Gujarat H.C : The petitioner challenges in this special civil application communication issued to the Sub-Registrar, Government of Gujarat, Ahmedabad, by the Appropriate Authority under Chapter XX-C of the IT Act, 1961 (‘the Act’) inviting his attention to s. 269UC, pointing out that “in this context it is worthwhile to clarify that the jurisdiction of the provisions of Chapter XX-C is not only restricted to the mere sale of properties above ten lakhs of rupees but these extend to any kind of transfer of rights in immovable properties (s. 269UA).

High Court Of Gujarat

Gujarat Urban Co-Operative Banks Federation vs. Union Of India

Sections 269UA(d), 269UA(f), 269UC, 269UD, 269UL

Rajesh Balia & A.R. Dave, JJ.

Spl. Civil Appln. No. 1929 of 1991

6/7th April, 1999

Counsel Appeared

S. N. Soparkar, for the Petitioner : Mihir Joshi for R.P. Bhatt & H.M. Bhagat, for the Respondents

JUDGMENT

The petitioner challenges in this special civil application communication issued to the Sub-Registrar, Government of Gujarat, Ahmedabad, by the Appropriate Authority under Chapter XX-C of the IT Act, 1961 (‘the Act’) inviting his attention to s. 269UC, pointing out that “in this context it is worthwhile to clarify that the jurisdiction of the provisions of Chapter XX-C is not only restricted to the mere sale of properties above ten lakhs of rupees but these extend to any kind of transfer of rights in immovable properties (s. 269UA). It is once again impressed upon you that the document/instruments produced for registration may be accepted duly after each such document is accompanied by an NOC issued by this office.”

2. In the copy of the communication it refers to the mortgage deeds, lease agreements or deeds, development agreement of immovable properties, allotment agreements or other similar agreements through which interest, right or title in the property exceeding Rs. 10 lakhs pass from one person to the other. By way of illustration, reference has been made to mortgage deeds executed by various persons in favour of Gujarat Financial Corpn. GIIC, scheduled banks, cooperative banks, etc., lease deeds executed by the Ahmedabad Municipal Corpn. and instruments of lease/sale executed by Ahmedabad Urban Development Authority are being registered without obtaining No Objection Certificate (NOC) from the Appropriate Authority at Ahmedabad.

The petitioner, an apex society, is a federation of urban co-operative banks within the State of Gujarat and the member co-operative banks are engaged in the business of banking. In the course of business of transacting loans, the persons securing loan facilities from the banks are required to furnish security for the repayment of loans by way of mortgage of immovable properties by creating charge in immovable properties. The contention of the petitioner is that the execution of mortgage for securing repayment of loans is not the transfer within the meaning of provisions under Chapter XX-C of the IT Act. The Appropriate Authority had no jurisdiction to direct the Sub- Registrar of the State Government, respondent No. 4, to desist from registering the instruments of mortgage without obtaining an NOC from the Office of the Appropriate Authority, Ahmedabad. It was urged by Shri Soparkar, the learned counsel for the petitioner, that s. 269 in Chapter XX-C does not take within its purview all kinds of transfers which may properly fall within the meaning of ‘transfer’ under the provisions of the Transfer of Property Act but are limited to the kind of transfers specified under s. 269UA itself which confines the applicability of the provisions of Chapter XX-C only to the transfers by way of sale, exchange or lease in respect of immovable properties defined under s. 269UA(d)(i). He urges that creation of interest in immovable property by way of mortgage does not bring it within any of the provisions of Chapter XX-C so as to invite inhibition against registration of the mortgage deeds without obtaining NOC which, in turn, casts an obligation on the intending transferor of interest in property and by way of mortgage to execute an agreement to that effect at least 4 months before the intended date of creating mortgage and to file the same within the period prescribed with the Appropriate Authority for the purpose of obtaining NOC. It carries with it the option on the part of the Appropriate Authority to substitute itself in place of the transferee if it finds that the transfer is in order to evade or avoid payment of tax by not stating correctly the full value of the consideration, within the reasonable proximity of its fair market value as on the date of the envisaged transfer.

