Full Judgment Text
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CASE NO.:
Appeal (civil) 6049 of 1998
PETITIONER:
APPROPRIATE AUTHORITY & ANR.
Vs.
RESPONDENT:
R.C.CHAWLA & ORS.
DATE OF JUDGMENT: 10/05/2001
BENCH:
S. Rajendra Babu & K.G. Balakrishnan
JUDGMENT:
RAJENDRA BABU, J. :
L...I...T.......T.......T.......T.......T.......T.......T..J
An agreement to sell was entered into on 6.5.1994 by
respondent NO.3 with respondent Nos. 1 and 2 in respect of
property bearing municipal No.C-590, Defence Colony, New
Delhi for a total sale consideration of Rs.80 lacs. An
application in Form 37(I) was filed before the Appropriate
Authority as required under Section 269UC of the Income Tax
Act, 1961 [hereinafter referred to as the Act]. The
Appropriate Authority by an order made on 30.1.1984 under
Section 269UD ordered the purchase by the Central Government
of the said property for the sale consideration mentioned in
the agreement to sell. This order was challenged before the
High Court in C.W.P.No.3884 of 1994. The High Court by an
order made on 17.10.1997 quashed the order for compulsory
sale made in favour of the Union of India. Hence this
appeal by special leave.
According to the Appropriate Authority, the fair market
value is assessed to be Rs.96,85,650/-, thus resulting in an
increase by 20 per cent of the apparent consideration of
Rs.80 lacs plus conversion charges of Rs.1,04,000/-. In
reaching this conclusion, the Appropriate Authority took two
instances of sale of properties situate at C-77, Defence
Colony, New Delhi and C-86, Defence Colony, New Delhi to
show that the value has been understated by more than 15 per
cent. Even assuming for the sake of argument that the
valuation assigned by the Appropriate Authority to the
property in question is correct, one important factor has
been ignored by the Appropriate Authority, namely, that the
property was under litigation and proceedings were still
pending in the court of law at the time when the sale was
sought to be made and the Additional District Judge in fact
had issued an injunction on May 27, 1994 restraining the
same, transfer or parting with the possession of the
property. The Department brushed aside this important
factor as regards pending litigation, which had been
initiated by the step brother of the transferor in which the
title of the transferor had been challenged. In those
circumstances, the High Court felt that the impending
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litigation altogether cannot be ignored while determining
the fair market value on the ground that the transferor had
agreed to indemnify the transferee or that in the long run
the litigation will fail. Whatever may be the other
argument that had been addressed by the parties concerned,
it is clear that the pending litigation assumed sufficient
importance in the matter. The High Court took note of the
fact that in other cases where there is pending litigation
in respect of properties which have been subjected to
proceedings under Chapter XX-C of the Act had been
discounted by 10 per cent. It is not necessary to determine
this particular percentage. The well known principle of
administrative law that if a relevant factor is ignored, the
order made becomes vitiated has to be applied in the present
case as well. On that basis, the order made by the
Appropriate Authority is vitiated and on this short ground
we find that the view taken by the High Court is correct and
calls for no interference.
The appeal is, therefore, dismissed with costs
quantified at Rs.10,000/-