Madras H.C : Whether the shareholder of the first respondent-company, has locus standi to challenge the order of the Appropriate Authority and to intervene as such in the proceedings ?

High Court Of Madras

Sterling Horticulture & Research Ltd. vs. Appropriate Authority & Ors.

Section 269UD

A.S. Venkatachalamoorthy & C. Nagappan, JJ.

W.A. No. 245 of 1997 & C.M.P. No. 4127 of 1997

3rd November, 2000

Counsel Appeared

V. Ramachandran for S.K. Mani, for the Appellant : Mrs. Chitra Venkataraman, for the Respondents

JUDGMENT

A.S. VENKATACHALAMOORTHY, J. :

The fourth respondent herein, as owner of the property in question, viz., an extent of 6,180 sq. mtrs. of vacant land and superstructure in an area of 4,406.92 thus in all 10,587 sq. mtrs., bearing door No. 5, Greenways Road., Adyar, Madras, now known as No. 4 Bishop Garden Extension, Raja Annamalaipuram, Madras-28, in the Sub- Registration District of Mylapore, Registration District of Madras Chengalpattu, entered into an agreement on 27th July, 1995, to sell the abovesaid property to the appellant herein for a total consideration of Rs. 19,75,00,000. As per the provisions of the IT Act, the appellant along with the fourth respondent submitted Form No. 37-I on 27th July, 1995, itself. As per the agreement, the appellant paid a sum of Rs. 75,00,000 as advance. It was agreed between the parties that the purchaser, viz., the appellant herein, should pay the balance sale consideration within fifteen days from the date of receipt of the approval from the office of the Appropriate Authority.

The Appropriate Authority after receiving the said Form No. 37-I issued a notice to the parties under s. 269UD(1A) of the IT Act, 1961. The District Valuation Officer, inspected the property on 9th Oct., 1995, followed by another inspection by the members of the Appropriate Authority on 20th Oct., 1995. Based on the inspection and the value of the other properties, which the Appropriate Authority considered comparable, the authority prima facie came to the view that there was significant undervaluation to the extent of 51.37 per cent giving rise to a presumption of attempt to evade tax.

The Appropriate Authority after hearing the parties concerned, viz., the appellant and the fourth respondent, passed an order dt. 27th Nov., 1995, holding that the property had been undervalued and that presumption of attempt to evade tax had not been rebutted. In the said order, the Appropriate Authority compared two other properties, the first one can be referred to as “Soundarya Nursery property” and the second one as “Boat Club Road property”, and it came to the conclusion that the Soundarya Nursery property is not comparable and placed reliance on the Boat Club Road property and passed the said order dt. 27th Nov., 1995.

2. Aggrieved by the said order of the Appropriate Authority, the appellant herein filed W.P. No. 16777 of 1995, praying to the Court to quash the impugned order dt. 27th Nov., 1995, of the first respondent and pass such further orders as the Court deems fit and necessary. In the affidavit filed in support of the writ petition, the appellant contended that the Boat Club Road property was not comparable to the property in question and that the Boat Club

Road property is closer to Mount Road which is the main thoroughfare and is in the heart of the commercial activity in the city and that the Boat Club Road is also off the main road, Chamiers Road, and the value prevailing in that Boat Club Road was much higher than the value prevailing in Bishop Garden. The appellant also pointed out that the property in question is in the interior and has to be approached through a narrow winding road from Greenways Road. Furthermore, the appellant also put forth a contention that the impugned order clearly discloses non-application of mind to factors which are materially relevant and that the power and jurisdiction of the authority is limited to cases where the authority has some material on the basis of which it can reach a definite conclusion that the parties are attempting to evade payment of proper amount of tax.

The first respondent, in the counter-affidavit, contended that the impugned order has to be read as a whole and a practical view has to be taken and necessarily while passing an order, minor inconsistency has to be ignored. It is also contended that the impugned order is not vitiated and is not liable to be set aside.

