Delhi H.C : Petitioner’s application (CM 9134/01). Since the modification/directions sought for in the applications are in substance similar, both the applications are being disposed of by this common order.

High Court Of Delhi

Dr. A.K. Garg & Anr. vs. Kailash Nath & Associates & Ors.

Sections 269UD, 269UG, 269UH

S.B. Sinha, C.J. & D.K. Jain, J.

Civil Misc. Nos. 11681 & 12908 of 2001 in Civil Writ Petn. 3139 of 1993

7th January, 2002

Counsel Appeared

S.K. Jain with Ms. Jaya Tomar, for the Petitioners : R.S. Endlaw, for the Respondent No. 1 : R.D. Jolly with Ajay Jha, for the Respondent No. 4


D.K. JAIN, J. :

Respondents No. 1 and 4 in the titled writ petition, in their respective applications, being CM Nos. 11681/01 and 12908/01 seek modification of the order, dt. 5th Oct., 2001, passed by this Court, while disposing of petitioner’s application (CM 9134/01). Since the modification/directions sought for in the applications are in substance similar, both the applications are being disposed of by this common order.

2. To understand and appreciate the controversy raised in the applications, it would be necessary to note a few background facts. Respondent No. 1, a builder (hereinafter referred to as the vendor) had entered into an agreement dt. 25th June, 1991, with the petitioners (hereinafter referred to the vendees) for the sale of residential flat No. 2 on the 4th floor of the multistoreyed building known as Neelgiri Apartments, situated at 9, Barakhamba Road, New Delhi. The vendor and the vendees filed a statement in Form No. 37-I prescribed under r. 48L of the IT Rules, 1962, and as required under Chapter XX-C of the IT Act, 1961 (for short ‘the Act’). The Appropriate Authority under the Act, respondent No. 4 herein, vide order dt. 28th May, 1993, decided to purchase the said flat and, thus, passed the order under s. 269UD(1) of the Act. The vendees challenged the said order by filing the present writ petition, inter alia, assailing the order on the plea of non-compliance with the provisions of s. 269UG of the Act. The writ petition was finally disposed on 17th Dec., 1997 [since reported as Mrs. Kailash Suneja & Ors. vs. Union of India & Ors. (1998) 145 CTR (Del) 560 : (1998) 231 ITR 318 (Del) : TC S3.191], wherein the order passed by the Appropriate Authority was quashed. While holding so, K. Ramamoorthy, J. did not go into the question of alleged non-compliance with the provisions of s. 269UG of the Act but Y.K. Sabharwal, J. (as his Lordship then was) accepted the plea and held that the balance sale consideration was tendered by the Central Government to the vendor on 6th Sept., 1993, which was beyond the stipulated period under s. 269UG(1), thereby attracting the rigours of s. 269UH, resulting in the abrogation of the purchase order. The Appropriate Authority unsuccessfully challenged the said order in the Supreme Court in its appeal (Civil Appeal No. 6048/98) which was dismissed on 4th May, 2001, upholding the view taken by Y.K. Sabharwal, J.

3. According to the vendees, on the dismissal of the said appeal by the Supreme Court, they wrote to the

Appropriate Authority to deliver to them possession of the property but having failed to get any response thereto they filed an application (CM 9134/2001), seeking a direction to the Appropriate Authority to accept Rs. 23.10 lakhs, the amount paid by it to the vendor and to hand over physical possession of the property to them. The application was disposed of by this Court on 5th Oct., 2001, with the following order : “Heard. On payment of the balance apparent consideration to the authorities within two weeks from today, possession of the property in question shall be handed over to the vendee, petitioner in the writ petition. If the Department has any claim regarding interest so far as the vendor is concerned, it is open to it to take action as is available in law. Though a stand was taken by learned counsel for the respondent that physical possession was not handed over, we find this stand to be clearly untenable in view of what has been stated in order dt. 16th March, 1994. If any other amount if payable by the vendee to the vendor, that is a question with which we are not presently concerned. Application stands disposed of.”

4. As noted above, the present applications have been filed for modification of the said order. The vendor in its application seeks clarification to the effect that : (1) the claim, if any, of the Appropriate Authority towards interest on the amount paid is against the vendees only and not against the vendor; and (2) that nothing contained in order dt. 5th Oct., 2001, entitled the petitioner to receive possession of the flat from the vendor without paying the dues thereof. The Appropriate Authority, on the other hand, in their application seek a direction to the vendees and/or the vendor to pay interest @ 18 per cent per annum on Rs. 23,13,994, the amount paid to the vendor by the Central Government for the period from 1st Sept., 1993, till the date of realisation of the amount.

5. Having heard learned counsel for the parties, we are of the opinion that the aforeextracted order requires a little modification/clarification, more so to shorten the litigation between the parties.

