condition precedent to the exercise of jurisdiction under these sections does not exist. " In Ajantha Industries v. Central Board of Direct Taxes [1976] 102 ITR 281 (SC) it is observed thus (at p. 286) : "Mr. Sharma also drew our attention to a decision of this court in S. Narayanappa v. Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that : if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of underassessment, that would be sufficient to give jurisdiction to the Income-tax Officer to issue notice under section 34.' The court in terms held that whether these grounds are adequate or not is not a matter for the court to investigate." In Indian Oil Corporation v. ITO [1986] 159 ITR 956 (SC), it is observed as follows (p. 968) : "In the case of S. Narayanappa v. CIT [1967] 63 ITR 219, this court again reiterated the conditions required to be fulfilled to confer jurisdiction on the Income-tax Officer to issue a notice under section 34 of the 1922 Act which is in pari materia with section 147 of the Act. It was reiterated that if there were in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact which could have a material bearing on the question of underassessment or escapement, that would be sufficient to give jurisdiction to the Income-tax Officer to issue the notice for reopening. Whether those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s situated in the intensely populated commercial cradle of Bangalore, namely, Chickpet, at OTC Road, also known as Chickpet Main Road. It covers a land area of 17,160 sft. (1594.2 sqms.). Its dimensions are irregular. The width of the road on which the property is situated is 14.9 mts. It falls in Zone 'A' of CDP and enjoys an FAR of 1.25. The building covers an area of 2742 sqms. It is a double storeyed commercial complex constructed in the year 1909 with lime mortar and bricks. The roofing is partly Madras terrace and partly by Mangalore Tiles. All joinery works are with teakwood, no services have been provided except electricity, sanitary and water supply in a portion of the first floor. The tenants had done a lot of internal modifications at their cost. The building being 90 years old, has outlived its normal span of life. No maintenance has been done in many years. A prudent buyer will think of developing the property by dismantling the existing building and constructing a new commercial complex for which Chickpet is meant." Then in paragraph 22, it is stated thus: "The facts of the case have been detailed in the preceding paras, because of the rather sensitive nature of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under article 226 of the Constitution or even this court under article 132 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is mala fide or arbitrary or that it is based on irrelevant and extraneous considerations. Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question. 11. We are clearly of the opinion that the requirement of recording reasons under section 127(1) is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee." The reason for such conclusion is stated in paragraph 15 as under: " 15. When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person who can challenge the order in court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the law only one penalty is permissible, the court may not issue its writ to compel the observance of natural justice, not because it approves the non-observance of natural justice but because courts do not issue futile writs. But it will be a pernicious principle to apply in other situations where conclusions are controversial, however slightly, and penalties are discretionary ... In our view, the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary. It ill comes from a person who has denied justice that the person who has been denied justice is not prejudiced. As we said earlier, where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice but because courts do not issue futile writs. We do not agree with the contrary view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two-fold purpose : (1) that the 'party aggrieved' in the proceeding acquires knowledge of the reasons and in a proceeding before the High Court or the Supreme Court (since there is no right of appeal or revision) it has an opportunity to demonstrate that the reasons which persuaded the authority to pass an order adverse to his interests were erroneous, irrational or irrelevant, and (2) that the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the quasi-judicial or the executive authority invested with judicial powers. " On this basis, it is concluded in paragraphs 11 to 15 thus (p.118) : "11. Since an order under section 269UD(1) is neither appealable nor revisable, its validity can only be tested by the High Courts under articles 226 and 227 and by the Supreme Court under article 136 of the Constitution. The non-disclosure of reasons in the order impugned or non-communication of the same, where separately recorded, is not a proper compliance with the requirements of section 269UD(2). The aggrieved party is handicapped inasmuch as it is unable to question the order with reference to the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the order is backed by appropriate legal foundations and has been passed fairly, justly, reasonably and not arbitrarily or capriciously for extraneous reasons. The law as settled by the apex court now admits of no doubt that the violation of the principles of natural justice being an infringement of article 14 of the Constitution, an order which infringes article 14 is an order which suffers from an error of law apparent on the face of it calling for interference by the High Court. 