Calcutta High Court
Mahabodhi Society Of India And Anr. vs Union Of India (Uoi) And Ors. on 5 January, 1994
Equivalent citations: [1994]209ITR412(CAL)
JUDGMENT Ajit K. Sengupta, J.
1. In this application under Article 226 of the Constitution of India, the petitioners have challenged the order passed by the appropriate authority under Section 269UD of the Income-tax Act, 1961, for purchase of the lease rights in the property being premises Nos. 7 and 7/1, Keyatala Lane, Calcutta, by the Central Government for a sum of Rs. 32,52,437 as against the consideration declared in the statement in the prescribed form, i.e., Form No. 37-I, at Rs. 1,88,33,096.
2. The case has a chequered history. Shortly stated, the first petitioner, a society registered under the Societies Registration Act, has been functioning for the practice, profession and propagation of Buddhism. A declaration of trust dated January 25, 1956, by Smt. Susahmamayi Devi and Sambhu Nath Banerjee, since deceased, her husband, who was a judge of this High Court as the confirming party, created a trust in respect of a plot of land measuring 2 bighas, 14 cottahs, 13 chittacks, together with a two-storeyed building, being premises Nos. 7 and 7/1, Keyatala Lane, P.S. Tollygunge, Calcutta. The trust was in favour of the petitioner-society. Under the terms of the trust deed, the society was to take possession of the trust estate but was to allow the settlor and her husband, the late Sambhu Nath Banerjee, during the joint lives or life of either of them to reside therein free of any rent and also to collect all rents and issues therefrom. It is only after the death of both the settlor and her husband, the confirming party, that the society will hold the property and take possession to further the objects of revival of Buddhism in India and do all such things as are required and/or conducive to the achievement of the said object, i.e., propagation of the Buddhist religion and teachings of Lord Buddha, installing and keeping installed an image of Lord Buddha in the trust estate and carrying out the daily and periodical worship and festivals of such image according to the tenets of the Buddhist religion and also arranging for lectures on panchsheels, holding meetings, gatherings or discourses, maintaining a library and reading room of Buddhist literature.
3. The deed of settlement, however, vested in the settlor the power of revocation, modification or alteration of the trust so created. The confirming party, the husband, Sambhu Nath Banerjee, predeceased his wife. Upon his death, the settlor, his wife, revoked the trust altogether and filed an originating summons, being Suit No. 187 of 1979 in this court, inter alia, for a declaration that the said declaration of trust dated January 25, 1956, was not binding on her. The said suit was, however, settled by consent of the parties and a decree was passed in the said suit on the basis of the terms of such settlement. Under the terms of the consent decree, the settlor, Sushamamayi Devi, was to pay to the first petitioner a sum of Rs. 20 lakhs by way of bank draft drawn in favour of the said petitioner within a period of six months from the date of filing of the terms of settlement, time being the essence of such settlement. The decree further provided that upon such payment by the said settlor, plaintiff, the society, the first petitioner, was to execute at its cost a deed of disclaimer and/or surrender releasing its right, title and interest whatsoever in the trust estate, viz., premises Nos. 7 and 7/1, Keyatala Lane, Calcutta.
4. In default of payment of the said sum of Rs. 20 lakhs by the said settlor within the period stipulated, the settlement was to stand determined, the property vesting in the society, the first petitioner herein. The said Sushamamayi Devi, settlor; however, failed to pay the said sum of Rs. 20 lakhs in terms of the consent decree and the trust created by her was declared valid and binding on her. The petitioners' case is that the settlor meanwhile died and the provisions of the declaration of trust dated January 25, 1956, came into effect in terms of the said consent decree whereby the said society became entitled to hold the estate subject to its obligation to provide residence for Buddhist monks, to establish a library hall to have an image of Buddha installed and spend money befittingly for the spread of Buddhism and for its study.
5. Thus, the petitioner-society claimed to have become the absolute owner of the said property subject to the terms and provisions of the said declaration of trust dated January 25, 1956.
6. Eventually, one Sanjiv Karanjai of 16-B, Shakespeare Sarani, Calcutta, said to be a devotee of the faith, came forward to develop the said property, to assist the society in its endeavour to provide residence for Buddhist Monks and also to establish a Buddhist temple along with a library hall for dissemination of the teachings of Lord Buddha and the advancement of Buddhist literature for propagation of Buddhism and thereby help the petitioner-society perform its duties and obligations under the trust. The said Sanjiv Karanjai agreed to enter into a lease agreement with the first petitioner. The lease agreements are as follows :
"1. Shri Sanjiv Karanjai shall be the lessee of the premises for a period of 99 years with an option to renew the said lease for a further period of 99 years.
2. As consideration he will pay to the first petitioner a premium of Rs. 5 lakhs and shall have a five-storeyed building having 15,000 sq. ft., each floor having 3,000 sq. ft. super-built covered area, including lift, at his cost and deliver it to the society, the first petitioner.
3. He will also pay Rs. 2,000 per month from the date of the lease until delivery of the said 15,000 sq. ft. super-built covered area as per choice and specification of the lessor within 24 months from the date of sanction of the plan by the Calcutta Municipal Corporation along with car parking facilities and out-houses for the servants and employees of the society,
4. Upon completion and delivery of the building, he will be paying Rs. 10,000 per month as rent subject to enhancement at the rate of 5 per cent. on the expiry of every ten years.