The learned counsel for the respondents urged that the object of enacting Chapter XX-C is to check avoidance and evasion of tax through effecting under-valued transfers of the immovable property. Ordinarily, he contends that, in broad legal sense, a mortgage is not a sale, exchange or lease of immovable property but it is a transfer of interest in immovable property, and in a given case, a transfer in the garb of mortgage may be, in fact, a transfer by way of sale, exchange or lease for all practical purposes and in order to check and to find the real nature of transaction the provisions of Chapter XX-C extends to all kinds of apparent transactions of transfer notwithstanding that they do not purport to be sale, exchange or lease of the immovable property. He further contends that at any rate, even if a mortgage of immovable property may not fall within the meaning of transfer under s. 269UA(d)(i), it does fall within sub-cl. (ii) of the aforesaid provision as it includes in its ambit wider connotation of transfer and is not confined to mere agreements of sale, exchange or lease. He further drew attention to the circular of the CBDT dt. 12th July, 1990 to issue NOC in the case of mortgage within a week’s time so that there may not be any difficulty on account of filing of Form No. 37-I.

We have carefully considered the rival contentions. The first thing which strikes us is that the purport of Chapter XX-C is not acquisition of property but is to check on the transfer for undervalued consideration as a means of evading or avoiding tax. The provision operates before any transfer actually takes effect, at a stage where transfer is intended to take place. The provisions are in the nature of conferring right of pre-emptive purchase by the Central Government on being found that proposed consideration disclosed in the agreement to transfer is grossly undervalued. In the context of object and rights and obligations flowing under the provisions of Chapter XX-C the scope of enquiry is not to determine the true nature of proposed transaction of transfer of immovable property but is to consider whether the apparent consideration disclosed in agreement, which flows from transferee to vendor, is grossly undervalued price, in order to avoid or evade payment of tax that may become payable as a result of such transfer or may have the ingredient of utilisation of black money by understating full value of apparent consideration and the part of the real value being transacted through black money.

6. In this connection, the following observation of the Supreme Court in C.B. Gautam vs. Union of India (1992) 108 CTR (SC) 304 r/w (1993) 110 CTR (SC) 179: (1993) 199 ITR 530 (SC) : TC S3.142 may be usefully referred to : “….the very historical setting in which the provisions of this Chapter were enacted suggests that it was intended to be resorted to only in cases where there is an attempt at tax evasion by significant undervaluation of immovable property agreed to be sold.” The Court, after referring to the affidavits filed before it in detail, concluded,— “The legislative history of Chapter XX-C…….. make it clear that the powers of compulsory purchase conferred under the provisions of Chapter XX-C of the IT Act are being used and intended to be used only in cases where in an agreement to sell an immovable property in an urban area to which the provisions of the said Chapter apply, there is a significant undervaluation of the property concerned, namely, of 15 per cent or more.”

