KRISHNA KUMAR RAWAT & ORS. versus UNION OF INDIA & ORS. on 29 July 2019

KRISHNA KUMAR RAWAT & ORS.

v.

UNION OF INDIA & ORS.

(Civil Appeal Nos.9800-9801of 2010)

JULY 29, 2019

[ABHAY MANOHAR SAPRE ANDDINESH MAHESHWARI, JJ.]

Income Tax Act, 1961 – ss.269UC, 269UD (1A), 269UE (1),269UG (4) and Chapter XX-C – Rajasthan Urban Areas (SubDivision) Rules, 1975 – r.11 – Vesting of Property in CentralGovernment – Appellants (Prospective buyers) entered into anagreement for purchase of the suit land for a total consideration ofRs.99,84,500/- – Appellants furnished information about thepurchase of the suit land u/s 269UC of the Act to the appropriateauthority – Appropriate authority issued a show cause notice u/s.269UD (IA) of the Act stating that sale consideration disclosed bythe appellants was very low – After making inquiries and hearingthe parties, the appropriate authority passed an order dated30.03.1994, directing that in terms of s.269UE(1) of the Act, thesuit land stood vested in the Central Government – Writ petition –Single Judge of the High Court upheld the order dated 30.03.1994– The appellants and vendor (respondent No.3) filed separate intracourt appeals before the Division Bench of High Court – DivisionBench of the High Court dismissed the appellants’ appeal, however,partly allowed the vendor’s appeal with the direction that upondepartment taking over possession of the suit land, prospectivebuyers were entitled to claim refund of the amount paid to the vendortogether with interest @ 6% p.a., out of the maturity amount of theFDR (created by department) and the remaining amount to be paidto the vendor – Review Petition was also dismissed – On appeal,held: Appropriate authority examined the location of the suit land,its area and its proximity with main roads, industries and residentialcolonies situated in the nearby areas and determined the marketvalue of the suit land at Rs.1,46,58,548/- as against the apparentconsideration of Rs.99,84,500/- fixed in the agreement – It was afterrecording the factual findings, the appropriate authority came to a

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Aconclusion that the case for pre-emptive purchase of suit land ascontemplated u/s. 269UD(1) was made out against the appellants –Findings recorded by the writ Court, appellate Court and reviewCourt were consistently against the appellants – These findings werebased on appreciation of evidence and in conformity withrequirements of s.269UD – Hence, the same are upheld – InsofarBthe entitlement of the prospective buyers to the refund amount isconcerned, the Division Bench of the High Court did not take intoconsideration s.269UG(4) of the Act – Thus, decision to be takenby the appropriate authority for disbursement of the amount ofconsideration, as required u/s. 269UG(4) of the Act in accordanceCwith law.Dismissing the C.A.No.9800-9801/2010 and partly allowingthe C.A.No.9901/2010, the Court CIVILAPPEALNos.9800-9801/2010

DHELD: 1. Appropriate authority after setting out the factsin detail, the appropriate authority examined the location of thesuit land, its area, and its proximity with the main roads, industriesand residential colonies situated in the nearby areas etc. Theappropriate authority then found that having regard to thetopography of the suit land, it has a potential market value.E[Para 26] [343-B]

2. Thereafter, the appropriate authority examined thecondition of the two existing godowns bearing Nos. 13 and 14and other structures standing on the suit land and found as a factthat the condition of the two existing godowns was very good andFthese godowns were actually being used by the appellants forcommercial purposes. [Para 27] [343-C]

3. Considering the rates applicable as in the case of CPWDstructures by cost index and keeping in view the relevant factorssuch as size, location, condition and the commercial use of theGgodowns, the appropriate authority fixed Rs.42 lakhs as beingthe market value of the two godowns. [Para 28] [343-D]

4. The appropriate authority then worked out the rate ofthe suit land at Rs.1727.5 per sq. meter and accordinglydetermined the market value of the suit land at Rs.1,79,21,532/-H

as against its declared value of Rs.99,84,500/- in the agreement.[Para 29] [343-E]

5. The appropriate authority then considered the appellants’objections to the effect that while determining the market valueof suit land, deduction of 30% to 40% should have been givenand, if it had been given, there would have been no difference of15% in the value of the suit land as was required to be made outfor invoking powers under Chapter XX-C by the appropriateauthority for pre-emptive purchase of the suit land. [Para 31][344-G-H]

6. The appropriate authority, however, rejected thissubmission finding no merit therein. The appropriate authoritythen examined the issue in the light of Rule 11 of the RajasthanUrban Areas (sub division) Rules, 1975 and other relevant factsand came to a conclusion that, if several other aspects such asthe location of the suit land and its commercial value is takeninto consideration, the market value of the suit land would besubstantially enhanced and would come to Rs.1,46,58,548/- asagainst the apparent consideration of Rs.99,84,500/- fixed in theagreement. The appropriate authority, therefore, held that in anycase, value of the suit land was 15% higher than the amount ofthe apparent consideration fixed in the agreement. [Para 32][345-A-C]

