1999 PLP 641 (PTD)

(f) 'transfer',

(i) in relation to any immovable property referred to in sub-clause (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 part performance of a contract of the nature referred to in section 53-A of the Transfer of Property Act, 1882 (4 of 1882): Explanation.

For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years; (ii) in relation to any immovable property of the nature referred to in sub-clause (ii) of clause (d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a cooperative society or company or other association of persons or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, such property." "Section 269-UC. (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, no transfer of any immovable property in such area and of such value exceeding five lakhs rupees, as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of subsection (2) at least four months before the intended date of transfer. (2) The agreement referred to in subsection (1) shall be reduced to writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties. (3) Every statement referred to in subsection (2) shall,

(i) be in the prescribed form; (ii) set forth such particulars as may be prescribed; and (iii) be verified in the prescribed manner, and shall be furnished to the appropriate authority in such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties. " "Section 269-UD. (1) Subject to the provisions of subsections (1-A) and (1-B), the appropriate authority, after the receipt of the statement under subsection (3) of section 269-UC 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, make an order for the purchase by the Central Government of such immovable property at an 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 fr9m the end of the month in which the statement referred to in section 269-UC in respect of such property is received by the appropriate authority: Provided further that where the statement referred to in section 269-UC in respect of any immovable property is received by the appropriate authority on or after the 1st day of June, 1993, the provisions of the first proviso shall have effect as if for the words two months', the words 'three months' had been substituted: ...." "Section 269-UE.(1) Where an order under subsection (1) of section 269-UD is made by the appropriate authority in respect of an immovable property referred to in sub-clause (i) of clause (d) of section 269-UA, such property shall, on the date of such order, vest in the Central Government in terms of the agreement for transfer referred to in subsection (1) of section 269-UC:..." "Section 269-UF. (1) Where an order for the purchase of any immovable property by the Central Government is made under subsection (1) of section 269-UD, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of the apparent consideration. (2) Notwithstanding anything contained in subsection (1), where, after the agreement for the transfer of the immovable property referred to in that subsection has been made but before the property vests in the Central Government under section 269-UE, the property has been damaged (otherwise than as a result of normal wear and tear), the amount of the consideration payable under that subsection shall be reduced by such sum as the appropriate authority for reasons to be recorded in writing, may by order determine. " "Section 269-UG. (1) The amount of consideration payable in accordance with the provisions of section 269-OF shall 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 concerned becomes vested in the Central Government under subsection (1), or, as the case may be, subsection (6), of section 269-UE:.. " "Section 269-UL. (1) Notwithstanding anything contained in any other law for the time being in force, no registering officer (G. C. Bharuka, J) appointed under the Registration Act, 1908 (16 of 1908), shall register any document which purports to transfer immovable property exceeding the value prescribed under section 269-UC unless a certificate from the appropriate authority that it has no objection to the transfer of such property for an amount equal to the apparent consideration therefor as stated in the agreement for transfer of the immovable property in respect of which it has received a statement under subsection (3) of section 269-UC, is furnished, along with such document. (2) Notwithstanding anything contained in any other law for the time being in force, no person shall do anything or omit to do anything which will have the effect of transfer of any immovable property unless the appropriate authority certifies that it has no objection to the transfer of such property for an amount equal to the apparent consideration therefor as stated in the agreement for transfer of the immovable property in respect of which it has received a statement under subsection (3) of section 269-UC. (3) In a case where the appropriate authority does not make an order under subsection (1) of section 269-UD for the purchase by the Central Government of an immovable property, or where the order made under subsection (1) of section 269-UD stands abrogated under subsection (1) of section 269-UH, the appropriate authority shall issue a certificate of no objection referred to in subsection (1) or, as the case may be, subsection (2) and deliver copies thereof to the transferor and the transferee. " In the case of C.B. Gautam v. Union of India (1993) 199 ITR 530, the Supreme Court, keeping in view the legislative history of Chapter XX-C of the Act and the stand taken on behalf of the Revenue has held that the power of compulsory purchase conferred under the said Chapter is being used and intended to be used only in cases where in an agreement to sell an immovable property in an urban area to which the provisions of this Chapter apply, there is significant under valuation of the property concerned, namely, by 15 per cent or more. It has