7. A look at the scheme of Chapter XX-C, which is encompassed between ss. 269UA to s. 269UO, reveal that, after declaring the applicability of the Chapter and defining the terms used in various provisions and providing for constituting Appropriate Authority, prohibits transfer of any immovable property, in such area and of such value exceeding Rs. 5 lakhs, except after an agreement for transfer is entered into between the persons who intend transferring immovable property in accordance with the provisions of sub-s. (2) of s. 269UC at least 4 months before the intended date of transfer. Apart from prescribing the mode and format of reducing in writing such agreements for transfer, it requires the parties to agreement to furnish such statement to the Appropriate Authority in a manner and within the time from its execution as may be prescribed. Sec. 269UD authorises the Appropriate Authority, as interpreted by the Hon’ble Supreme Court in C.B. Gautam’s case (supra), on being satisfied about the undervaluation of the apparent consideration by more than 15 per cent of the real market value, to make an order for the purchase of such immovable property by the Central Government at an amount equal to the amount of apparent consideration. Such order may be made within two months from the end of the month in which the statement referred to above has been received by the Appropriate Authority. On making of such order under s. 269UD, the immovable property referred to in sub-cl. (i) of cl. (d) of s. 269UA is to vest in the Central Government in terms of the agreement for transfer referred to above, or in case the property under agreement for transfer is one prescribed in sub-cl. (ii) of cl. (b) of s. 269UA, viz., not the corpus of property but the rights of the nature referred to in that provision in respect of the immovable property are to vest in the Central Government and placing the Central Government in the same position in relation to such rights as the person in whom such rights would have deemed to vest, if such an order had not been made. Importantly, s. 269UE envisages that if the property which is to vest in the Central Government is subject to any encumbrance or leasehold rights, the same does not evaporate. But if the Appropriate Authority after giving hearing to parties to proposed transfer considers that encumbrance or leasehold rights specified in the agreement have been brought into existence in order to defeat the provisions of Chapter XX-C, he may declare that property shall vest in the Central Government free from such specified encumbrances or leasehold rights. Thus, transfers of immovable property for the purpose of Chapter XX- C are different from agreement of transfer in ordinary sense creating encumbrances or leasehold rights. Sec. 269UF to s. 269UH deal with the provisions relating to the payment of apparent consideration as purchase price for the purchase of immovable property by the Central Government and consequences of failure to pay or deposit the consideration in terms thereof. Sec. 269UI empowers the Appropriate Authority with the powers of the Chief CIT under s. 131 of the Act. Sec. 269UJ provides for rectification of apparent mistakes. Significantly, s. 269UK prohibits any of the parties to agreement to revoke or alter the agreement for the transfer of immovable property or transfer of such property in respect of which a statement has been furnished under s. 269UC unless the Appropriate Authority has made an order for the purchase of the immovable property by the Central Government under s. 269UD or the period specified for the making of such order has expired, or the order of purchase of such property by the Central Government stands abrogated on operation of s. 269UH. Sec. 269UL, which is another significant provision for the purpose of transfer of ownership, provides,— “Notwithstanding anything contained in any other law for the time being in force, no registering officer appointed under the Registration Act, 1908 (16 of 1908), shall register any document which purports to transfer immovable property exceeding the value prescribed under s. 269UC unless a certificate from the Appropriate Authority that it has no objection to the transfer of such property for an amount equal to the apparent consideration therefor as stated in the agreement for transfer of the immovable property in respect of which it has received a statement under sub-s. (3) of s. 269UC, is furnished along with such document.” While it inhibits the registration of immovable property envisaged under Chapter XX- C, unless the Appropriate Authority certifies that it has no objection to such transfer, it also requires the Appropriate Authority to issue a certificate to that effect in case it does not make an order under s. 269UD for the purchase of the property by the Central Government or the order so made is abrogated under s. 269UH. Sec. 269UM confers immunity on transferor against any claim by the transferee under the agreement on account of its purchase by the Central Government under the provisions of the Act. Sec. 269UN declares the orders of Appropriate Authority to be final and conclusive and s. 269UO makes the provision of the Chapter inapplicable to agreement for transfer in relation to the property where such transfer is made by a person to his relative on account of natural love and affection and the document contains recital to that effect.

8. In the context of salient features of Chapter XX-C(i) that it deals with pre-emptory purchase of the property proposed to be transferred by its owner by the Central Government on an order to that effect being made by the Appropriate Authority under the IT Act on finding that apparent consideration is grossly undervalued than the market price of the property to be transferred, (ii) that it does not vest the property on purchase by the Central Government free from existing encumbrances or leasehold rights unless otherwise declared, (iii) that it prohibits any revocation or alteration in the agreement to transfer of any property in question until decision to that effect has been taken by the Appropriate Authority, (iv) it envisages execution of an agreement for the purpose of intended transfer to which this Chapter applies at least 4 months before the intended date when such transfer is proposed to take place and a statement in the prescribed form in relation to such proposed transfer is to be filed before the Appropriate Authority within prescribed time, and (v) it prohibits registration of a document which purports to transfer except on issue of NOC from the Appropriate Authority, it would be apposite to look at the relevant definition clauses which define the terms ‘immovable property’ and ‘transfer’ for the purpose of Chapter XX-C. Sec. 269UA is the interpretation clause for Chapter XX-C and the terms ‘immovable property’ and the ‘transfer’ are defined under cls. (d) and (f) of s. 269UA as under : “(d) ‘immovable property’ means— (i) any land or any building or part of a building, and includes, where any land or any building or part of a building is to be transferred together with any machinery, plant, furniture, fittings or other things, such machinery, plant, furniture, fittings or other things also. Explanation.—For the purposes of this sub-clause, ‘land, building, part of a building, machinery, plant, furniture, fittings and other things’ include any rights therein; (ii) any rights in or with respect to any land or any building or a part of a building (whether or not including any machinery, plant, furniture, fittings or other things therein) which has been constructed or which is to be constructed, accruing or arising from any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other AOP or by way of any agreement or any arrangement of whatever nature), not being a transaction by way of sale, exchange or lease of such land, building or part of a building.” “(f) ‘transfer’,— (i) in relation to any immovable property referred to in sub-cl. (i) of cl. (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in s. 53A of the Transfer of Property Act, 1882 (4 of 1882). Explanation.—For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than 12 years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than 12 years; (ii) in relation to any immovable property of the nature referred to in sub-cl. (ii) of cl. (d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a co-operative society or company or other AOP or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of such property.”

