Tenancy rights after compulsory purchase: notice to vacate held outside jurisdiction where occupants had a decree and possession.

After compulsory purchase under Chapter XX-C, the scope of a notice requiring occupants claiming tenancy rights to vacate depended on whether section 269UE could extinguish subsisting encumbrances. The text notes the principle from C. B. Gautam that "free from all encumbrances" does not automatically destroy existing encumbrances, while completed transactions with possession already taken and compensation accepted were treated as protected. On the stated facts, the occupants were asserted tenants with a decree in their favour and possession obtained in execution, so the clarificatory paragraph in C. B. Gautam was said not to apply. The notice directed against them was therefore stated to lack jurisdiction.

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Issues: Whether, after an order of compulsory purchase under Chapter XX-C of the Income-tax Act, 1961, the notice issued under section 269UE could validly require occupants claiming tenancy rights to vacate the premises, and whether the protective principle in C. B. Gautam applied to the facts of the case.

Analysis: The challenge turned on the scope of the Supreme Court's ruling that the expression "free from all encumbrances" in section 269UE(1) could not be read to extinguish subsisting encumbrances, and that monthly tenancies could continue though rent-protection laws would not bind the Central Government. The Court also noted the clarification that completed transactions, where possession had been taken over and compensation had been paid and accepted without protest, would not be upset. On the facts, the petitioners were not mere strangers to the property but asserted tenancy rights, had obtained a decree in their favour, and had been placed in possession in execution proceedings. The Court held that the clarificatory paragraph in C. B. Gautam did not cover such a case and that the notice directed against the petitioners lacked jurisdiction.

Conclusion: The notice under section 269UE was without jurisdiction, and the petition was allowed.

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