Delhi High Court
Rn Soin And Sons Pvt Ltd vs Appropriate Authority And Ors on 2 February, 2012
Author: Sanjiv Khanna
Bench: Sanjiv Khanna, R.V. Easwar
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 1757/2011
% Date of Decision : 2nd February, 2012.
+ W.P.(C) 1757/2011
RN SOIN AND SONS PVT LTD ..... Petitioner
Through: Mr.Sandeep Sethi,
Sr.Advocate with Mr.Rajat
Naved, Advocate.
versus
APPROPRIATE AUTHORITY AND ORS ..... Respondents
Through: Mr.N.P.Sahni, Advocate
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE R.V. EASWAR
SANJIV KHANNA,J: (ORAL)
1. The present writ petition under Article 226 impugns the order
dated 22.02.2010 passed by the Appropriate Authority under Chapter
XX-C of the Income Tax Act, 1961 (Act for short). The Appropriate
Authority by the impugned order has passed an order for purchase u/s
269 UD(1) of the Act, inter alia, holding that the apparent
consideration of Rs.23,80,387/- as declared in form No.37-I for
WP(C) 1757-11 Page 1 of 22
purchase of property bearing No.20 Oak Wood Drive, Malibu Towne,
Sohna Road, Gurgaon was under-stated.
2. The relevant facts are that two individuals, namely, Yogeshwar
K.Dhawan and Namita Kaul Bhattacharya had originally applied and
were issued an allotment letter dated 27.04.1994 in their name for a
plot admeasuring 872.64 Sq.meters @ Rs.2392 per sq. meter by M/s.
Malibu Estates Pvt. Ltd. (the respondents no.3 herein). They had paid
Rs.1,25,000/- initially and between the period February, 1994 to
December, 1994, they had paid Rs.5,24,000/- towards the sale
consideration (inclusive of initial payment of Rs.1,25,000/- to M/s
Malibu Estate Pvt. Ltd., respondents no. 3).
3. The petitioner M/s R. N. Soin & Sons Pvt. Ltd. claims that the
said two individuals assigned and transferred their rights in favour of
the petitioner. The petitioner made the payment of Rs.18,56,387/-
between February, 1995 to May, 1996 to respondent no. 3. On
12.06.1996 the petitioner and the respondent No. 3 entered into a plot
buyer agreement. The plot number is mentioned. An annexure to the
plot buyer agreement states and gives the details of payments already
made. The payments recorded were by account payee instruments.
WP(C) 1757-11 Page 2 of 22
The agreement stipulates that the basic sale price of the plot was
Rs.2392 per sq. meter and in addition the petitioner was liable to pay
External Development Charges of Rs. 275.80 per sq. meter,
preferential location charges of Rs.60 per sq. meter, and a contingency
deposit of Rs. 24 per sq. meter. The total cost of the plot after
including another amount of Rs.15,000/- was Rs.24,16,983/-
4. After development was complete and the plot was ready for
possession, the petitioner had filed form No.37-I seeking permission
under Section 269UD (1) of the Act on 25.08.2000 with the respondent
no. 1. A formal agreement was executed before form No.37-I was
filed. Thereafter, vide order dated 30.11.2000, the Appropriate
Authority passed the order dated 30.11.2000 for pre-emptive
purchase/acquisition u/s 269UD(1).
5. The Appropriate Authority in this order dated 30.11.2000
proceeded and observed that for determining whether the apparent
consideration was understated, they were bound to evaluate the market
value of the property on the date when form 37-I was filed. They
rejected the contention of the petitioner that they should, for the
purpose of valuation, take into consideration the initial date of private
WP(C) 1757-11 Page 3 of 22
agreement i.e. 24.02.1994. The reasoning given by the Appropriate
Authority in the order dated 30.11.2000 reads as under:-
"In view of these submissions it was
contended that in the situation of the present
case, the Appropriate Authority is duty bound
to evaluate the property on the date when the
Parties entered into initial private agreement
i.e. 24.02.1994 and not on the date of the
formal agreement which was recorded in
Form 37-I and filed on 25.08.2000.
4(i) The above contentions raised by the AR
have been carefully considered. The sum and
substance of these contentions is that for the
purpose of valuation, the date of initial
private agreement i.e. 2.2.1994 is relevant
irrespective of the fact that Form No.37-I
was filed on 25.08.2000. This contention of
the AR is not tenable as the Hon'ble Supreme
Court in the case of DLF Universal Ltd. &
Ors. Has clearly held that "foundation for
exercise of jurisdiction by the Appropriate
Authority u/s 269UD is the statement in
Form No. 37-I and not agreement for
transfer". The Appropriate Authority
acquires the jurisdiction u/s 269UD of the
Income Tax Act with the filing of the
statement in Form No.37-I and not with
respect to any other agreement for transfer.
