Article 226 review in compulsory purchase cases is limited to legality, with valuation upheld on comparable-sale evidence.

Judicial review under Article 226 of a compulsory purchase order under Chapter XXC is confined to legality, relevance of material and rationality; the High Court cannot reappreciate evidence or act as an appellate court. Valuation based on contemporaneous comparable sales and objective market material is a valid basis for finding that the apparent consideration was more than 15 per cent below fair market value, and a plea of forced sale may be rejected on the surrounding circumstances. On the facts, the purchase order was sustained and interest on the deposited amount was directed to be paid.

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Issues: (i) Whether the High Court, in exercise of jurisdiction under Article 226, could reappreciate the material and act as an appellate court while reviewing an order of compulsory purchase under Chapter XXC of the Income-tax Act, 1961; (ii) Whether the appropriate authority had considered relevant materials and adopted a valid basis for determining that the apparent consideration was more than 15 per cent below the fair market value so as to justify purchase under section 269UD; (iii) Whether the respondents were entitled to interest on the amount deposited pursuant to the transaction.

Issue (i): Whether the High Court, in exercise of jurisdiction under Article 226, could reappreciate the material and act as an appellate court while reviewing an order of compulsory purchase under Chapter XXC of the Income-tax Act, 1961.

Analysis: Supervisory jurisdiction under Article 226 remains limited to correcting jurisdictional error, consideration of irrelevant material, exclusion of relevant material, absence of evidence, or conclusions that no reasonable person could reach. The absence of a statutory appeal does not enlarge that jurisdiction into a full appellate power. If two views are possible on the material, the High Court cannot substitute its own view for that of the statutory authority.

Conclusion: The High Court could not reappreciate the evidence or exercise appellate powers.

Issue (ii): Whether the appropriate authority had considered relevant materials and adopted a valid basis for determining that the apparent consideration was more than 15 per cent below the fair market value so as to justify purchase under section 269UD.

Analysis: The authority relied on contemporaneous sale instances in the same locality and treated the agreement value as materially lower than the market rate. The Court held that the authority had applied the correct legal approach of valuing the property on objective, comparable-sale material and that the presumption of understatement for tax evasion arose on the facts. The plea of forced sale was considered and rejected on the chronology and surrounding circumstances.

Conclusion: The authority's valuation and compulsory purchase order were upheld.

Issue (iii): Whether the respondents were entitled to interest on the amount deposited pursuant to the transaction.

Analysis: Although entitlement to interest depends on the facts and equity of each case, the Court found it appropriate on these facts to direct payment of the deposited amount together with accrued interest to the respondents.

Conclusion: Interest on the deposited amount was directed to be paid to the respondents.

Final Conclusion: The compulsory purchase order was sustained, the High Court's interference was set aside, and the statutory acquisition under Chapter XXC remained undisturbed, with a separate direction regarding payment of the deposited sum with interest.

Ratio Decidendi: Judicial review under Article 226 of a compulsory-purchase order under Chapter XXC is confined to legality, relevance of material, and rationality, and the statutory authority's valuation based on comparable sales will not be disturbed unless it is vitiated by irrelevant considerations, exclusion of relevant material, or a conclusion unsupported by evidence.

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