IN HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. WRIT PETITION NO. 1994 OF 2018 New White Rose CHS Ltd through its Secretary Farman Ellahi Siddiqui .. Petitioner Versus Appropriate Authority, appointed by Central Government u/S. 269UB of Income Tax Act, 1961 & Ors. .. Respondents Mr. Sanjeev M. Gorwadkar, Sr. Advocate a/w Mr. Yusuf Baugwala and Gaurav Gangal i/by Ms. Sana Y. Baugwala for Petitioner Mr. Akhileshkumar Sharma for Respondent No. 1 Mr. Sachin M. Bandkar for Respondent No. 9 CORAM : AKIL KURESHI & S.J. KATHAWALLA, JJ. Reserved on : JULY 15, 2019. Pronounced on : JULY 23, 2019 JUDGMENT (Per Akil Kureshi, J.) 1. This petition is filed by Cooperative Housing Society claiming to be owners of land admeasuring 359.80 sq. yards bearing CTS No. C/1233, Survey No. 282, Hissa No. 3, Sherly Ranjan Road, Bandra (W) (hereinafter 1 OS WP 1994-18.doc referred to as "the said land") on which residential complex is constructed and members of Cooperative Society are purchasers of flats from developer . They claim to be purchasers for value without notice. Income Tax Department claims ownership over said land by virtue of vesting of title in terms of Section 269UE of Income Tax Act, 1961 ("the Act" for short). purchaser has challenged order dated 21.10.1994 passed by Appropriate Authority under Section 269UD of Act and further communication dated 2.8.2017 issued by Appropriate Authority threatening to take forcible possession of land in question with assistance of Police authority. This piquant situation has arisen in following background:- 2. case has checkered history. This Writ Petition is sequel to Writ Petition No. 2475 of 1994 which was filed by erstwhile owner of land (respondent No. 6 herein) and proposed purchasers (respondent Nos. 3 to 5 herein). At outset, we may record that learned counsel for petitioner had placed before us complete 2 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc compilation of said Writ Petition No. 2475 of 1994 with accompanying documents which are taken on record and marked "X" for identification. We would be referring facts and documents from present petition as well as those stated in Writ Petition No. 2475 of 1994 to extent they are relevant for our purpose. 3. Respondent No. 6 herein was erstwhile owner of said land. It appears that on said land, there was tin shed which was in occupation of five tenants. Respondent Nos. 3 to 5 herein intended to purchase said land. They offered sum of Rs. 1.40 Crores by way of sale consideration to purchase land. Respondent No. 6 agreed to sell same on such terms. Memorandum of Understanding ("MOU" for short) was, therefore executed between parties on 18.7.1994. said MOU records that there is structure standing on said land and property is occupied by tenants. All details of their names, room numbers and rent paid were indicated in Annexure to MOU. vendor had agreed to sell his right, title and interest in said property to purchaser 3 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc for total consideration of Rs. 1.40 Crores. Rs. 14 Lacs was paid by way of earnest money at time of execution of MOU. Remaining sum of Rs. 1.26 Crores would be paid within 30 days from receipt of 'No Objection Certificate' from Appropriate Authority under Act and on providing marketable title and handing over possession of said land. Paragraph 4 of MOU envisaged that purchasers would be put in possession of property on "as is where is basis". But paragraph 5 of MOU specified that property was tenanted and it would be responsibility of vendor to have tenants evicted and put purchasers in possession of property against payment of balance agreed consideration. original owner, thereafter, applied to Income Tax Department for necessary 'No Objection' for sale of land on which Appropriate Authority passed order dated 21.10.1994 under Section 269UD of Act. Authority was of opinion that fair market value of property would be not less than 1,74,36,000/-. As per MOU, vendor had agreed to sell same for consideration of Rs. 1.40 Crores. difference between fair market value and declared 4 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc apparent consideration was more than 15%. Accordingly, Government would pay sum of Rs. 1.40 Crores to vendors and purchasers. Pursuant to such order, Deputy Commissioner of Income Tax issued communication dated 25.10.1994 directing original owner and proposed purchasers to handover possession of property within 15 days failing which further steps would be taken and conveying that property vests in Government. 