Compulsory purchase under Chapter XX-C fails without hearing, while limitation runs from the High Court judgment in pending matters.

A compulsory purchase order under Chapter XX-C could not stand because the intending seller and purchaser were not given a reasonable opportunity of hearing, which had to be read into the scheme before exercise of section 269UD(1) powers; the order was therefore quashed. Revesting under section 269UH was not attracted, as the record showed payment of consideration after the stay was vacated, so there was no failure of payment causing abrogation. The two-month period under the proviso to section 269UD(1) was held to run from the date of the High Court judgment disposing of the pending matter, and the matter was remitted for fresh disposal in accordance with law.

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Issues: (i) Whether the order of compulsory purchase under section 269UD(1) was vitiated for want of reasonable opportunity of hearing; (ii) Whether non-payment of consideration resulted in revesting of the property under section 269UH; (iii) From what date the two-month period under the proviso to section 269UD(1) was to be reckoned.

Issue (i): Whether the order of compulsory purchase under section 269UD(1) was vitiated for want of reasonable opportunity of hearing.

Analysis: The provisions of Chapter XX-C were held to be valid, but the requirement of a reasonable opportunity of hearing to the intending seller and purchaser had to be read into the scheme before an order of compulsory purchase could be made. The impugned order was passed without affording such opportunity to the affected parties.

Conclusion: The order under section 269UD(1) was vitiated and could not be sustained.

Issue (ii): Whether non-payment of consideration resulted in revesting of the property under section 269UH.

Analysis: The consideration under section 269UF is payable to the transferor, and the record showed payment of the amount to the transferor after the stay order was vacated. On these facts, there was no failure attracting the consequence of abrogation and revesting under section 269UH.

Conclusion: Revesting of the property did not occur.

Issue (iii): From what date the two-month period under the proviso to section 269UD(1) was to be reckoned.

Analysis: The two-month period was held to run from the date of the judgment of the High Court disposing of the pending matter, in light of the clarification in Gautam and the fact that the matter remained pending before the court. The alternative reckoning from the date of vacation of stay or from the original Supreme Court judgment was rejected.

Conclusion: The limitation period was to be reckoned from the date of the High Court judgment.

Final Conclusion: The compulsory purchase order was quashed for want of hearing, the plea of revesting failed, and the matter was sent back to the appropriate authority for fresh disposal in accordance with law.

Ratio Decidendi: In proceedings under Chapter XX-C of the Income-tax Act, 1961, a compulsory purchase order cannot be sustained unless the affected parties are given a reasonable opportunity of hearing, and the statutory time limit is to be computed in accordance with the date fixed for pending matters by the governing clarification.

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