Delhi H.C : The Authority dealt with each of the objections raised by the parties and has recorded its reasons which it is required to do under the statute, which provides for recording of reasons under s. 269UD(1B).

High Court Of Delhi

Brindco Sales Ltd. vs. Appropriate Authority & Ors.

Sections 269UD, Art. 226, Art. 227

Arijit Pasayat, C.J. & D.K. Jain, J.

Civil Writ Petn. No. 5799 of 2000

12th October, 2000

Counsel Appeared

M.S. Syali with Satyen Sethi, for the Petitioner : R.D. Jolly with Ms. Prem Lata Bansal, for the Respondents



Order dt. 31st July, 2000, passed by the Appropriate Authority, IT Department, New Delhi (in short, the Authority), under s. 269UD(1) of the IT Act, 1961 (in short, the Act), directing preemptive purchase of property D-1/5, Okhla Industrial Area, Phase II, New Delhi, is under challenge in this petition.

2. Background facts necessary for disposal of the writ petition, which has been filed alleging non-application of mind and/or non-consideration of relevant materials by the authorities essentially are as follows : A statement in Form 37-I was filed by Span India (P) Ltd., respondent No. 3, on 28th April, 2000, indicating that it was the transferor and the petitioner was transferee in respect of an immovable property, i.e., D-1/5, Okhla Industrial Area, Phase II, New Delhi, having total land area of 1,042.34 sq. mts. In col. No. 4 of the form particulars of the property were described as an industrial building with basement, mezzanine floor, two-storied office block with built-up area of 15,174 sq. ft. However, in the annexure to the said form at Sl. No. 3 no description of theindustrial building was given. It was only indicated to be as per agreement of sale enclosed. A copy of the agreement to sell was also filed along with Form 37-I. Notice under s. 269UC(4) of the Act was issued on 15th May, 2000, pointing out certain defects, which, inter alia, included defects in columns 3, 5(iv)(b) and 8(ii) of the annexure to Form 37- I. It was also pointed out that column No. 11 of the annexure was also not properly filled up. Further, signatories of both the transferor and the transferee, at pp, 1, 3, 4,5 and 6 of Form No. 37-I had put only initials and not the full signatures. Rectified Form 37I was filed on 22nd May, 2000. So far as Sl. No. 3 of annexure is concerned following details were provided : Basement 4,542 sq. ft. Ground floor 1,097 sq. ft. Hall 3,445 sq. ft. First floor 1,548 sq. ft. Mezzanine floor 4,542 sq. ft. 15,174 sq. ft. Thereafter, a notice under s. 269UD(1) was issued by the Authority on 7th July, 2000. It was pointed out in the notice that apparent consideration of Rs. 1,50,00,000 Rupees one crore fifty lacs) in respect of the property is considered low when compared with instance property, as per valuation report enclosed in the notice. The fair market value of the property was stated to be assessed by adopting instances received pertaining to property D-158/A, Okhla Industrial Area, Phase-I, New Delhi. The fair market value was assessed at Rs. 1,98,14,425 (Rupees one crore ninety eight lacs fourteen thousand four hundred twenty- five). As the understatement worked out to +24.3 per cent taking the above fair market value as the base, notice in question was issued. Further, valuation report enclosed with the notice indicated the price and as to how themarket value was arrived at. The same is as follows : “Time gap w.e.f. 25th Feb., 2000 20th April, 2000 = 1.75 months @ 1% per +1.75% Rs. 14,280 x 1,042.34 sq. mt. Rs.1,48,84,615 Plus : Cost of structure as worked out Rs. 49,29,810 Rs.1,98,14,425 Parties were required to show cause as to why pre-emptive purchase order under s. 269UD(1) be not made. In response to the show-cause notice, both the petitioner and respondent No. 3, submitted their written submissions. Main ground of objection was that the property in question adjoins on the right side a vacant plot which has been encroached upon by squatters who have built 40/50 jhuggies on the plot. The encroachment occurred about a decade back. The plot now houses about 300 jhuggies dwellers who pose a serious security hazard, besides filth and foul smell that has been created. The service lane at the back has also been occupied by the jhuggies dwellers who have built jhuggies on it. There are two Sulabh Socchalayas opposite the factory adding to the foul atmosphere. It was also submitted that the building had severe problem of termites and practically the entire woodwork had been eaten away by termites, which had spread along the walls to all floors. Drying up of a water well was an additional disadvantage. The factory in the left side used heavy presses resulting in heavy noise pollution. It was further stated that depreciated value of the building as fixed at Rs. 49,30,000 is exorbitant when the original value was Rs. 18,43,000 in the year 1988. It was highlighted that the plot size of the instant property was in the neighbourhood of 600 sq. mts. whereas the plot under consideration is 1,042.34 sq. mts. Instance area has better potential which is not available to the property in question. Because of better locality, the instance property may have fetched better price.