13. From the above discussion, it follows that the impugned order which did not incorporate the reasons for taking action under section 269UD(1) and the action of the appropriate authority of not even conveying the reasons, separately recorded, to the affected party either along with the impugned order or otherwise, is not only a violation of the statutory provisions of section 269UD(1) and (2) but also is against the established principles of natural justice. Such an order is a nullity and cannot be sustained. 14. Learned counsel for the Revenue, lastly, submitted that, even if the impugned order had violated the rule of audi alteram partem and the appropriate authority by withholding the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferor could urge ? The sale consideration is the same. Instead of the transferor selling the property to private individual, there is pre-emptive purchase. Beyond that, what is the prejudice caused to the transferor ? There is nothing whatever. The object of introduction of Chapter XX-C of the Act itself will make the position clear because of the following passage in the Finance Minister's speech (see [1986] 158 ITR (Journal) 13 ) : "In line with the Long Term Fiscal Policy another major step being taken is to empower the Government with a pre-emptive right to purchase properties which are offered for sale in the market at the price agreed to by the transferor. To begin with, this provision will apply to properties valued at over Rs. 10 lakhs located in metropolitan cities. An honest seller, wherever he may be, will not be hurt by this measure. For the rest, it is between them and the Income-tax Department and God . " To say that a stigma gets attached when once the Revenue exercises the right of pre-emptive purchase, in our considered view, is not the correct way of approach. Then again, the argument on behalf of the appellant proceeds on the footing that if reasons are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of that power." In the instant case, as we pointed out earlier, the statute, viz., section 269UD(1) of the Act, excludes the application of the principles of natural justice. In Union of India v. Tulsiram Patel, AIR 1985 SC 1416, it has been held in paragraph 101, at page 1462, thus : " 101. Not only, therefore, can the principles of natural justice be modified but in exceptional cases they can even be excluded. There are well-defined exceptions to the nemo judex in causa sua rule as also to the audi alteram partem rule. The nemo judex in causa sua rule is subject to the doctrine of necessity and yields to it as pointed out by this court in J. Mohapatra and Co. v. State of Orissa [1985] 1 SCR 322, 334-335 ; AIR 1984 SC 1572, 1576, 1577. So far as the audi alteram partem rule is concerned, both in England and in India, it is well established that where right to a prior notice and an opportunity to be heard before an order is passed would obstruct the taking of prompt action, such a fight can be excluded. This right can also be excluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s otherwise provided in this Chapter, any order made under sub-section (1) of section 269UD or any order made under sub-section (2) of section 269UF shall be final and conclusive and shall not be called in question in any proceeding under this Act or under any other law for the time being in force. " The object of making the order passed under section 269UD(1) final and conclusive is not without purpose. Thus we conclude that there is no scope for observance of the principles of natural justice. Point No. 3 : The argument of Sri Srinivasan is that section 269UA(b), while defining 'apparent consideration', states : "....and where the whole or any part of the consideration for such transfer is payable on any date or dates falling after the date of such agreement for transfer, the value of the consideration payable after such date shall be deemed to be the discounted value of such consideration as on the date of such agreement for transfer, determined by adopting such rate of interest as may be prescribed in this behalf ; " and this would apply only to transfers by way of lease. We find no justification to restrict it only to lease. We will now extract clauses 1.3 and 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the consideration payable under section 269UF, the appropriate authority may, in lieu of the payment of the amount of consideration, set off the amount of consideration or any part thereof against such liability or sum, after giving an intimation in this behalf to the person entitled to the consideration. " From this provision, it is apparent that it is only the tax liability of the person entitled to the consideration payable under section 269UF that could be deducted. In the instant case, the trust deed in the preamble states as follows : "This declaration of trust dated the 14th day of August, 1945, by and between Sri Vidyavati Kapur, aged about 45 years, wife of Mr. Nandalal Kapur (hereinafter called the Trustor or 'Author of the Trust' of the one part) and (1) Sri Vidyavati Kapur, (2) Nandlal Kapur, aged about 47 years, son of Thakordass Kapur, (3) Mohanlal Kapur, aged about 27 years, son of Thakordass Kapur, (4) Premavati Kapur, aged about 26 years, wife of Mohanlal Kapur, the said 1, 2, 3 and 4 hereinafter called the Trustees of the other part at present residing in Bangalore (which expressions Trustor and Trustees shall unless it be repugnant to the context or mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Govt. under Chapter XX-C of the Income-tax Act, 1961, property premises 'Mohan Buildings', Nos. 775 to 809, Old Taluk Cutchery Road, Chickpet, Bangalore-53-Transferor Messrs. Vidyavathi Kapur Trust, Rex Theatre Building, No. 12, Brigade Road, Bangalore-560 001-Submission of list of arrears reg. Ref : CCIT's letter in F. No. CC/DC(HQ-I)/XXC(P)/63/90-91, dated 4-2-1991. Kind reference is invited to the letter cited above. In this connection, I am enclosing herewith list of income-tax and wealth-tax arrears outstanding against Sri Mohanlal Kapur, beneficiary of M/s. Vidyavathi Kapur Trust, as on date, along with regular challans so as to effect necessary adjustment from out of the apparent sale consideration of the above property payable to Sri Mohanlal Kapur, as desired by the Chief Commissioner. (Sd.) ........................ Income-tax Officer. ABSTRACT (Rs.) Total income-tax arrears 2,39,749 Total wealth-tax arrears 10,102 ------------------------- Total 2,49,851" ------------------------- On February 26, 1991, the transferor was informed by the Deputy Commissioner of Income-tax as under : "As per the above purchase order by the Appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarify that the interest of the purchaser would stand extinguished as and when the payment of the sum of Rs. 50 lakhs is tendered to M/s. Rajatha Trust. We further request that the balance consideration of Rs. 1,00,17,084 (rupees one crore seventeen thousand and eighty-four only) may please be paid forthwith, since we have complied with all the formalities. (Sd.) Mohanlal Kapur (Sd.) Kamal Kapur." Despite intimation by the Deputy Commissioner of Income-tax dated February 26, 1991, there was no demur by the transferor. If Mohanlal Kapur has received the consideration without any demur, we are unable to see what valid objection the appellant could take, notwithstanding the fact that the order of the Deputy Commissioner refers to Mohanlal Kapur as the beneficiary. As to what would be the tax liability where the trustee and the beneficiary are one and the same individual, is the real point for consideration. In this case, Mohanlal Kapur occupies a dual capacity. Therefore, so long as the amount has been paid into his hands, it matters very little as to what position he occupies-whether trustee or beneficiary. In Halsbury's Laws of England, Fourth edition, vol. 48, para 616, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le property by the Central Government is made under sub-section (1) of section 269UD, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration." Hence, the authority which pays the amount is the Central Government. Then again, under section 269UG(1) which has already been extracted, the amount of consideration payable must be in accordance with section 269UF. Certainly, therefore, if the Central Government is obliged to pay, it is that authority which could make the payment after deducting the tax liability to the transferor in accordance with section 269UG(1), proviso. Thus, the conclusion could be reached that it is the Central Government which is thought of as the "appropriate authority" for the purpose of the proviso to section 269UG(1). In State of Tamil Nadu v. Manakchand [1984] 56 STC 237 (Mad) [FB], it has been observed as follows (at pp. 250 to 253): " It is one of the settled canons of interpretation of statutes that if an interpretation clause gives a particular meaning to a word it does not follow as a matter of course that if that word is used more than once in the Act it is on each o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h must be given to the words "six previous years" in section 2(6A)(c). It is to be noticed that the definitions given in section 2 of the Act are, as provided therein, to govern "unless there is anything repugnant in the subject or context". Now, the appellant contends that the words "unless there is anything repugnant" are much more emphatic than the words such as "unless the subject or context otherwise requires", and that before the definition in the interpretation clause is rejected as repugnant to the subject or context, it must be clearly shown that if that is adopted, it will lead to absurd or anomalous results. And our attention was invited to authorities in which the above rules of construction have been laid down. It is unnecessary to refer to these decisions as the rules themselves are established beyond all controversy, and the point to be decided ultimately is whether the application of the definition in section 2 (11 ) is repelled in the context of section 2 (6A) (c).' In the context of the situation, the learned Judges held that it would be repugnant to the definition of 'dividend' in section 2(6A)(c) to import into the words 'six previous years' the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "insurer" in various sections of the Act, the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word has been used and that will be giving effect to the opening sentence in the definition section, namely, unless there is anything repugnant in the subject or context. In view of this qualification, the court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. Therefore, though ordinarily the word "insurer" as used in the Act (Insurance Act, 1938) would mean a person or body corporate actually carrying on the business of insurance it may be that in certain sections the word may have a somewhat different meaning.' The above being the canon of interpretation of definition clauses, we have to examine whether the expression 'total turnover' occurring in the proviso to section 7A of the Act