The learned single Judge, after elaborately considering the matter, set aside the impugned order dt. 27th Nov., 1995, and remitted the matter back to the Appropriate Authority for fresh consideration in accordance with law. The learned single Judge imposed certain conditions and it is necessary that the same have to be quoted in extenso. “(a) As the Central Government has already parted with a sum of Rs. 19 crores to the vendor which has with it, not only the advance paid by the petitioner but also the discounted amount paid by the Department as well, the Department is entitled to proper protection for the amount which it has already paid. As the impugned order is being set aside at the instance of the petitioner, the petitioner is directed to deposit with the Appropriate Authority the sum paid by the Central Government as the discounted consideration together with interest thereon at the rate of 15 per cent per annum from the date of such payment by the Central Government to the transferor, till date of deposit by the petitioner. Such deposit shall be made by the petitioner within six weeks from today. On such deposit being made by the petitioner, the Appropriate Authority shall make a fresh order after due consideration in accordance with law and after hearing the parties, within four weeks thereafter. (b) If the deposit is not made by the petitioner as directed above, the order of pre-emptive purchase shall stand restored and the petitioner shall not be entitled to question the same thereafter. The Central Government will then be free to sell the property by public auction. (c) Counsel for the petitioner contended that possession of the property should be given to the petitioner on deposit of the amount. I do not consider it proper to give any such direction. Possession will continue to remain with the Government unit a fresh order is made after the petitioner deposits the amount as directed. In the event of the authority directing the pre-emptive purchase after fresh consideration, the amount deposited by the petitioner shall be refunded to the petitioner forthwith. If the authority decides to grant a ‘no objection certificate’ the amount deposited by the petitioner shall be appropriated by the Central Government without any liability on the part of the vendor to refund the discounted consideration, and the amount paid by the Government to the transferor shall be deemed to have been paid by the petitioner.”

3. Being aggrieved by the order of the learned single Judge, the appellant has filed the above writ appeal. In the memorandum of grounds of appeal, a two-fold attack has been made, viz. (i) that the learned single Judge having arrived at various findings which are in favour of the appellant ought to have only quashed the impugned order and ought not to have, after setting aside the impugned order, remitted the matter back to the Appropriate Authority for fresh disposal; (ii) and that the order of the learned single Judge in directing the appellant to deposit with the Appropriate Authority the sum paid by the Central Government as the discounted consideration together with interest thereon at the rate of 15 per cent per annum from the date of such payment (9th Dec., 1995) by the Central Government to the transferor, viz., the fourth respondent till the date of deposit by the appellant within a period of six weeks from the date of the judgment and that only on such deposit being made by the appellant, the Appropriate Authority shall make a fresh disposal of the matter in accordance with law, after hearing the parties, within four weeks thereafter, is improper and cannot be justified.

4. Before this Court, learned counsel for the appellant advanced his arguments only with reference to the award of interest at the rate of 15 per cent per annum from the date of payment by the Central Government to the fourth respondent (transferor) till the date of deposit by the appellant (i.e.), the second submission as referred to in the previous paragraph. In brief, learned counsel for the appellant contended that inasmuch as the learned single Judge of this Court rightly found that the Appropriate Authority failed to consider the objections raised by the appellant in the manner it ought to have done and directed the said authority to reconsider the matter and that too when the appellant has not been put in possession of the property in question, the condition imposed by the learned single Judge to pay interest at the rate of 15 per cent per annum on the amount paid by the Central Government to the fourth respondent for the period from 9th Dec., 1995, the day when the Central Government paid the amount to the fourth respondent till the date the appellant deposits the money, is contrary to law. In support of his contention, learned counsel for the appellant relied upon two decisions reported in R. Shanmuganathan vs. Appropriate Authority (2001) 165 CTR (Mad) 576 : (2000) 242 ITR 652 (Mad) and Smt. Jaspal Kaur vs. Union of India (1999) 157 CTR (Del) 146 : (1999) 240 ITR 493 (Del).