7. It is after recording the aforementioned factual findings,the appropriate authority came to a conclusion that the case forpre-emptive purchase of the suit land as contemplated underSection 269UD(1) of the Income Tax Act, 1961 is made out againstthe appellants. [Para 36] [347-D]

8. Now coming to the order of the writ Court(Single Judge)dated 14.09.1994, this Court finds on its perusal that the writCourt rightly observed that it could not act as an appellate Courtto examine the legality and correctness of the pre-emptive orderdated 30.03.1994 passed by the appropriate authority underSection 269UD(1) of the Act but its jurisdiction was confined onlyto examine as to whether any relevant material is ignored or anyerroneous material is considered or whether the order of theappropriate authority has violated the principle of natural justice AB

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Aor any case is made out for infraction of any statutory provisionor whether the decision taken by the appropriate authority forpre-emptive purchase is such that no reasonable person couldever take such decision. [Para 37] [347-E-F]

9. It is in the light of the findings recorded by the appropriateBauthority, writ Court, appellate Court and lastly, review Courtconsistently against the appellants, the question, which arisesfor consideration in this appeal is whether any case is made outto interfere in the impugned order. [Para 42] [349-C-D]

10. It is not in dispute that the appropriate authority laid aCfactual foundation in the show cause notice to prove the value ofsuit land, which, according to the authority, was 15% higher thanthe apparent consideration. It is also not in dispute that acategorical finding was recorded by the appropriate authority thatthe fair market value of the suit land was 15% more than theapparent consideration mentioned in the agreement of sale byDthe parties. As mentioned above, these findings were examinedby the writ Court, intra appellate Court and lastly the review Courtin their respective jurisdiction. They were upheld. [Para 44][349-E]

11. The findings are based on appreciation of evidence. TheECourt does not find these findings to be either arbitrary or illegalor against any statutory provisions and nor they can be regardedas being perverse to the extent that no reasonable man couldever reach to such conclusion. This Court also find that thesefindings are in conformity with the requirements of Section 269FUD of the Act and the law laid down by the Constitution Bench inthe case of C.B. Gautam v. Union of India & Others. [Para 45][349-G-H; 350-A]

CIVILAPPEALNO 9901/2010

12. Division Bench of High Court dismissed the appeal filedGby the prospective buyers and partly allowed the appeal filed bythe vendor. This Court finds that while passing the aforesaid order,the provisions contained in Section 269UG (4) of the Act werenot taken into consideration by the Division Bench, which interalia provide as to how the issue in relation to amount of H

consideration is finally required to be dealt with by the appropriateauthority in a case of this nature. [Para 3, 4] [351-F; 352-A-B]

13. Therefore, this Court is of the view that instead of issuingthe aforementioned impugned directions in relation to thedisbursement of the amount of FDR, the High Court should haveleft the matter to be decided by the appropriate authority asrequired under Section 269UG (4) of the Act. [Para 6] [352-E]

C.B Gautam v. Union of India and Others(1993) 1 SCC78 : [1992] 3 Suppl. SCR 12 – relied on.

Sahib Singh Kalha & Ors. v. Amritsar Improvement Trust& Ors.(1982) 1 SCC 419 ; Lal Chand v. Union ofIndia & Anr.(2009) 15 SCC 769 : [2009] 13 SCR622 ; Executive Engineer, Karnataka Housing Boardv. Land Acquisition Officer, Gadag & Ors.(2011) 2 SCC246 : [2011] 1 SCR 600 – referred to.

Case Law Reference[1992] 3 Suppl. SCR 12 relied onPara 22(1982) 1 SCC 419 referred toPara 48[2009] 13 SCR 622 referred toPara 48[2011] 1 SCR 600 referred toPara 48

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 9800-9801 of 2010

From the Judgment and Order dated 31.05.2007 of the High Courtof Judicature for Rajasthan, Bench at Jaipur in D.B. Special AppealNo. 744 of 1994 and order dated 24.07.2007 in D.B. Civil Review PetitionNo. 80 of 2007

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Civil Appeal No. 9901 of 2010.

S. Ganesh, Rana Mukherjee, Sr. Advs., Naveen Chawla, MayankBaghani, T. Mahipal, Arijit Prasad, T. M. Singh, (for Mukesh KumarMaroria & Mrs. Anil Katiyar), Ms. Shobha Gupta, Rajendra KumarPanigrahi, Advs. for the appearing parties.

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338SUPREME COURT REPORTS

AThe Judgment of the Court was delivered byABHAY MANOHAR SAPRE, J.