further held that (at page 548): "If the appropriate authority concerned is satisfied that, in an agreement to sell immovable property in such area as set out earlier, the apparent consideration shown in the agreement for sale is less than the fair market value by 15 per cent. or more it may draw a presumption that this undervaluation has been done with a view to evade tax. Of course, such a presumption is rebuttable and the intended seller or purchaser can lead evidence to rebut such a presumption. Moreover, an order for compulsory purchase of immovable property under the provisions of section 269-UD requires to be supported by reasons in writing and such reasons must be germane to the object for which Chapter XX-C was introduced in the Income-tax Act, namely, to counter attempts to evade tax." The mechanism devised by Parliament for achieving the aforesaid objects is that though under the provisions of the Transfer of Property Act the transfer of immovable property, though compulsorily register able, need not necessarily be preceded by an agreement for transfer, under section 269-UC of the Act, the execution and filing of such an agreement in the prescribed form and the manner, has been made mandatory. Disobedience of this mandate restrains registration of the instrument of transfer except on obtaining a no objection certificate from the appropriate authority (section 269-UL) resulting in non-recognition of the intended transfer in law. With the filing of the agreement referred to as the statement for statutory purposes of Chapter XX-C, section 269-UD is activated conferring jurisdiction on the appropriate authority to make an order for purchase by the Central Government of the said immovable property at an amount equal to the apparent consideration. The provisions contained in sections 269-UE to 269-UN provide for the consequences, which will flow from the exercise/non-exercise of the said jurisdiction by the appropriate authority. Under the scheme envisaged under Chapter XX-C of the Act is axiomatic that the said jurisdiction can be founded only on a legally enforceable agreement of transfer. To hold otherwise will not only be opposed to public policy but would also result in the detriment of public interest and will prove to be defeative of other beneficial Acts. To illustrate: (1) 1f X and Y enter into an agreement for sale of a property Z at a miserably low consideration as compared to the market price and- file a statement under section 269-UC, is the appropriate authority, despite having found the said fact still obliged to either pass an order for purchase of the property by the Central Government or to issue a statutory certificate according its no objection to such a palpably void and fraudulent transaction. (2) Similarly, if A files an agreement for sale of a property to Y which is admittedly an excess vacant land within the meaning of the Ceiling Act, the sale whereof is completely prohibited under section 5(3) thereof declaring the intended transfer to be null and void, even in this case also is the appropriate authority left with only either of the said two options. (3) Similarly, if the person files an agreement to sell the Bangalore City Railway Station for an apparent consideration of rupees one lakh to some intending buyer, can the appropriate authority even in such a case be compelled to either make an order of purchase by the Central Government of its own property or to give statutory consent to such a palpably illegal transaction. In my opinion, the giving of such a grammatical construction to the said provisions will amount to attributing absurdity to the legislative exercise which is impermissible under the established canons of interpretation of enactments. The only conclusion, therefore, can be that the appropriate authority can be directed to act under Chapter XX-C only if it is found that the agreement filed under section 269-UC is not void, and as such is not non-est in law. This being the jurisdictional premise on which the appropriate authority can proceed to act, unless such premise is shown to exist, this Court under writ jurisdiction cannot issue any direction to the appropriate authority to act in any of the manners provided under Chapter XX-C of the Act. Section 7 of the Transfer of Property Act provides for a person competent to transfer property and it reads as under: "Every person competent to contract and entitled to transferable property, or authorised, to dispose of transferable property not his own, is competent to transfer such property either wholly or in part, and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the time being in force." Section of the Contract Act defines the capacity to contract as follows: "Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject." In the present case, the petitioners cannot be said to be persons competent to transfer the property in question, because, as found above, (i) they have not acquired any title over the land; (ii) the order, dated July 26, 1990, passed by this Court in O.S.As. Nos.12 and 13 of 1989 has specifically restrained the petitioners from effecting any such transfer; and (iii) the lands in question had already been declared to be excess under the Ceiling Act and section 5(3) of this Act declares transfer of such lands as null and void. The said view taken by me finds ample support from a Division Sunderlal Sheth v. S.K. Laul (1992) 198 ITR 594, wherein Mrs. Sujata V. Manohar, J. as she then was, has held at page 596 as follows: "In our view such is not the intention of sections 269-UC and 269-UD, nor need the sections be interpreted in this manner. Section 269-UC comes into picture when the sale of a property is intended to take place. At least three months before such sale the statement is required to be furnished. This would necessarily imply that the statement must refer to an agreement to sale which is capable of being put into