4. said order passed by Appropriate Authority was challenged by purchases and original owner jointly before this Court in Writ Petition No. 2475 of 1994 on various grounds. valuation accepted by Appropriate Authority was questioned. On this petition, order came to be passed by Division Bench on 21.10.1994 granting ad-interim order in terms of prayer clause (c) pending admission. This prayer clause (c) of petition reads as under:- "(c) Pending hearing and final disposal of petition, this Hon'ble Court may be pleased to prohibit and restrain by order or injunction, Respondents, their officers and agents from proceeding further by way of taking possession of said property or otherwise in pursuant of said orders of first Respondent dated 5 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc 21.10.1994 and 25.10.1994 being Exhibit 'E' & 'F' respectively. 5. In terms of this interim order, pending final disposal of petition, thus, Department was restrained from proceeding further by way of taking possession of said land pursuant to order dated 21.10.1994. This petition was admitted and interim order continued. On 14.7.2016, this petition came to be dismissed in following manner:- "1. Mr. Bhujale, learned Counsel appearing in support of petition states that petitioners are not interested in pursuing this petition further. 2. In view of above, petition is dismissed. No order as to costs." 6. When these events were taking place, parallely certain developments which are of significance for our purpose took place. In order to take note of these developments, we have to go back in time. During pendency of above petition, on 6.9.2004, original owner executed agreement for development (hereinafter referred to as development agreement ) with M/s. N.I. Developers, partnership firm. This development agreement was registered on 8.9.2004. Under agreement, original owner assigned all his rights in favour of new purchasers 6 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc for sale consideration of Rs. One Crore. developer would be entitled to take all steps for developing property. This development agreement, however, does not refer to previous transaction of agreement to sale in favour of original purchasers or proceedings under Chapter XXC of Act. Keeping total silence about order passed by Authority under Section 269UD of Act and pending petition filed by original owner and erstwhile purchasers before this Court, said development agreement came to be executed. 7. Acting on basis of such development agreement, M/s. N.I. Developers submitted plans for construction of residential building known as New White Rose CHS Ltd before Municipal authorities. Authorities approved plan on or around 8.12.2005. M/s. N.I. Developers enrolled members and constructed building. petitioner society was registered on 8.8.2014. constructed building of six floors containing 13 units comprising of 12 flats and 1 shop was conveyed to petitioner society vide conveyance deed dated 23.12.2016 7 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc executed under provisions of Maharashtra Ownership of Flats Act. 8. On or around 5.8.2017, petitioner society received letter dated 2.8.2017 issued by Appropriate Authority addressed to Anoj Bhimsen More and other legal heirs of erstwhile owner Bhimsen Bhikaji More with copy marked to Secretary of society. In such letter, background of litigation under act was referred at length. legal heirs of deceased original owner were called upon to supply details of document executed in favour of M/s. N.I. Developers. members of petitioner society in meantime had purchased flats and started residing there with their families. They claimed that they were not aware about past proceedings under Act. Upon receipt of said letter, they approached High Court vide Chamber Summons (L) No. 372 of 2017 for being impleaded as parties. They also moved Notice of Motion (L) No. 659 of 2017 for recall of order of disposal of Writ Petition No. 2475 of 1994 by order dated 14.7.2016. On 18.11.2017, Division Bench of this Court disposed of such 8 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc proceedings in following manner: " Mr. Gorwadkar, learned Senior Counsel appearing in support of Chamber Summons and Notices of Motion, seeks to withdraw all three applications, with liberty to take such proceedings in law as are available to petitioner. Liberty as prayed for granted. 2. All applications i.e two Notices of Motion and Chamber Summons are withdrawn with aforesaid liberty." Thereupon, this independent petition has been filed by society. 9. In support of petition, learned counsel for petitioner raised following contentions:- (i) That petitioner is bonafide purchaser for value without notice. members of petitioner society have invested their hardearned money for acquiring their residential units. They had no knowledge about proceedings under Chapter XXC of Act and orders passed with respect to property. He submitted that Income Tax Department had taken no steps for getting its name registered in property records. erstwhile owner had executed registered development agreement in favour of M/s. N.I. Developers who had constructed building in question. Department cannot now take stand that land having vested in department, society acquired no legal title; (ii) That Department had not paid apparent sale consideration to original owner / proposed purchasers and 9 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc therefore vesting of land in Department had not taken place; (iii) That order passed by Appropriate Authority under Section 269UD of Act suffers from various lacuna. valuation report presented by original owner was not considered. fact that property was tenanted was totally ignored. valuation of non-comparable properties was cited for coming to conclusion that fair market value of property was higher than apparent sale consideration. 