C.A. Nos.9800-9801/2010

1. These appeals are directed against the final judgment and orderBdated 31.05.2007 passed by the High Court of Judicature for RajasthanBench at Jaipur in D.B. Special Appeal No.744 of 1994 whereby theDivision Bench of the High Court dismissed the special appeal filed bythe appellants herein and the final judgment and order dated 24.07.2007in D.B. Civil Review Petition No.80 of 2007 by which the review petitionarising out of SA 744/94 was also dismissed.

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2. In order to appreciate the controversy involved in these appeals,it is necessary to set out the relevant facts infra.

3. The appellants are the writ petitioners whereas the respondentsare the respondents of the writ petition out of which these appeal arise.

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4. The dispute relates to a land measuring around 9500 sq. yards/7945 sq. meters along with two Godowns (Nos.13 and 14) and certainother structures standing thereon, which are part of Khasra No. 126situated in village Durgapur, Tahsil Sanganeer, Jaipur (hereinafter referredto as the “suit land”).

E5. One-Smt. Mithilesh Kumari [respondent No. 3 herein (sincedeleted)] and Smt. Krishna Kumari Roongta jointly owned the suit land.The suit land then became a property of a firm called M/s RajasthanIndustrial Company, which consisted of several partners along with Smt.Mithilesh Kumari and Smt. Krishna Kumari Roongta. This partnershipwas later dissolved by a dissolution deed dated 31.03.1986 executed byFthe partners. In terms of the dissolution deed, two godowns (Nos.13 and14) together with 1/4[th] undivided share in the suit land fell to the shareof Smt. Mithilesh Kumari.

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6. On 11.11.1993, the appellants (prospective buyers) hereinentered into an agreement with Smt. Mithilesh Kumari for purchase ofGthe suit land for a total consideration of Rs.99,84,500/- (Rs. 1051/- persq. yard). The appellants paid a sum of Rs.40,00,000/- to Smt. MithileshKumari towards the advance for purchase of the suit land. According tothe appellants, they were placed in possession of the two godowns andother structures standing on the suit land. So far as 1/4[th] land was H

concerned, the appellants were given symbolical possession of the suitland.

7. The appellants then furnished the information about the purchaseof the suit land in accordance with the requirements of Section 269UCof the Income Tax Act, 1961 (hereinafter referred to as “the Act”) tothe appropriate authority in Form No. 37 and submitted the copy of theagreement dated 11.11.1993.

8. The valuation officer of the Income Tax Department vide hisletter dated 18.01.1994 informed the appellants that he would inspectthe suit land on 21.01.1994. He also sought certain information from theappellants in relation to the suit land. The valuation officer then made aninspection of the suit land and submitted his report to the appropriateauthority.

9. The appropriate authority, on receipt of the report, issued ashow cause notice on 08.03.1994 to the appellants under Section 269UD (1A) of the Act stating therein that the apparent sale consideration,as disclosed by the appellants in the sale agreement, was on lower sidefor various reasons and that, as a matter of fact, the value of the suitland was much higher than the agreed rate specified in the agreement.

10. It was mentioned in the show cause notice dated 08.03.1994that the Jaipur Development Authority on 07.11.1992 had sold a plot ofland at A-90 Triveni Nagar, Near Durga Pura Railway Station in auctionat the rate of Rs.1781/- per sq. meter. It was pointed out that if anadjustment of 5% is made towards less development whereas 10% isallowed on account of large size of the suit land and further 12% isallowed on account of time gap, the rate of the suit land would work outto Rs.1692/- per sq. meter, i.e., Rs.1,34,39,556/- as against the agreedvalue of Rs.99,84,568/-. It was further pointed out that the valuedetermined by the appropriate authority at Rs.1,34,39,556/- does notinclude the value of existing two godowns nor it takes into account thecommercial potential of the suit land.

11. It was thus pointed out that after taking into consideration allthese aspects, the value of the suit land would still be higher than whatwas agreed between the parties in the agreement and what theappropriate authority has determined. The show cause notice, therefore,concluded in saying as to why pre-emptive purchase order, as envisaged A

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Aby Section 269 UD (1) of the Act, be not made against the appellants inrelation to the suit land. The appellants were asked to file reply to theshow cause notice.

12. The appellants (prospective buyers) and the vendor (R-3) filedtheir respective replies to the show cause notice. According to them,Bfirstly, comparison of small developed plot of land in Triveni Nagar withthe suit land for determination of the value of the suit land was notjustified; Second, development of land would need 40% deduction foramenities such as park, roads, electricity, water supply and all othercivic amenities; third, the market rate of the area in question as on01.04.1991 for the first category was fixed at Rs.550/- per sq. meterCand for the second category, it was fixed at Rs.450/- per sq. meter andif one would add 12% due to time element of two years, it would workout to Rs.690/- per sq. meter; fourth, sub-division of the suit land wouldbe required to be got approved from the JDA and, if it is done, it wouldleave 30% to 40% of the land open for civic amenities; and lastly, oneDplot measuring 116.3 sq. meters was sold at the rate of Rs.861.10 persq. meter whereas the rate of the area was fixed by the DAC at Rs.600/- per sq. meter and, therefore, in no case, the value determined by theDepartment in the show cause notice appears to be justified and hencethe show cause notice be withdrawn by allowing the parties to giveeffect to the sale agreement, as agreed, for the consideration shown inEthe agreement.

