ASGAR S PATEL Vs. UNION OF INDIA

JUDGEMENT

(1.) Flat No. 201, 2nd Floor, New Jaldarshan, Dorry Cross Road, Bandra (West), Bombay was owned by one Hemant Chawla (hereinafter the 'Transferor', for short). On 1-5-1994 the transferor entered into an agreement to sell the said flat for a consideration of Rs. 45,50,000/- in favour of the six apellants herein (hereinafter referred to as the 'Transferees', for short). An amount of Rs. 4,55,000/- was paid by the transferees to the transferor on 1-5-1994 i.e. the date of the execution of the agreement. The balance consideration of Rs. 41 lakhs was to be paid on completion of sale within 30 days from the receipt of 'no objection certificate' from the Appropriate Authority. On 6-5-1994 the transferor and the transferees jointly filed a statement in Form37-I under S. 269-UC of the Income-tax Act, 1961 (hereinafter the 'Act', for short). A copy of the agreement was annexed with Form 37-A as statutorily required and as per the pro forma the names of the six transferees were mentioned in column No. 4 of Form 37-I.

(2.) On 12-8-1994 the Appropriate Authority issued notice under Section 269-UD (IA) of the Act to the transferor and the transferees in view of its having formed an opinion that there was significant under-valuation of the property and calling upon the transferor and the transferees to show cause why an order of compulsory purchase by Central Government be not made. Vide Para 6 of the notice the Appropriate Authority noted that out of the amount of consideration agreed upon between the parties to the agreement dated 1-5-1994, an amount of Rupees 4,55,000/- was paid by way of earnest money on the execution of the agreement and the balance amount was payable within 30 days from the receipt of NOC from the Appropriate Authority. The transferor and the transferees filed responses to the show cause notice disputing the grounds for compulsory purchase by the Central Government.

(3.) On 30-8-1994 the Appropriate Authority passed an order directing compulsory purchase in favour of the Central Government for a discounted value of Rupees 44,25,680/-. Vide paras 8 and 9 of its order, the Appropriate Authority directed that out of the consideration payable by the Central Government, the encumbrance as mentioned in Clause 3 of the agreement, should be satisfied by the transferor and in the meantime the amount shall be deposited in the account of the appropriate authority. Vide Clause 9 of the agreement, the vendor was to bear 50% transfer fee payable to the Society which liability amounted to Rs. 22,000/-. The order directed this amount also to be retained by the Appropriate Authority towards the vendor's liability for payment of transfer fee. Clause (3) of the agreement referred to the flat forming subject-matter of sale having been offered as security to Indian Overseas Bank in connection with a loan of Rs. 36,50,878/- taken by the transferor. There was also an order of attachment before judgment-cum-garnishing order dated 13-9-1994 secured by one Chandrakant and Co., a partnership firm, creating an encumbrance to the tune of Rs. 6,00,800/- on the flat.