10. On other hand, learned counsel for Income Tax Department opposed petition contending as under: (i) That petitioner society has no locus standi to challenge order passed under Section 269UD of Act. original owner and proposed purchasers had filed Writ Petition challenging said order which was withdrawn. petitioner having failed in getting said order recalled, cannot maintain separate Writ Petition; (ii) That land in question had vested in Income Tax Department by virtue of statutory provisions. original owner could not have executed any development agreement in respect of such land since he had lost title to land. His fraudulent act would not pass any title in favour of M/s. N.I. Developers and consequently, in petitioner society. (iii) That in agreement itself, executed by erstwhile owner in favour of proposed purchasers, he had undertaken to evict tenants at his cost and to put purchasers in vacant possession of land in question. He had in fact, written letter to Income Tax Department in June 1997 agreeing to 10 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc withdraw petition before High Court and to handover peaceful vacant possession to Department upon releasing of consideration of Rs. 1.40 Crores. In response to said letter, Department had written to original owner on 15.7.1997 showing its willingness to release consideration upon petitioner withdrawing petition and agreeing to hand over vacant possession. said original owner did not act on this suggestion. petitioner cannot make grievance about non-releasing of sale consideration which was deposited with Appropriate Authority as required under law. 11. Respondent No. 9, one of heirs of deceased respondent No. 3 - Yusuf Mohammed Khan who was one of original purchasers had appeared through his Advocate and contended that original owner had played fraud on purchasers also. He contended that his father expired in year 2005 and therefore, petition could not have been withdrawn in year 2016 without instructions from legal heirs of deceased. He pointed out that original purchaser had paid earnest money of Rs. 14 Lakhs to original owner which they have so far not received either from owner or from Department. 12. At outset, we may deal with petitioner's challenge to order dated 21.10.1994 passed by 11 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc Appropriate Authority under Section 269UD of Act. For several reasons, we are of opinion that petitioner has no right to challenge said order. We may recall genesis of said order was agreement for sale of said land by original owner Bhimsen Bhikaji More to three prospective purchasers Mr. Yusuf Mohammed Khan and two others. When this agreement was executed on 18.7.1994, Chapter XXC in Act was in force. 'No Objection' from Income Tax Department was necessary before sale deed could be executed. parties to agreement, therefore, filed necessary documents and declarations before Income Tax Authorities. On basis of valuation reports and other relevant material, Appropriate Authority was of opinion that apparent sale consideration of Rs. 1.40 Crore declared in agreement was substantially lower than fair market value and difference between fair market value and declared apparent consideration was more than 15%, permitting Department to exercise powers under Section 269UD of Act. This order was challenged jointly by original owner and prospective purchasers in Writ Petition No. 2475 of 12 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc 1994. In such petition, Court had granted injunction restraining Department from taking possession pursuant to such order. This petition was disposed off on 14.7.2016 recording statement of counsel for petitioners that petitioners were not interested in pursuing petition further. petition was, therefore dismissed. Thus, original owner as well as prospective purchasers who were aggrieved by said order and therefore had locus standi to challenge same and had also challenged same did not pursue petition. petitioner herein is not successor in title of any of petitioners of Writ Petition No. 2475 of 1994. petitioner obviously does not claim to be legal heir of any of petitioners therein, nor can petitioner be seen as succeeding in title to said property. petitioner's claim to property, as we have noted, is through transactions of members with subsequent developer namely M/s. N.I. Developers. M/s. N.I. Developers derived his right to develop