From the aforesaid two definitions which are key to open the windows to the field of coverage under Chapter XX- C goes to show that in the definition of immovable properties specific meaning has been given to the immovable property. While the definition of immovable property for the purpose of Chapter XX-C has been confined to the land or any building or part of a building and to include where such land, building or part of building is to be transferred together with any machinery, plant, furniture, fittings or other things and to include rights in such land, building or part of building or in such machinery plant, furniture, fittings or other things intended to be transferred along with the land or building or part of such building. It may be noticed that the definition is a deviation from the general definition of immovable property for the purpose of transfer of property under general law. Though Transfer of Property Act does not define what is immovable property, and in interpretation clause merely excludes standing timber crop and grass from the purview of immovable property, the term has been defined under s. 3(26) of the General Clauses Act,1897, as,— “immovable property’ shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.”

9. In contrast, under s. 269UA, the things attached are not to be treated as immovable property on the basis of it being fixed with the immovable property but are to be treated to be part of the immovable property only if the same are to be transferred along with the land or building or part of the building. In such event, it includes not only things that are attached with corpus but includes ordinarily treated as movables like plant and machinery and furniture not attached to land. Broad definition of including benefits to arise out of land as immovable property have not been included. Obviously, when the entire property is considered to be immovable property, a part of such property, namely, the rights therein, have also been considered to be immovable property. Sub-cl. (ii) of cl. (d) goes further and states that any rights in or with respect to any land or any building or a part of a building which has been constructed or which is to be constructed may also be treated as immovable property provided they accrue or arise in favour of its owner from any transaction not being a transaction by way of sale, exchange or lease of such land, building or part of the building. That is to say, those rights in or in respect of the immovable property defined in sub-cl. (ii) are independent of proprietorship right acquired by way of sale, exchange or lease to any concerned person under some agreement or agreements. Whether as a result of becoming member of a society by becoming member of co-operative societies or of other AOP or company, one becomes entitled to enjoy the property without becoming its owner. There being no transaction of lease, exchange or lease in their favour or by some form of agreement such rights have accrued, then such rights also are to be treated as transfer of immovable property. Such rights in general law may not amount to immovable property.

10. Clause (f) of s. 269UA defines ‘transfer’ for the purposes of the Chapter. Sub-cl. (i) restricts the meaning of transfer for the purpose of Chapter only to transfer by way of lease, exchange or lease for a term not less than 12 years and includes allowing possession of property to be taken or retained in part performance of contract of the nature referred to in s. 53A. Obviously, a transfer of interest in property by way of mortgage is not envisaged to be a transfer under sub-cl. (i) of cl. (f). In other words, all forms of transfer of immovable property envisaged under the Transfer of Property Act have not been ipso facto accepted to be transfer for the purpose of operation of Chapter XX-C. Sub-cl. (ii) of cl. (f) refers to transfer of rights stated in sub-cl. (ii) of cl. (d), that is to say, rights which have been acquired otherwise than by sale, exchange or lease. A transaction can be treated transfer of such rights provided such rights itself are transferred or enables the promisee under the agreement the enjoyment of such property. Reference to such property obviously refers to the rights acquired and considered immovable property within the meaning of sub-cl. (ii) of cl. (d). It cannot have reference to acquisition of a right by way of creation of a mortgage by entitling the mortgagee to enforce mortgage against the mortgagor for the purpose of securing repayment of the loan. Where a property is mortgaged for the purpose of securing a loan under the Transfer of Property Act, the transferee acquires right for the first time which is considered to be an interest in property to enforce his right of recovery against the debtor by reaching the property and recovering the same by putting the property on sale. Transfer of interest by way of mortgage is not for the purpose of transferring enjoyment of immovable property nor it is transfer of any right envisaged under cl. (d)(ii) which can be governed by Chapter XX-C. In the context ‘transfer of property’ in the sense of transfer of an interest in property can come within purview of Chapter XX-C only if such transfer results in creation of such rights as may come within cl. (d)(ii) to constitute an ‘immovable property’. Acquisition of interest in immovable property, a creditor’s right to enforce his recovery against property apart from against person of the debtor, is not by way of transaction of sale, exchange or lease, nor the same is for enjoyment of property, nor it is transfer of whole bundle of rights of seller in the immovable property. Before the mortgage deed is executed, no right in favour of mortgagee comes into existence which can be considered to be a right in or in respect of land or any building or part of a building or other attachments thereto within the meaning of sub-cl. (ii) of cl. (d). In such event, even if it can be taken to be that a mortgage results in creation of such rights, the question of applying cl. (ii) of cl. (f) would arise only when such rights are said to be transferred within the meaning of sub-cl. (ii) of cl. (f) by the mortgagee. Thus, on the plain reading of the definition of transfer under s. 269UA(f), transfer of interest in immovable property by way of a mortgage is not envisaged to be covered under the Chapter. To this extent, apparently, the Appropriate Authority was in error when it said in its order that Chapter XX-C extends to any kind of transfer of rights in immovable properties and a stand which is reiterated in a reply affidavit filed on behalf of the respondents 1 and 2. In para 2 of the affidavit, it has been stated emphatically that “the application of the provisions of Chapter XX-C is not only restricted to a mere sale of property but also existence to any kind of transfer of rights in immovable property as per s. 269UA.”

