TaxTMI 
TaxTMI 
TaxTMI 
1998 (8) TMI 23
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.... proposed vendee and vendor, respectively, in respect of the sale of a mill known as "Hastings Jute Mill" situated at G. T. Road, Rishra, as a going concern, inclusive of assets and liabilities as per the terms and conditions contained in the said agreement. The property included land measuring 105 bighas and 18 cottahs and the structures raised thereon along with all erections, etc., inclusive of fixtures and fittings and various plants and machineries. The total consideration by way of agreed sale price in respect of the entire property was fixed at Rs. 777.50 lakhs free from all encumbrances and charges, etc. Since the value of the proposed sale transaction exceeded the prescribed limit as per section 269UC of the Act, Form No. 37-I in terms of the said section and the rules made under the Act was submitted before respondent No. 1 on March 22, 1994, along with the copy of the aforesaid agreement dated March 7, 1994, seeking permission/no-objection from respondent No. 1 in respect of the sale of the said property. However, respondent No. 1 neither granted the "no-objection" certificate nor passed any order of taking recourse to the exercise of the power of pre-emptive purchase of....
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....ly to pass order either granting "no objection" certificate to the parties or to direct the pre-emptive purchase of the property in terms of section 269UD, and not to pass any other order whatsoever. In effect and substance, therefore, the appropriate authority has only two options, either to grant no objection certificate or to invoke section 269UD, which would be the issue that we shall consider in this appeal. The sale agreement in this case was executed on March 7, 1994 and Form No. 37-I, was submitted to the appropriate authority on March 22, 1994. However, it is the admitted case of the parties before us that the possession of the property had been handed over by the vendor to the vendee prior to March 22, 1994, the date when Form No. 37-I, was submitted by them to the appropriate authority. The case of the vendor and the vendee before us as also in the writ court is that the possession of the property was handed over by the vendor to the vendee in pursuance of a stipulation in the sale agreement that, before the sale actually takes effect, the property would be given on lease for a period of three years with powers granted to the vendee to run and manage the industrial unde....
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....herein it was mentioned that the lease would be granted for a period of three years and that upon completion of sale by the execution and registration of the sale deed and agreement of lease, the lease deed itself would merge in the vendee's right under the sale deed conveyance. The ground and reason for passing the order by the appropriate authority on June 24, 1994, manifestly and clearly stated in the order itself was that the transfer of the property had already taken place and such transfer being within the purview, scope and meaning of section 269UA(f), the furnishing of the statement in Form No. 37-I, was not a valid act in the eyes of law and, hence, it could not be acted upon. The appropriate authority, therefore, treated Form No. 37-I, as non est and ordered its being "filed". Para. 7 of the order being relevant for this purpose needs to be quoted verbatim hereinbelow. This para reads thus : "It is, therefore, clear that 'transfer' within the meaning of Chapter XX-C has already taken place by handing over physical possession of the property in part performance of the agreement for sale. The submission of Form No. 37-I before the appropriate authority for obtaining a cle....
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....prevented the parties, pending finalisation of the agreement, to execute a lease deed between themselves. What is to be noted is that the lease period was for three years. Section 269UA(f) clearly suggests that only such lease as would be for a period of twelve years or more, would come within the definition of the expression "transfer" and, hence, may attract the mischief of section 269UC. In our view, the appropriate authority misconstrued the scope of the expression "transfer" and wrongly took an untenable position in law that submission of Form No. 37-I was an inappropriate act and that this form was non est in the eyes of law and, thus, not liable to be acted upon. The scheme of Chapter XXC of the Act, more particularly sections 269UC, 269UD and 269UL leave the appropriate authority with no choice or option but to either issue "no objection" certificate to the parties submitting Form No. 37-I or to pass an order in terms of section 269UD resorting to pre-emptive purchase of the property. No other option is available to the appropriate authority. In the case of Tanvi Trading and Credits (P.) Ltd. v. Appropriate Authority [1991] 188 ITR 623, a Division Bench of the Delhi High ....
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....f the transaction or its legality and validity. Furthermore, the appropriate authority has no jurisdiction to club one property with another with a view to find faults in the validity of the transaction which, otherwise has been cleared by the competent authority under the Urban Land (Ceiling and Regulation) Act." The object and purpose of inserting Chapter XX-C in the Act was clearly to discourage the proliferation of black money in transactions relating to the purchase and sale of immovable properties, and with this in view the Legislature had enacted the aforesaid legislative provision insisting on the parties intending to effect sale and purchase of properties to submit the requisite information to the appropriate authority so that the appropriate authority may be in a position to examine and find out whether the consideration for which the property was being sold was adequate or not. If it found out that the consideration was adequate and proper, it was supposed to issue "no-objection certificate". If, however, in the opinion of the appropriate authority the stated consideration was inadequate, it could resort to the power of pre-emptive purchase under section 269UD. The lang....