property under MOU executed in its favour by erstwhile owner on 6.9.2004. When this agreement was being executed, erstwhile owner of 13 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc land had lost his title to land since by virtue of order dated 21.10.1994 under Section 269UD of Act, land had vested in Government. original owner, therefore had no authority to execute said agreement of development dated 6.9.2004. development agreement therefore, did not pass on title in land in favour of M/s. N.I. Developers. petitioner who claims title to land through M/s. N.I. Developers, therefore, cannot step into shoes of any of original petitioners of Writ Petition No. 2475 of 1994 so as to sustain challenge to impugned order. This is precisely why this Court did not permit petitioner to revive said petition which stood dismmissed on statement of counsel for original petitioners. Independently also, petitioner cannot maintain stand alone petition. petitioner not having acquired any title or right in property, cannot be allowed to challenge validity of order under which erstwhile owner lost his title, merely because members of petitioner society have purchased flats constructed on such land and therefore, feel themselves aggrieved by order of Appropriate Authority. Term 14 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc "person aggrieved" has particular conotation in legal parlance. Not any or every person who faces adverse consequences of order or action, can be allowed to question legality thereof. In order to be able to sustain legal challenge to action or order, petitioner must have locus standi which in present case, we find completely lacking. 13. With this, we may go to other aspects of matter namely petitioner's challenge to order dated 2.8.2017 passed by Income Tax Officer calling upon heirs of original owner Bhimsen Bhikaji More to provide necessary details of transactions executed by said deceased Bhimsen Bhikaji More and further calling upon them to handover peaceful possession of property in question failing which Department would initiate further action for eviction. In this context, we may first peruse legal provisions contained in Chapter XXC of Act. said Chapter was inserted by Finance Act, 1986 w.e.f. 1.10.1986. Section 269UA is definitions provision containing various definitions for purposes of said 15 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc Chapter including 'apparent consideration'. Section 269UB pertains to constitution of Appropriate Authority. Section 269UC pertains to restrictions on transfer of immovable property which provides that transfer of immovable property exceeding value of prescribed amount would not be effected except after agreement which would be presented before Authorities. Appropriate Authority thereupon could pass order under Section 269UD of Act exercising option of purchasing such property by Central Government for amount equal to amount of apparent consideration. Section 269UD of Act reads as under:- "Order by appropriate authority for purchase by Central Government of immovable property. 269UD. (1) Subject to provisions of sub-sections (1A) and (1B), appropriate authority, after receipt of 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 time being in force, make order for purchase by Central Government of such immovable property at amount equal to amount of apparent consideration : Provided that no such order shall be made in respect of any immovable property after expiration of period of two months from end of month in which statement referred to in 16 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc section 269UC in respect of such property is received by appropriate authority : Provided further that where statement referred to in section 269UC in respect of any immovable property is received by appropriate authority on or after 1st day of June, 1993, provisions of first proviso shall have effect as if for words "two months", words "three months" had been substituted : Provided also that period of limitation referred to in second proviso shall be reckoned, where any defect as referred to in sub- section (4) of section 269UC has been intimated, with reference to date of receipt of rectified statement by appropriate authority : Provided also that in case where statement referred to in section 269UC in respect of immovable property concerned is given to appropriate authority, other than appropriate authority having jurisdiction in accordance with provisions of section 269UB to make order referred to in this sub-section in relation to immovable property concerned, period of limitation referred to in first and second provisos shall be reckoned with reference to date of receipt of statement by appropriate authority having jurisdiction to make order under this sub-section : Provided also that period of limitation referred to in second proviso shall be reckoned, where any stay has been granted by any court against passing of order for purchase of immovable property under this Chapter, with reference to date of vacation of said stay. (1A) Before making order under sub-section (1), appropriate authority shall give reasonable opportunity of being heard to transferor, person in occupation of immovable property if transferor is not in occupation of property, transferee and to every other person whom appropriate authority knows to be interested in property. 