5. The building to be so constructed shall have on the ground floor a 'Mandir1 with tbe image of Lord Buddha, a prayer-cum-meeting and auditorium hall on the first floor along with requisite number of seats and furniture for the hall, a library room and other living rooms on the second floor, a guest-room of special type for the monks and the members of the society on the third floor, rooms for the managers of the society on the fourth floor."
7. A draft deed of lease was placed by the governing body of the society before Bhagabati Prasad Banerjee J. of this court, who is one of its members, seeking his guidance as to the propriety or otherwise of the proposed lease. Bhagabati Prasad Banerjee J., looked into the matter and on examination of the lease arrangement recommended it as beneficial for the society. In his words :
"It will help Mahabodhi Society of India not only to protect the properties, but at the same time bring huge funds for Mahabodhi Society of India to liquidate all dues. It will help to construct big and costly complex with temples, lecture halls, its maintenance etc., and above all Mahabodhi Society will become the owner of a big complex without spending any funds. Frankly speaking, I do not find any alternative means to restore the properties from the hands of the trespassers and to get a big costly complex constructed without investing any funds.
It appears there is no legal impediment to entering into such a contract which will protect and will help the Mahabodhi Society of India to carry out the objects of the trust and the objects of the Mahabodhi Society of India fully.
If it is not done, the Mahabodhi Society of India will be held guilty of negligence in protecting and preserving the said properties, which would be liable to be sold for the arrears of the municipal taxes and others. In such a situation, the society will lose its right over the properties."
8. Finally, Bhagabati Prasad Banerjee J., as the member of the governing body of the society, advised the society to accept the offer of Sri Karanjai, respondent No. 7 herein, to be the lessee of the property under the terms as indicated above.
9. The society, however, being governed by the Indian Charitable and Religious Trusts Act, 1920, filed an application under Section 7 of the said Act before the learned District Judge, Alipore, being Miscellaneous Judicial Case No. 336 of 1987, for issuing direction permitting the society, the first petitioner, to grant the lease of the property according to the terms and conditions contained in the draft lease deed. The learned District Judge upon examination of the matter and in exercise of judicial discretion under the statute approved the proposal for the lease by an order dated December 21, 1987. In the said order, the learned District Judge recorded the principal terms of the lease deed and in the light of the objects of the trust deed and the financial condition of the petitioner-society, accorded approval for the lease by exercise of his powers under Section 7 of the Indian Charitable and Religious Trusts Act, 1920. Thus, the lease arrangement has judicial sanction which the statute governing the society mandatorily requires.
10. As the natural sequence of events, the first petitioner, i.e., the society, and the lessee, the said Sanjiv Karanjai, filed on February 18, 1988, the statement in Form No. 37-I of the Income-tax Rules, 1962, read with Section 269UL(3) of the Income-tax Act, 1961, before the appropriate authority of income-tax under Chapter XX-C thereof for a certificate of "No objection" to the proposed lease. But, the said appropriate authority of the Income-tax department declined to pass any order, neither granted the requisite certificate of "No objection" in terms of Section 269UL(3) nor came to a decision for the pre-emptive purchase and held by an order passed by it on April 28, 1988, that the statement in Form No. 37-I is premature and invalid not requiring any action on the part of the appropriate authority. The statement was simply filed in its record by the said authority. The appropriate authority raised the issue that the petitioner-society has no valid title to the property proposed to he transferred by way of lease and the society's claim to be the owner of the property is disputable and it has no competence to transfer lawfully the property by the proposed lease. It also pointed out that the society's claim to the ownership of the premises is the subject-matter of multiple litigations instituted by some parties who are presently occupying the property. In view of the title of the petitioner society being contested the society cannot set up itself as the lessor nor could it effect the transfer as such to the other party as the lessee. On that ground, the application of the petitioner-society on the basis of the statement in the statutory form, viz., No. 37-I, was "filed", obviously treating it as infructuous. The final outcome was that neither the "statement" was acted upon nor a "No objection certificate" issued.
11. The society, the first petitioner, being aggrieved, impugned the said observations of the appropriate authority in the present writ proceeding as officious and ultra vires the powers conferred on the said authority under Chapter XX-C. According to the petitioner, the appropriate authority exceeded its jurisdiction by raising the question of the first petitioner's title to the property and its rights at law to act as the lessor. The provisions for pre-emptive purchase of the property as contained in Chapter XX-C does not invest the appropriate authority with any power to go into the question of the title. Under the provisions the appropriate authority is required to examine whether there are reasons for the Central Government to exercise its right of pre-emptive purchase or in the other event to issue a certificate of "No objection".
12. When the writ petition was moved on May 20, 1988, this court by an order of the said date set aside the order of the appropriate authority passed on April 20, 1988, and directed it "to pass a fresh order on the basis of the facts and circumstances of this case as appearing now and decide whether the option will be exercised under relevant provisions of the Income-tax Act, 1961, or not."