5. Per contra, learned counsel appearing for the Revenue contended that in view of the pendency of the proceeding instituted by the appellant, viz., the writ petition, even though the Central Government with the permission of this Court notified for the sale of the property on two occasions, nobody came forward to buy and that further a period of nearly three years had elapsed by then, the learned single Judge was right in imposing conditions. Learned counsel also placed reliance on the ruling reported in Appropriate Authority vs. Mass Traders (P) Ltd. (1993) 111 CTR (Kar) 294 : (1993) 202 ITR 741 (Kar) : TC S3.172.

6. The agreement was entered into between the appellant and the fourth respondent on 27th July, 1995, in and by which, the fourth respondent agreed to sell the property to the appellant for a sale consideration of Rs. 19,75,00,000. Thereafter, the appellant and the fourth respondent submitted Form No. 37-I on 27th July, 1995, seeking necessary approval. The authorities inspected on two occasions, and after giving opportunity to both the parties, the first respondent, viz., the Appropriate Authority, came to the conclusion that the initial rebuttable presumption raised in its show-cause notice stood unrebutted and that this was a fit case where the Appropriate Authority should exercise the pre-emptive right to purchase the schedule property under transfer at an amount equal to the amount of discounted consideration and by invoking the powers vested under s. 269UD(1) of the IT Act, 1961. Consequently, the immovable property was purchased by the Central Government for a sum of Rs.

19,18,04,260. In the said order, the Appropriate Authority called upon the fourth respondent to surrender possession within 15 days of service of the said order. The fourth respondent surrendered possession as required. The first respondent/Appropriate Authority paid the amount to the fourth respondent on 9th Dec., 1995.

7. Being aggrieved by the order of the Appropriate Authority, the appellant filed WP No. 16777 of 1995. The learned single Judge, after elaborately considering the matter, disposed of it finally by order dt. 11th Feb., 1997. By the said order, as already noticed, the learned single Judge, set aside the impugned order and remitted the matter back to the Appropriate Authority for fresh consideration, imposing certain pre-conditions on the appellant. In the said order, the learned single Judge pointed out that rightly the Appropriate Authority did not consider the Soundarya Nursery property, and that with regard to the Appropriate Authority comparing the other property, viz., Boat Club Road property, the learned single Judge, in para No. 17 of the judgment, observed as under : “The authority itself appears to have been aware of the difficulties in comparing the Boat Club Road property with the schedule property when it is stated in para. 5 of the order that the Boat Club property is fairly comparable with this property. No reasons have been given for rejecting the factors mentioned by the petitioner, as distinguishing this property from the property of the Boat Club Road.” (Emphasis, italicised in print, supplied) Again in para No. 27, the learned single Judge observed thus : “Learned counsel for the parties rightly submitted that it would not be unjust if the authority were to be directed to reconsider the matter and make a fresh order, as the authority has not dealt with the objections raised by the petitioner in the manner it ought to have done.” (Emphasis, italicised in print, supplied) With the above categorical findings, the impugned order was set aside and the matter was remitted back to the Appropriate Authority.

8. As already noted, the impugned order was passed on 27th Nov., 1995, and thereafter, the appellant filed WP No.

16777 of 1995, which was ultimately allowed on 11th Feb., 1997. In view of that, the appellant cannot be blamed as being responsible for initiating writ proceedings and thereby causing loss and hardship to the first respondent. In fact, pending the writ petition, the appellant moved WMP No. 1448 of 1997, as the Appropriate Authority proposed to sell the property by public auction on 5th Feb., 1997. The learned single Judge, after hearing both the parties did not grant stay and, on the other hand, permitted the Revenue to proceed with the auction, but not to confirm the sale pending disposal of the writ petition. The appellant aggrieved by the order of the learned single Judge, filed the above writ appeal and also obtained interim orders. The Revenue is in possession of the property ever since December, 1995, when it took possession from the fourth respondent.