13. The appropriate authority, after making inquiries and hearingthe parties passed an order dated 30.03.1994 under Section 269UD (1)of the Act. The appropriate authority overruled the appellants’ objectionsand directed compulsory purchase of the suit land by the CentralFGovernment at an amount equal to the apparent consideration fixed bythe parties in the agreement dated 11.11.1993. The authority furtherdirected the Income Tax Department to serve a copy of the order passedfor purchase of the suit land by the Central Government to the appellantsfor their information. The order also directed that in terms of SectionG269UE (1) of the Act, the suit land stood vested in the Central Governmentwith effect from 30.03.1994. The appellants were directed to deliverpossession of the suit land to Shri RS Sagar, DVO, Income TaxDepartment, Jaipur who, in turn, wrote to the appellants to intimate thetime and the date of handing over the possession to the Income TaxDepartment.H

14. With these background facts, the appellants herein feltaggrieved by the pre-emptive purchase order dated 30.03.1994 passedby the appropriate authority of the Income Tax Department and filed awrit petition (W.P. No.1899/1994) on 13.04.1994 in the High Court ofRajasthan, Bench at Jaipur questioning therein the legality and correctnessof the order dated 30.03.1994. The respondents (Income TaxDepartment) contested the writ petition and defended the pre-emptivepurchase order as being legal and proper on the reasoning stated therein.

15. The Single Judge, by order dated 14.09.1994, dismissed thewrit petition and upheld the order dated 30.03.1994 as being legal andproper. The appellants felt aggrieved and filed appeal (D.B.S.A. No.744/1994) before the Division Bench of the High Court. The vendor(respondent No.3) also filed appeal (SAW No.188/95) against the orderof the Single Judge. Both the appeals were disposed of by the DivisionBench consisted of (Chief Justice S.M. Jha and Justice MohammadRafiq) by order dated 31.05.2007. So far as the appellants’ appeal(No.744/1994) is concerned, it was dismissed and so far as the vendor’sappeal (SAW No.188/1995) is concerned, it was partly allowed with thedirection that upon department taking over possession of the suit land,prospective buyers would be entitled to claim refund of the amount paidto the vendor together with interest @ 6% p.a., out of the maturity amountof the FDR (created by the department) and the remaining amount shallbe paid to the vendor.

16. The appellants felt aggrieved and filed review petition in theHigh Court. The Division Bench, which heard the review petition, wasconsisted of (Justice R.M. Lodha (as His Lordship then was and laterbecame the CJI) and Justice Rafiq because in the meantime, the ChiefJustice S M Jha, who was member of the main judgment had retired).

17. The Review Court dismissed the review petition by a reasonedorder dated 24.07.2007 which gave rise to filing of C.A. Nos.9800-9801/2010 in this Court by the prospective buyers. So far as C.A. No.9901/2010 is concerned, it is filed by the Union of India (Income TaxDepartment) against that part of the order which allowed the appeal(SAW 188/1995) filed by the vendor wherein directions mentioned abovewere issued for compliance. This is how these three appeals are clubbedfor their analogous hearing.

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18. So, the question, which arises for consideration in the appeals(CA Nos.9800-9801/2010), is whether the High Court (Single Judge,Division Bench and Review Bench) was justified in dismissing theappellants’ writ petition, intra court appeal and review petition and therebywas justified in upholding the pre-emptive order dated 30.03.1994 passedby the appropriate authority.

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19. Mr. S. Ganesh, learned senior counsel appearing for theappellants, in substance, elaborated the same submissions, which wereurged by the appellants in the writ petition, writ appeal and review petitionbefore the High Court and also added some new arguments, which werenot urged before the High Court.

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20. In reply, learned senior counsel Shri Mukerjee appearing forthe respondents (Union of India) while supporting the impugned ordercontended that no case has been made out to interfere in the reasoningand the conclusion arrived at by the High Court and, therefore, the appealsdeserve dismissal.

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21. Having heard the learned counsel for the parties at length andon perusal of the record of the case, we find no merit in these appeals.

22. At the outset, it is apposite to mention that the constitutionalvalidity of Chapter XX-C inserted in the Income Tax Act, 1961 by theEFinance Act, 1986 of which Section 269 UE(1) is its part was challengedin this Court in the case of C.B Gautam vs Union of India and Others(1993) 1 SCC 78. Chapter XX-C deals with compulsory acquisition ofproperty and provides for pre-emptive purchase at apparent considerationby the Government of any immovable property.