effect. In the present case, the trust property cannot be validly sold without the permission of the Charity Commissioner. Hence, such an agreement of sale cannot be acted upon by the income-tax Authorities. We are not dealing with a situation where there may be disputes between various parties as to their right to the property in question, their right to enter into the agreement of sale, etc. Here is a case where the sale cannot take effect by reason of a statutory bar on such sale without the approval of the Charity Commissioner. Therefore, section 269-UC can come into operation only after the approval is granted by the Charity Commissioner for such sale. The period of filing such a statement has to be computed with reference to the approval granted by the Charity Commissioner for the sale of the property, bearing in mind the public purpose underlying such approval. The Department was, therefore, right in considering the form in question as invalid." Mr. Naik sought to submit that the view taken by the Bombay High Court in Madhukar Sunderlal Sheth's case (1992) 198 ITR 594, has been overruled in a subsequent case in J. Gala Enterprises Estate and Investments (Pvt.) Ltd. v. W. Hassan, CIT (1995) 216 ITR

110. But, I find the contention to be erroneous, because the factual premise leading to challenge of the orders passed by the appropriate authority were quite different in the two cases; and, as such, in the latter case the first was found to be distinguishable. In the first case, as noticed hereinafter the Court had found the agreement of sale to be unenforceable, whereas in the second case, it has been observed that (at page 113): "It Cannot be said that the said agreement for transfer entered into by and between the first petitioner and respondents Nos.6 to 8 is ~contrary to law or void. " Now, I may proceed to discuss the decisions cited at the bar on behalf of the petitioners. In the case of Kelvin Jute Co. Ltd. v. Appropriate Authority (1990) 185 ITR 453 (Cal), the petitioner-company was, admittedly, the owner of the land involved therein. It was declared to be a sick industrial unit within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985. In order to help raise finance so that it could be revitalised it entered into an agreement to sell part of its land. The State Bank of India and the State of West Bengal had given consent to the transaction. Accordingly, the petitioner-company entered into an agreement on September 1, 1988, for sale with Granite Ceramics (Pvt.) Ltd. Thereupon it filed an application under Form No.37-I as required under Chapter XX-C of the Act; but the appropriate authority refused to act thereon on the ground that it was premature. The reason given was that the petitioner may choose to surrender the subject property as excess land under the provisions of 'the Ceiling Act in preference to its other lands. On these facts, the Court held the order of the appropriate authority as unsustainable in law by, inter alia, observing that: "Under the present concept of law, the prospective transferor and the transferee have right to enter into an agreement for sale if there is no bar or impediment in law. The sale is proposed without offending any provisions of law prohibiting such transfer." It was further held that the appropriate authority as the pre-emptor cannot demand to better the title before he exercises the right of pre-emption. The Court after noticing that it was nobody's case that the transferor-company had no title to the property in question held, therefore, that the only option left with the appropriate authority was either to purchase the property by exercising the right under section 269-UD of the Act or else to issue "No objection certificate". In the case of Naresh M. Mehta v. Appropriate Authority (1991) 188 ITR 585 (Mad), the ownership of the transferor was admitted. Nonethe less, the appropriate authority had refused to act upon the statement filed in Form No.37-I of the Act mainly on the ground that the division of the property of which the land under sale formed part was not done in accordance with the municipal laws. The Court held on the facts of the case that there was no scope on the part of the appropriate authority to examine as to whether the division of property was done in accordance with or contrary to the municipal laws, and that he could have merely acted by either exercising the right of purchase with all the defects, shortcoming and limitations of the property which was the subject-matter of the statement or he should have issued a certificate of "no objection". In the case of Mrs. Satwant Narang v. Appropriate Authority, I.T. Department (1991) 188 ITR 656 (Delhi), the petitioner was undisputedly found to be the owner of the freehold immovable property which was the subject-matter of the statement filed in Form No.37-I. Here also the appropriate authority refused to act on the said statement by alleging that the division of the property between the petitioner and his son was irregular and illegal being violative of the provisions of the municipal bye-laws. The Court found such consideration to be extraneous and issued a direction for issuance of no objection certificate under section 269-UL of the Act. In the case of Tanvi Trading & Credits (P.) Ltd. v. Appropriate Authority (1991) 188 ITR 623 (Delhi), the facts needs to be noticed in slightly greater detail. In this crave the transferee was the petitioner before the High Court. He had challenged the order of the appropriate authority, dated July 20, 1989, and January 22, 1990, purported to have been passed under Chapter XXC of the Act. Admittedly, eight transferors (respondents Nos.3 to 10) were owning 5,000 square yards of land in Delhi on the date of enforcement of the Ceiling Act. Out of the said lands, the competent Authority declared 680.26 square metres owned by the said respondents as excess vacant lands. Under an agreement, dated