NIRMAL LAXMINARAYAN GROVER MRS Vs. APPROPRIATE AUTHORITY

JUDGEMENT

(1.) THE petitioner who has agreed to purchase the suit property from respondent No. 3 as per the agreement of sale dt. 24th Feb., 1992, has challenged in this writ petition the order passed by the Appropriate Authority under s. 269UD(1) of the IT Act, 1961 (for short 'the Act'), by which the Appropriate Authority has directed compulsory purchase of the suit property belonging to respondent No. 3 for an apparent consideration of Rs. 13,25,343.

(2.) THE facts are that the petitioner is a permanent resident of Nagpur whereas respondent No. 3 is a resident of Bombay. Respondent No. 3 is acting as managing trustee of the trust of Ashish and Salil Pradhan (Hit) Private Trust. It is in the capacity of a managing trustee of the above trust and also as a constituted attorney of the beneficiaries of the said trust that she entered into an agreement of sale with the petitioner on 24th Feb., 1992, in respect of sale of land belonging to the said trust admeasuring 6,000 sq. ft. equivalent to above 557.17 sq. mts. from and out of a total area of 2,508.39 sq. metres of Survey No. 210/7 (part) in Civil Lines, Nagpur, for a consideration of Rs. 13,50,000. At the time of entering into the above agreement with the petitioner on 24th Feb., 1992, the petitioner paid an amount of Rs. 1,00,000 by way of earnest money to respondent No. 3 and the balance consideration of Rs. 12,50,000 was to be paid by the petitioner at the time of the execution and registration of the sale deed which as per the agreement of sale dt. 24th Feb., 1992, was to be executed within three months thereof, i. e., up to 24th May, 1992. Parties were under obligation to obtain, inter alia, the no objection certificate under s. 269UL(3) of the Act without which the sale deed could not be registered in view of the provisions of s. 269UL(1) of the Act.