F23. The then learned Chief Justice M.H.Kania, speaking for theconstitution bench, upheld the constitutional validity of Chapter XX-C.

24. The question involved in these appeals is, therefore, requiredto be examined keeping in view the law laid down in the case of C.BGautam (supra).

25. Coming first to the order dated 30.03.1994 (Annexure P-11)of the appropriate authority, which was impugned in the writ petition, wefind from its perusal that it was passed by the authority, which is constitutedunder Section 269 UB of the Act. This consisted of three members, who G

are senior officials of the Income Tax Department. The order runs into16 pages and deals with all the issues on facts and law raised in theshow cause notice and its reply.

26. After setting out the facts in detail up to Para 3, the appropriateauthority examined in Paras 4 and 5 the location of the suit land, its area,and its proximity with the main roads, industries and residential coloniessituated in the nearby areas etc. The appropriate authority then foundthat having regard to the topography of the suit land, it has a potentialmarket value.

27. Thereafter, the appropriate authority in Para 7 examined thecondition of the two existing godowns bearing Nos. 13 and 14 and otherstructures standing on the suit land and found as a fact that the conditionof the two existing godowns was very good and these godowns wereactually being used by the appellants for commercial purposes.

28. Considering the rates applicable as in the case of CPWDstructures by cost index and keeping in view the relevant factors suchas size, location, condition and the commercial use of the godowns, theappropriate authority fixed Rs.42 lakhs as being the market value of thetwo godowns.

29. The appropriate authority then in the same para worked outthe rate of the suit land at Rs.1727.5 per sq. meter and accordinglydetermined the market value of the suit land at Rs.1,79,21,532/- as againstits declared value of Rs.99,84,500/- in the agreement.

30. It is apposite to reproduce Paras 6 and 7 infra:

“6. The subject property is very close to Tonk Road andon the main road leading to Durgapura station andconnecting to Tonk Road. On the north side of the subjectproperty is the main Road and on the eastern side, there ispublic road leading to residential colonies which have comeup in its neighbourhood. There are residential colonies ofVishnu Puri and Mahavir Nagar across the road on the northside and residential colonies of Green Nagar and ArjunNagar on the eastern side across the road. Immediatelyafter this khasra No.126, there is vegetable oil factory ofM/s Rohtas Industries Ltd. on the western side.

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A7. We have carefully considered the facts of the case andcontentions of the ld. representatives of the transferor andtransferees. As stated earlier, there are existing godownsbearing Nos.13 and 14. Besides, there are offices and guardroom etc. Considering the rates applicable as in the caseof CPWD structures as up date by cost index, the value ofBthe structure including godowns is estimated at Rs.42 lakhs.The main godown are of 2929 sq. meters and other structure171 sq. meter. The godowns are lead bearing structurewith Tubler trusses and AC sheet roofing having CCflooring in it. Proper electric installation and other servicesCare provided as per the norms. It is not correct to say thatthe cost of removal of debris will be more than the cost ofstructure. As a matter of fact, even entire iron used has alot of value be godowns are having internal height of 18feet and raised platform. These were constructed sometimes in 1980 and are in very good condition. In view ofDthe fact that commercial use of the property has been allowedby the Distt. Magistrate and Jaipur Development Authority,there is no need to demolish them unless the property isbeing exploited fro better gains. The declared land valuewill come to Rs.99,84,700/- minus Rs.42,00,000/- =E57,84,500/-. Therefore, the declared land rate works outto Rs.57,84,500/- divided by 7943 sq. meters = Rs.728/-per sq. meter as against the prevailing land rate of the saleinstance property at Rs.1727.5 per sq. mt. The land valueof the subject property on this basis works out to Rs.1727.5x 7943 =Rs.1,37,21,532/-. If the value of depreciatedFstructure of Rs.42 lakhs is added, the total value of thesubject property comes to Rs.1,79,21,532/- as against thedeclared value of Rs.99,84,500/-.”

31. The appropriate authority then in para 8 considered theappellants’ objections to the effect that while determining the marketGvalue of suit land, deduction of 30% to 40% should have been given and,if it had been given, there would have been no difference of 15% in thevalue of the suit land as was required to be made out for invoking powersunder Chapter XX-C by the appropriate authority for pre-emptivepurchase of the suit land.

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32. The appropriate authority, however, rejected this submissionfinding no merit therein. The appropriate authority then examined theissue in the light of Rule 11 of the Rajasthan Urban Areas (sub division)Rules, 1975 and other relevant facts and came to a conclusion that, ifseveral other aspects such as the location of the suit land and itscommercial value is taken into consideration, the market value of thesuit land would be substantially enhanced and would come toRs.1,46,58,548/- as against the apparent consideration of Rs.99,84,500/-fixed in the agreement. The appropriate authority, therefore, held that inany case, value of the suit land was 15% higher than the amount of theapparent consideration fixed in the agreement.

