WP1880_99.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1880 OF 1999 Desiree M. Thakur and another Petitioners Vs. Appropriate Authority and another Respondents Dr. Abhinav Chandrachud a/w. Mr. Manish Doshi a/w. Harsha Sawant i/ b. M/s. Vimadalal & Co. for Petitioners. Mr. Ashok Kotangale a/w. Mr. A. K. Saxena and Mr. Prabhakar Ranshur for Respondents. CORAM : UJJAL BHUYAN, MILIND N. JADHAV, JJ. DATE : FEBRUARY 13, 2020 P.C. : Heard Dr. Abhinav Chandrachud, learned counsel for petitioners and Mr. Ashok Kotangale, learned standing counsel Revenue for respondents. 2. By filing this petition under Article 226 of Constitution of India, petitioners seek direction to respondent No.1 to pay to petitioners benefits which accrued on amounts of Rs.65,93,334.00 and Rs.32,96,667.00 including interest from date of transfer of said amounts into its Public Deposit Account till 21.05.1999 and thereafter further benefits including interest on account of alleged wrongful withholding of said amounts by respondent No.1. 3. brief recital of facts is considered necessary. 4. Petitioner No.2 is company incorporated under Companies Act, 1956 whereas petitioner No.1 is one of its Directors. 1/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc 5. Petitioner No.1 on behalf of petitioner No.2 had entered into agreement for sale dated 04.05.1994 with Mrs. L. (Noreen) I. Pereira and others for purchase of 2/3rd undivided shares of land bearing Survey Nos.262/19, 265/A/1, C.T.S. Nos.1170 and 1159 situated at Sherley Mala Road, Bandra (West), Mumbai admeasuring 995 sq.mtrs. By said agreement, Mrs. Pereira and others had agreed to sell and petitioners had agreed to purchase said undivided 2/3 rd share of land for total consideration of Rs.2,30,93,000.00, out of which amount of Rs.65,93,334.00 was paid by petitioners to vendors as earnest money and balance amount of Rs.1,55,00,000.00 was payable within 30 days of receipt of certificate from appropriate authority under Section 269 UC of Income Tax Act, 1961. balance consideration of Rs.10,00,000.00 was payable on execution of deed of conveyance and other formalities by vendors. 6. Subsequently, petitioner No.1 on behalf of petitioner No.2 entered into another agreement for sale dated 27.06.1994 with one Mr. Dennis Ferriera for sale of remaining 1/3 rd undivided share in aforesaid land. By said agreement, said Mr. Dennis Ferriera had agreed to sell land and petitioners had agreed to purchase land (1/3 rd undivided share) for total consideration of Rs.1,15,46,667.00, out of which amount of Rs.32,96,667.00 was paid by petitioners to vendors as earnest money. As per agreement, further sum of Rs.77,50,000.00 was payable within 30 days of receipt of no objection certificate from appropriate authority under Section 269UC of Income Tax Act, 1961. balance amount of Rs.5,00,000.00 was payable on execution of deed of conveyance and after completion of formalities by vendors. 7. Show cause notices dated 16.08.1994 were issued by appropriate authority to petitioners to show cause as to why orders under Section 269UD(1) of Income Tax Act, 1961 (briefly 'the Act' hereinafter) should not be passed. It was mentioned that appropriate 2/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc authority was prima facie of view that there was significant under- valuation of two properties. 8. Petitioners responded to said notices and made detailed written submissions. 9. However, submissions made by petitioners were not accepted by appropriate authority whereafter two separate orders were passed on 30.08.1994 ordering compulsory / pre-emptive purchase of two sets of immovable properties by Central Government. While so directing, consideration amounts under two agreements were discounted whereafter it was ordered that amount of Rs.2,16,93,324.00 be paid in terms of first agreement dated 04.05.1994 and sum of Rs.1,13,45,072.00 be paid in terms of second agreement dated 27.06.1994. 10. Petitioners challenged legality and validity of above orders dated 30.08.1994 before this Court by filing two separate writ petitions being Writ Petition Nos.2086 of 1994 and 2087 of 1994. It is stated that both writ petitions were admitted and were pending final adjudication. 11. In meanwhile, respondent No.2 deposited apparent consideration amount into its Public Deposit Account, which was communicated to vendors vide letter dated 28.09.1994, with copy to petitioners. said deposit included two amounts of Rs.65,93,334.00 and Rs.32,96,667.00 respectively paid by petitioners to vendors as earnest money. 12. It is stated that petitioners desired to withdraw two writ petitions. As per instructions of petitioners, their counsel submitted praecipe before Court seeking withdrawal of two writ petitions but at same time seeking direction to respondent No.1 to make 3/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc payment to petitioners of aforesaid two amounts together with accumulated interest thereon. However, two writ petitions were disposed of on withdrawal vide orders dated 28.04.1999 without any order or direction as to payment of principal as well as interest. 