Court grants stay, directs property return to Respondent. Stay conditions and mortgage allowance included.

The court granted a stay on the operation of the order and directed the government to return possession of the property immediately to Respondent No. 3. Respondent No. 3 was allowed to mortgage the property without possession for up to 50% of the sale consideration. Conditions for staying the impugned order were imposed, including handing over possession to Respondent No. 3 and suspension of limitation provisions. If the writ petition is dismissed, Respondent No. 3 must return possession to the Income-tax Department within one month.

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Issues: Agreement to sell property, challenge to provisions of Income-tax Act, possession of property by Government, payment of purchase price, rights of parties, stay of impugned order, conditions for staying order.

Analysis:
The case involved an agreement to sell a property in New Delhi for Rs. 20 lakhs, with Rs. 2 lakhs paid as earnest money. The Central Government decided to purchase the property at the apparent consideration, leading to a challenge of the provisions of the Income-tax Act. The court granted a stay on the operation of the order and recalled an order affecting the rights of one of the parties without notice. Respondent No. 3 was asked to surrender possession, which was done, but the government did not pay the purchase price as per the order. The court considered it inequitable to deprive respondent No. 3 of the purchase price and possession, directing the government to return possession immediately. Respondent No. 3 was permitted to mortgage the property without possession up to 50% of the sale consideration. The court imposed conditions for staying the impugned order, including handing over possession to respondent No. 3, no payment of purchase price by income-tax authorities, and suspension of limitation provisions. If the writ petition is dismissed, respondent No. 3 must return possession to the Income-tax Department within one month, with the question of interest payment to be determined later. The case management applications were disposed of accordingly.

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