13. Pursuant to that interim order, the appropriate authority revived the proceeding which culminated in a decision for purchase of the lease right by the Central Government for a sum of Rs. 32,52,437. The said order was passed under Section 269UD(1) of the Income tax Act, 1961. Thus, the appropriate authority in a short span of about two months completely resiled from the earlier position that the first petitioner has no valid title which it could transfer. That was the finding of the appropriate authority in its order dated April 28, 1988, but in the fresh order passed on June 30, 1988, the self-same authority found that the first petitioner, the society, is possessed of clear title to effectuate the transfer by lease for purchase of which it invoked the provisions of Section 269UD(1).
14. With the leave of this court, the society, the first petitioner, filed a supplementary affidavit that impugns the said order passed by the appropriate authority deciding to purchase the rights under the proposed lease.
15. Shri S. Bagchi, the learned advocate appearing for the petitioner-society, in the first place, raised the issue that it was not open to the appropriate authority to shift from its earlier finding that there could not be any valid transfer by way of lease as per the draft lease deed and that the title of the petitioner-society to the property was highly questionable and that the transfer itself was non est and ineffective for lack of title. He emphasised that once the appropriate authority comes to that finding it becomes its bounden duty to issue a certificate of "No objection" under Section 269UL. According to him, the very finding of title wanting in the transferor and the consequential illegality predicates that the Central Government cannot be interested in exercising its right of pre-emptive purchase surrogating the transferee. By so pronouncing the transfer as illegal or invalid the appropriate authority earlier thought it prudent not to imperil the interest of the Central Government by such indiscreet purchase. This unmistakably predicates a decision not to exercise the discretion under Section 269UD in favour of pre-emptive purchase. That being the case, no course is left open to the appropriate authority but to issue a "No objection" certificate under Section 269UL. In this connection, he relied on Tanvi Trading and Credits P. Ltd. v. Appropriate Authority . He further pointed out that this decision of the Delhi High Court has been upheld by the Supreme Court (Appropriate Authority v. Tanvi Trading and Credits P. Ltd. while rejecting the special leave petition under Article 136 of the Constitution preferred by the department. The Supreme Court has also held that where a statement of a proposed transfer is filed before the appropriate authority under Section 269UC, the only right conferred on the appropriate authority by Section 269UD is to make an order for purchase of the property and, if such an order is not passed, it was imperative and obligatory on the appropriate authority to issue a "No objection" certificate under Section 269UL(3). The appropriate authority has no business to adjudicate on the question of the transfer of title or any infringement of law by the transfer or any other impediments to the proposed transfer. Such questions may enter into its consideration only in decision-making with regard to exercising the power of purchase. These questions would obviously preclude purchase of a property by the Central Government, the transfer having been found precarious. Mr. Bagchi contended that at the earlier stage when the petitioner moved the first petition on May 20, 1988, the circumstances of the case demanded the issue of a "No objection" certificate under Section 269UL(3) because the statement of the proposed transfer in Form No. 37-I was filed before the appropriate authority on February 18, 1988, and the time available for passing an order for pre-emptive purchase expired on April 30, 1988. Therefore, on May 20, 1988, the date on which this court set aside the earlier order implicitly and concomittantly required the appropriate authority to issue the "No objection" certificate. The fresh order passed lacks in scruples and bona fides as it avoids explaining its sudden shift from the earlier position and is, therefore, malicious.
16. The respondent appropriate authority, however, in its counter contested the contention urged by Mr. Bagchi saying that it is not that this court in its interim order on May 20, 1988, merely set aside the first order of the respondent, but at the same time gave the said respondent liberty to pass a fresh order. Therefore, the decision could have been relevant if the first order subsisted. That not being so and a fresh order for purchase of the lease rights having been passed, the reliance on the decision of the Delhi High Court as affirmed by the Supreme Court is no more relevant.
17. According to Mr. Bagchi, the contentions of the respondents flow from misreading of the order of this court dated May 20, 1988, as having abrogated the statutory prescription as to the limitation for passing an order for purchase under Section 269UD. The interim order, according to him, circumscribed the exercise of the powers by the appropriate authority only to the extent circumstances prevailing on that date could permit. In terms of the said order, the appropriate authority was directed to pass a fresh order "on the basis of the circumstances now appearing" (i.e., on the date of the order) and in accordance with law and did not give the respondent a carte blanche to pass any order contrary to the requirements of law as applicable to the circumstances then obtaining. One of the basic circumstances that appear on the date of the order, viz., May 20, 1988, was that the discretion of the appropriate authority stood barred by limitation and it cannot be any more open to the respondent to pass any order for purchase. According to Mr. Bagchi, the power of the respondent to make a fresh order flows not from the interim order of this court but from within the scheme of pre-emptive purchase as contained in Chapter XX-C.