9. From the above narration, the following has to be noticed. It is the Appropriate Authority which took possession of the property directly from the fourth respondent even in the first week of December, 1995, and continues to be in possession. Pending writ petition, no stay was granted and on two occasions, the Appropriate Authority endeavoured to sell the same. But, it appears that nothing materialised in the sense that nobody came forward to buy as expected by the Appropriate Authority. The learned single Judge has categorically found that the Appropriate Authority has not dealt with the objections raised by the petitioner in the manner it ought to have done and that the authority itself appears to have been aware of the difficulties in comparing the Boat Club Road property with the property in question and no reasons have been given by it for rejecting the factors mentioned by the appellant as distinguishing the property in question from the property of the Boat Club Road. The writ appeal was admitted by this Court and interim order has been granted.

10. In the facts and circumstances of the case, we find that none of the three parties can be blamed or could be found fault with. As far as the Appropriate Authority is concerned, it cannot be said to have acted mala fide and it only discharged its statutory duties and it cannot be blamed for having passed the order regarding the pre-emptive purchase of the property. The Court of law, viz, the learned single Judge set aside the order as the learned Judge found the same was not in accordance with law. It has to be remembered that the Appropriate Authority has acted only bona fide in passing the order of pre-emptive purchase. Coming to the fourth respondent, viz., the transferor, for his part, handed over, possession of the property and received the sale consideration. So far as the appellant is concerned, he has not been put in possession of the property. The learned single Judge has found that the impugned order of the first respondent is not in accordance with law and hence the appellant cannot be blamed in the sense that he cannot be called upon to pay the interest for the period from the date of payment by the Central Government to the transferor till the date of deposit by the appellant. It has to be noted that the appellant was within its legal rights to challenge the order of acquisition and its stand is vindicated by the fact that the order of pre-emptive purchase passed by the Appropriate Authority has been quashed by this Court. It is not as if the appellant was called upon to deposit the sale price at any point of time and it failed to do so. It has also to be remembered that the appellant had to keep the amount ready and available and it could not have utilised the amount for other investments. The appellant filing the writ petition cannot be a reason for the Court to impose the conditions, as the Court found that the Appropriate Authority had not dealt with the objections in the manner it ought to have done and it has not given reasons for rejecting the factors mentioned by the appellant in distinguishing the property in question and the Boat Club Road property. In fact, this is the only reason i.e., the appellant filing the writ petition given by the learned single Judge for imposing the condition that the appellant should pay interest also along with an amount paid equal to the one paid by the first respondent to the fourth respondent.

11. The contention by the Revenue that the appellant is responsible for the delay cannot be accepted inasmuch as the writ petition filed by the appellant has been allowed and the learned single Judge found that the order of the Appropriate Authority is not in accordance with law. So far as the contention that no purchasers came forward to buy in view of the pendency of the writ petition, the same has to be rejected as devoid of merit since the appellant filed the writ petition and the learned single Judge ultimately allowed the same, is only due to the Appropriate Authority’s own making. Thus, none of the three parties can be accused of anything. Once we come to the above conclusions, directing the appellant to deposit the amount with interest at 15 per cent per annum on the amount paid by the Appropriate Authority on 9th Dec., 1995, till the date of deposit by the appellant, cannot be sustained.

12. In this context, we deem it necessary to refer to two rulings. The first one is reported in R. Shanmuganathan vs. Appropriate Authority (supra). In that case, the Central Government by virtue of powers vested under Chapter XX- C of the IT Act, 1961, purchased the property of the appellants, took possession of the same and also paid the sale consideration. This was questioned by the appellants by filing a writ petition. The learned single Judge quashed the acquisition by the Appropriate Authority and directed the Appropriate Authority to deliver possession of the property back to the owner and the owner in turn was directed to refund the money with interest at 15 per cent per annum from the date on which the owners received the money till the date of refund of money to the respondent/Appropriate Authority. This was questioned by the owners in WA No. 755 of 1999. The Division Bench of this Court allowed the same, holding as under : “The appellants though succeeded before the learned Judge in getting the impugned order set aside and thereby they got the property acquired by the respondent- authority under the provisions of the IT Act, on condition that the petitioners/appellants shall refund to the respondent the entire amount received by them together with interest at the rate of 15 per cent from the date on which they received the money till the date they refund the money to the respondent-authority, the appellants have filed the above appeal aggrieved against the direction, directing them to pay interest at the rate of 15 per cent.

