Interim disbursement barred where statutory vesting and payment obligations under Chapter XXC depend on pending writ proceedings.

An order for pre-emptive purchase under Chapter XXC led to statutory vesting under section 269UE(1), but that vesting and any corresponding liability to pay consideration remained subject to the outcome of pending writ proceedings. Because further action had been stayed, the Court held that the Revenue should not be compelled at the interim stage to disburse the sale consideration or any part of it from public funds before final resolution of the challenge. If the writ petition succeeded, the statutory vesting would fall away and the parties would have to work out their rights separately. The vendors were therefore not entitled to interim payment pending disposal of the proceedings.

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Issues: Whether, after an order for pre-emptive purchase under Chapter XXC of the Income-tax Act, 1961 and during the pendency of writ proceedings with stay of further action, the vendors could compel the Income-tax Department to pay the sale consideration or any part thereof before final disposal of the litigation.

Analysis: On the making of an order under section 269UD(1), the property stood vested in the Central Government under section 269UE(1), but that vesting was contingent on the continued validity and operation of the statutory scheme and the outcome of the challenge to the order. If the writ petition succeeded, the statutory vesting would disappear and the parties would have to work out their rights elsewhere. Since the purchaser had invoked judicial restraint and the authorities were prevented from proceeding further, directing payment of the entire consideration from public funds at the interim stage would expose the Government to serious risk of non-recovery if the transaction ultimately failed or the order was set aside.

Conclusion: The vendors were not entitled to an interim direction for payment of the sale consideration by the Department pending disposal of the writ proceedings.

Final Conclusion: In proceedings arising from a stay against action under Chapter XXC, the Court would not direct the Revenue to disburse the sale consideration before the dispute is finally resolved.

Ratio Decidendi: Where statutory vesting and the Government's liability to pay consideration are subject to the result of pending judicial proceedings, interim disbursement of public funds to the vendors is not warranted.

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