18. It is, therefore, urged that the order of this court could not by any means be read as having dispensed with the limitation of time by way of remand of the initial order because there was no initial order passed by the appropriate authority. According to Mr. Bagchi, the interim order of this court cannot be treated as an order of remand, because the appropriate authority refrained from passing any order either under Section 269UD or 269UL(3) of the Act and merely "filed" the statement in Form No. 37-I as premature and infructuous. He pointed out to the concluding observation of the said authority in their order dated April 28, 1988, viz., "therefore, the question of acting upon it does not arise, the said statement in Form No. 37-I is filed as such." This shows that the respondent refrained from passing any order and allowed the matter to be barred by limitation. The relevant statute does not confer on the court the power to place the limitation under suspended animation. Here, the statutory provision is not content with imposing limitation but goes a step further to make such limitation rigid and irrelaxable. The question of limitation must be decided by the provisions of the Act and the courts cannot be presumed to have travelled beyond them. In this connection, reliance was placed on the decision of the Supreme Court in India Electric Works Ltd. v. James Mantosh, . In that case, the question of application of Section 14 of the Limitation Act was the subject-matter for determination. Section 14 vests in the court discretion to relax the limitation where a cause of action was being prosecuted in good faith in a court which from defect of jurisdiction or other cause of a like nature is unable to entertain it. The period spent in so prosecuting the suit in the wrong court is to be excluded. In that connection, the Supreme Court observed: "It is well-settled that all questions of limitation must be decided by the provisions of the Act and the courts cannot travel beyond them." He further referred to the decision of the Bombay High Court in Maharashtra State Road Transport Corporation v. Raoji Hari Lad, , wherein the Bombay High Court observed (at page 3) :
"It follows from the provisions of the Limitation Act and the principles enshrined therein that no court is entitled to invoke any principle for holding a claim as not barred by law of limitation if such a principle is not to be found expressly or by necessary implication in the provisions of the Limitation Act. No separate or independent principle can be invoked to add to or supplement, much less abrogate or nullify the provisions of the Limitation Act."
19. In this connection, Mr. Bagchi adverted to the provisions of Section 269UD and in particular to the first proviso below Sub-section (1) thereof. The said proviso ordains that no order of purchase 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 Section 269UC in respect of the property is received by the appropriate authority. This limitation, it is urged, is rigid and inflexible. It cannot be varied except in one condition, viz., where the statement referred to in Section 269UC is given to a wrong appropriate authority ; in such a contingency alone the time taken in transmitting the statement to the appropriate authority having jurisdiction in respect of the immovable property is excludible in computing limitation. The statute envisages no other situation for relaxing or varying the period of limitation. Therefore, it is totally wrong on the part of the respondent to construe the direction of this court contained in the interim order as having conferred upon the respondent the latitude to pass the order of purchase in disregard and supersession of this statutory limitation. Neither can the order of this court be read as one abrogating the statutory limitalion nor can such intention be attributed to the court while passing the interim order dated May 20, 1988. Far from giving the respondent such latitude the interim order of this court conditioned the exercise of the powers of the respondent in the matter of purchase in the expression, "on the basis of circumstances now appearing in this case". One such circumstance appearing in the case on that date was that the power of the appropriate authority was barred by limitation and the circumstances as then appeared permitted the appropriate authority only to issue a "No objection" certificate, the discretion to purchase having already terminated. Therefore, the said interim order cannot be construed as an order passed in relaxation of the limitation which is, for all practical purposes, inflexible.
20. Mr. Bagchi emphasised that, the Legislature has given the limitation under the chapter particular rigidity with the only exception in the event of the application being filed to an appropriate authority who has no jurisdiction in respect of the immovahle property. In such eventuality, the time taken in the transfer of the statement to the appropriate authority of competent jurisdiction alone can be added to the period of two months. That the rigidity of limitation is a definite and deliberate legislative act is clear from the observations of the Finance Minister in the Long-term Fiscal Policy announced in December, 1985. In paragraph 5,30 of the said policy statement, the following observation has been relied upon (see [1986] 157 ITR (St.) 16) :
"To reduce undue uncertainty in property transactions the Government's pre-emptive right of purchase will automatically lapse after 60 days of the seller's applying for the clearance certificate from the Income-tax Department for any particular property sale."
21. He stressed the fact that the new Chapter giving the Central Government the pre-emptive right of purchase was inserted by the Finance Act, 1986, in implementation of this long-term policy statement. Therefore, this shows the legislative intent to make the limitation rigid.
22. There are other ramifications in the argument advanced on behalf of the petitioner. It has been argued that the provisions of Chapter XX-C are not at all meant to apply to the petitioner's case. The primary purpose of introducing the Chapter is to counteract tax evasion by understatement of consideration in the transactions of transfer of immovable properties. It is argued that the Chapter is a new device to replace the earlier scheme under Chapter XX-A as the latter provision did not prove to be effective. To highlight this particular aspect, reference was again made to the statement of the Finance Minister on the long-term policy in December, 1985, paragraphs 5.29 and 5.30, wherein the object of the new legislative measure was clearly expressed to he a measure for countering evasion. The said policy statement made it clear that the provision is to operate where there is understatement in the transfer deed for the purpose of tax evasion. Even in his speech, the Finance Minister makes it clear that the purpose of the provision is not to hurt an honest seller. In this case, the petitioner is the organ of a religious denomination, i.e., Buddhists. Its object is to practise, profess and propagate the Buddhist faith. What is more, it is a non-taxable entity. Therefore, the motive of tax evasion and its eradication which constitutes the theme of the whole legislative scheme is irrelevant. No motive of tax evasion can be attributed to a corporate body of a religious denomination which is not at all a taxable entity. The action of the respondent tarnishes the image of the petitioner as the champion and preacher of the Buddhist faith in India. It maligns the petitioner by implicating it in a plot of tax evasion which is simply unthinkable. Mr. Bagchi stressed that the order impugned in the writ petition apart from being illegal, has the undesirable effect of hurting the religious sentiments of the community professing and practising Buddhism.
