Court dismisses petition challenging government's property acquisition, upholds compensation validity. Costs imposed on petitioners.

The court dismissed the petition challenging the Central Government's acquisition of the property, ruling that the petitioners had no valid claim to ownership or compensation. The court upheld previous decisions confirming the government's acquisition, rejecting the petitioners' claims based on a subsequent sale deed. It was held that the compensation deposited by the Income Tax Department on behalf of the Union of India was valid, and only the legal heirs of the former owner were entitled to it. The court imposed costs on the petitioners for persisting with litigation despite repeated losses in prior proceedings.

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Issues Involved:
1. Legality of the acquisition of the property by the Central Government.
2. Right of the petitioners to claim ownership and compensation for the property.
3. Competence of the Department of Income Tax to deposit compensation.
4. Applicability of Chapter XXA of the Income Tax Act post its repeal in 1986.
5. Physical possession of the property by the Income Tax Department.
6. Right of legal heirs to receive compensation.

Detailed Analysis:

1. Legality of the acquisition of the property by the Central Government:
The property in question was acquired by the Central Government under Section 269-F(6) of the Income Tax Act, 1961, via an order dated 17.02.1978. This acquisition was challenged by the then-owner, Manak Chand Khanna, but his appeal was dismissed by the Income Tax Appellate Tribunal on 05.10.1981, and the dismissal was upheld by the High Court. The acquisition order thus became final.

2. Right of the petitioners to claim ownership and compensation for the property:
The petitioners claimed ownership of half the property based on a sale deed executed in their favor in 1991 by the general attorney of Manak Chand Khanna. However, since the property was acquired by the government in 1978, Manak Chand Khanna was no longer the owner and had no right to sell it. The petitioners' civil suit seeking a declaration of ownership and injunction was dismissed by the Additional Civil Judge in 2000, and this dismissal was upheld by the Additional District Judge in 2005 and by the High Court in 2008 (RSA no.1538 of 2005). Consequently, the petitioners had no title, right, or interest in the property and no right to be heard in the proceedings under Section 269-I of the Act.

3. Competence of the Department of Income Tax to deposit compensation:
The petitioners argued that the Central Public Works Department (CPWD) was the competent authority to deposit the compensation. However, the court held that whether the compensation was deposited by the Income Tax Department or CPWD was immaterial, as the property vested in the Union of India. The compensation was deposited on behalf of the Union of India, satisfying the legal requirement.

4. Applicability of Chapter XXA of the Income Tax Act post its repeal in 1986:
The petitioners contended that since Chapter XXA was repealed in 1986, the property should revert to the original owner. However, the court noted that the acquisition had become final before the repeal, and the amendment did not affect proceedings that had already been concluded. The judgment in "M. Mathew Thomas and others Vs. Commissioners of Income Tax" was not applicable as the acquisition had attained finality long before the repeal.

5. Physical possession of the property by the Income Tax Department:
The petitioners claimed that the Income Tax Department had not taken physical possession of the property. The court found this issue irrelevant, as the petitioners' suit for a declaration of ownership was dismissed. Any occupation by the petitioners was deemed illegal, as the property had vested in the government, and an order for taking possession was passed in 1989.

6. Right of legal heirs to receive compensation:
The court held that only the legal heirs of Manak Chand Khanna were entitled to the compensation deposited by the Income Tax Department. The petitioners had no right to this compensation, as they had no valid claim to the property.

Conclusion:
The petition was dismissed, and the court imposed a cost of Rs. 25,000/- on the petitioners for continuously litigating the matter despite losing in previous rounds. The legal heirs of Manak Chand Khanna were recognized as the rightful claimants to the compensation.

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