can be given the same meaning as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with the words 'insurer means' and is therefore exhaustive. It may be accepted that, generally, the word 'insurer' has been defined for the purposes of the Act to mean a person or body corporate, etc., which is actually carrying on the business of insurance, i.e., the business of effecting contracts of insurance of whatever kind they might be. But section 2 begins with the words 'in this Act, unless there is anything repugnant in the subject or context' and then come the various definition clauses of which clause (9) is one. It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case, namely, unless there is anything repugnant in the subject or context. Therefore, in finding out the mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituate the disputed words within the section of which they are part and in relation to the rest of the Act. The external context involves determining the meaning from ordinary linguistic usage (including any special technical meanings), from the purpose for which the provision was passed, and from the place of the provisions within the general scheme of statutory and common law rules and principles. 19. The opening sentence in the definition of the section states 'unless there is anything repugnant in the subject or context'. In view of this qualification, the court has not only to look at the words but also to examine the context and collocation in the light of the object of the Act and the purpose for which a particular provision was made by the Legislature. Reference may be made to the observations of Wanchoo J., in Vanguard Fire and General Insurance Co. Ltd. v. Fraser and Ross [1960] 30 Comp Cas (Ins.) 13 ; AIR 1960 SC 971, where the learned judge said that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve intent, if one be ascertainable, from the words actually employed. " If this interpretation is applied, we do not see why the "appropriate authority" under section 269UG(1), proviso, should not be taken to mean the "Central Government" since the opening words of the definition clause under section 269UA are : " ... unless the context otherwise requires". If the context here so requires and if so read, it would bring out the true intention of the Legislature as to the appropriate authority, we think such an interpretation is warranted. The Central Government has delegated the power under sections 269UF and 269UG to the Chief Commissioner of Income-tax, Bangalore, by its order dated July 21, 1989, which reads: "F. No. 316/217/87-OT (Pt. 111) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 21st July, 1989. It is hereby ordered that the following Chief Commissioners of Income-tax shall exercise the functions of the Central Government in their respective charges for the purpose of the provisions of section 269UF and section 269UG of the Income-tax Act, 1961 : ... 5. Chief Commissioner of Income-tax, Banga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner filed in Form No. 37-1 of the Act and to make up its mind, if the Central Government would like to purchase the property for the apparent consideration mentioned in the agreement or not. According to learned counsel, the petitioner will not suffer any injury inasmuch as she has agreed to sell the property for the consideration mentioned in the agreement whether it goes to the purchaser or the Central Government that will not make any difference to the petitioner." The argument of Mr. Srinivasan is that, where the Act prescribes a particular mode and a particular authority to exercise the power, no other mode is possible. He relies on the leading decision in Taylor v. Taylor [1875] 1 Ch D 426. At pages 431 and 432, it is observed as follows : "The 16th section says : 'Any person entitled to the possession or to the receipt of the rents and profits of any settled estates for a term of years determinable on his death, or for an estate for life, or any greater estate, may apply to the court by petition in a summary way to exercise the powers conferred by this Act.' The 17th section provides that, subject to the exception contained in the next section, every applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd under sections 164 and 364 of the Code of Criminal Procedure, 1898. This rule squarely applies where, indeed, the whole aim and object of the Legislature would be plainly defeated if the command to do the thing in a particular manner did not imply a prohibition to do it in any other. Maxwell on the Interpretation of Statutes, Eleventh Edn., pp. 362-363. The rule will be attracted with full force in the present case, because non-verification of the surrender in the requisite manner would frustrate the very purpose of this provision. Intention of the Legislature to prohibit the verification of the surrender in a manner other than the one prescribed, is implied in these provisions. Failure to comply with these mandatory provisions, therefore, had vitiated the surrender and rendered it non est for the purpose of section 5(3)(b). " Certainly, if the object and the aim of the legislation is defeated, one should adopt this principle. But, in this case, we are not persuaded to hold that, by adoption of this interpretation in relation to an appropriate authority or in relation to the payment of a lesser value, the object of the Act is in any way frustrated. Even then, as we have stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is connection. At the risk of repetition, we repeat it once again (p. 619) : "....the petitioner further states that, under the proviso