1994 (11) TMI 92 - HC - Income Tax

Court quashes pre-emptive purchase order, issues mandamus for 'no objection' certificate.

The court allowed the writ petitions, quashing the notice and order for pre-emptive purchase. A writ of mandamus was issued to compel the appropriate ... High Court, Movable Property, Purchase Of Immovable Property By Central Government Issues Involved:1. Validity of the pre-emptive purchase order.2. Authorization and limitation for passing the pre-emptive purchase order.3. Compliance with principles of natural justice.4. Issuance of 'no objection' certificate.5. Interpretation of Supreme Court and High Court directions.Detailed Analysis:1. Validity of the Pre-emptive Purchase OrderThe petitioner challenged the notice dated April 12, 1994, and the order dated July 26, 1994, issued by the Deputy Commissioner of Income-tax, whereby the competent authority ordered the pre-emptive purchase of the property. The petitioner argued that the order was passed in violation of the law and caused undue harassment.2. Authorization and Limitation for Passing the Pre-emptive Purchase OrderThe petitioner argued that the appropriate authority was not authorized to pass the pre-emptive purchase order as it was barred by the limitation prescribed by law. The facts revealed that Chapter XXC of the Income-tax Act became operative in Patna from June 1, 1989. The petitioner contended that the transaction in question was entered into before the chapter became applicable, and thus the pre-emptive order should not apply.3. Compliance with Principles of Natural JusticeThe first pre-emptive purchase order was passed on November 17, 1989, and was challenged and stayed by the court. The second pre-emptive purchase order was passed on June 15, 1993, but was quashed by the court on the ground that it was passed without hearing the petitioners, thus violating the principles of natural justice. The court emphasized that the order visited the petitioners with civil consequences and they should have been heard before the order was rendered.4. Issuance of 'No Objection' CertificateThe petitioner argued that if the pre-emptive purchase order was quashed, the respondents were bound to issue a 'no objection' certificate to allow the registration of the sale deed. The court cited precedents where it was held that if the appropriate authority fails to exercise its power within the prescribed period, it must issue a no objection certificate.5. Interpretation of Supreme Court and High Court DirectionsThe Supreme Court in C. B. Gautam v. Union of India upheld the validity of Chapter XXC but required a reasonable opportunity to be given to concerned parties. The court also clarified that the period for passing the order should be reckoned from the date of the disposal of the pending matters. The High Court, in its order dated April 27, 1993, directed the authorities to act in accordance with the Supreme Court's judgment. The petitioner contended that the High Court did not remand the matter back to the appropriate authority but only allowed them to proceed in accordance with the law.The court concluded that the order passed by the High Court did not authorize the prescribed authority to pass a fresh order of pre-emptive purchase after the expiry of the period of limitation. The court held that the prescribed authority could proceed further only in a manner permitted by law, which did not allow passing a fresh order after the limitation period.Conclusion:The writ petitions were allowed, and the notice dated April 12, 1994, and the order dated July 26, 1994, were quashed. A writ of mandamus was issued commanding the appropriate authority to issue a no objection certificate within four weeks. There was no order as to costs.