As submitted by learned counsel appearing for the appellants, when the learned Judge has found that the acquisition of the appellant’s property under the provisions of the IT Act cannot be sustained in law, as the respondent-authority has no jurisdiction to acquire the said property under Chapter XX-C of the IT Act, the appellants/petitioners should not have been directed to pay interest at 15 per cent. By the alleged acquisition under the said Act, the respondent authority has prevented the appellants/petitioners from enjoying their property by taking possession of the same. When the lawful possession of the appellants was denied, the respondent-authority cannot claim any interest for the amount paid towards the said acquisition. Hence, the respondent-authority is not entitled to any interest as directed by the learned Judge. So, the order of the learned Judge is modified to the extent that the appellants/petitioners are liable to refund the entire amount to the respondent deposited by them, towards the acquisition of the property in question and, on such repayment of the said amount, the respondent-authority shall hand over possession of the residence as directed by the learned judge.”

13. The other decision is one reported in Smt. Jaspal Kaur vs. Union of India (supra). In that case, an agreement to sell an immovable property was entered into between the purchases and the third respondent for Rs. 15 lakhs on 25th Oct., 1989. Out of that, a sum of Rs. 1,50,000 was paid as earnest money by the petitioners to the vendor at the time of agreement. The parties sought for no-objection certificate from the Appropriate Authority. In June, 1990, the Appropriate Authority passed an order of pre-emptive purchase of the property. Following this, the vendor delivered possession on 20th June, 1990. The Appropriate Authority, thereafter in February, 1992, paid the balance amount of sale consideration i.e., Rs. 13,50,000. In the writ petition filed, the order of the Appropriate Authority was set aside in January, 1995, and the matter was remanded for passing fresh orders. Following that, a fresh order for purchase of property was passed by the Appropriate Authority in April,1995. The same was again challenged by the petitioners. The writ petition was finally disposed of on 13th Feb., 1998, quashing the order of pre-emptive purchase dt. 27th April,1995, and the Appropriate Authority was directed to issue a no objection certificate under s. 269UL(3) of the IT Act, 1961. The Appropriate Authority in those circumstances, prayed for return of the purchase money along with interest at the rate of 18 per cent per annum from the petitioners and/or respondent No. 3 w.e.f. 28th Feb., 1992, on which date it paid the money to the owners of the property. The Division Bench of the Delhi High Court which considered the matter came to the conclusion that the Appropriate Authority would not be entitled for any interest, as claimed. In coming to such conclusion the Court also considered the earlier ruling of the Karnataka High Court, in Appropriate Authority vs. Mass Traders (P) Ltd. (supra). We consider it necessary to extract the relevant portions which run as under : “We have considered the rival contentions of learned counsel for the parties. In the facts and circumstances of the case it appears that neither of the three parties can be faulted. So far as the Appropriate Authority is concerned, it was acting in bona fide discharge of its statutory duties and it cannot be blamed for having passed the orders regarding pre-emptive purchase of the property. Law has taken its course and the orders were ultimately set aside by the Court. That should not be taken to mean that the action of the authority was not bona fide. The vendor, i.e., respondent No. 3, cannot be held liable in any manner for payment of any interest to the Appropriate Authority. The vendor had to receive the sale consideration of the property. She handed over the possession of the property to the Appropriate Authority and it was just and fair that she should have received the balance sale consideration. Moreover asking her to pay any interest on the said amount at this stage will only mean that she will be deprived of both, the property as well as the sale consideration because the entire amount will be wiped out by way of payment of interest.