to section 269UG(1), only tax liabilities due by a person interested in the consideration alone can be deducted, that the transferor-trust had no arrears and that the consideration cannot be reduced by the tax due by the beneficiary, Sri Mohanlal Kapoor. It is further stated that the arrears deducted are not correct arrears. In response to this, it has to be stated that Sri Mohanlal, apart from being a beneficiary, is also one of the persons entitled to dispose of Mohan Building. As a matter of fact, a notice was given to the transferor on February 26, 1991, regarding the adjustment of tax arrears to be made. No objection was raised. The adjustment was impliedly accepted. Therefore, the petitioner cannot question the adjustment now. At any rate, the alleged mistake in adjusting the tax arrears of Sri Mohanlal against the consideration payable to the trust is a matter that can be sorted out between the Department and the transferor through correspondence. The mistake is not so grave as to challenge the validity of the order itself." Further, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, in favour of the Central Government is given by the transferor. Why did the transferor do all these ? It is hard put to explain. The law on acquiescence can be gathered from the following rulings. In Pannalal Binjraj v. Union of India [1957] 31 ITR 565, 593 ; AIR 1957 SC 397, it is observed at page 412 thus : "45. There is moreover another feature which is common to both these groups and it is that none of the petitioners raised any objection to their cases being transferred in the manner stated above and in fact submitted to the jurisdiction of the Income-tax Officers to whom their cases had been transferred. It was only after our decision in Bidi Supply Co. v. Union of India [1956] 29 ITR 717 (SC), was pronounced on 20th March, 1956, that these petitioners woke up and asserted their alleged rights, the Amritsar group on 20th April, 1956, and the Raichur group on 5th November 1956. If they acquiesced in the jurisdiction of the Incometax Officers to whom their cases were transferred, they were certainly not entitled to invoke the jurisdiction of this court under article 32. It is well settled that such conduct of the petitioners would disentitle them to any relief at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, and John Kemp [ 1874] 5 PC 221 at p. 239 as follows : 'Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.' This passage was cited with approval b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We hold accordingly that the High Court was in error in entertaining the writ petitions for the purpose of examining whether the respondents could avoid their contractual liability by challenging the rules under which the bids offered by them were accepted and under which they became entitled to conduct their business. It can never be that a licensee can work out the licence if he finds it profitable to do so ; and he can challenge the conditions under which he agreed to take the licence, if he finds it commercially inexpedient to conduct his business." In N. Chellappan v. Kerala State Electricity Board, AIR 1975 SC 230, it has been observed thus in paragraph 7 (at p. 233) : "The High Court said that acquiescence of the Board by participating in the proceedings before the umpire as sole arbitrator would not confer jurisdiction as there was inherent lack of jurisdiction in that the order in O. P. No. 11 of 1972 was bad in law and that it did not clothe the umpire with any jurisdiction. We are of the view that even assuming that the order in O. P. No.11 of 1972 was not passed on consent, the umpire had power to pass the award. As we have said, the umpire could have entered upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciate was that while it was true that want of jurisdiction to review the order of August 31, 1955, could not be cured by waiver, it would not necessarily follow that the court was obliged to grant certiorari at the instance of a party whose conduct was such as to disentitle it for it. The High Court was exercising its extraordinary jurisdiction and the conduct of the petitioners was a matter of considerable importance. The High Court did not take due notice of the fact that the writ petitioners (or other predecessors-in-interest) had allowed the passing of the order dated August 31, 1955, in spite of the individual notices which were issued under section 7, and did not deserve any relief. It did not notice the further fact that when the order dated August 31, 1955, had become final because of the failure to file an appeal or an application for revision, it was not permissible under the law, in view of the specific bar Of section 18 for the writ petitioners to move a 'restoration' application on March 12, 1958, for its review and to obtain its reversal by the Competent Officer's orders dated March 15, 1958, and May 12, 1958, and to obtain a wholly beneficial order for the transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction on that ground but acquiesces and takes the chance of a decision in his favour, will be disentitled to a writ of certiorari. At page 315 of his book, De Smith states as follows : "The right to certiorari or prohibition may be lost by acquiescence or implied waiver. Acquiescence means participation in proceedings without taking objection to the jurisdiction of the Tribunal once the facts giving ground for raising the objection are fully known. It may take the form of failing to object to the statutory qualification of a member of the Tribunal, or appealing to a higher Tribunal, against the decision of the Tribunal of first instance without raising the question of jurisdiction.' The Supreme Court, in the case of Pannalal Binjraj v. Union of India [1957] 31 ITR 565 (SC) ; AIR 1957 SC 397, has stated as follows in para 45 at page 412 (pp. 593, 594 of 31 ITR) : 'There is moreover another feature which is common to both these groups and it is that none of the petitioners raised any objection to their cases being transferred in the manner stated above and in fact submitted to the jurisdiction of the Income-tax Officers to whom their cases had been transferred. It was only afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the position in the instant case. We may also refer to Halsbury's Laws of England, Vol. 1, Fourth edition, para 71, which reads : " 71. Waiver and acquiescence.