17 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc (1B) Every order made by appropriate authority under sub- section (1) shall specify grounds on which it is made. (2) appropriate authority shall cause copy of its order under sub-section (1) in respect of any immovable property to be served on transferor, person in occupation of immovable property if transferor is not in occupation thereof, transferee, and on every other person whom appropriate authority knows to be interested in property." Section 269UE of Act pertains to vesting of property in Central Government and reads as under:- "Vesting of property in Central Government. 269UE. (1) Where order under sub-section (1) of section 269UD is made by appropriate authority in respect of immovable property referred to in sub-clause (i) of clause (d) of section 269UA, such property shall, on date of such order, vest in Central Government in terms of agreement for transfer referred to in sub- section (1) of section 269UC: Provided that where appropriate authority, after giving opportunity of being heard to transferor, transferee or other persons interested in said property, under sub-section (1A) of section 269UD, is of opinion that any encumbrance on property or leasehold interest specified in aforesaid agreement for transfer is so specified with view to defeat provisions of this Chapter, it may, by order, declare such encumbrance or leasehold interest to be void and thereupon aforesaid property shall vest in Central Government free from such encumbrance or leasehold interest. (2) transferor or any other person who may be in possession of immovable property in respect of which order under sub- 18 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc section (1) of section 269UD is made, shall surrender or deliver possession thereof to appropriate authority or any other person duly authorised by appropriate authority in this behalf within fifteen days of service of such order on him : Provided that provisions of this sub-section and sub-sections (3) and (4) shall not apply where person in possession of immovable property, in respect of which order under sub-section (1) of section 269UD is made, is bonafide holder of any encumbrance on such property or bonafide lessee of such property, if said encumbrance or lease has not been declared void under proviso to sub-section (1) and such person is eligible to continue in possession of such property even after transfer in terms of aforesaid agreement for transfer. (3) If any person refuses or fails to comply with provisions of sub- section (2), appropriate authority or other person duly authorised by it under that sub-section may take possession of immovable property and may, for that purpose, use such force as may be necessary. (4) Notwithstanding anything contained in sub-section (2), appropriate authority may, for purpose of taking possession of any property referred to in sub-section (1), requisition services of any police officer to assist him and it shall be duty of such officer to comply with such requisition. (5) For removal of doubts, it is hereby declared that nothing in this section shall operate to discharge transferor or any other person (not being Central Government) from liability in respect of any encumbrances on property and, notwithstanding anything contained in any other law for time being in force, such liability may be enforced against transferor or such other person. (6) Where order under sub-section (1) of section 269UD is made in respect of immovable property, being rights of nature 19 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc referred to in sub-clause (ii) of clause (d) of section 269UA, such order shall have effect of (a) vesting such right in Central Government ; and (b) placing Central Government in same position in relation to such rights as person in whom such right would have continued to vest if such order had not been made. (7) Where any rights in respect of any immovable property, being rights in, or with respect to, any land or any building or part of building which has been constructed or which is to be constructed, have been vested in Central Government under sub-section (6), provisions of sub-sections (1), (2), (3) and (4) shall, so far as may be, have effect as if references to immovable property therein were references to such land or building or part thereof, as case may be." Section 269UF of Act pertains to consideration for purchase of immovable property by Central Government. Sub-section (1) of Section 269UF provides that where order