APPROPRIATE AUTHORITY Vs. MASS TRADERS PRIVATE LIMITED

JUDGEMENT

(1.) THESE petitions are directed against two orders made under section 269UD(1) of the Income-tax Act, 1961 (for short, "the Act"), on July 25, 1989, initiating action under Chapter XX-C of the Act.

(2.) RESPONDENTS Nos. 2 and 3 entered into an agreement to sell their respective undivided interest in the property comprised in Municipal Nos. 4 and 5 (new Nos. 9 and 11), situate at Infantry Road, Bangalore, with the petitioner herein. The agreement entered into between the aforesaid parties disclosed that the consideration for sale of the property was Rs. 1,38,04,850 as far as the share of respondent No. 2 is concerned and Rs. 46,01,475 as far as the share of respondent No. 3 is concerned. The property in question consists of land measuring 43,309 square feet comprising within it main building and outhouse with a plinth area of 960 square metres. It is located, one side facing Queen's Road and the other side facing Infantry Road, Bangalore. This property originally belonged to one H. M. Maneckji, who purchased the same in a court sale on March 20, 1952, and the sale in his favour was confirmed on March 10, 1953. The said Maneckji, transferred the said property in favour of one N. K. Irani and his wife, respondent No. 2, by a registered deed dated May 14, 1957. The said N. K. Irani died on January 5, 1972, leaving behind his wife and a son, who are respondents Nos. 2 and 3 in these proceedings. Under the law of succession applicable to parsis, the share belonging to N. K. Irani devolved upon his wife and son and thus respondent No. 2 became the owner of undivided three-fourths share while respondent No. 3 became owner of the remaining one-fourth share. The third respondent is residing in the United States of America and he is a non-resident Indian. He executed a power of attorney in favour of one G. K. Irani to deal with the property in question. Inasmuch as the third respondent was a non-resident Indian, he applied to the Reserve Bank of India for permission to sell the property. The Reserve Bank of India gave such permission. The property was agreed to be sold to Neat Holdings and Trading Company Private Limited, Bombay, for which purpose respondents Nos. 2 and 3 sought a no objection certificate which was also granted. The valuation mentioned in respect of the share of the third respondent is the same as the one accepted by the Reserve Bank of India. Subsequently, certain differences arose between Neat Holdings and Trading Company Private Limited and respondents Nos. 2 and 3 with the result that the agreement entered into between the parties stood terminated and they entered into another agreement with the petitioner on May 22, 1989. The appropriate authority invoked its powers under section 269UD of the Act and directed purchase of the property by the Central Government for the sum of Rs. 1,84,06,325 as stated earlier. It is the validity of this order that is called in question in these writ petitions.

(3.) THE Department wants to recover interest from the petitioner. Such a question does not arise at all. Whatever amounts have been paid is in lieu of consideration of the sale of property. THE property was in the possession of the Department until now just as the amount paid is in the possession of sellers. If, on that amount, the Department seeks to claim interest, the seller/petitioner can claim damages for deprivation of possession. Neither of the reliefs can be granted to either of them. Further, certain amount is deposited to the credit of the petitioner under interim order of this court and the Department cannot have any claim over the interest thereon.