TMI Blog1990 (4) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... e at a cost of Rs. 3,30,300. As required under the provisions of the Income-tax Act, the petitioner forwarded a duly verified statement in Form No. 37-1 and also a copy of the agreement of sale dated January 29, 1988. This was received by the second respondent on January 29, 1988, as seen from the impugned order. Under the provisions of the Income-tax Act, the second respondent is expected to pass orders within 60 days of the receipt of the statement in Form No. 37-1 regarding purchase of the property. In accordance with that, just before the expiry of the last day, the second respondent, by order dated March 28, 1988, has passed the impugned order deciding to purchase the property for a sum of Rs. 32,76,733.50 Mr. V. P. Raman, learned counsel appearing for the petitioner, submits that from a reading of paragraph 6 of the impugned order, it will be crystal clear that the same has been passed hastily and without application of mind, on the last day. In other words, the contention of learned counsel is that though the property agreed to be sold by the petitioner to the third respondent was in respect of 90.505% of the right, title and interest in the property for a consideration o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing equal to the amount of the apparent consideration stated in the agreement of sale." In addition to the above, an annexure is given to the impugned order setting out the schedule of property proposed to be purchased. There also, the entire property is mentioned and not an undivided share of 90.505% as contended by learned counsel for respondents Nos. 1 and 2. There is force in the contention of learned counsel for the petitioner that the order has been passed by the second respondent on the last day without proper application of mind which led to this lacuna. I am not prepared to accept the statement in the counter-affidavit to the effect that the decision by the second respondent was to purchase 90.505% of the right, title and interest in the property and not 100% in view of the clear statement in paragraph 6 of the impugned order read with annexure 1. As I am of the view that the impugned order is liable to be set aside on this error which is apparent on the face of the records, I have not dealt with the other grounds. In the result, the order of the second respondent dated March 28, 1988, made in No. AA/Mds/1 (223) 3/87-88 is quashed and the writ petition is allowed. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the learned single judge in support of the submission hereinabove noticed. It was also brought to the notice of the learned single judge that, even in the schedule which was appended as annexure to the impugned order, it was the "entirety" of the property which was decided to be purchased by the second respondent. On behalf of the Revenue, the submission was countered and it was urged before the learned single judge that paragraph 6 of the order impugned in the writ petition was required to be read along with the other paragraphs of the order and, when so read, it was capable of being understood that the second respondent had decided to purchase only 90.505% of the right, title and interest in the property in question and not 100% as contended. The submission on behalf of the Revenue, however, did not find favour with the learned single judge, who extracted paragraph 6 of the impugned order and, thereafter, allowed the writ petition. It would be advantageous at this stage to refer to that part of the judgment of the learned single judge (at p. 105) : "For better appreciation, paragraph 6 is extracted below:- 'As per the reasons recorded by us separately, we have come t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent of the property which was sought to be transferred by the writ petitioner to the third respondent and, therefore, had only decided to purchase the extent of the property decided to be sold to the third respondent and nothing more than that. She submitted that the order impugned in the writ petition should be taken as a whole and not piecemeal. Mr. Raman, appearing for the writ petitioner, however, submitted that a reference to paragraphs 3 and 4 of the order impugned in the writ petition would only show certain factual assertions and not conclusions which were contained only in paragraph 6 thereof. He, therefore, sought to defend the order on that ground. Mr. Raman further argued that the judgment of the learned single judge could be sustained even on some other grounds and, in support of this submission, he made a reference to some other pleas raised in the writ petition. We shall refer to those pleas as and when we deal with the same. In our opinion, the submission of Mrs. Nalini Chidambaram with regard to the manner in which the order impugned in the writ petition has been interpreted cannot be said to be without merits. Reading the order impugned in the writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in possession of that property shall surrender or deliver possession thereof to the appropriate authority or any other person duly authorised by him in this behalf within 15 days of the service of an order on him. On the failure of the person in possession to comply with the directions, the appropriate authority or the person duly authorised by it, may take possession of the immovable property even by use of force and if necessary, may requisition the services of any police officer to assist it. Under section 269UF, where an order for the purchase of any immovable property by the Central Government is made under section 269UD, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration. Sub-section (2) of section 269UF deals with damage to the