-The right to impugn proceedings tainted by the participation of an adjudicator disqualified by interest or likelihood of bias may be lost by express or implied waiver of the right to object." Mr. Srinivasan tries to get over the application of this principle of acquiescence, stating that, where the action of the appropriate authority is without jurisdiction, this principle would not apply. Reliance is placed on Khardah Company Ltd. v. Raymon and Co. (India) (P.) Ltd., AIR 1962 SC 1810, and at pages 1815 and 1816, it is stated thus : "But what confers jurisdiction on the arbitrators to hear and decide a dispute is an arbitration agreement as defined in section 2(a) of the Arbitration Act, and where there is no such agreement, there is an initial want of jurisdiction which cannot be cured by acquiescence. It may also be mentioned that the decision in Wyld, ex parte [1860] 30 LJ Bcy 10 has been understood as an authority for the position that when one of the parties to the submissions is under a disability, that will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is incurable." This ruling also does not in any way help the appellant in this case. K. M. Oosman and Co. v. K. Abdul Malick Sahib [1951] AIR 1951 Mad 681, is a case relating to trade mark where it was held that acquiescence cannot be implied merely because of the delay in filing the suit and using the trade mark for a short period. We do not think that this has any application to the facts of the case on hand. No doubt the principle of acquiescence will not apply to a position which is against law, and approbate and reprobate will not apply to acts which are ultra vires. But, here, we have concluded otherwise. Therefore, Basheshar Nath v. CIT [1959] 35 ITR 190 ; AIR 1959 SC 149, has no application. In fact, at page 172 of AIR 1959 SC, it is observed (p. 234 of 35 ITR) : "It has been said that 'waiver' is a troublesome term in the law. The generally accepted connotation is that to constitute 'waiver', there must be an intentional relinquishment of a known right or the voluntary relinquishment or abandonment of a known existing legal right, or conduct such as warrants an inference of the relinquishment of a known right or privilege. Waiver differs from estoppel in the sense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty of the appellant-transferor to protest, he did not do so. In fact, Mr. Srinivasan frankly concedes that there was no protest in explicit terms. We may add that there was not even an implicit protest. He now wants to rely on technicalities and revelling in them. Hence, neither Goparanjan Dube v. Arbitrator, Hirakud Land Organisation, AIR 1976 Orissa 118, nor Gian Chand Dhawan v. Union of India, AIR 1976 Delhi 83, can help him. In Karnail Singh v. State of Punjab, AIR 1983 Punj 160, it is stated at page 161 thus : "Thus where the application for payment clearly states that the payment was sought for under protest, the mere fact that the receipt did not contain any words indicating protest is not sufficient to hold that the party had waived the right to apply for reference." The argument of Mr. Srinivasan that the fact that the appellant asked for payment of Rs. 1,00,17,084 and accepted a lesser amount would not amount to waiver does not appeal to us. Therefore, reliance placed on Kamalpur (Assam) Tea Estate P. Ltd. v. Supdt. of Taxes [1989] 175 ITR 142 (Gauhati) cannot help him because what is stated in that decision is this (headnote at p. 143) : "Article 265 of the Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax most willingly and produced the documents of title and furnished all other particulars and handed over possession of the property and also attorned the tenancy of portion of the building in favour of the Central Government. It is only thereafter that the payment was made to the petitioner under section 269UF(1) by the Chief Commissioner of Income-tax. Therefore, quite apart from the legal arguments advanced by Sri K. Srinivasan highlighting the alleged violations committed by the Chief Commissioner both as to the computation of the discounted value and the deduction of arrears of income-tax/wealth-tax due from one of the beneficiaries, the petitioner must fail on the ground of acquiescence." We are in entire agreement with this finding of the learned judge. Hence, irrespective of other issues, on the application of the principle of acquiescence alone, the case of the appellant-transferor is liable to be thrown out. Accordingly, we answer point No. 8 in the affirmative. Before parting, we must place on record our appreciation of the valuable assistance afforded by all learned counsel in this case where we trod upon new ground on important points of law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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