6. From a reading of the aforenoted order of the Supreme Court made in Appropriate Authority’s appeal, it would appear that the only issue urged and decided by the apex Court was with regard to the applicability of s. 269UH on the facts in hand and the Court held that the section was clearly attracted. Therefore, the said order hardly leaves any room for doubt that on account of failure on the part of the Central Government to tender/pay a part of the consideration, required to be tendered/paid to the vendor within the specified period, the purchase order stood abrogated and the property in question re-vested in the vendor. In the event of such a situation, sub-s. (2) of s. 269UH provides that the Appropriate Authority is to make, soon thereafter, a declaration to that effect and serve a copy of such declaration on the owner-transferor and deliver or cause to be delivered possession of the property to the transferor or to the person(s) from whom possession was obtained by it. These are mandatory statutory requirements and the Appropriate Authority is bound to comply with the same. The stand of the Appropriate Authority that it was not in possession of the property is untenable, particularly in view of the observations made in the order dt. 5th Oct., 2001, and the fact that the Central Government had even issued an advertisement for auction of the property in question. It was only on a motion by the vendees that the auction, was stayed vide order dt. 16th March, 1994. It is difficult to comprehend that without taking over possession, symbolic or otherwise, the Central Government would ever put the property to action. 6A. The question which now remains to be considered is as to whether the Appropriate Authority is entitled to claim interest on a part of the consideration paid by it to the vendor, either from the vendor or the vendees, for the period the amount remained with the vendor and whether the Appropriate Authority could be held responsible for the delay in delivery of possession of the property, as alleged by the vendees.

7. Having given our thoughtful consideration to the rival submissions, we are of the view that it would not be fair and proper to lay any fault on either of the three parties. So far as the Appropriate Authority is concerned, we have no reason to doubt its bona fides. It was acting in the discharge of its statutory duties and could not be blamed for passing order for pre-emptive purchase of the property by the Central Government. Merely because its order was ultimately set aside, it cannot be said that its action was mala fide. So far as the vendor is concerned it again cannot be held liable for payment of any interest to the Appropriate Authority inasmuch as it had to receive total consideration for the property in terms of the agreement to sell dt. 25th June, 1991. Since as per sub-s. (2) of s. 269UE, the vendor had to surrender or deliver possession of the property to the Appropriate Authority and no complaint in this respect was made by the Appropriate Authority warranting coercive action in terms of sub-ss. (3) and (4) thereof, there was no reason why the vendor should not have received the balance sale consideration. Furthermore, if the vendor is now called upon to pay interest as demanded by the Appropriate Authority. For no fault of theirs a substantial part of the sale consideration would be lost to the vendor. Similarly, in our view, the vendees cannot be blamed for protecting their interest in the property by taking recourse to their legal right to challenge the order of pre-emptive purchase by the Central Government. In fact they ultimately succeeded in getting the order quashed. Indeed, but for their action in getting the auction stayed, the property would have gone out of their hands, or in any case third party rights would have emerged. At best, the vendees could, perhaps, have derived some benefit in the bargain for not parting with the balance sale consideration which remained with them and presumably they could have earned some interest on it. We feel that the deprivation of the use and fruits of the property to the vendees was a greater loss to them as compared to the amount of interest which they could have earned. As observed by the apex Court in Rajalakshmi Narayanan vs. Margaret Kathleen Gandhi & Ors. (1993) 201 ITR 681 (SC) : TC S3.326 the question of grant of interest has to be decided on the facts and circumstances of a particular case, considering the equities of the matter. In our view, on the facts in hand, equity does not warrant to call upon the vendees to pay interest to the Appropriate Authority. Under the circumstances, we are of the opinion that the prayer of the Appropriate Authority (CM 12908/01) for direction to the vendor or the vendees to pay interest cannot be granted. As regards the apprehension of the vendors that the vendees are trying to take possession of the property in question without paying the dues, we do not consider it necessary to deal with the same inasmuch as the order passed under s. 269UD(1) having been declared as abrogated and the property having revested in the vendor, in terms of s. 269UH of the Act, there is no impediment left in now giving full effect to the agreement to sell dt. 25th June, 1991. However, to avoid any further dispute it may be clarified that since the vendors had received the balance sale consideration from the Appropriate Authority, they will not be entitled to charge any interest on the said amount for the period the order passed by the Appropriate Authority under s. 269UD(1) remained sub judice either before this Court or the Supreme Court. The order of pre-emptive purchase made under s. 269UD(1) of the Act having abrogated, all restrictions imposed by Chapter XX-C of the Act disappear and the rights and liabilities of the vendor and the vendees shall obviously be governed by the agreement of sale entered into by them. Both the applications stand disposed of. Order dt. 5th Oct., 2001, is modified to the extent that the Appropriate Authority shall issue the requisite declaration under s. 269UH(2) of the Act and deliver or cause to be delivered possession of the property in question to the vendor within eight weeks from date of this order. On theAppropriate Authority complying with these directions, the vendor will take appropriate steps to deliver physical possession of the immovable property to the vendees in terms of the said agreement to sell.

[Citation : 256 ITR 662]

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