property otherwise than as a result of normal wear and tear and reduction of the consideration payable in respect thereof. The amount of consideration payable in accordance with the provisions of section 269UF is required 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 immovable property be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te authority to order purchase of immovable property for an amount equal to the amount of the apparent consideration as specified in the agreement of transfer and the second respondent has passed the impugned order in accordance with law. The challenge with regard to the violation of the principles of natural justice was denied. It was submitted that the second respondent had recorded the reasons as required by section 269UD but no reply was given with regard to the averments contained in paragraph 9 onwards of the affidavit in support of the writ petition, wherein a grievance had been projected with regard to the non-recording of reasons and the failure to give an opportunity prior to the passing of the order, as also the non-communication of the reasons. With the permission of the court, however, during the course of arguments, Mrs. Nalini Chidambaram filed an additional affidavit of R. Vijayalakshmi, a member of the appropriate authority. In the said affidavit, the stand of the Revenue with regard to the compliance with the principles of natural justice and the communication of the reasons has been spelt out in extenso and, in our opinion, it is desirable to extract the same her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m under special circumstances. It has been found that Chapter XX-C has been very effective and the objective of the Legislature has been achieved to a great extent. With the above objective in view, the Legislature has specifically provided under section 269UN that orders made under sections 269UD and 269UF shall be final and conclusive and shall not be called in question in any proceedings under the Act or any other law for the time being in force . . . " Mrs. Nalini Chidambaram sought to meet the argument raised by Mr. Raman by reiterating the stand as reflected in the above affidavit. According to her, since Parliament consciously had not specifically provided for any right of hearing before an order under section 269UD(1) of the Act came to be passed, it was not permissible for the court to extend the application of the "rules of natural justice" to the cases covered under Chapter XX-C of the Act. She argued that the requirement of section 269UD(1) of the Act was only to the extent of recording of reasons before passing an order under that section and that no obligation was cast on the appropriate authority to either incorporate those reasons in the order itself or to com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount equal to the amount of apparent consideration ; Provided that no such order shall be made in respect of any immovable property after the expiration of a period of two months from the end of the month in which the statement referred to in section 269UC in respect of such property is received by the appropriate authority : Provided further that in a case where the statement referred to in section 269UC in respect of the immovable property concerned is given to an appropriate authority, other than the appropriate authority having jurisdiction in accordance with the provisions of section 269UB to make the order referred to in this subsection in relation to the immovable property concerned, the period of limitation referred to in the preceding proviso shall be reckoned with reference to the date of receipt of the statement by the appropriate authority having jurisdiction to make the order under this sub-section. (2) The appropriate authority shall cause a copy of its order under sub-section (1) in respect of any immovable property to be served on the transferor, the person in occupation of the immovable property if the transferor is not in occupation thereof, the transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if the statute was silent with regard to the observance of the rules of natural justice, those principles shall be read" into the statute. Bhagwati J. emphasised that audi alteram partem is a rule devised by courts to ensure a just decision by the statutory authority and is calculated to act as a healthy check on the abuse or misuse of power and its reach and applicability cannot be allowed to be circumscribed. Thus, it is too late in the day to urge that since the Legislature did not specifically provide in Chapter XXC of the Income-tax Act that the affected party shall have a right of hearing before an order under section 269UD(1) is passed, the courts would not insist upon compliance with at least the minimal rules of audi alteram partem to be followed particularly by an authority exercising quasi-judicial powers. We are unable to accept the argument that since the decision to act under section 269UD(1) is taken by "senior officials of the Revenue" who are supposed to act "fairly, justly and reasonably and not arbitrarily" there is no need to follow the audi alteram partem rule. Fair hearing is a postulate of decision making by a statutory authority exercising quasi-judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that rule, not even a dozen properties could be purchased under Chapter XXA of the Act is a self defeating justification. If, by getting a reply from the affected party, the proposal to purchase the property was given up by the authorities, it justifies the giving of such an opportunity, rather than denial of it. Surely, the Revenue does not mean to suggest that once they decide to purchase any property, the lack of justification for its action is irrelevant. That