In this connection, it would be also apposite to consider the meanings of the terms ‘sale’, ‘exchange’, ‘lease’ or ‘mortgage’. These terms have not been defined under Chapter XX-C. Under the Transfer of Property Act, each of the term has been defined. Sec. 54 of the Transfer of Property Act defines ‘sale’ as “the transfer of ownership in exchange for a price paid or promised or part paid and part promised. “Sec. 105 defines ‘lease’ to mean “a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.” Sec. 118 defines ‘exchange’ to mean “where two persons mutually transfer the ownership of one thing for ownership of another, neither thing or both things being money only, the transfer is called an ‘exchange’. The provision further requires that a transfer of property in completion of an exchange can be made only in the manner provided for the transfer of such property by sale, making it clear that exchange is at par with the sale where the former is for a consideration in the form of money, the latter is transfer in consideration of kind or partly in kind and partly in money. Sec. 58 defines ‘mortgage’ as the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.” If these four definitions are closely examined, the transactions of sale and exchange result in transfer of whole bundle of rights of owner in the entire property which carries with it right of exclusive enjoyment of the property by the transferee. A transfer by way of lease also is a transfer of right to enjoy the property to the exclusion of all, for the period for which lease right for exclusive enjoyment of the property is transferred. As against this, no such right of ownership or enjoyment of property is envisaged in a transfer of interest by mortgage. If the transfer by way of mortgage is a transfer in the form of providing security for repayment of loan, the purpose for which transfer of interest in property can take place has statutorily been accepted to be to secure the payment of money advanced. If it is not for that purpose, the transfer would cease to be a mortgage. In other words, the transfer of property by way of mortgage is to create a charge only which may be with or without the possession of the property but proprietary rights remain with the mortgagor and ordinarily the mortgagee gets the right to recover his dues if the debtor fails to discharge his obligation, by putting the property on sale or from the usufruct of the mortgaged property. The property only becomes subject to the rights of the mortgagee, who can enforce his right in terms of the provisions of the Transfer of Property Act in relation to recovery of his debts. This obviously does not fit in the scheme of compulsory purchase of the property subject to agreement for transfer envisaged under ss. 269UC and 269UD.

The scheme clearly suggests that it applies to such transfers where either the entire bundle of rights, that is to say, ownership rights, have been transferred or right to enjoy property or rights in property to the exclusion of those have been transferred. In this connection, we take notice that while under sub-cl. (i) of cl. (f) of s. 269UA, modes of transfer include in the definition transfer only sale, exchange or lease, sub-cl. (ii) which deals with the transfer of rights in or with respect to any land or building falls within the definition of purview only if it has the effect either of transferring such property, that is to say, transferring of such right itself or enabling the enjoyment of those rights by the transferee which were enjoyed by the transferor. Where the transfer lacks in the transfer of ownership and also lacks in transferring right of enjoyment of property such transaction does not fall under sub-cl. (ii) of cl. (f) to be considered as transfer for the purpose of Chapter XXC.