Coming to the case of the purchasers, we are of the view that no fault can be found with their actions in dealing with the property which they intended to purchase all through. The petitioners were within their legal rights to challenge the order of acquisition and their stand is vindicated by the fact that the orders of pre-emptive purchase passed by the Appropriate Authority were quashed by the Court on both the occasions. The petitioners were always ready and willing to pay the balance sale consideration. To protect their interest in the property, the petitioners cannot be faulted for seeking the orders for maintenance of status quo with respect to the property. Unless such an order was passed by the Court, the property would have gone beyond the reach of the petitioners. The Department would have put the property to auction and third party interests would have intervened.

With due respect, we are unable to agree with the reasoning contained in the judgment in Appropriate Authority vs. Mass Traders (P) Ltd. (1993) 111 CTR (Kar) 294 : (1993) 202 ITR 741 (Kar) : TC S3.172. We are unable to persuade ourselves to the idea of the purchasers being called upon to compensate the Appropriate Authority for having obtained the order of maintenance of status quo with respect to the property. Seeking such an order was fully justified. Unless such an order was passed the property would have gone out of the hands of the petitioners. The amount of balance consideration paid by the Appropriate Authority to the vendor was in accordance with their statutory liability on account of having passed an order of pre-emptive purchase of the property. At best it can be said that the purchasers did not have to part with the amount of Rs. 13.5 lakhs which was the balance sale consideration and this money remained with them. In our view deprivation of the use and fruits of the property to the purchasers, i.e., the petitioners herein, was a greater loss to them as compared to the meagre amount of interest which presumably they could have earned on that amount. The purchasers had to keep the amount always ready and available and they could not have utilised the amount for other investments. We feel it would be inequitable to ask the purchasers to pay interest whatsoever on this amount. As already noted the amount of Rs. 13.5 lakhs has already been deposited by the petitioners with respondent No. 2 on 23rd April, 1999. The prayer of respondent No.

2 for award of interest on the amount of Rs. 13,50,000 is accordingly rejected. Respondent No. 2 is directed to issue the ‘no-objection certificate’ in terms of s. 269UL(3) of the IT Act forthwith, not later than four weeks from the date of this order and simultaneously deliver the possession of the property to the vendee. There will be no order as to costs.”

14. Learned senior counsel appearing for the Revenue placed reliance on the ruling of the Karnataka High Court in Appropriate Authority vs. Mass Traders (P) Ltd. (supra). The brief facts in that case are thus : It was concerning a property in the Bangalore City owned by two persons, which they agreed to sell to “X”, in April, 1988. Following that, the parties submitted Form No. 37-I as required under the provisions of the IT Act, 1961. The Appropriate Authority granted permission, by its order dt. 27th June, 1988. However, the agreement did not go through and after a lapse of one year, the owners entered into a fresh agreement to sell the property in May, 1989. The total consideration was Rs. 1,84,06,325 and an application in Form No. 37-I was again filed before the Appropriate Authority. On 25th July, 1989, the Appropriate Authority directed that the property in question be purchased pre- emptively. As against this order, a writ petition was filed. The learned single Judge ultimately set aside the impugned order on the ground that no tenable reasons had been given to sustain the impugned order and accordingly quashed the same. When the Department wanted to recover interest from the bank, the Court came to the conclusion that such a question does not arise and that whatever amounts have been paid is in lieu of consideration for the sale of property and that the property was in fact in the possession of the Department until it delivered the judgment. The request of the Department if allowed, the seller/owner can claim damages for deprivation of possession and hence, neither of the reliefs can be granted to either of them. The writ appeals are filed both by the Department as well as by the owner in W.A. Nos. 2164 and 2165 of 1992. The Division Bench framed mainly two questions for consideration.

(a) Whether the shareholder of the first respondent-company, has locus standi to challenge the order of the Appropriate Authority and to intervene as such in the proceedings ?

(b) Whether the purchaser had the right to challenge the order of the Appropriate Authority and whether it had the right of hearing before the order is passed ?