23. That apart, the action taken by the respondent, the appropriate authority, is further assailed as a blatant invasion on the fundamental rights of the petitioner-society under Article 25(1). The order is assailed as having infringed the right of freedom of religion. It aims at taking away from the religious denomination practising and professing Buddhism their right to profess, practise and propagate Buddhism. The entire lease arrangement was entered into by the petitioner for the purpose of propagating the teachings and tenets of Lord Buddha by establishing a centre and a venue for practice and scholarly studies in Buddhism and to support its monks, scholars and teachers. As a matter of fact, the trust, of which the society is the trustee, requires the society, the petitioner, to utilise the property for revival of Buddhism. The agreement was entered into, it is submitted, only for achieving the said object of propagation of the religion ; the society on its own is not financially solvent as to build the necessary superstructure requisite for the establishment of such a centre as required under the trust. It is urged that the act of the respondent constitutes a naked invasion of the right to freedom of the society which is a religious denomination. It is further urged that the right of the petitioner as a religious denomination to manage its religious affairs is also trampled upon by the respondents. The order of purchase is passed in deliberate hostility towards the petitioner as a religious denomination and in cold calculation to frustrate its attempt to establish and maintain institutions for religious purpose. It also robs the society of its right as a religious denomination to manage its own affairs, to own and acquire property and to administer such property in accordance with law. Under Article 26 of the Constitution such right of any religious denomination, as the society represents, cannot be interfered with as has been done in this case. This right is an inviolate right subject to the only restraint that the exercise of the right accords with public order, morality and health. In the present case, it is an established fact that the transfer in question has already been subjected to judicial scrutiny as required by law and the court of competent jurisdiction, i.e., the District Judge, has already found in his judicial review under Section 7 of the Indian Charitable and Religious Trusts Act, 1920, that the transaction is beneficial to the objects of the society. The society's right is already fettered by the said statute, No further fetters can be put on it unless the Legislature legislates new fetters for a religious denomination. Therefore, it cannot be said by the respondent that the petitioner-society in administering its property acted in a manner opposed to public order, morality and health nor is it assailable as a transaction sought to be carried out contrary to or inconsistent with any law.
24. It has been emphasised by the learned advocate for the petitioner that where a special law governs the transaction of a religious denomination and the transaction is effective only after it is sanctified by a judicial authority duly empowered by that special Act, the case cannot come under Chapter XX-C. In a case like the present one, the very question of initial or inherent jurisdiction bars the respondent from acting under the provisions of the Income-tax Act. When a transaction of a religious denomination has undergone judicial review, in a process prescribed by law and has passed the requisite test under such law, any attempt on the part of the respondent to invoke the provisions of Chapter XX-C of the Income-tax Act would be unseemly and also ultra vires inasmuch as it would amount to abridgement of the right to freedom of religion. The District Judge had approved the transaction under Section 7 of the Indian Charitable and Religious Trusts Act, 1920. According to Mr. Bagchi, by following the principle of generalia specialibus non derogant, the respondents have become functus officio.
25. The last legal objection raised by Mr. Bagchi is that the provisions of Chapter XX-C are not also otherwise operative in a transfer where the consideration is in future specie which cannot be rendered in present monetary terms. The cost of the structure to come up in a distant future and also the cost of future services to be rendered are not according to him reducible to any monetary equivalent in praesenti because the monetary equivalent is an imponderable. Therefore, according to him, the machinery of computation of the compensation fails. That being the case, the provisions have to be called to a halt. In this connection, he referred to the decision of the Supreme Court in CIT v. B.C. Srinivasa Setty to impress that the charging section and the computation provisions together constitute an integrated part. When there is a case to which the computation provision cannot apply at all, it is evident that such a case was not intended to fall within the charging section. According to him, an analogous situation is present here. The consideration for the lease consists, apart from the future services to be rendered by the lessee, in construction of a five-storeyed structure with a total covered super-built area of 15,000 sq. ft. of which construction, according to the finding of the appropriate authority, respondent No. 3, can be completed not before 9.5 years from the date of the order passed by the appropriate authority. The cost of construction would be the major part of the consideration but it is an unknown quantity. In such a case, the consideration is not at all computable. Therefore, the initial power with which respondent No. 3 is clothed cannot extend to the case.
26. Mr. Bagchi has also contested the order passed by the appropriate authority exercising the pre-emptive right of purchase on the merits. According to him, the entire order is replete with such fallacies as knock the bottom out of the order. In the first instance, he alleges the arbitrariness of the appropriate authority in not putting the petitioner on notice of the case made out by the appropriate authority. The appropriate authority has rested its case on certain sale instances alleged to be comparable to the immovable property involved herein. But the petitioner was never confronted with such instances. Thus, the order violates the principles of natural justice. He further pointed out that the appropriate authority has, on the one hand, presumed that the construction of the property can be completed only after 9.5 years because of the ongoing litigation for eviction of the unauthorised occupancy. On the other hand, it estimates the cost of construction at the present value at Rs. 250 per sq. ft. But the present cost of construction has been related to the future, viz., 9.5 years hence, and the same has again been discounted at 8 per cent. per annum to arrive at its present value. This is against basic human logic. If the cost of construction of the proposed super-structure is computed at the 'present cost of construction, the same cannot again be related to a future date as the future cost and progressively discounted to say that the discounted value is the present cost of construction. The present cost of construction so arrived at by the discounting method comes to Rs. 120 per sq. ft. (i.e., 18,05,118 + 1,50,000). The fallacy is further compounded by the fact that the self-same authority in paragraph 6 has estimated that the lessee shall have to incur the cost of Rs. 750 per sq. ft. for delivering equal accommodation to the existing tenants and the total outlay for rehabilitating the existing tenants would involve the sum of Rs. 92.91 lakhs at the said rate of Rs. 750 per sq. ft. Thus, the appropriate authority on the one hand calculates that the rate of cost of construction would be Rs. 750 sq. ft. but while computing the consideration for the transfer the same cost is taken at Rs. 120 per sq. ft. The order is thus malicious.