for purchase of any immovable property is made under Section 269UD(1) of Act, Central Government shall pay, by way of consideration for such purpose, amount equal to amount of apparent consideration. Section 269UG of Act pertains to payment or deposit of consideration. Under sub-section (1) of Section 20 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc 269UG of Act,the amount of consideration payable in accordance with provisions of section 269UF shall be tendered to person entitled thereto within period of one month from end of month in which immovable property vests in Central Government. Sub- section (3) of Section 269UG provides that notwithstanding anything contained in sub-section (1), if person entitled to amount of consideration does not consent to receive it, or if there is any dispute as to title to receive amount of consideration, Central Government shall deposit with Appropriate Authority amount of consideration required to be tendered under sub-section (1) within period specified therein. Section 269UH of Act pertains to revesting of property to transferor on failure of payment or deposit of consideration and reads as under:- "269UH.(1) If Central Government fails to tender under sub- section (1) of section 269UG or deposit under sub-section (2) or sub- section (3) of said section, whole or any part of amount of consideration required to be tendered or deposited thereunder within period specified therein in respect of any immovable property which has vested in Central Government under sub-section (1) or, as case may be, sub-section (6) of section 269UE, order to purchase immovable property by Central Government 21 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc made under sub-section (1) of section 269UD shall stand abrogated and immovable property shall stand re-vested in transferor after expiry of aforesaid period : Provided that where any dispute referred to in sub-section (2) or sub- section (3) of section 269UG is pending in any court for decision, time taken by court to pass final order under said sub- sections shall be excluded in computing said period. (2) Where order made under sub-section (1) of section 269UD is abrogated and immovable property re-vested in transferor under sub-section (1), appropriate authority shall make, as soon as may be, declaration in writing to this effect and shall (a) deliver copy of declaration to persons mentioned in sub-section (2) of section 269UD; and (b) deliver or cause to be delivered possession of immovable property back to transferor, or, as case may be, to such other person as was in possession of property at time of its vesting in Central Government under section 269UE." Section 269UN of Act provides finality to order passed by Appropriate Authority under Section 269UD of Act. 14. It was in terms of these provisions that Appropriate Authority had passed order dated 21.10.1994 under Section 269UD of Act exercising option of 22 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc purchasing property for apparent sale consideration of Rs. 1.40 Crores. In terms of Section 269UE of Act, upon such order being passed under Section 269UD(1), property on date of transfer stood vested in Central Government. In terms of sub-section (1) to Section 269UG of Act, amount of consideration that becomes payable would be tendered to persons entitled thereto. In present case, original owner would have received sum of Rs. 1.26 Crores as against Rs. 14 Lakhs to be refunded to proposed purchasers. However, original owners and purchasers jointly filed Writ Petition and challenged order under Section 269UD(1) itself. Central Government, therefore, acted in terms of sub-section (2) of Section 269UG and deposited amount with Appropriate Authority. petition filed by erstwhile owner and proposed purchasers has now come to be dismissed. Thereupon, interim relief granted against taking possession of property by Central Government stood automatically vacated. During pendency of petition, erstwhile owner was divested of his title in land since land stood vested in Government. He, therefore, could 23 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc not have dealt with such property. His action of executing MOU in favour of M/s. N.I. Developers in year 2004, did not amount to transferring any right, title or interest in property. Any development carried out by M/s. N.I. Developers pursuant to such MOU on such property was wholly unauthorized. 