The Authority considered all the aforesaid contentions. So far as the disadvantageous situation arising from the viewpoint of pollution, etc. and security hazard are concerned, to have a better appreciation, the said property was inspected by all the three members on 26th July, 2000. It was observed that functioning of the warehousing activities presently being carried out in the subject property is in noway hampered by presence of jhuggies of the adjoining vacant plot, which now occupied by the jhuggies, is also an industrial plot. The transferor vide letter dt. 24th July, 2000, pointed out that slum dwellers in the vicinity were likely to be provided alternate accommodation in lieu of being evicted from the plot. This had likelihood of enhancing value of the property. The transferee also stated that they would be using the property only for warehousing purposes, and not for any public dealing and the existing environment does not pose any handicap to it. It was also stated that since trucks carrying goods have to be unloaded at late hours, the ready availability of labour in the vicinity is an advantage. Considering the aforesaid aspect, the Authority observed that the advantages and disadvantages on account of functioning of the activities in the premises are considered to be balancing and no reduction in valuation was called for. Adverting to the problem of termites, as raised, it was observed by members of the Authority during inspection that there was no such serious problem. The use of woodwork was much less and termite problem is controllable and does not affect the price of the factory. Considering the stand relating to dry well, it was observed that civic amenities are available in the area and drying up of well does not affect the value. It was noticed that water level in Delhi has gone down in general everywhere. Analysing noise pollution aspect, it was noticed that factory on the left side used heavy presses, but that does not in anyway reduce the valuation for industrial factory where such noise is unavoidable. The Authority did not also find any substance in the plea relating to enhanced valuation of building. It was noted that written down value of the building worked out to Rs. 10,76,000 as on 31st March, 2000. Depreciated value of the building has been taken in accordance with present rate of construction for such building in the year 2000 as on the date of valuation. This reproduction cost of the building as on the date of valuation has been considered from which the depreciation suffered due to the ageing factor for 14 years @ 1.5 percent per annum = 21 percent has been deducted. This would give the price of such building, which it would fetch if sold in the open market. It was, inter alia, noted that written down value has no relevance so far as the fair market value on the date of valuation is concerned. Referring to the question whether instance property was over valued being a smaller plot, the Authority noted that permitted FAR ratio of a small plot is higher than the permitted FAR of a big plot. The two plots were comparable. Since their FAR is the same, no adjustment is needed while arriving at the fair market value of the property. Rejecting the contention that instance property was situated in a better locality, it was noted that subject property faced wider road as compared to instance property, and the area is fully developed.

The Authority noted the contention that the present factory of the buyer of D-158, Okhla Industrial Area, Phase-I, New Delhi, is located directly opposite to it and it may make better business sense for him to acquire the property at an asking price for his business convenience and expediency. It noticed that fair market value was found to be reasonable and there was no factor, which indicated higher price paid by the purchaser in respect of the said property. In the aforesaid background, the Authority held that the subject transaction was made for less than market price and it was done with a view to avoid tax. In that view of the matter, it was considered a fit case to make pre-emptive purchase under s. 269UD of the Act. Payment was directed to be made by the Central Government to the transferor at the discounted value as worked out in annexure to the order and subject to production of original title deeds. An application for modification of the order was filed by the petitioner which after due consideration has also been rejected. Learned counsel for the petitioner reiterated the grounds taken before the Authority in addition to submitting that margin was not very high when compared to the scope for making a different valuation. Learned counsel for the respondents submitted that finality is attached to an order passed under s. 269UD(1) by s. 269UN and conclusions of the Authority arrived at after taking note of all relevant facts should not be interfered with in the present writ petition. It is submitted that all objections of the petitioner and respondent No. 4 were duly considered and after analysing the factual position and visiting the premises, the order was passed. Sec. 269UD relates to an order by Appropriate Authority for purchase by Central Government of immovable property. The said provision presently reads as follows : “269UD. (1) Subject to the provisions of sub-ss. (1A) and (1B), the Appropriate Authority, after the receipt of the statement under sub-s. (3) of s. 269UC in respect of any immovable property, may, notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force, make an order for the purchase by the Central Government of such immovable property at any amount equal to the amount of apparent consideration: Provided that no such order shall be made in respect of any immovable property after the expiration of a period of two months from the end of the month in which the statement referred to in s. 269UC in respect of such property is received by theAppropriate Authority: Provided further that where the statement referred to in s. 269UC in respect of any immovable property is received by the Appropriate Authority on or after the 1st day of June, 1993, the provisions of the first proviso shall have effect as if for the words “two months”, the words “three months” had been substituted : Provided also that the period of limitation referred to in the second proviso shall be reckoned, where any defect as referred in sub-s. (4) of s. 269UC has been intimated, with reference to the date of receipt of the rectified statement by the Appropriate Authority:

Provided also that in a case where the statement referred to in s. 269UC in respect of the immovable property concerned is given to an Appropriate Authority, other than the Appropriate Authority having jurisdiction in accordance with the provisions of s. 269UB to make the order referred to in this sub-section in relation to the immovable property concerned, the period of limitation referred to in the first and second provisos shall be reckoned with reference to the date of receipt of the statement by the Appropriate Authority having jurisdiction to make the order under this section : Provided also that the period of limitation referred to in the second proviso shall be reckoned, where any stay has been granted by any Court against the passing of an order for the purchase of the immovable property under this Chapter, with reference to the date of vacation of the said stay. (1A) Before making an order under sub-s. (1), the Appropriate Authority shall give a reasonable opportunity of being heard to the transferor, the person in occupation of the immovable property if the transferor is not in occupation of the property, the transferee and to every other person whom the Appropriate Authority knows to be interested in the property. (1B) Every order made by the Appropriate Authority under sub-s. (1) shall specify the grounds on which it is made, (2) The Appropriate Authority shall cause a copy of its order under sub-s. (1) in respect of any immovable property to be served on the transferor, the person in occupation of the immovable property if the transferor is not in occupation thereof, the transferee, and on every other person whom the Appropriate Authority knows to be interested in the property.” Sec. 269UD is one of the cluster of provisions contained in Chapter XX- C. From 15th Nov., 1972, a new Chapter XX-A was effectively introduced in the IT Act, which operated upto 19th Sept., 1985. Chapter XX-A was replaced by a new Chapter XX-C. Sec. 269U deals with commencement of the Chapter and it provides that provisions of the Chapter shall come into force on such date as the Central Government may appoint in the Official Gazette; and different dates may be appointed for different areas. Sec. 269UA deals with definitions for the purpose of the Chapter.

9. When there is a proposal for sale, information in Form 37-I, is received by the Authority. It has to either purchase the property by exercising its rights under s. 269UD(1) or to issue no objection certificate if it does not want to purchase the property. There is no third option for leaving the question open. In the words of the apex Court in Appropriate Authority vs. Tanvi Trading & Credits (P) Ltd. (1991) 100 CTR (SC) 278: (1991) 191 ITR 307 (SC) : TC 3R.1046, under the scheme of legislation two alternatives are open, i.e., (i) Union of India through Appropriate Authority can buy a property, or (ii) in the event of its decision not to buy, it has to issue a no objection certificate leaving it open to the parties to deal with the property. It is to be noted that petitioner laid great stress on the existence of jhuggies to underline its stand regarding disadvantages. But, as noted by the Authority, petitioner itself had spelt out several advantages available due to existence of such jhuggies, e.g. easy availability of manpower at odd hours. It had also conceded possibility of increase in price of the property when jhuggi dwellers leave the place on being provided alternative accommodation. Sec. 269UD has no conditions precedent except to the extent that property is situated in an area to which the Chapter is applicable, and a statement has been received in respect thereof. A pre-emptive right has been bestowed by s.269UD on the Authority having jurisdiction over the area where the property is situated to make an outright final order for purchase by the Central Government of such immovable property at an amount equal to amount of apparent consideration as per the statement submitted to it under s. 269UC. The action in question does not depend upon any special circumstance. Use of the expression “notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force” makes the position crystal clear. It is a pre-emptive right based on State prerogative, which reigns supreme over those of individuals. But the powers have to be exercised within a limited time span. That is the statutory circumspection on the powers conferred under s. 269UD. Sec. 269UD(1B) mandates recording of reasons specifying the grounds on which it is made. This is a salutary provision as an act uninformed by reason is prima facie arbitrary. It is to be noted that s. 269UD as originally enacted did not contain sub-ss. (1A) and (1B). They appear to have been introduced to get over deficiencies pointed out by the apex Court in C.B. Gautam vs. Union of India (1992) 108 CTR (SC) 304 r/w (1993) 110 CTR (SC) 179 : (1993) 1 SCC 78 : TC S3.142. But the earlier provision also warranted recording of reasons. Duty to give reasons entails a duty to rationalize the decision. Reasons, therefore, help to structure the exercise of discretion, and the necessity of explaining why a decision is reached. It requires one to address one’s mind to be relevant factors, which ought to be taken into account. Further, furnishing reasons affords the affected party to know why a decision was reached. In C.B. Gautam’s case (supra) it was observed that “the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the quasi-judicial or the executive authority invested with judicial powers”. Reasons when given provide a glimpse of the decision-making process and assist the forum where the order is assailed to gauze transparency of the process. Reasons are harbingers between the mind of the decision-maker to the controversy in question and the decision or conclusion arrived at.

