FLASH BUILDERS Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) THE brief facts for filing these two petitions are as follows : Writ Petition No. 1259 of 1989 is filed by the purchaser for issue of a writ of certiorari calling for the records to quash the impugned order dated January 9, 1989, issued by the first respondent in the writ petition, namely, the Appropriate Authority, Income-tax Department, Madras, under section 269UD(1) of the Income-tax Act, 1961, ordering the purchase of the property at No. 85, Chamiers Road, Alwarpet, Madras-600 018, by the Central Government, in respect of which the writ petitioner is claimed to have entered into an agreement for purchase with the third respondent for a consideration of Rs. 50,50,000 and in respect of which he had advanced Rs. 3,75,000 in addition to substantial amounts of expenditure, which he had incurred for making an application to the M. M. D. A. for permit and sanction of plan for construction and other developmental matters. By virtue of the impugned order under section 269UD(1), the property shall vest in the Central Government free from all encumbrances from the date of the order. THE first respondent also directed that under the provisions of section 269UE(2) of the Act the transferor or any other person who may be in possession of the property shall surrender or deliver possession of the said property to the first respondent or any other person who is authorised by them within 15 days of the service of the order free from all encumbrance. According to the writ petitioner, the above provisions are unconstitutional and as such, the impugned order is totally illegal. He has also filed W. M. P. No. 1920 of 1989 for granting interim stay of operation of the impugned order of the first respondent and restraining the first respondent from taking further steps in pursuance of the said order. THE writ petitioner obtained interim stay on February 2, 1989. To vacate the said interim stay, the third respondent filed W. M. P. No. 5041 of 1989.

(2.) IT is averred in the affidavit filed in support of the petition for vacating the grant of stay that the agreement was entered into by him with the first respondent on October 18, 1988, and at the time of the said execution, a sum of Rs. 1,00,000 was received by him and the sale consideration was fixed at Rs. 50,50,000. As per the agreement, the balance amount was required to be paid in two instalments, namely, the first of such instalments of Rs. 4,50,000 should be made on or before January 15, 1989, and the second payment of the balance of Rs. 45,00,000 should be made on or before March 15, 1989, and since the first respondent contravened the said terms, the third respondent became entitled to rescind the same. According to the third respondent, the impugned order dated January 9, 1989, was received by him on January 20, 1989. He would submit that apart from Rs. 1,00,000, no further amount was paid and the allegations contra are false. Since the writ petitioner has committed breach, he has not only lost his right to purchase the property but he is also debarred from challenging the action of the first respondent. The writ petitioner cannot challenge the action of the authority, namely, the first respondent, the Appropriate Authority of the Income-tax Department. IT is further stated that unless the sale consideration of Rs. 50,50,000 due and payable by the appropriate authority (first respondent) is received by him, he will not be able to tide over his financial commitments and problems. He would submit that he has been living in the property ever since 1971. He closed down his business and he is not doing any business at present. His two sons are prosecuting studies in the U. S. A. and the third one is undergoing studies in Guindy Engineering College, Madras, and hence he is in dire need of funds. He would further state that he met with an accident recently and is incurring heavy expenditure on that account. He would further state that there is no constitutional violation of the present piece of legislation and that it is perfectly valid. The same is intended to curb the dealings in relation to black money, concealment of income and other anti-social activities. Since the said legislation is within the power of Parliament, the writ petitioner has no case for stay. Hence, he prays for vacating the stay as well as for issue of a direction to the first respondent to pay the sum of Rs. 50,50,000 with interest at 18 per cent. per annum.

(3.) LEARNED counsel appearing for the Income-tax Department, Mrs. Nalini Chidambaram, submitted that the order passed in W. A. No. 1359 to 1361 of 1988 cannot be relied on in support of the case of the third respondent as the said order was passed in the circumstances of the said case wherein the parties agreed to the terms and it was not an order passed on merits after taking into consideration all the relevant provisions and their impact. In Padma's case [1990] 185 ITR 269, referred to above, it was observed (at page 271) :