13. Counsel on behalf of petitioners by their letters dated 28.04.1999 informed respondent No.1 about withdrawal of two writ petitions whereby objection of petitioners to pre-emptive purchase orders was withdrawn and therefore, respondent No.1 was called upon to make requisite payments to petitioners along with accrued interest thereon. 14. It is stated that respondent No.1 had paid balance of apparent consideration money to vendors and took over possession of two properties. 15. Respondent No.1 by letter dated 05.05.1999 informed petitioners that payment would be made by authority but declined to agree for payment of interest on above two amounts by taking plea that no direction was issued by High Court for payment of interest. 16. Petitioners counsel by letter dated 07.05.1999 pointed out to respondent No.1 that refusal to pay interest was contrary to provisions of Section 269UG(4) of Act. Be that as it may, respondent No.1 by his letter dated 21.05.1999 forwarded to counsel of petitioners two cheques for amounts of Rs.32,96,667.00 and Rs.65,93,334.00 i.e. two amounts paid by petitioners to vendors without paying any interest. 17. Petitioners through their lawyers reiterated claim to interest by subsequent letter dated 31.05.1999 but without any success. 4/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc 18. Aggrieved, present writ petition has been filed seeking reliefs as indicated above. 19. Shri Awadesh Kumar, Deputy Commissioner of Income Tax has filed affidavit on behalf of appropriate authority constituted under Chapter XXC of Act. Stand taken in affidavit is that claim of petitioners to interest on two principal amounts is not maintainable. two amounts were offered to petitioners on 29.07.1995 but petitioners refused to accept payment and returned two cheques. There was no delay on part of respondents to make payments. subsequent delay had occurred because of attitude of petitioners in refusing to accept two cheques. Therefore, petitioners are not entitled to any interest on aforesaid two amounts. 19.1. It is stated that because of litigation at instance of petitioners, respondents were prevented from auctioning subject property in open market and in realizing sale proceeds though apparent consideration was paid to transferors long back. Instead, respondent No.1 has suffered damages for not being able to auction property which has been quantified at Rs.1,29,09,448.00. 19.2. It is stated that two cheques returned by petitioners were deposited in Fixed Deposit Account and had earned interest as under:- (i) cheque for Rs.65,93,334.00 earned interest of Rs.8,66,417.00 upto 12.05.1999; and (ii) cheque for Rs.32,92,666.00 earned interest of Rs.4,33,208.00 upto 12.05.1999. 19.3. However, it is contended that counter claim of respondents far exceeds interest earned on aforesaid two principal amounts. Therefore, petitioners are not entitled to claim of interest. 5/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc 19.4. It is further stated that following withdrawal of two writ petitions, respondent No.1 immediately paid two principal amounts to petitioners vide cheque Nos.406147 and 406146, both dated 21.05.1999. 20. Dr. Chandrachud, learned counsel for petitioners has taken us to provisions of Chapter XXC of Act, more particularly to Section 269UG(4) thereof to contend that appropriate authority is under legal obligation to consider payment of interest on consideration amount deposited with appropriate authority, which is invested by said authority in Government or other securities. Refusal on part of appropriate authority to pay interest on ground that there was no order to that effect by Court while allowing withdrawal of two writ petitions is not justified. appropriate authority has to apply its mind and act in fair and reasonable manner while deciding claim of interest which he failed to do in present case. He submits that while submitting praecipe before Court for withdrawal of two writ petitions, prayer was made for direction to pay interest. When writ petition was closed on withdrawal, no occasion arose for issuing direction for payment of principal or interest since writ petitions were filed assailing orders of appropriate authority for pre- emptive purchase. He, therefore, submits that Court may consider issuing necessary directions to respondent No.1 for payment of adequate interest to petitioners. 