15. Learned counsel for petitioner had, however, submitted that since Government did not pay apparent sale consideration to original owner, land would revest in him. However, this argument cannot be accepted. Firstly because Section 269UG envisages tendering of consideration to persons entitled to receive same and if same is not accepted, depositing it with Appropriate Authority which in present case was done. It is not case of petitioner that original owner and purchasers had shown willingness to receive payment. Their action of challenging order itself was sufficient indication of their unwillingness to receive same. It is not even case of petitioner that amount was not tendered to them. Relevant provisions of 24 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc Chapter XXC are sufficiently clear. Under Section 269UE(1) of Act, upon Appropriate Authority passing order under Section 269UD(1), land would vest in Government. question of payment or tendering sale consideration would arise later. Since vesting had taken place before payment of sale consideration, legislature advisedly provided in Section 269UH for revesting of land in owner if sale consideration or part thereof was not paid or tendered within time prescribed. 16. We may also refer to undated letter received by Department on 23.6.1997 written by original owner in which it was stated as under:- " We refer to above matter and send you herewith our proposal for your kind consideration. We are agreeable to withdraw above petition and obtain vacant and peaceful possession from tenants/occupants of said property and hand over same to you in terms of release to us amount of consideration Rs. 1,40,00,000/-. We shall thank you to let us have your confirmation to above so that necessary steps can be taken by us in that behalf." In response to such letter, Deputy Commissioner of Income Tax on 15.7.1997 wrote to 25 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc owner as under:- " Please refer to your letter dated Nil regarding withdrawal of above mentioned Writ Petition. 2. Appropriate Authority has considered request made by you and are of view that they may have no objection to said proposal, in case you along with transferees are ready to handover peaceful and vacant possession of subject premises to it." Thus, original purchaser had conveyed his willingness to withdraw petition and obtain vacant and peaceful possession from tenants and handover same to Department upon release of consideration of Rs. 1.40 Crores. Department accepted such proposal under letter dated 15.7.1997 stating that there would be no objection to making such payment if owner is ready to handover peaceful vacant possession of land in question. However, nothing materialized out of this correspondence. We do not find that stand of Department flowing from said letter dated 15.7.1997 is in any manner conflicting with orders passed by Appropriate Authority. original owner in MOU dated 18.7.1994 had agreed to sell land in question for consideration of Rs. 1.40 Crores. agreement showed that property had 26 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc several tenants. owner had undertaken responsibility to vacate such tenants at his own cost, obtain vacant possession of property and handover vacant possession to purchasers. His letter to Department written in June 1997 was in tune with this agreement. He showed willingness to withdraw petition and hand over vacant possession if Department released consideration. Department accepted proposal as was made by owner. concept of revesting of property in original owner upon Department failing to tender or deposit apparent sale consideration cannot be applied in present case. Learned counsel for Respondent No. 9 who is one of legal heirs of original purchasers, however, had objected that said Writ Petition No. 2475 of 1994 could not have been withdrawn on behalf of purchasers since his father i.e one of purchasers had already expired by then. This contention is completely off mark since for several years after death of this purchaser who was one of petitioners of said petition, his legal heirs were not brought on record. Qua said petitioner, therefore, 27 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc petition had abated. There was no question of unauthorized withdrawal of petition by counsel on behalf of dead person. It was case where proceedings qua deceased had abated. In any case, no such grievance can be examined at his instance in this petition. He is respondent in this petition and has not asked for any relief. Further, he has not taken any steps to have order of dismissal of petition recalled and petition revived. 17. situation, therefore, that has arisen is that members of petitioner society have purchased their individual residential units from Developer who was granted necessary permissions and occupancy certificate by Municipal Authorities. Thus, members claim to be bonafide purchasers for value without notice. On other hand, building is constructed on piece of land, title of which had vested in Central Government as far back as in year 1994. original owner, therefore, had no authority to deal with land in question. Very clearly, he fraudulently executed another development agreement with M/s. N.I. Developers. 