15. As we have noticed above, the object of the provisions contained in Chapter XX-C and the scheme unfolded thereunder, the transaction of mortgage otherwise does not match the very scheme and object. Sec. 269UC, other conditions being fulfilled, prohibits effecting any transfer of property except after an agreement for transfer is entered into between the proposed transferor and proposed transferee at least 4 months before the intended date of transfer. Such agreement has to be reduced in writing in the form of a statement by each of the parties to the proposed transfer which is to be furnished to the Appropriate Authority within such time as has been prescribed under the rules. On furnishing such information, the Appropriate Authority has to take decision whether to order the Central Government for the purchase of such immovable property at an amount equal to the apparent consideration stated in the agreement for transfer. As noticed above, by the very nature of the transaction, a transfer of interest in immovable property by way of mortgage envisages advancing a loan by the transferee to the transferor of such interest and on repayment of such loan charge comes to an end. The transferee’s right under the mortgage to sell the property arises only in case the transferor fails to discharge his obligation under the agreement. A transaction of mortgage preconditions to put the transferee in the position of a person who has advanced or promises to advance loan and to hold right to sell property only in default. If ss. 269UC and 269UD are read to be applicable to a transfer of property by way of mortgage in terms of agreement for transfer, it would result in placing the Central Government as a loan advancing agency in place of the creditor who has agreed to advance the loan to the owner of the immovable property by creating charge over the property to secure repayment of his loan. On the contrary, if s. 269UD is read in literal sense, it would result in outright sale of property annihilating the transaction of loan inasmuch as the amount of loan would become the apparent consideration. The contention raised on behalf of the respondents apparently lost sight of the fact that the amount of loan for securing repayment of which a property is mortgaged necessarily does not correlate to and commensurate with the market price of the property to be mortgaged in full. Property of much higher value may be mortgaged for securing a loan of much lesser sum. In that event, the interest which is sought to be transferred by way of mortgage is only to the extent of the amount of loan. The entire value of property is not subject-matter of such agreement. It is limited to the extent of the amount of loan. In a given case, the amount of loan may be more than the value of the property concerned. It may only serve as a partial security for the entire loan. Accepting the contention of the learned counsel for the respondents would mean that either the property of Rs. 1 crore sought to be mortgaged for a sum of Rs. 10 lakhs for the purpose of securing a loan of Rs. 10 lakhs, by dint of provision of ss. 269UC and 269UD, could be acquired for a sum of Rs. 10 lakhs or where a property is mortgaged to secure repayment of a loan of Rs.

1 crore but the property itself is valued at only Rs. 50 lakhs. The apparent consideration of the property would be considered to be Rs. 1 crore when, in fact, it is not so. The anomaly in accepting the contention of the learned counsel for the respondents does not end here. Under s. 269UE, the property does not vest with the Central Government free from all encumbrances and under s. 269UK, until the decision of the Appropriate Authority to exercise option to purchase it at apparent consideration or the expiry of period without taking decision thereon, the parties to the agreement for transfer are precluded from revoking or altering the agreement. If the same were to apply to an agreement for loan secured under a mortgage agreement, it would result in denying the transferee the right not to advance the loan during the pendency of proceedings or the transferor not to require the advancement of loan to him at all and keep his option for carrying on with his activity without securing the loan.