21. Per contra, Mr. Kotangale, learned standing counsel has referred to averments made in affidavit-in-reply filed on behalf of respondent No.1 and submits that petitioners cannot take advantage of their own conduct. When principal amounts were offered to petitioners, they declined to accept same on ground that orders of pre-emptive purchase were challenged before this Court. Having withdrawn challenge i.e., writ petitions thereby accepting such purchase, petitioners cannot now seek interest on two principal 6/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc amounts. He, therefore, seeks dismissal of writ petition. 22. Submissions made by learned counsel for parties have been considered. Also perused materials on record. 23. Chapter XXC covering Sections 269U to 269UO was inserted in Act by Finance Act, 1986 with effect from 01.10.1986. Section 269UA is definition clause whereby various expressions used in said Chapter have been defined. While agreement for sale has been defined in Section 269UA(a) to mean agreement, whether registered under Registration Act, 1908 or not, for transfer of any immovable property, expression apparent consideration means consideration amount in relation to any immovable property which is provided in agreement for transfer, or in case of exchange, price that such sale would ordinarily fetch in open market. Appropriate authority is defined in clause (c) of Section 269UA to mean authority constituted under Section 269UB to perform functions of appropriate authority under Chapter XXC. Clause (e) defines expression person interested . said expression has been defined to include any person in relation to any immovable property claiming or entitled to claim interest in consideration payable on account of vesting of that property in Central Government under Chapter XXC. 23.1. While Section 269UC places restrictions on transfer of immovable property, Section 269UD provides for passing of order by appropriate authority for purchase of immovable property in question by Central Government. As per sub-section (1), purchase of immovable property by Central Government should be at amount equal to amount of apparent consideration. 24. Where order is passed under Section 269UD(1), property in question shall on date of such order vest in Central Government in terms of agreement for transfer. This provision is contained in sub- section (1) of Section 269UE. It says that where order is made by 7/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc appropriate authority in respect of immovable property under sub- section (1) of Section 269UD, such property shall vest in Central Government on date of such order in terms of agreement for transfer. 25. As per Section 269UF, where order for purchase of immovable property by Central Government is made under sub-section (1) of Section 269UD, Central Government shall pay by way of consideration for such purchase, amount equal to amount of apparent consideration. 26. Section 269UG deals with payment or deposit of consideration. As per sub-section (1), amount of consideration payable in accordance with provisions of Section 269UF shall be tendered to person or persons entitled thereto within period of one month from end of month in which immovable property concerned becomes vested in Central Government. Thus, amount of apparent consideration is required to be tendered to person entitled to receive such consideration within period of one month from end of month in which immovable property concerned becomes vested in Central Government. We have already noticed that under sub- section (1) of Section 269UE, once order is passed by appropriate authority for purchase of immovable property by Central Government under Section 269UD(1), such property shall on and from date of such order vest with Central Government. 26.1. Sub-section (4) to Section 269UG on which much reliance has been placed by learned counsel for petitioners reads as under: (4) Where any amount of consideration has been deposited with appropriate authority under this section, appropriate authority may, either of its own motion or on application made by or on behalf of any person interested or claiming to be interested in such amount, order same to be 8/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc invested in such Government or other securities as it may think proper, and may direct interest or other proceeds of any such investment to be accumulated and paid in such manner as will, in its opinion, give parties interested therein same benefits therefrom as they might have had from immovable property in respect whereof such amount has been deposited or as near thereto as may be. 27. careful perusal of provisions contained in sub-section (4) would indicate that where any amount of consideration has been deposited by Central Government with appropriate authority, appropriate authority either on its own or on application, may order said amount of consideration to be invested in such Government or other securities and may direct that interest or other proceeds of such investment as accumulated be paid to parties interested as benefits which they might have had from immovable property in respect of which such amount was deposited. Thus duty is cast upon appropriate authority to invest amount of consideration deposited by Central Government and pay interest accrued thereon to parties interested. 