This petition has been filed under Arts. 226 and 227 of the Constitution of India, 1950 (in short the Constitution). The principles upon which the superior Courts in England interfere by issuing writs of certiorari are fairly well known and they have generally formed the basis of decisions in our Indian Courts. It is true that there is lack of uniformity even in the pronouncements of English Judges, with regard to the grounds upon which a writ, or, as it is now said, an order of certiorari, could issue, but such differences of opinion are unavoidable in judge-made law which has developed through a long course of years. As is well known, the issue of the prerogative writs, within which certiorari is included, had their origin in England in the King’s prerogative power of superintendence over the due observance of law by his officials and Tribunals. The writ of certiorari is so named because in its original form it required that the King should be “certified of” the proceedings to be investigated and the object was to secure by the authority of a superior Court, that the jurisdiction of the inferior Tribunal should be properly exercised (Vide Ryots of Garabandho vs. Zemindar of Parlakimedi 70 I.A. 129). These principles were transplanted to other part of the King’s dominions. In India, during the British days, the three chartered High Courts of Calcutta, Bombay and Madras were alone competent to issue writs and that too within specified limits and the power was not exercisable by the other High Courts at all. “In that situation”, it was observed in Election Commission, India vs. Saka Venkata Rao 1953 SCR 1144 at p. 1150) “the makers of the Constitution having decided to provide for certain basic safeguards for the people in the new set up, which they called fundamental rights, evidently though it is necessary to provide also a quick and inexpensive remedy for the enforcement of such rights and, finding that the prerogative writs which the Courts in England had developed and used whenever urgent necessity demanded immediate and decisive interposition, were peculiarly suited for the purpose, they conferred, in the States’ sphere, new and wide powers on the High Courts of issuing directions, orders or writes primarily for the enforcement of fundamental rights, the power to issue such directions, etc., ‘for any other purpose’ being also included with a view apparently to place all the High Courts in this country in somewhat the same position as the Court of King’s Bench in England.”

The language used in Arts. 32 and 226 of our Constitution is very wide and the powers of the Supreme Court as well as of all the High Courts in India extend to issuing of orders, writs or directions including writs in the nature of habeas corpus, mandamus, quo warranto, prohibition and certiorari as may be considered necessary for enforcement of the fundamental rights and in the case of the High Courts, for other purposes as well. In view of the express provisions in our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges. We can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner, so long as we keep to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law. One of the fundamental principles in regard to the issuing of a writ of certiorari, is, that the writ can be availed of only to remove or adjudicate on the validity of judicial acts. The expression “judicial acts” includes the exercise of quasi-judicial functions by administrative bodies or other authorities or persons obliged to exercise such functions and is used in contrast with what are purely ministerial acts. Atkin L.J. thus summed up the law on this point in Rex vs. Electricity Commissioners (1924) 1 KB 171 at 205. “Where anybody or persons having legal authority to determine questions affecting the rights of subjects and having the duty to act judicially act in excess of their legal authority they are subject to the controlling jurisdiction of the King’s Bench Division exercised in these writs.” The second essential feature of a writ of certiorari is that the control, which is exercised through it over judicial or quasi-judicial Tribunals or bodies is not in an appellate but supervisory capacity. In granting a writ of certiorari the superior Court does not exercise the powers of an Appellate Tribunal. It does not review or reweigh the evidence upon which the determination of the inferior Tribunal purports to be based. It demolishes the order, which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior Tribunal. The offending order or proceeding, so to say, is put out of the way as one, which should not be used to the detriment of any person (vide per Lord Cairns in Walshall’s Overseers vs. London and North Western Railway Co. 4 App. Cas. 30, 39).