27. The respondent's plea in its counter is that the petitioner can have no cause of action in so far as the petitioner is not going to be prejudiced by the order passed for pre-emptive purchase under Section 269UD. This plea is, however, contested by the petitioner's advocate and it has been emphasised that the order passed puts the petitioner in great jeopardy and is meant to frustrate the very object of the lease arrangement. It is pointed out that the scheme of law does not contemplate any compensation by way of specific performance by the Central Government in the event the Central Government decides to step into the shoes of the lessee. It is only monetary compensation that is contemplated by the Act, but the proposed lease casts on the lessee the onerous duty of delivering the consideration in specie, a five-storeyed building complete as a temple as well as a venue for assembly of scholars in Buddhism with library, lecture hall, residence and so on. The choice of the lessee by the petitioner is crucial to the success of the entire project which is a big step towards revival and propagation of Buddhism, the objects of the trust as well as the objects of the society. The lessee is a devotee of Buddhism with credentials. This right of choice of the person to be the lessee for completion of the project is not a matter capable of monetary valuation or reducible to monetary compensation. Under the scheme, immediately upon purchase the Central Government will sell the lease rights to the highest bidder wherewith to pay the compensation to the petitioner but the terms of the lease agreement are such as leave no room for monetary compensation. The entire project will be thus heading for failure if it falls into wrong hands. The order under Section 269UD(1) shall prove to be a total disaster to the object of the society.
28. It is stressed by the petitioner's advocate that the petitioner's interest could be said to be out of peril if the Central Government had simply stepped into the shoes of the lessee in the case and was ready to perform all the obligations and duties precisely to the specifications which the lessee under the arrangement is obligated to execute. But that is not to be as the law does not contemplate such a course to be taken by the Central Government. That being so, this particular type of lease agreement is completely out of the scope and ambit of Chapter XX-C. The learned advocate concluded that there will be irretrievable loss to the society if the order is allowed to go to its logical consequence. The pious attempt of the society to translate the objects of the trust will simply founder.
29. I have considered the submissions and have also gone through the affidavit-in-opposition submitted by the respondent. The gist of the arguments advanced on behalf of the petitioner are :
1. By coming to a finding in the first instance that the title to the property of the petitioner is wanting, the appropriate authority arbitrarily decided against exercising the pre-emptive right of purchase and was, therefore, bound to grant the no objection certificate under Section 269UL(3). He reinforced the argument by citing the decision of the Supreme Court in Appropriate Authority v. Tanvi Trading and Credits Pvt. Ltd. .
2. The interim order of this court dated May 20, 1988, did not abrogate the limitation under Section 269UD(1), proviso, and permitted the respondent to pass a fresh order within the four corners of Chapter XX-C and not travelling beyond that. The time for exercising the option on that day having stood barred by limitation is a circumstance which forbade the respondents to pass the impugned order that they did.
3. Because of the bar of limitation the only order to be passed in pursuance of the said interim order was to be one allowing the no objection certificate.
4. No order of the court can be construed to have abrogated statutory limitation, more so, where the statute makes the limitation rigid and leaves no room for the court to relax it. The position would have been different if the appropriate authority instead of filing the statement in Form No. 37-I had acted on it and passed an order under Section 269UD(1). The direction of this court would have saved the limitation.
5. The petitioner as a religious denomination could not come under the scheme of pre-emptive purchase as the scheme is a measure for counteracting tax evasion. The petitioner-society being a non-taxable entity, no evil motive of tax evasion could be imputed to it.
6. The dealings of the petitioner society with its property being governed by a special Act, viz. the Indian Charitable and Religious Trusts Act, 1920, and the particular transaction having been subjected to judicial scrutiny by the civil court of competent jurisdiction under Section 7 of the said Act, the special chapter of the Income-tax Act is excluded on the maxim that the special law excludes the general law.
7. The transactions are judicially found to be beneficial to the petitioner, a religious denomination. The order passed under Section 269UD is officious as well as violative of the rights of the society under articles 25 and 26 of the Constitution of India.
8. The action of the appropriate authority is sacrilegious as it maligns the organ of Buddhism in India thus hurting the sentiments of those who profess and practise the Buddhist faith.
9. The order is otherwise malicious as it is calculated to spoil the endeavour of the petitioner to open a centre for dissemination of the teachings of Lord Buddha.
