K K ANANDAM AMMAL Vs. UNION OF INDIA

JUDGEMENT

(1.) IN this petition under article 226 of the Constitution of INdia, the petitioner has sought for a declaration that the provisions of Chapter XXC of the INcome-tax Act, 1961 (hereinafter referred to as "the Act"), introduced by the Finance Act, 1986, brought into force with effect from October 1, 1986, and rule 48L of the INcome-tax Rules, 1962 (hereinafter referred to as "the Rules"), introduced by the INcome-tax (Seventh Amendment) Rules, 1986, which was also brought into force on October 1, 1986, and also the provisions of section 269UD of the Act, are unconstitutional, illegal, void and unenforceable. The petitioner has also sought for the issue of a writ of certiorarified mandamus, to call for the records comprised in the proceedings of the second respondent in A.A./MDS/10(46)/12/86-87, dated December 9, 1986, and quash the same and consequently to direct respondents Nos. 1 to 3 to redeliver possession of the property bearing Door No. 98, Oliver Road, Mylapore, Madras 4, to the petitioner and to pass such further or other orders as this court may deem fit and proper in the circumstances of the case As far as the constitutional validity of the provisions contained in Chapter XXC, including that of section 269UD of the Act, is concerned, in the light of the decision of the Supreme Court in Gautam (C. B.) v. Union of INdia, learned counsel for the petitioner has not addressed any argument, rightly also because in the said decision, the Supreme Court has upheld the constitutionality of the provisions contained under Chapter XXC of the Act. Therefore, what remains to be considered in this writ petition is, as contended by petitioner, the applicability of Chapter XXC of the Act to the transaction in question and also the validity of the order dated December 9, 1986, passed by the second respondentBy the impugned order, the second respondent has directed pre-emptive purchase of the immovable property in question. We may also state the relevant facts which are not in dispute in this case. After the order was passed under section 269UD(1) of the Act on December 9, 1986, possession of the immovable property in question was delivered to the appropriate authority on December 13, 1986. The document evidencing the delivery of possession of the property is signed by the petitioner as well as the vendor. We may point out here that the petitioner agreed to purchase the property in question on February 24, 1986, for a sum of Rs. 5 lakhs. Thereafter, on the coming into force of Chapter XXC of the Act, Form No. 37-I was filed as required by section 269UC of the Act and rule 48L of the Rules on October 15, 1986, within 15 days from the date of application of Chapter XXC to Madras. Pursuant to Form No. 37-I, the appropriate authority passed an order on December 9, 1986, directing pre-emptive purchase of the property on the ground that the consideration agreed upon was far less than the market value of the property as on the date of the agreement. As already stated, pursuant to the order, possession was delivered. After obtaining possession, the appropriate authority put up the property for auction and the public auction was held on February 16, 1987. The sixth respondent, Suresh Mittal, was the auction purchaser. He paid the entire amount for which he had offered the bid on March 5, 1987, and the auction was confirmed on March 25, 1987. The auction purchaser was put in possession on September 14, 1987. The writ petition in question came to be filed in November, 1987. Thus, after everything was over, without any objection on the part of the petitioner, the writ petition has been filed mainly on the ground that Chapter XXC was not attracted to the agreement of sale which was entered into on February 24, 1986, and even otherwise Chapter XXC is unconstitutional and hence the order dated December 9, 1986, should be quashed. We have already pointed out that Chapter XXC has been held to be valid and, therefore, learned counsel is right in not putting forth any contention in this regardOn these facts, we are now to consider (i) Whether Chapter XXC of the Act is attracted to the agreement dated February 24, 1986" (ii) Whether the rule laid down in C. B. Gautam's case can be applied to the case on hand " (iii) If so, to what relief the parties are entitled " Point No. (i) The contention of learned counsel for the petitioner is that, as the agreement of sale was entered into on February 24, 1986, and the petitioner was put in possession of the property agreed to be sold by the vendors, on receiving the entire sale consideration, such agreement did fall within the ambit of the expression "transfer" as defined in Chapter XXA of the Act and, as such, it is a case which comes under Chapter XXA of the Act, and, therefore, Chapter XXC of the Act which came into force on October 1, 1986, long after the agreement is not attracted to the transaction in question. Learned counsel has placed reliance on the definition of the word "transfer" as occurring in Chapter XXA of the Act. Section 269A(h) defines the expression "transfer" as follows "'transfer', - (i) in relation to any immovable property referred to in sub-clause (i) of clause (e), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882)."* The Explanation is not relevant for our purpose; therefore, it is not referred to. It is submitted by learned counsel that as the agreement of sale coupled with the delivery of possession in part performance of an agreement of sale as per section 53A of the Transfer of Property Act squarely falls within the aforesaid definition as contained in section 269A(h) and the transaction is required to be registered with the competent authority as per section 269AB of the Act by filing the agreement in the prescribed form, the mere fact that the deed of transfer was not executed before Chapter XXC came into force, will not make the provisions contained in Chapter XXC applicable to the agreement. It is contended that if Chapter XXC were to be applied to the agreement in question, it would not be possible for the petitioner to comply with the requirement of rule 48L of the RulesOn the contrary, it is contended by Mr. N. V. Balasubramaniam, junior standing counsel for income-tax cases, appearing for respondents Nos. 1 to 3, and also Mr. V. Ramachandran, learned senior counsel appearing for respondents Nos. 6 to 8, who are the auction purchaser and the subsequent purchasers, that the fact that the agreement was entered into on February 24, 1986, is not of any materiality as long as it remained an agreement and there was no transfer of the property as per law as contemplated under section 269UC in Chapter XXC of the Act; the provisions contained therein continued to apply. It is also submitted that this is a case in which the contention of the nature raised by the petitioner is not at all applicable, because it was the petitioner and the original owner of the property who together submitted Form No. 37-I and sought for a decision of the appropriate authority, and thereby submitted themselves to the jurisdiction of the appropriate authority, admitting that the transaction in question is governed by the provisions contained in Chapter XXC of the Act. Learned counsel also brought to our notice Form No. 37-I and the contents mentioned therein. As already pointed out, Form No. 37-I has been filed on October 15, 1986, as required by rule 48L of the rules. Relying upon rule 48L of the Rules, learned counsel submitted that a reading of the said provision makes it clear that there is no difficulty whatsoever for complying with that rule even in the case of transactions of agreement of sale which had taken place prior to the coming into force of Chapter XXC and which had remained an agreement of sale and not resulted in execution of a deed of transfer before the coming into force of Chapter XXC of the Act Rule 48L reads thus