Unearned increase liability in auctioned government property cannot block mutation and freehold conversion for the purchaser.

Property vested in the Central Government under section 269UE and was later auctioned to the purchaser; the unearned increase, if payable, arose from the prior governmental position and had to be settled inter se between the authorities. The purchaser could not be burdened with that liability merely because the revenue authority did not challenge the development authority's demand. Mutation and freehold conversion could not be withheld on that basis, and the liability to deposit the unearned increase was placed on the first respondent.

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Issues: Whether the amount of unearned increase payable for mutation and conversion of the property into freehold was liable to be borne by the Central Government authorities and not by the petitioner purchaser.

Analysis: The property had vested in the Central Government under section 269UE of the Income-tax Act, 1961, and was thereafter auctioned to the petitioner. The liability arising from unearned increase, if any, was connected with the prior position of the property and with the inter se obligation of the government authorities. The petitioner, having purchased the property in auction and received a sale deed, could not be made to suffer because the revenue authority had not challenged the demand raised by the development authority. The dispute as to liability had to be worked out between the concerned authorities, and the petitioner's mutation and conversion could not be withheld on that account.

Conclusion: The liability to deposit the unearned increase was held to lie on the first respondent, and the petitioner was entitled to have mutation and freehold conversion processed.

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