33. It is apposite to reproduce paras 8 and 9, which deal with thisquestion:

“8. Even though the contention of the Ld. representativesregarding deduction of 30% to 40% for roads and parksetc. is not acceptable in principle. We may work out thevalue of the subject property even on this basis as follows:

Saleable area as per rule 11 of Rajasthan Urban Areas(subdivision) Rules, 1975 is about 6%. This rule furtherprovides that this may be more if the plot size is small.

Assuming for arguments sake that 66% of 7,943 which isequal to 5242.38 sq. meters is available for sale, the landrate will have to be worked out on the basis of sale instanceby adjustment of time gap of +12% only. In other words,the rate of sale instance will be 1718x1.12 = 1994.72 persq. meter. It is so because of the fact that the deduction of34% contemplates absence of large size as well as “lessdeveloped”. On that basis, the land value will be1995x5242.38=1,04,58,548/- if the value of structure ofRs.42 lakhs is further out to Rs.1,46,58,548/- as againstdeclared apparent consideration of Rs.99,84,500/-.

9. While coming to the above noted valuation ofRs.1,46,58,548/- adjustment on account of the followingaspects have not been made. If these were furtherconsidered the value arrived at will still be higher:

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Ai) Deduction of 34% only has been allowed. The deductioncan be still less if the plot is of smaller size. This willenhance the saleable land area and land value.

ii) Triveni Nagar is in the interior from main Tonk Road.The development along Tonk Road is certainly veryBprestigious and valuable. No factor has been added inthe sale instance on this account. It has been ascertainedthat sale instances referred to by the Ld. representativein his written submissions dated 24.3.94 of Triveni Nagarare not at all comparable for several reasons. Plot No.B-44, Triveni Nagar (copy of sale deed in respect of thisCproperty has been filed) is near/on the nullah. Thesurroundings are very poor. Besides, this sale instanceis not reliable as it has not been examined forpre-emptive purchase as the alleged apparentconsideration is only Rs.1 lakh. Details of another saleDinstance property at A-256 Triveni Nagar have not beenmade available but this property is again very close tothe nullah and its surroundings are also very poor. Bothof these sale instances cannot be compared with thesubject property whereas the sale instance relied by uscan be comparable subject to adjustment of time gap,Ecommercial nature etc.

iii) The subject property is on main road connectingDurgapura station to Tonk Road. It is very close to TonkRoad. The vacant land adjacent to two godowns of thesubject property falls on the side of main road leading toFnewly developed colonies. In other words, the subjectproperty has vacant land area on the main station roadas well as on other side road leading to colonies. Thisfactor has not been added while coming to the valuation;

iv) As pointed out earlier, the nature of the subject propertyGis commercial. The value of commercial properties isalso about 50% more than the residential properties. Ifthis factor is added, the present market value of thesubject property will be substantially enhanced.”

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34. The appropriate authority then in para 10 also examined thecase keeping in view the market rates notified by the sub-Registrar,Jaipur for the purpose of paying stamp duty on the sale deed in relationto the lands situated in an area called “Triveni Nagar” and “Durgapura”.The appropriate authority was, however, of the view that the rates notifiedin the circular support the case of Income Tax Department rather thanthe case of the appellants because the minimum reserved price notifiedfor commercial use was at Rs.1800/- Per sq. meter.

35. The appropriate authority then in para 12 dealt with anotherargument of the appellants that the adjustment of Rs.10 lakhs payabletowards registration charges and Rs.15 lakhs has to be provided forroads, water and electricity supply. The appropriate authority rejectedthis argument because it found that this amount was not a part of theapparent consideration between the parties.

36. It is after recording the aforementioned factual findings, theappropriate authority came to a conclusion that the case for pre-emptivepurchase of the suit land as contemplated under Section 269UD(1) ismade out against the appellants.

37. Now coming to the order of the writ Court(Single Judge) dated14.09.1994, we find on its perusal that the writ Court rightly observedthat it could not act as an appellate Court to examine the legality andcorrectness of the pre-emptive order dated 30.03.1994 passed by theappropriate authority under Section 269UD(1) of the Act but itsjurisdiction was confined only to examine as to whether any relevantmaterial is ignored or any erroneous material is considered or whetherthe order of the appropriate authority has violated the principle of naturaljustice or any case is made out for infraction of any statutory provisionor whether the decision taken by the appropriate authority for pre-emptivepurchase is such that no reasonable person could ever take such decision.

38. Despite observing this, the writ Court examined all the issuesof facts arising in the case like an appellate Court and found no merittherein.