10. The prejudice caused by the order is not reducible to monetary compensation and, therefore, the Chapter cannot at all have application because the same does not contemplate compensation by way of specific performance which is the very essence of the arrangement for lease in the present case.
11. The Chapter is not also applicable as the consideration in the instant lease is in specie to be delivered in future of which the money value is an imponderable factor and thus there cannot be any computation of the compensation. The computation machinery not being available, the provisions as a whole break down.
12. The order has also been passed cavalierly and against elementary logic and, thus, it is vitiated by non-application of mind and imperceptibility of reality.
30. I find that the order passed by the appropriate authority is fit to be struck down on the first limb of the arguments advanced on behalf of the petitioner. The bar of limitation should not have been violated by the appropriate authority. It is plain that the appropriate authority did not pay heed to the requirement of following the limitation which it should have, especially when the Finance Minister in the long-term policy laid special stress on the requirement of rigid limitation so as not to keep the citizens on tenterhooks. In paragraph 5.30 of the said policy statement the following observation occurs (see [1986] 157 ITR (St.) 16) :
"To reduce undue uncertainty in property transactions the Government's pre-emptive right of purchase will automatically lapse after 60 days of the sellers applying for the clearance certificate from the Income-tax Department for any particular property sale."
31. The order passed by the court on May 20, 1988, restricted the powers of the appropriate authority to act in accordance with law and having regard to the circumstances of the case as obtaining on that date. The order cannot be conceived as having abrogated the limitation nor can it be said to have given the limitation a fresh lease of life. It was precisely for this reason that the said order circumscribed the respondent's liberty to decide the matter afresh "on the basis of circumstances now appearing". This necessarily implies that the fresh order was to be passed within the four corners of the law and subject to the existing circumstances. The fact of the matter is that, in this case, the statement in Form No. 37-I was filed on February 18, 1988. Therefore, the limitation period of 60 days from the end of February, 1988, was to expire on April 29, 1988. It was on April 28, 1988, just a day before the expiry date of the limitation, that the appropriate authority merely kept the said statement on its record and decided not to act on it. Therefore, the limitation expired even before the commencement of the writ proceedings. If a view was possible that where a writ proceeding starts during the currency of the limitation period, the limitation should stop running from the date of initiation of the proceedings till its disposal, that also could not advance the case of the appropriate authority because here the writ proceedings commenced after the limitation expired.
32. It is, however, now settled principle of law that where the order passed within the limitation is set aside by the High Court or the Supreme Court, directing the revenue authority to pass a fresh order, the limitation does not operate. This has been held by the Supreme Court in the Director of Inspection of Income-tax v. Pooran Mall and Sons . The court observed (at page 394) :
"Even if the period of time fixed under Section 132(5) is held to be mandatory that was satisfied when the first order was made. Thereafter, if any, direction is given under Section 132(12) or by a court in writ proceedings, as in this case, we do not think an order made in pursuance of such a direction could be subject to the limitations prescribed under Section 132(5)."
33. That was a case of limitation for the purpose of retention of seized articles. But, the fundamental principle with regard to limitation shall likewise apply in the present case. In this case, however, the appropriate authority cannot be said to have passed any order under Section 269UD(1) or under Section 269UL(3). The authority merely treated the statement in Form No. 37-I as non est and observed in express terms that they were not acting on the said statement. The matter was closed by merely filing the statement. That happened on April 28, 1988, while the expiry date of the limitation was April 29, 1988. The writ petition was moved in May, 1988, i.e., after the expiry of the limitation. The final position is that there was no order passed within the statutory period of limitation. That being "the circumstances of the case appearing on the date", it was not open to the appropriate authority to revive the statement and the proceeding for pre-emptive purchase. Such option stood barred by limitation. The principle laid down by the Supreme Court in Pooran Mall's case , cannot come to the saving of the limitation in this case. That principle shall operate provided an order was passed on time which is directed to be redecided.
34. If an order under Section 269UD(1) was passed by the appropriate authority in the first instance within the period of limitation, it would have been possible to hold that the limitation of time does not affect the present order. Learned counsel for the petitioner is correct in construing the implication of the order passed by this court on May 20, 1988, as one leaving open to the appropriate authority the only course, namely, the granting of a "No objection" certificate. There was no other option available in the circumstances of the case. The order needs to be set aside solely on the ground of bar of limitation.
35. But the submissions made on behalf of the petitioner makes certain substantial questions of law of which the major question appears to me to be two-fold. One relates to the question whether a religious denomination which is a non-taxable entity and whose dealings in its property are governed by a special Act could at all come within the scope of Chapter XX-C. I hold that an affirmative view has to be taken in this respect. It will be officious on the part of the tax. authorities to interfere in any dealings by a religious denomination where a judicial authority of competent jurisdiction has already adjudged the transaction as wholesome and beneficial to the interests of such religious denomination. It is not only that any attempt on the part of the appropriate authority to act under Chapter XX-C in regard to such transaction would be an impingement on the authority of the judiciary specially appointed to examine the salutariness of the transaction. Worse still, it would be violative of the provisions of Article 26 of the Constitution. Such an act would also be unsavoury as hostile to a particular religious faith in the special context of facts obtaining in this case. In any case, the invocation of the powers under Chapter XX-C would amount to an invasion of the freedom of the right to practise, profess and propagate the religious faith. Our Constitution is a secular Constitution and secularism which is the key-note of the Constitution does not imply that the act of the State has to be anti-religious, rather it is the inherent and elemental requirement that religion should be free. Here, the respondent in a mindless manner has proceeded to thwart a laudable endeavour of the petitioner which is the organ of Buddhism in India to revive Buddhism and to disseminate the high moral teachings of Lord Buddha. Even if the acts of the appropriate authority which are clearly hostile to the petitioner are not the outcome of any parochialism, yet its effect is deleterious inasmuch as it abridges in the ultimate effect the right of those professing Buddhism to practise and propagate it. Thus, the order is ultra vires both articles 25 and 26 of the Constitution.
