Judicial review of compulsory purchase under Chapter XX-C turns on legality, fairness and relevant valuation material, not reappraisal of merits.

Chapter XX-C pre-emptive purchase under section 269UD is discussed as a limited judicial review regime focused on illegality, irrationality, procedural unfairness, or disregard of relevant factors. The commentary notes that an agreement-holder's challenge was not barred where the Supreme Court had kept all contentions open, that notice, reply and hearing satisfied natural justice, and that RBI approval or alleged litigation risk did not restrict statutory power. It also explains that valuation based on comparable sales, locality features and the belting method will not be reappraised in judicial review where relevant material and reasons support a finding of significant undervaluation.

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Issues: (i) Whether the petitioner, as an agreement-holder, lacked enforceable standing to challenge the order under Chapter XX-C in the face of the Supreme Court's directions keeping all contentions open; (ii) whether the order of compulsory purchase under section 269UD was vitiated for want of reasonable opportunity or for non-consideration of relevant factors, including the Reserve Bank of India approval and alleged litigation risk; and (iii) whether the Appropriate Authority's valuation based on comparable instances and belting method suffered from such illegality or irrationality as to justify interference in judicial review.

Issue (i): Whether the petitioner, as an agreement-holder, lacked enforceable standing to challenge the order under Chapter XX-C in the face of the Supreme Court's directions keeping all contentions open.

Analysis: Although an agreement-holder ordinarily may not have a substantial independent right, the Supreme Court had expressly kept open all contentions for challenge to the later order dated 14 June 1993. In that situation, the High Court could not reject the petitions merely on the ground of want of right, because doing so would have been inconsistent with the binding directions preserving the petitioner's opportunity to assail the later order.

Conclusion: The objection to maintainability on the ground of absence of right was rejected.

Issue (ii): Whether the order of compulsory purchase under section 269UD was vitiated for want of reasonable opportunity or for non-consideration of relevant factors, including the Reserve Bank of India approval and alleged litigation risk.

Analysis: The material showed that notice was issued, a detailed reply was filed, and the petitioner was heard before the order was passed. The Court held that substantial justice had been afforded and that the hearing could not be characterised as wholly denied. The Reserve Bank of India approval did not fetter the statutory power under Chapter XX-C, because the object of the provision was to detect and curb tax evasion through significant undervaluation. The alleged litigation risk was found to be no real litigation factor on the facts. The Court therefore found no violation of natural justice or other legal infirmity on these grounds.

Conclusion: The challenge based on denial of hearing and ignored relevant factors was rejected.

Issue (iii): Whether the Appropriate Authority's valuation based on comparable instances and belting method suffered from such illegality or irrationality as to justify interference in judicial review.

Analysis: The Court noted that Chapter XX-C is intended to operate where there is significant undervaluation of immovable property with a view to evading tax, and that judicial review is confined to the decision-making process rather than reappreciation of the merits. The authority had considered the property's corner location, commercial potential, road frontage, applicable zone and floor area ratio, and comparable sales from the same locality. It also considered other nearby transactions and gave reasons for arriving at a market rate higher than the apparent consideration. Since relevant material had been considered and no material illegality or perversity was shown, the Court declined to sit in appeal over the fact-finding exercise.

Conclusion: The valuation-based challenge failed and the impugned purchase order was upheld.

Final Conclusion: The petitions failed on all substantive grounds, and the compulsory purchase order under Chapter XX-C was sustained.

Ratio Decidendi: In judicial review of pre-emptive purchase under Chapter XX-C of the Income-tax Act, the Court will interfere only for illegality, irrationality, procedural unfairness, or disregard of relevant factors, and will not reappreciate valuation evidence where the authority has considered relevant comparable material and given reasons for finding significant undervaluation.

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