16. Sec. 269UL further lends support to the conclusion to which we have reached that obligation of the Registrar not to register a document without NOC from the Appropriate Authority depends on what the document purports to be as it exists. Sec. 269UL does not use the terminology document which results in transfer of immovable property but uses the phrase document which purports to transfer immovable property exceeding the value prescribed, that is to say, it is the apparent nature of the documents which is to be considered for the purpose of operating various provisions of Chapter XX-C. If the document apparently purports to transfer by way of sale, exchange or lease of any immovable property defined under sub-cl. (ii) of cl. (d) or purports to transfer rights or enjoyment of such rights as are referred to in sub-cl. (ii) of cl. (d), the provisions of s. 269UL are attracted but where the document does not purport to be transfer, neither the mandate to the registering officer not to register document without NOC from Appropriate Authority nor the other provisions requiring a decision to order the Central Government to purchase the property at the apparent consideration comes into operation. The scope of inquiry by the Registrar under the various provisions of Chapter XX-C is whether document sought to be registered purports to transfer immovable property within the meaning of s. 269UA. If it falls into that, he cannot register unless the same is supported by ‘no objection certificate’ from the Appropriate Authority. It is of essence that Appropriate Authority exercise jurisdiction of pre-emptive purchase of the property before document of transfer is executed and transaction is completed. That is why under s. 269UC, it is envisaged that an agreement to transfer in writing is to be executed at least 4 months before the intended date of transfer and such agreement to transfer is produced before the Appropriate Authority to be examined by him. This enquiry is, on such agreement to transfer being furnished to him, whether apparent consideration for which immovable property is proposed to be transferred is within permissible proximity with the market price of such property; if it is beyond such permissible proximity to consider whether such understatement of consideration is with a view to evade or avoid tax and not bona fide or genuine for the purpose of making an order for its purchase by the Central Government at the apparent consideration, where any person instead of executing agreement of transfer for such intended transfer attempts to execute a deed of such transfer and complete the transaction by registering the same the registering authority has been ordained to refrain from registering any such document which purports to transfer immovable property covered under Chapter XX-C unless accompanied with no objection certificate from the Appropriate Authority ensuring that no document purporting to transfer immovable property within the meaning of Chapter XX-C escapes its applicability. Beyond that, no other inquiry as to the true nature of transaction by going behind the document is permissible at that stage. If ultimately, during the course of regular assessments, any transaction is found to be sham, bogus or with ulterior motive, the consequence would follow. Non-applicability of failure to take action under Chapter XX-C does not result in foreclosing the applicability of other provisions of the Act or absolve the assessee found guilty of indulging in the activity of avoiding tax by dubious methods from consequences under other provisions of the Act. Thus, viewed from any angle, whether in the light of the definition of ‘transfer’, whether in the light of the objects with which Chapter XX-C has been enacted or in the light of the workability of the provisions of compulsory purchase by the Central Government and the statutory mandate with the registering officer to abide by before registering the documents contemplated under the provisions, the Appropriate Authority was not justified in directing the registering officer of the State to withhold registration of mortgages by holding that Chapter XX-C and the definition of ‘transfer’ under s. 269UA takes within its sweep all kinds of transfers without any inhibition. It may further be noticed that from the illustration which has been picked up by the Appropriate Authority for pointing out to the registering officer his laxity in not affecting the provisions of s. 269UL was misplaced. It has referred to the mortgages executed in favour of the Gujarat State Financial Corporation, Gujarat Industrial Investment Corporation, scheduled banks and co-operative banks. By the very nature of their business, these institutions are involved in the business of lending money and obtaining mortgages of immovable property to secure repayment of their loans. The question of those transactions being a transaction of transfer of ownership rights or transfer of property by way of sale, exchange or lease does not arise. It would be a flight of imagination to consider GSFC, GIIC, scheduled banks or co-operative banks obtaining a mortgage of the immovable property surreptitiously to camouflage the transactions of the purchase of the property by these institutions in the garb of executing a mortgage deed. The Appropriate Authority has no authority to limit or enlarge the scope of the statutory mandate that all registering authorities to insist on NOC before the documents referred to therein are registered. By the very nature of things, the mandate is confined to the documents of transfer referred to in s. 269UA(f), viz., the documents which purport to transfer property by way of sale, exchange or lease for a term not less than 12 years and transfer of right envisaged under cl. 2 (d)(ii) which results in putting the transferee in the enjoyment of property as was being enjoyed by transferor on account of such rights arising under any agreement and not to any other documents. The Appropriate Authority may be justified in drawing attention of the registering authority to the relevant provisions of the Act and may also be justified in securing relevant information relating to the transfers envisaged under s. 269UA(f) but cannot travel beyond it by putting its own interpretation and issuing direction to the registering officer not to transfer all documents requiring a registration under the Transfer of Property Act and the Registration Act. That must depend on the provisions of the statute which are eloquent in themselves. Any such direction cannot bind the registering officer and even if any such directions are issued, he can be directed to ignore the directions issued to him in the guise of Circular dt. 17th Oct., 1989 from the Appropriate Authority. Such direction is beyond the scope of s. 269UL which obviously has to be read in the context of the entire scheme of Chapter XX-C.

17. We, accordingly, allow this petition and direct that respondent No. 3 and other registering officers of respondent No. 4 elsewhere in the State are not bound to act upon any instructions as to prohibiting registration of any document which does not fall within the definition of transfer given under s.269UA(f) and he has no jurisdiction to hold an inquiry into the real nature of document ignoring the apparent nature of document for the purpose of exercising his right under s. 269UL. This is without prejudice to any inquiry in relation to the matters which the registering officer is otherwise entitled to make in law relating to registration or other laws regulating such enquiries. Rule is made absolute with no order as to costs.

[Citation : 247 ITR 134]

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