28. Insofar present case is concerned, facts are not in dispute. Order for purchase of immovable property by Central Government was passed by appropriate authority under Section 269UD(1) on 30.08.1994. As per affidavit of respondent No.1, cheques for two amounts of Rs.65,93,334.00 and Rs.32,96,667.00 were issued to petitioners on 21.07.1995 but petitioners refused to accept two cheques following which two cheques were deposited in Fixed Deposit Account and earned interest of Rs.8.66,417.00 and Rs.4,33,208.00 respectively upto 12.05.1999 when two principal amounts (without interest amounts) were repaid to petitioners following withdrawal of two writ petitions. 9/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc 29. As discussed above, once order is passed under Section 269UD(1) of Act, immovable property in question covered by said order shall vest in Central Government. As per sub-section (1) of Section 269UG, amount of consideration payable on account of such purchase shall be tendered to person or persons entitled to receive such payment within period of one month from end of month in which immovable property concerned becomes vested in Central Government. 30. In instant case, orders under Section 269UD(1) were passed on 30.08.1994. Therefore, in terms of Section 269UG(1), consideration amount was required to be paid within one month from end of month of August, 1994 i.e. within 30 th September, 1994. As per affidavit of respondent No.1, cheques covering two principal amounts were offered to petitioners on 21.07.1995 much after statutory period as discussed above. amounts which were required to be paid by 30th September, 1994 were offered to petitioners on 21.07.1995. Because of pendency of two writ petitions whereby petitioners had assailed legality and validity of two orders passed under Section 269UD(1), naturally petitioners declined to accept two cheques. two cheque amounts were thereafter deposited by respondent No.1 in Fixed Deposit Account. 31. two writ petitions filed by petitioners assailing orders under Section 269UD(1) were finally closed on withdrawal on 28.04.1999 whereafter cheques covering two principal amounts of Rs.65,93,334.00 and Rs.32,96,667 were handed over to petitioners on 12.05.1999. As per own statement of respondent No.1, these two amounts which were kept in Fixed Deposit Account had earned interest of Rs.8,66,417.00 and Rs.4,33,208.00 upto 12.05.1999. 32. Petitioners initial refusal to accept aforesaid amount on 21.07.1995 in view of pendency of two writ petitions assailing 10/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc two orders passed under Section 269UD is understandable. Respondent No.1 did not inform Court regarding payment and refusal of cheque amounts. Respondent No.1 had deposited cheque amounts in Fixed Deposit Account on which interest accrued. Had two amounts been paid promptly to petitioners in terms of Section 269UG(1), it is petitioners who would have got benefit of interest on said amounts, in fact more, considering delay in making payments from 30.09.1994 to 21.07.1995. 33. As discussed above, sub-section (4) of Section 269UG empowers appropriate authority to invest consideration amount deposited with it in Government or other securities and may thereafter direct interest or other proceeds that may accrue on such investment to be paid to interested party. This is to be paid as benefit which interested party might have had from immovable property in respect of which such amount was deposited. 34. In view of aforesaid statutory provisions, it was not justified on part of appropriate authority to refuse payment of interest to petitioners when it had actually earned interest on two principal amounts by taking plea that there was no direction from Court for payment of interest. In fact interest was earned on money that belonged to petitioners. It would be wholly unfair and unjust if appropriate authority is allowed to appropriate interest amount accrued on money legitimately belonging to petitioners. 35. At this stage, it is submitted that following order passed by this Court on 01.09.1999, interest amount of Rs.12,99,625.00 (Rs.8,66,417.00 plus Rs.4,33,208.00) was deposited with office of Prothonotary. 36. Accordingly, we direct Prothonotary to release aforesaid amount to petitioners with further interest accrued thereon. 11/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: WP1880_99.doc 37. Writ petition is accordingly allowed. However, there shall be no order as to costs. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Minal Parab 12/12 ::: Uploaded on - 11/03/2020 ::: Downloaded on - 23/04/2020 15:40:18 ::: Desiree M. Thakur and another v. Appropriate Authority and another