28 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc 18. At same time, we cannot lose sight of fact that Department has also contributed substantially to this complication. It is agreed position that after passing order under Section 269UG of Act, Department took no further steps to safeguard its interest in land. In property records, there was no indication of land having vested in Government. No claim, no charge, no interest of Government was recorded in property records. least that Department could have done was to have its name entered in property records. Had same been done, documents of transfer of land by original owner to M/s. N.I. Developers would not have been registered and we are sure, development permission and subsequent permissions would not have been granted by Municipal Authorities. Thus, it was because Department did not have its name entered in property records that original owner fraudulently and perhaps in connivance with developer could execute development agreement and developer could obtain series of permissions from Municipal Authorities such as development permission, construction commencement, completion and occupation 29 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc certificates. While passing final order, therefore, these aspects shall have to be borne in mind. 19. We have, however, no doubt that petitioner society or its members do not have any legal title to land in question. erstwhile owner upon being divested of his title, could not have passed on any valid title in developer and in turn, developer could not have passed valid title to petitioner society. Despite this, particularly looking to inaction on part of Income Tax Department in safeguarding its rights in property by having appropriate entries made in property records, we are of opinion that some conciliation has to be found. We would, therefore, request CBDT to sympathetically examine these facts and take appropriate decision in terms of its powers under Section 119(2) of Act. In context, we may recall that against apparent consideration of Rs. 1.40 Crores, according to Appropriate Authority, market value as on date of transaction i.e 18.7.1994 was Rs. 1,74,36,000/- Thus, according to Department, property was undervalued 30 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc by sum of Rs. 24,36,000/-. In other words, if Department had auctioned property soon after it was acquired under Section 269UD of Act, Department could have reasonably expected to take additional sum of Rs. 24,36,000/- over and above base figure of Rs. 1.40 Crores which would in any case be paid over to original owner and prospective purchasers in their respective shares. Thus, Department would have earned profit of Rs. 24.36 Lakhs. We have noticed that as per sale agreement dated 18.7.1994, purchasers had paid sum of Rs. 14 Lacs to owner. This amount shall also have to be accounted for since same must be returned to them. Therefore, if petitioner society agrees to pay sum of Rs. 39 Lakhs (which would comprise of Rs. 25 Lakhs to be retained by Department rounded off from Rs. 24.36 Lakhs and Rs. 14 Lakhs to be refunded to heirs of original purchases) along with simple interest @ 8% p.a. from date of order dated 21.10.1994 till actual deposit and further sum of Rs. 10 Lakhs to Department (without interest) towards cost of litigation and other costs, in our opinion, CBDT should consider whether ownership of 31 ::: Uploaded on - 23/07/2019 ::: Downloaded on - 26/07/2019 14:37:11 ::: OS WP 1994-18.doc petitioner society and possession of residential units by members of society can be regularized. For such purpose, proceedings be placed before CBDT. If petitioner society is agreeable to deposit amounts mentioned above, it may indicate same to CBDT within period of four weeks from today. Such declaration would be accompanied by formal request for regularization of ownership and possession. CBDT would dispose of such application preferably within four months of its receipt. If petitioner do not show such willingness, petition would automatically be dismissed. 20. Before closing, we may record that original purchasers and / or their heirs must receive sum of Rs. 14 Lacs they had paid to owner way back in July 1994. Therefore, if CBDT accepts request of society mentioned in previous paragraph, from amount that society may deposit with Income Tax Department, original purchasers and their heirs may be paid over sum of Rs. 14 Lacs with interest. If petitioner society does not show willingness to deposit such amount, this 32 OS WP 1994-18.doc attempt to find solution will in any way fail and in such circumstances, out of amount of Rs. 1.40 Crores deposited by Government of India with Appropriate Authority, sum of Rs. 14 Lacs would be paid over to them with accrued interest. This would be done after due verification of their identity. It would not be necessary to pay any amount to erstwhile owner since he has clearly defrauded Department as well as indirectly members of petitioner society. 21. With these directions, Writ Petition is disposed of [ S.J. KATHAWALLA, J. ] [ AKIL KURESHI, J ] 33 New White Rose CHS Ltd. v. Appropriate Authority