(3.) AFTER having thus considered the scheme of Chapter XX -C of the Act, turning to the facts in the instant case, it may be seen that the petitioner and respondent No. 3 filed the statement in Form No. 37 -I as required by the provisions of s. 269UC of the Act r/w r. 48L of the IT Rules, 1962, for obtaining a no objection certificate from the Appropriate Authority to the transfer of the suit property described hereinabove as per the agreement of sale dt. 24th Feb., 1992, in favour of the petitioner, i. e., the transferee, regarding which there was an agreement of transfer on 24th Feb., 1992, referred to hereinbefore. However, after receipt of the said statement in the prescribed Form No. 37 -I, from the parties, without giving any show -cause notice or any opportunity of being heard to the petitioner and respondent No. 3, the Appropriate Authority, all of a sudden passed an order on 24th April, 1992, directing compulsory purchase of the suit property for apparent consideration of Rs. 13,25,343. The petitioner, therefore, challenged the said order in this Court in Writ Petition No. 1096 of 1992. This Court by its judgment rendered on 11th Dec., 1992, quashed the said order dt. 24th April, 1992, passed by the Appropriate Authority for non -compliance with the principles of natural justice and remanded the matter back to it for passing a fresh order in the light of the judgment of the Supreme Court in the case of C. B. Gautam (supra). It may be seen that in order to save s. 269UD(1) of the Act from being challenged on the ground that it is invalid being arbitrary, discriminatory and violative of art. 13 of the Constitution, the Supreme Court has in the judgment in C. B. Gautam's case (supra), read in sub -s. (1) of s. 269UD of the Act the requirements of the principles of natural justice to be observed by the Appropriate Authority before passing an order of compulsory purchase of the property in question thereunder. The Appropriate Authority was thus required to give a show -cause notice to the transferor and the transferee and to give them an opportunity of being heard before the order of compulsory purchase was passed by it under s. 269UD(1) of the Act. After remand of the proceedings to the appropriate authority, it gave show -cause notices dt. 28th Jan., 1993, to the petitioner and respondent No. 3 stating therein that the apparent consideration shown in the agreement of sale of the suit land was Rs. 13,50,000 and that in view of the judgment of this Court dt. 11th Dec., 1992, in WP No. 1096 of 1992 referred to above, they would be given an opportunity of being heard. They were thus asked to show cause as to why the suit property should not be purchased under Chapter XX -C of the Act. The petitioner and respondent No. 3 were required to submit their replies to the show -cause notice by 15th Feb., 1993, in the notice of the Appropriate Authority at Ahmedabad and they were asked to attend the said office on 16th Feb., 1993, for personal hearing, if they so desired. Accordingly, the petitioner submitted her reply on 13th Feb., 1993, contending that there was no under valuation in the sale transaction in question and that the suit property was being purchased at its market value. It was also pointed out that the consideration for the suit property agreed to between the parties was fair and reasonable and that in fact the rate of valuation fixed as per the land rates maintained by the Nagpur Corporation and by the stamp authorities for levy of stamp duty and the registration charges upon documents relating to transfer of title was much lower than the market rate calculated for the suit property on the basis of the consideration agreed to between the parties. It was pointed out that for the area in question the said land rate fixed was Rs. 1,500 per sq. mt., i. e., Rs. 145 per sq. ft., whereas the land rate for the suit transaction worked out to Rs. 225 per sq. ft. Further, it was pointed out by the petitioner in her reply to the show -cause notice that there was encroachment upon some portion of the suit land regarding which a dispute was going on and for which reason its market value would be lower than its real market value. The plea was also raised that since there were two co -owners, i. e., the beneficiaries, the share of each would be less than Rs. 10,00,000 and as such the provisions of compulsory purchase in Chapter XX -C of the Act would not be attracted to the instant sale transaction. Along with the reply to the show -cause notice the petitioner had also submitted documentary evidence in the shape of a valuation report and certain sale deeds to show that the suit transaction was for fair market value. It was also pointed out in her reply to the show -cause notice by the petitioner that before issuing the show -cause notice, the Appropriate Authority must come to the tentative or prima facie view that the property was undervalued and that it should incorporate in its show -cause notice the material or the reasons on the basis of which it comes to such a tentative or prima facie view in the absence of which the noticee does not have an opportunity to meet its case. The petitioner, therefore, demanded the reasons from the Appropriate Authority for its prima facie view that the suit property was undervalued. After receipt of the above reply of the petitioner to the show -cause notice issued by the Appropriate Authority and after hearing the learned advocate for the petitioner who appeared before it, the learned Appropriate Authority by its order dt. 23rd Feb., 1993, passed an order for compulsory purchase of the suit land for a net consideration of Rs. 13,25,343 payable to respondent No. 3 by the Central Government including a sum of Rs. 44,178 ordered to be deposited in the Appropriate Authority's account as per its finding in para 7 of its order relating to the question of vacant possession regarding encroachment of about 200 sq. ft. upon the suit land by the owner of the adjoining plot. The reasons for compulsory acquisition were recorded by the Appropriate Authority separately on the same date, i. e., 23rd Feb., 1993. A perusal of the reasons recorded by the Appropriate Authority would show that the suit land was situated in the Civil Lines area which was purely a residential locality of the people belonging to the upper middle class. The permissible FSI for the suit land was one and its permissible user was for residential purpose. After considering the question of its location, the Appropriate Authority determined the discounted value of the apparent consideration of Rs. 13,50,000 shown in the agreement of sale dt. 24th May, 1992, in accordance with the provisions of s. 269UA(b) r/w r. 48 -I of the IT Rules, 1962, which provides for a rate of interest of 8 per cent per annum for determining the discounted value of the apparent consideration given in the agreement of sale. It has calculated the discounted value of the consideration for the sale transaction at Rs. 13,25,343 as shown in para 4 of the reasons. The rate, therefore, worked out was Rs. 221 per sq. ft. The Appropriate Authority then worked out the land rate of land in the same locality of Civil Lines which was treated as a comparable sale instance by it. Its particulars are given by it in para 5 of the reasons. It appears from the particulars that the agreement of sale in the sale instance was dt. 26th Dec., 1990, and the area of the land agreed to be sold was 4,839.5 sq. ft. out of plot No. 2 in Shri Vallabh Co -operative Housing Society, Civil Lines, Nagpur. Its apparent consideration was Rs. 15,00,000 and the discounted rate per sq. ft. worked out was Rs. 304.20 with permissible FSI of 1. Since the property in the sale instance was sold one year two months earlier than the suit property, considering the 12 per cent increase in the land rate per annum, the rate of the land in the sale instance was worked out to Rs. 348 per sq. ft. As the difference was thus more than 15 per cent in the light of the judgment of the Supreme Court in the case of C. B. Gautam (supra), the Appropriate Authority was of the view that the suit land was significantly undervalued and there was thus a case for its pre -emptive purchase. As regards the case of the petitioner based upon the land the land rate maintained by the Nagpur Corporation and the stamp authorities, the Appropriate Authority rejected the said case on the ground that its main object was other than determining the market rate. As regards the two sale instances dt. 23rd Nov., 1989, and 23rd Nov., 1991, pointed out by the petitioner as comparable sale instances, the Appropriate Authority observed that the time gap between the instant sale transaction and the sale transaction in the first sale instance dt. 23rd Nov., 1989, was considerable and as regards the second sale instance dt. 23rd Nov., 1991, it observed that since the property therein was purchased by the tenant in occupation, he would naturally pay the price which is less than the market price in view of his tenancy rights. The Appropriate Authority thus rejected both the sale instances relied upon before it by the petitioner. The Appropriate Authority thus passed an order for compulsory purchase of the suit land for a net consideration of Rs. 13,25,343 payable by the Central Government to respondent No. 3 including the sum of Rs. 44,178 which was directed to be deposited in the account of the Appropriate Authority in view of the dispute about encroachment upon the said land by the owner of the adjoining land in the light of the findings of the Appropriate Authority in para 7 of its order dt. 23rd Feb., 1993. Feeling aggrieved by the order dt. 23rd Feb., 1993, passed by the Appropriate Authority, the petitioner has preferred the instant writ petition in this Court.