apart, we find that, in the impugned order, no reasons have been given by the appropriate authority. Indeed, the reasons for passing an order under section 269UD(1) after arriving at the "unanimous conclusion that it is a fit case for purchase on account of undervaluation" have been separately recorded, but those reasons, admittedly, were neither incorporated in the impugned order nor conveyed separately to the writ petitioner along with the impugned order. The argument of Mrs. Chidambaram that since high ranking officials constitute "the appropriate authority" under the Act, it had been decided by them that the reasons, though required to be recorded, "shall not form a part of the order and will not be communicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to record reasons operates as a deterrent against possible arbitrary action by the executive authority invested with the judicial power. " (emphasis supplied) Again, in Liberty Oil Mills v. Union of India, AIR 1984 SC 1271, while dealing with clause 8B of the Imports and Exports (Control) Act, which does not provide for a pre-decisional opportunity to the affected party and also lays down that an order may be made "without assigning any reason", their Lordships opined thus (paragraph 22 at p. 1287) : "Ours is a constitutional Government, an open democracy founded upon the rule of law and not a cloak and dagger regimen. It is inconceivable that under our constitutional scheme a decision of the kind contemplated by clause 8B which may have the effect of bringing to a standstill the entire business activity of the person affected and which may even spell ruin to him, should be made and implemented without being communicated to that person. Intertwined is the question of observance of natural justice and how can natural justice be satisfied if the decision is not even communicated ? It would be most arbitrary and quite clearly violative of articles 14 and 19(1)(g) of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for the order must be communicated to the affected party. An order of a quasi-judicial nature, without reasons, is a wholly defective order in the eye of law. To interpret the section in any other manner would not only be doing violence to the plain phraseology of the section, but also defeating the very purpose for which Parliament provided for "recording of reasons" while making an order and conveying a copy of that order to the affected party. It is an essential attribute of a quasi-judicial order that it shall disclose the material to the party against whom it is intended to be used. In Mahabir Prasad Santosh Kumar v. State of U. P., AIR 1970 SC 1302, Shah J., speaking for the Bench, opined that recording of reasons in support of a decision by a quasi-judicial authority is obligatory as it ensures that the decision is reached according to law and is not a result of caprice, whim or fancy or reached on ground of policy of expediency. A party to the dispute, observed Shah J., is entitled to know the grounds on which the order adverse to his interests had been passed. It would serve no purpose if the reasons are recorded but the party to the dispute is kept in the dark about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate authority, and to question its validity by reference to those reasons. That the Revenue can produce the reasons already recorded for scrutiny of the court, whenever demanded by the court, is not a substitute for passing and communicating a reasoned order to the affected party. Neither on the plain language of the section nor on the application of the rule of "natural justice", can the stand of the Revenue be countenanced. The exclusionary provision contained in section 269UN of the Act casts an even greater obligation on the authority passing an order under section 269UD(1) to record and communicate the reasons for the decision to the affected party. Learned counsel for the appellants, rightly, did not urge the applicability of the exclusionary clause in so far as the residuary jurisdiction of the Supreme Court under article 136 and of the supervisory and extraordinary jurisdiction of the High Courts under articles 226 and 227 of the Constitution of India are concerned. Judicial review, it is well settled, is available on grounds of arbitrariness in petitions under articles 226 and 227 of the Constitution of India irrespective of the presence of statutory exclusionary clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner, strictly speaking, with any adverse consequences. We are afraid, we cannot agree. Undoubtedly, from the very nature of the proceedings under Chapter XX-C of the Income-tax Act, the appropriate authority proceeds to act under that Chapter only after coming to a conclusion that it was a fit case for purchase of the property on account of "under-valuation" of the property, implying thereby an effort on the part of the transferor to conceal the true value of the property to "evade tax". An action under section 269UD(1), therefore, prima facie casts a stigma on the affected party of deliberately undervaluing the property, for the purpose of tax evasion. When such a property, after it vests in the Central Government, is put to auction by a notification, it is an information to the people at large that the property in question had been acquired on account of its "undervaluation" by the transferor. The action certainly affects the image and reputation of the party concerned and the loss of image and reputation is to be viewed far more seriously than mere monetary loss. The mere fact that the same price is being paid to the transferor does not take away the stigma of "un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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