The supervision of the superior Court exercised through writs of certiorari goes on two points, as has been expressed by Lord Summer on two points, in King vs. Nat Bell Linquors Ltd. (1922) 2 A.C. 128, 156. One is the area of inferior jurisdiction and the qualifications and conditions of its exercise; the other is the observance of law in the course of its exercise. These two heads normally cover all the grounds on which a writ of certiorari could be demanded. In fact there is little difficulty in the enunciation of the principles, the difficulty really arises in applying the principles to the facts of a particular case. Certiorari may and is generally granted when a Court has acted without or in excess of its jurisdiction. The want of jurisdiction may arise from the nature of the subject- matter of the proceeding or from the absence of some preliminary proceeding or the Court itself may not be legally constituted or suffer from certain disability by reason of extraneous circumstances Vide Halsbury, 2nd Edition, Vol. IX, p. 880,. When the jurisdiction of the Court depends upon the existence of some collateral fact, it is well settled that the Court cannot by a wrong decision of the fact give it jurisdiction which it would not otherwise possess (Vide Banbury vs. Fuller, 9 Exch, III; R. vs. Income Tax Special Purposes Commissioners 21 QBD 313. A Tribunal may be competent to enter upon an enquiry but in making the enquiry it may act in flagrant disregard of the rules of procedure or where no particular procedure is prescribed, it may violate the principles of natural justice. A writ of certiorari may be available in such cases. An error in the decision or determination itself may also be amenable to a writ of certiorari but it must be a manifest error apparent on the face of theproceedings, e.g., when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent error, which can be corrected by certiorari but not a mere wrong decision. The essential features of the remedy by way of certiorari have been stated with remarkable brevity and clearness by Morris L.J. in the case of Rex vs.

Northumerland Compensation Appellate Tribunal (1952) 1 KB 338 at 357. The Lord Justice says : “It is plain that certiorari will not issue as the cloak of an appeal in disguise. It does not lie in order to bring up an order or decision for re-hearing of the issue raised in the proceedings. It exists to correct error of law when revealed on the face of an order or decision, or irregularity or absence of, or excess of, jurisdiction when shown.” In dealing with the powers of the High Court under Art. 226 of the Constitution apex Court has expressed itself in almost similar terms (Vide Veerappa Pillai vs. Raman & Raman Ltd. (1952) SCR 583 at 594) and said : “Such writs as are referred to in Art. 226 are obviously intended to enable the High Court to issue them in grave cases where the subordinate Tribunal or bodies or officers act wholly without jurisdiction, or in excess of it, or in violation of the principles of natural justice, or refuse to exercise a jurisdiction vested in them, or there is an error apparent on the face of the record, and such act, omission, error or excess has resulted in manifest injustice. However, extensive the jurisdiction may be, it seems to us that it is not so wide or large as to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or the order to be made.” These passages indicate with sufficient fullness the general principles that govern the exercise of jurisdiction in the matter of granting writ of certiorari under Art. 226 of the Constitution.

13. Jurisdiction under Art. 227 must be sparingly exercised and may be exercised to correct errors of jurisdiction and the like but not to upset pure findings of fact, which falls in the domain of the concerned Court, Tribunal or forum only. (See Khimji Vidhu vs. Premier High School 2000 AIR SCW 2333). Exercise of power under Art. 227 can be done only in cases of : (i) Erroneous assumption or excess of jurisdiction. (ii) Refusal to exercise jurisdiction. (iii) Error of law apparent on the face of the records as distinguished from a mere mistake of law or error of law relating to jurisdiction. (iv) Violation of the principles of natural justice. (v) Arbitrary or capricious exercise of authority, or discretion. (vi) Arriving at a finding which is perverse or based on no material. (vii) A patent or flagrant error of procedure. (viii) Order resulting in manifest injuries. The case at hand does not suffer from any of the enumerated deficiencies to warrant interference.

14. It is to be noted that the Authority dealt with each of the objections raised by the parties and has recorded its reasons which it is required to do under the statute, which provides for recording of reasons under s. 269UD(1B). As has been rightly submitted by the counsel for the respondents, the Authority has considered the objections in detail, its conclusion are essentially factual and, it cannot be said that the conclusions are perverse or that it has ignored relevant material or has taken into consideration irrelevant material. That being the position, this does not appear to be a case where interference under Art. 226 or 227 of the Constitution of India, 1950, is called for. Judged in the above background, we find no merit in the writ petition. It is accordingly dismissed.

[Citation : 248 ITR 465]

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