May 10, 1989, the said respondents agreed to sell the aforesaid lands to the petitioners and, accordingly, filed a statement in Form No.37-I with the appropriate authority for grant of "no objection certificate". The appropriate Authority refused to act on the said statement on the ground as indicated in his order, dated July 20, 1989, that it was not certain as to which portion of the land will be surrendered to the State Government since part of it has been declared to be excess under the Ceiling Act. Thereupon, on September 25, 1989, the transferor-respondents wrote a letter to the competent Authority under the Ceiling Act specifying and demarcating the excess vacant land which they surrendered with a request for issuance of a notification under section 10 of the said Act. Immediately, thereafter, the appropriate authority was apprised of the said fact with a request for issuance of the desired no objection certificate. On November 24, 1989, even a fresh statement in Form No.37-1 was filed for securing the said object. But again the appropriate authority held it to be an invalid statement keeping in view its earlier order, dated July 20, 1989. On these facts, after examining the scheme under Chapter XXC of the Act, the Court held as under (at page 629): "If the appropriate authority chooses not to purchase the property in question, then section 269-UD does not contemplate the passing of any order similar to the order which has been passed by respondent No. l in the present case. In fact, the proviso to section 269-UD says that if no such order, meaning an order referred to under section 269-UD (1) for purchase, is passed and the period within which such an order can be passed has expired, then no order for purchase can at all be passed. When no other order of purchase is passed, then the provisions of section 269-UL come into operation." The appropriate authority had filed a special leave petition before the Supreme Court against the judgment in Tanvi Trading and Credits' case (1991) 188 ITR 623 (Delhi), which was dismissed by the Supreme Court by its order in Appropriate Authority v. Travi Trading and Credits (P.) Ltd. (1991) 191 ITR 307, which reads as under (at page 308): "Counsel for the petitioners fairly tells us that a no objection certificate' was issued as early as on January 15. 1991. The suggestion that it was issued under pressure and threat of a contempt proceeding is made out from the record. We agree that two alternatives are open under the scheme of the legislation: (i) the Union of India through the appropriate authority could buy the property, or (ii) in the event of its decision not to buy, it has to issue a ' no objection certificate' leaving it open to the parties to deal with the property. In that view of the matter, the High Court was right in its conclusion. The special leave petition is dismissed. No costs." The judgment of the Delhi High Court as approved by the Supreme Court with the observations noticed above his been followed in the cases of Megsons Exports v. Union of India-(1992) 194 ITR 225; Irwin Almedia v. Union of India (1992) 197 ITR 609 (Bom); MOI Engineering Ltd. v. Appropriate Authority (1992) 198 ITR 270 (Cal); and J. Gala Enterprises Estate and Investment (Pvt.) Ltd. v. W. Hassan, CIT (1995) 216 ITR 110 (Bom). From the resume of the reported cases noticed above, it will be found that in none of the cases could it have been said that in the eye of law the agreements of transfer of immovable properties filed by the transferors under section 269-UC were void either for want of title or because of specific statutory or judicial restraints prohibiting such transfer. Therefore, the pronouncements made in the judgments cited on behalf of the petitioners cannot help them in seeking the relief which they have desired in the present writ petitions. So far as the declaration of law trade by the Supreme Court in the case of Tanvi Trading and Credits (P.) Ltd.'s case (1991) 191 ITR 307, is concerned, that has to be viewed in the light of the facts which were before their Lordships, It is well-settled that the ratio of the judgment has to be discerned keeping in view the factual background in which the judgment was rendered. In the case before the Supreme Court, the facts were of too-telling spelling out unwarranted inactions resulting in gross harassment. It was not a case where the transferor lacked competence to contract or was not entitled to any transferable property within the meaning of section 7 of the Transfer of Property Act. As found above, in the present case, the petitioners have neither acquired any ownership over the property in question nor even otherwise are competent to transfer any interest in the property because of the judicial restraints embodied in the order, dated July 26, 1990, passed by this Court in O.S.As. Nos.12 and 13 of 1989. Moreover, the lands have already been declared to be excess under the Ceiling Act by tae competent Authority and transfer of such lands would be null and void under section 5(3) thereof For all these reasons, it has to be held that the agreement for sale entered into between the petitioner and the third respondent and filed in the form of a statutory statement in Form No.37-I purported to be one under section 269-UC read with Rule 48-L is void and non-est in law and no proceedings under section 269-UD of the Act can validly founded thereon. The petitioners are also guilty of suggestion falsi suppressio veri having falsely stated in the writ petition that they are the owners of the property in question and for having suppressed material facts as noticed above. For the said reasons, I am not inclined to issue a writ of mandamus as sought for by the petitioners. The writ petition is, accordingly, dismissed with costs assessed at Rs.5,

500. Let a copy of this judgment be placed on record in Writ Petition No.2390 of 1996. C. M. A./1749/FC Petition dismissed.