2004 (3) TMI 12

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....itioner and his vendees had jointly filed declaration in Form No. 37-1 with the appropriate authority, respondent No. 2 as required under the provisions of the Act. After inspection of the property and careful consideration of comparable sale instances in the vicinity of the said property, the appropriate authority prima facie came to the conclusion that the property was grossly undervalued by more than 15 per cent, of the market value. In the circumstances, the appropriate authority issued show-cause notice, which was replied to by the parties to the agreement. The appropriate authority after hearing the parties to the show-cause notice was pleased to pass an order under section 269UD(1) of the Act, directing the Central Government to exercise the right of purchase under the provisions of Chapter XX-C of the Act. Accordingly, the order came to be passed determining the apparent consideration, payable by the Central Government to the petitioner in a sum of Rs. 36,42,732 including Rs. 3,90,000 paid by the transferee of the agreement. The Central Government in spite of the order dated May 30, 1995, did not pay the apparent consideration to the petitioner in spite of repeated demand i....

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.... for the petitioner submitted that the petitioner is not challenging the order passed under section 269UD(1), as such, the said order may be treated as final and conclusive. He further submitted that in view of the provisions of section 269UD of the Act the property stood vested in the Union of India with the order under section 269UD(1) which in this case was passed on May 30, 1995. Learned counsel for the petitioner submitted that prior to the order under section 269UD(1) the property in question was inspected by the respondents. The encroachment made by Mr. Hansraj Oswal was very much noticed by them. In spite of noticing the aforesaid encroachment, the appropriate authority thought it fit to direct the Central Government to purchase the subject property under section 269UD(1) of the Act. He, therefore, submits that, at this stage, it is not open for the respondents to contend that the possession of the property cannot be taken by them unless the encroachment is removed and that no payment of the apparent consideration can be made by them unless possession in terms of the agreement is given to them. Mr. Dhakephalkar, the advocate for the petitioner, further submits that un....

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....for the Appropriate Authority to take shelter of the encroachment allegedly standing on the land and to refuse to take possession of the subject property. He submits that, in view of the order under section 269UD(1) he cannot deal with the property, that is how he is deprived of the property and at the same time he has not been paid consideration in pursuance of the provisions of Chapter XX-C of the Act, and on top of it, the appropriate authority wants to stick to the order so as to justify their action. He, thus, submits that the respondents cannot be allowed to blow hot and cold. He submits that the stand taken by the respondents is not only arbitrary but mala fide and they are not only trying to take undue advantage of the situation in which the petitioner is placed but are exploiting the provisions of the Act. Learned counsel for the petitioner urged that having noticed encroachment on the land, it was open for the appropriate authority not to exercise its option under section 269UD(1), but once having exercised this option it is not open for them to contend that they will stick to the order but at the same time they will not take possession of the property and that they wi....

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.... subject property free from encumbrances to the respondents, i.e., after removing the encroachment. In his submission till such time as the possession after removing the encroachment is delivered, the petitioner has no right to claim apparent consideration or withdrawal thereof from the bank. He thus prayed for discharge of the rule. Consideration Having heard the rival parties, the first aspect which needs consideration is, can the petitioner be asked to discharge an obligation which he cannot, in the sense, the petitioner, though obtained the decree from the competent court directing removal of encroachment; still as on date he cannot execute that decree claiming to be the decree-holder in view of the order under section 269UD(1) by virtue of which he has lost his title to the subject property. As on date, the petitioner has no saleable interest in the property. If he puts that decree in execution, the execution thereof may be successfully objected to by the encroacher on the ground indicated. It is, therefore, necessary for the respondents to take steps to remove the encroachment may be by executing decree or by resorting to the provisions of sub-section (2) read with sub-....

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....im interests in the property. The encroacher is bound to vacate the encroachment in view of the decree directing him to remove himself from the property. Thus, in the peculiar facts and circumstances of the case, encroachment on the land can hardly be said to be "encumbrance" on the property in question, as such, the respondents were not justified in calling upon the petitioner to remove the encumbrance from the property so as to enable him to claim the amount of apparent consideration. The decision of the respondents refusing to pay was unwarranted. Let us now consider the contention of the Revenue from another angle, presuming an encroachment to be an encumbrance on the land, in the light of the observations and findings recorded by the apex court in the case of C.B. Gautam v. Union of India reported in [1993] 199 ITR 530 while dealing with the contention that the provisions of Chapter XX-C are arbitrary and violate the provisions of the fundamental rights chapter in so far as an order for compulsory purchase under section 269UD of the Act has the effect of vesting the property in the Central Government free from all encumbrances; the value of which might not be reflected in t....

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....y purchase is made, the result would be that the property would be compulsorily purchased and the amount to be paid for the purchase would be only equal to the apparent consideration and this apparent consideration would not take into account the value of the encumbrances on the property like mortgages and so on or the leasehold rights. It is well known that a property may be heavily encumbered and its value can be considerably depressed if it were sold subject to encumbrances. It is equally well known that a property in respect of which there is a subsisting lease for a substantial period of time would fetch a comparatively low price because the purchase thereof would not carry with it the right to possession or occupation during the subsistence of the leasehold interests. In such cases, the amount of apparent consideration could be even less than the value of the encumbrances or the leasehold interests. An order for compulsory purchase in such cases would necessarily result in gross injustice to the encumbrance holders or the lessees and to their being deprived of their rights without their being in any way involved in the attempt at a tax evasion. It, therefore, appears to us di....