36. Another fundamental issue raised on behalf of the petitioner is whether where the consideration in future specie of which the consideration is imponderable not being reducible to monetary compensation, the chapter can be invoked. Here also I am in agreement with the contentions of Mr. Bagchi. If the consideration for a transfer is not monetary consideration or not existing things or is future things not having a workable present market value, the machinery for computation of the compensation fails. If the compensation is not computable, the Chapter itself becomes inoperative. The petitioner's counsel rightly relied on CIT v. B.C. Srinivasa Setty . There is a complete analogy in the two situations, viz., the capital asset not having a cost Of acquisition for computation of capital gains and consideration for transfer not having a present computable value. When the Supreme Court held that in the former case the computation of capital gains breaks down and the charge of capital gains tax shall fail, a similar view is to be taken that compensation payable not being computable, there cannot be an order of pre-emptive purchase by the Central Government. Compensation payable is cardinal to the whole scheme of Chapter XX-C. This will be evident from the observation of the Finance Minister in his Budget Speech of 1986 which inserted the Chapter. It reads (see [1986] 158 ITR (St.) 13) :
"In line with the Long-term Fiscal Policy another major step being taken is to empower the Government with a pre-emptive right to purchase properties which are offered for sale in the market at the price agreed to by the transferor. To begin with, this provision will apply to properties valued at over Rs. 10 lakhs located in metropolitan cities. An honest seller, wherever he may be, will not be hurt by this measure. For the rest, it is between them and the Income-tax Department--and God."
37. It leaves no doubt of the intention of the Legislature not to hurt an honest seller. Here also the petitioner cannot but be said to be an honest transferor. Yet, the act of the respondent is meant to hurt because there is no means of compensating the petitioner. If the lessee's rights are taken away by the Central Government, it shall put them in the market for sale to the mercenaries and property sharks with no credibility to the petitioner. This constitutes a high risk to the interest of the petitioner-society. The order could have been unexceptionable if it were the contemplation of the law that the Central Government would step into the shoes of the lessee and do all acts necessary for specific performance under the lease agreement. That not being possible, the case is not one that the chapter could take in.
38. The contentions on behalf of the petitioner assailing the order on the merits are also valid. There could be no sense in first assuming the cost of construction to be Rs. 250 per sq. ft. on the date of the agreement and then relating forward the said cost to 91/2 years thence and again discounting that total cost at the rate of 8 per cent. per annum for the entire period of 9.5 years. The entire method only shows a malice unbecoming of an authority consisting of experts entrusted with plenary powers.
39. There is one discrepancy in the whole course of dealing with the case by the appropriate authority. It would strike at anybody's sensibility as to why and wherefore the authority in a matter of a month did a volte face and found the petitioner possessed of title to the property to act as its lessor contrary to its earlier finding of the same title being wanting. There has not been any change in the circumstances that were considered earlier to be the detracting factor as regards the petitioner's title to the property. There is, however, no whisper about the deficiency or imperfection or absence of title in the second order. It makes a beeline for preemptive purchase without going into the ceremony of explaining the departure from the earlier conclusion. There is no mention as to why the present order is absolutely silent. This aspect though not directly touching the question of validity of the order is an indication that the entire approach of respondent No. 3 has been light-hearted not consonant with the spirit of a public authority acting quasi-judicially, instructed as to the law that should govern the matter.
40. In the premises, I am constrained to set aside the order for the multiple infirmities as discussed in the foregoing. That apart, I also hold that the nature of the consideration for the lease in the instant case is Such as precludes computation of monetary compensation and cannot, therefore, fall within the ambit of the scheme of pre-emptive purchase envisaged in Chapter XX-C of the Income-tax Act, 1961. It is beyond the competence of the appropriate authority to exercise the pre-emptive powers of purchase under Section 269UD. Worse still, even if such power were there, the same stood barred irreversibly long before the date of passing the order.
41. The order having been set aside and struck down, the petitioner is entitled to the certificate of "No objection" under Section 269UL(3).
Respondent No. 3 is directed to grant the "No objection" certificate within two weeks hence. The respondents are further directed to issue a certificate under Section 250A(1) on satisfaction of all legal requirements by the petitioner for that purpose. If the registration of the lease deed has already been completed by the registering authority on a provisional basis in terms of the order of this court dated May 20, 1988, the same shall be treated as valid and final upon production of the "No objection" certificate under Section 269UL(3) and the certificate under Section 230A(1). There will be no more any restraint on the lessor in the matter of delivery of possession of the leasehold property. The interim order thus stands vacated. In the result, the petition is allowed without any order as to costs.