39. When the matter came up in intra court appeal at the instanceof the appellants herein before the Division Bench, the appellate Courtalso, in detail, examined each factual issue.

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A40. The Division Bench, in its judgment dated 31.05.2007, minutelydealt with the contentions urged on behalf of the appellant and concurredwith the reasoning and conclusion of the Single Judge and the appropriateauthority. We consider it apposite to quote the relevant extract from thejudgment with a view to show as to how the issue in relation to processof valuation of the suit land was dealt with by the Division Bench. ItBreads as under:- A

“….But on examination of the impugned order ofpreemptive purchase, we find that the Appropriate Authorityin para 8 of the order has categorically noted this argumentwith reference to Rule 11 of the Rajasthan Urban AreasC(Sub-Division, Reconstruction and improvement of Plots)Rules, 1975 and noted that the said rule provides that thesaleable are would be about 66% and this may be more ifthe plot size is smaller but assuming that only 66% wouldhave available are for sale, yet out of 7,943 sq. mtrs. AnDarea equal to 5242.38 sq. mtrs. Would have been availablefor sale. Appropriate Authority therefore by this alternativemode worked out the rate of the land on the basis ofcomparable sale instance i.e. 5242.38 sq. mtrs. byadjustment of time gap of +12% which then would come toRs. 1994.72 per sq. mtrs. It was noted that this was soEbecause the deduction of 34% land contemplates absenceof larger size as well as less development. On this basisthe land value will be Rs. 1995 x 5242.38 = 1,04,58,548/-.Value of the constructed godowns of Rs. 42 lacs being addedthereto, total value of the said property would come to Rs.F1,46,58,548/- as against declared apparent considerationof Rs. 99,84,500/-. We do not find any error in the approachtaken by the Appropriate Authority because deduction of34% of the land for making the provision of civic amenitieslike roads, parks, open spaces, electricity, water, sewerage,drainage, would essentially exclude the element of the landGarea being a large size agricultural chunk of land, which isthe alternative argument made by the respondents and thiswould then also exclude the element of the land being lessdeveloped/under developed. In other words, making useof 1/3[rd] land would in fact make the remaining 2/3[rd] landHdeveloped and with the sub division of lands into plots of D

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smaller sizes, it would no longer remain a large sizeundeveloped agricultural land. In fact, making provision ofall these civic amenities and facilities by using 1/3[rd] of theland would considerably enhance its saleability andappreciate the value of the remaining 2/3[rd] of the land.”

41. Now coming to the order of the Review Court, when thematter was taken up in review jurisdiction at the instance of the appellantsherein against the judgment of the appellate Court, Justice Lodha speakingfor the Bench, again went into each issue on facts and law in detail andfound no merit in any of the issues. The Review Court, therefore, alsodismissed the review petition by a well reasoned order.

42. It is in the light of the findings recorded by the appropriateauthority, writ Court, appellate Court and lastly, review Court consistentlyagainst the appellants, the question, which arises for consideration in thisappeal is whether any case is made out to interfere in the impugnedorder.

43. Though learned counsel for the appellants with his usual fairnessvehemently reiterated more or less the same submissions, which wereaddressed in the High Court and also added some new submissions butwe are unable to accept his submissions. In our view, the appropriateauthority and the High Court were right in their respective approach, thereasoning and the conclusion. This we say for the following reasons.

44. It is not in dispute that the appropriate authority laid a factualfoundation in the show cause notice to prove the value of suit land,which, according to the authority, was 15% higher than the apparentconsideration. It is also not in dispute that a categorical finding wasrecorded by the appropriate authority that the fair market value of thesuit land was 15% more than the apparent consideration mentioned inthe agreement of sale by the parties. As mentioned above, these findingswere examined by the writ Court, intra appellate Court and lastly thereview Court in their respective jurisdiction. They were upheld.

45. In our considered opinion, these findings are based onappreciation of evidence. We do not find these findings to be eitherarbitrary or illegal or against any statutory provisions and nor they canbe regarded as being perverse to the extent that no reasonable mancould ever reach to such conclusion. We also find that these findings arein conformity with the requirements of Section 269 UD of the Act and A

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Athe law laid down by the Constitution Bench in the case of C.B. Gautam(supra).

46. Learned counsel for the appellants, however, argued thatsince there was no reference of the two godowns in the show causenotice and secondly, the appellants were also not served with the copyBof the valuation report of the two godowns, the impugned orders arerendered bad in law on account of these two infirmities.

47. We find no merit in this submission for three reasons. First,the appellants did not raise this objection at any stage of the proceedings.We cannot, therefore, entertain this submission at this stage: Second, inCany event, no prejudice was caused to the appellants because all relevantdocuments were filed on this issue in the writ proceedings. The appellants,therefore, had full opportunity to deal with these documents which theyalso availed of and lastly, this issue was also argued on its merits. It isfor all these reasons, we do not find any substance in this submission.