On the first question, the Bench held that the shareholder has no locus standi to challenge the order of the Appropriate Authority. On the two other questions, it held that respondents Nos. 1 to 3 ought to have been heard before the order is passed. Following this, the Division Bench also gave certain directions, which run as under : “

(a) That respondent No. 1 appears before the Appropriate Authority on 15th April, 1993, at 11.00 a.m. and on that day he deposits a sum of Rs. 1,84,06,325 with the Chief CIT, Bangalore, and further deposits the interest at the rate of 12 per cent per annum on the sum of Rs. 1,84,06,325 from 14th Sept., 1989, till 15th April, 1993, or till the date of deposit, whichever is earlier.

(b) In the event respondent No. 1 fails to deposit the amount of Rs. 1,84,06,325 with interest at 12 per cent. per annum from 14th Sept., 1989, on or above 15th April, 1993, the pre-emptive purchase order passed and the consequences flowing from it shall stand restored and the Central Government would be free to proceed further in the matter on the basis of the pre- emptive purchase order.

(c) In the event respondent No. 1 deposits the aforesaid sum within the time as stipulated above, the Appropriate Authority shall decide the matter afresh as indicated above on or before 15th June, 1993.

(d) Till then, the Central Government is permitted to retain the property in question. Similarly, the owners are also permitted to retain the sum which has been paid to them by the Central Government.

(e) We also make it clear that it is open to respondent No. 1 to withdraw the sum of Rs. 37.5 lakhs deposited by the Central Government in Canara Bank, Branch at Trinity Circle, Bangalore, in the name of respondent No. 1 along with interest accrued thereon.

(f) In the event respondent No. 1 deposits the sum of Rs. 1,84,06,325 with interest as stipulated above on or before April, 1993, and it, ultimately, the Appropriate Authority passes the preemptive purchase order directing to purchase the property, the sum of Rs. 1,84,06,325 deposited by respondent No. 1 shall be refunded to respondent No. 1 with interest at 12 per cent per annum from the date of deposit till the date of refund of the amount which shall be made within one month from the date of amount is deposited by the auction purchaser.”

15. With reference to the above decision, we would like to point out the following : (i) The Division Bench has not given reasons for awarding interest as per cl. (a) as mentioned above. (ii) As per cl. (f), if, ultimately, the Appropriate Authority passes the pre-emptive purchase order, directing purchase of the property, though whatever amount is deposited by the purchaser, shall be returned to the purchaser with interest at 12 per cent per annum from the date of deposit till the date of refund. (iii) It is also to be noted that this judgment was considered by other two subsequent judgments, which were also referred to. (iv) We are not inclined to follow the ruling of the Karnataka High Court. But, on the other hand, we follow the ruling of this Court in R. Shanmuganathan vs. Appropriate Authority (supra) as well as the ruling of the Delhi High Court in Smt. Jaspal Kaur vs. Union of India (supra). Consequently, we pass the following order : (i) The appellant shall deposit the amount, viz., Rs. 19,18,04,260 with the first respondent/Appropriate Authority, within a period of thirty days from today. (ii) In case the appellant fails to comply with this direction, the pre-emptive purchase order passed and the consequences flowing therefrom shall stand restored and the Central Government would be free to proceed further in the matter on the basis of the pre-emptive purchase order. (iii) In the event of the appellant depositing the aforesaid sum within the time as stipulated, the Appropriate Authority shall decide the matter afresh within six weeks from the date of deposit. (iv) Till then, the Central Government is permitted to retain the property in question. (v) The owners are permitted to retain the sum which had been paid to them by the Central Government. (vi) In the event of the appellant depositing the said sum as directed above and it, ultimately, the Appropriate Authority passes the pre-emptive purchase order directing to purchase the property, the sum so deposited by the appellant shall be refunded to it with interest at 15 per cent per annum from the date of deposit till the date of refund of the amount which shall be made within one month from the date of the fresh order to be passed by the Appropriate Authority.

In the result, the appeal is allowed to the extent indicated above. Consequently, the connected CMP will stand closed.

[Citation : 249 ITR 149]

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