D48. Learned counsel for the appellants then took us to the factualissues, such as location of the suit land, comparable sales relied on bythe Department to prove the value of the suit land etc. These submissionswere urged essentially with a view to show that the value of the suit landmentioned in the show cause notice was not the real market value and,therefore, the order of pre-emptive purchase of the suit land is bad inElaw. Learned counsel, in support of his submissions, also placed relianceon the decisions in Sahib Singh Kalha & Ors. vs. AmritsarImprovement Trust & Ors., (1982) 1 SCC 419, Lal Chand vs. Unionof India & Anr. , (2009) 15 SCC 769, and Executive Engineer,Karnataka Housing Board vs. Land Acquisition Officer, GadagF& Ors., (2011) 2 SCC 246. We have examined the submissions keepingin view the decisions cited.

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49. As mentioned above, these issues were gone into at fourstages, i.e., first by the appropriate authority then by writ Court followedby intra court appeal and lastly by review Court on facts and wereGrejected finding no merit. In an appeal filed under Article 136 of theConstitution, we cannot hold de novo inquiry into these issues again.In our view, these findings have been recorded in conformity with therequirements of Section 269UD(1) of the Act and hence deserve to beupheld. They are accordingly upheld.

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50. In view of the foregoing discussion, we find no merit in C.A.Nos.9800-9801/2010. The appeals are accordingly dismissed.

CIVILAPPEALNo.9901 2010

1. This appeal is directed against the final judgment and orderdated 31.05.2007 passed by the High Court of Judicature for RajasthanBench at Jaipur in Division Bench Special Appeal No.188 of 1995 wherebythe appeal filed by the vendor (respondent No.1 in this appeal) waspartly allowed with a direction to the appellants(Income Tax Department)that the prospective buyers would be entitled to the refund of the amountpaid to the vendor together at the rate of 6% p.a. out of the maturityamount of the aforesaid FDR and remaining amount be paid to thevendor.

2. On perusal of the record, we find that the Single Judge of theHigh Court had passed an interim order dated 14.09.1994 directing theparties to maintain status quo. He also directed that the period of stayorder would be excluded for making the payment by the respondent tothe seller depending upon the outcome of the writ petition. This orderwas later modified on 27.09.1994. While extending the stay order, theSingle Judge, however, clarified that in case, if the action impugned isheld bad in law, the vendor would be entitled for reimbursement of theloss occasioned to her. It was, however, submitted before the DivisionBench of High Court in the appeal that the concerned authorities hadinvested the amount of apparent sale consideration, i.e., Rs.99,88,500/-in a fixed deposit (FDR) and the period of FDR was being extendedfrom time to time, pending appeal.

3. Taking into consideration these facts and other relevantcircumstances, the Division Bench while dismissing the appeal filed bythe prospective buyers, partly allowed the appeal filed by the vendor andissued the following directions:- “ ……..but the appeal filed by the vendor (SAW No. 188/95) is partly allowed with the direction that upon departmenttaking over possession of the subject property, prospectivebuyers would be entitled to refund of the amount paid tothe vendor together with interest @ 6% p.a., out of thematurity amount of the aforementioned FDR and remainingamount shall be paid to the vendor. In the facts of the case,however, we leave the parties to bear their own costs.”

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A4. We find that while passing the aforesaid order, the provisionscontained in Section 269UG (4) of the Act were not taken intoconsideration by the Division Bench, which inter alia provide as to howthe issue in relation to amount of consideration is finally required to bedealt with by the appropriate authority in a case of this nature.

B5. Section 269UG (4) of the Act reads as under:- “(4) Where any amount of consideration has been depositedwith the appropriate authority under this section, theappropriate authority may, either of its own motion or onan application made by or on behalf of any person interestedCor claiming to the interested in such amount, order the sameto be invested in such Government or other securities asit may think proper, and may direct the interest or otherproceeds of any such investment to be accumulated andpaid in such manner as will, in its opinion, give the partiesinterested therein the same benefits therefrom as theyDmight have had from the immovable property in respectwhereof such amount has been deposited or as near theretoas may be.”

6. We are, therefore, of the view that instead of issuing theaforementioned impugned directions in relation to the disbursement ofEthe amount of FDR, the High Court should have left the matter to bedecided by the appropriate authority as required under Section 269UG(4) of the Act.

7. We are, therefore, inclined to allow the appeal filed by Union ofIndia to the extent that the above-mentioned directions issued by theFHigh Court are hereby set aside and the matter is left open for thedecision to be taken by the appropriate authority as required underSection 269UG(4) of the Act in accordance with law.

8. The appeal is accordingly allowed in part. The impugneddirections contained in the concluding para of the impugned order areGset aside.

Ankit Gyan

Appeals disposed of.

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