Therefore, for the purpose of determining
fair market value of subject property the
relevant date would be the date on which
agreement for transfer is reduced into
writing in Form No. 37-I. Following the
judgement of the Hon'ble Supreme Court
referred to above, the Appropriate Authority
WP(C) 1757-11 Page 4 of 22
cannot exercise jurisdiction in any other
manner except based on the Statement in
Form 37-I. In the present case, it is admitted
fact that the date mentioned on the Form
No.37-I is 24.08.2000. Therefore, this was
the relevant date for the purpose of
determining the fair market value of the
subject property as also whether there was
any under valuation or not. The fair market
value of the subject property as on this date
was determined at Rs.57,39,353/- based on
which the understatement worked out to
+58.55% taking FMV as base. This
contention of the AR, thus fails."
6. The aforesaid order was challenged in Writ Petition (C)
No.7591/2000 which was disposed of vide order dated 18.10.2010. In
this decision, the Division Bench referred to two decisions, DLF
Universal Ltd. Vs. Appropriate Authority & Anr. (2000) 243 ITR 730
(SC) and Ansal properties & Industries Ltd. (1999) 236 ITR 793
(Del.).
7. The High Court reproduced the ratio of decision of the Supreme
Court in DLF Universal Ltd. (supra). For the sake of convenience the
said findings/ratio is reproduced below:-
"To sum up, our findings are: -
(i) Agreement for transfer as defined in clause
(a) of section 269 UA refers to an agreement
which is entered into privately between the
WP(C) 1757-11 Page 5 of 22
parties thereto; such an agreement may be
oral or in writing.
(ii) An agreement for transfer entered into by
the parties in Form 37-I under section 269 UC
is not an agreement defined by clause (a) of
section 269 UA. It is an agreement statutorily
ordained to be entered into in a
prescribed proforma.
(iii) Agreement for transfer, the phrase as
occurring in Chapter XXC has two meanings
depending on the context where it occurs. It
may be an agreement for transfer as defined in
clause (a) of section 269 UA (which in this
judgment has been referred to as private
agreement). It may be an agreement for
transfer as defined in section 269 UC (which
in this judgment has been called a
proforma agreement). Since the agreement for
transfer under section 269 UC is to be
drawn up in the form of a statement, in
Chapter XX-C, the word 'statement' has
been used interchangeably with agreement for
transfer in Form 37-I. ``Agreement for transfer
as occurring in section 269 UKI, section 269
UM and section 269 UD is to be assigned the
meaning as defined by clause (a) of section
269 UA. At all the other places in Chapter
XX-C, agreement for transfer means and must
be read as proforma agreement i.e. an
agreement for transfer in the prescribed Form
37-I as the context so requires.
(iv) The Appropriate Authority cannot be
found fault with refusing to act upon or take
cognisance of proforma agreement in
statement Form 37-I (i) if the requisite
WP(C) 1757-11 Page 6 of 22
particulars though available are not supplied
or (ii) if the requisite particulars would be
available at the time when the property has
reached a state in which it is proposed to be
transferred and yet the particulars are not
being made available with precision because
the form is being filed with a view to secure
NOC for a transfer in contemplation.
(v) A delay in filing Form 37-I is not a defect.
The period of 15 days prescribed by Rule 48-L
is directory and not mandatory.
(vi)The period of 15 days is to be calculated
from the date of entering into the proforma
agreement in Form 37-I and not from the date
of any other proceeding private agreement
between the parties.
(vii) If there are agreement more than one
entered into between the parties, then it is the
latest of the agreements which supersedes the
earlier ones which has to accompany Form
37-I when filing before the Appropriate
Authority. Other agreements if relevant may or
looked into by the Appropriate Authority.
(viii) A defect contemplated by section 269 UC
(4) is one which is capable is being cured.
(ix) The stage for entering into the statutory
agreement or proforma agreement in Form
37-I arises when the parties are ready to make
available all the particulars contemplated by
several clauses of Form 37-I consistently with
the nature of the property. The date of
entering into the proforma agreement
must have proximity of relationship by time
WP(C) 1757-11 Page 7 of 22
with the proposed transfer of property
as defined in clause (f) of section 269 UA. The
test for determining proximity of relationship
is the availability of the property agreed to be
transferred in such status in which it is
proposed to be transferred.
(x) A no objection certificate issued by
Appropriate Authority based on an agreement
for transfer of property to be constructed
cannot be utilised for securing registration of
property which has been constructed."
8. The Division Bench also noticed paragraphs 7, 8 and 14 of the
judgment of the Supreme Court in DLF Universal Ltd. (supra), which
again for the sake of convenience are reproduced below:-
"7. Agreement for transfer and statement in
Form 37-I are two different documents. As
rightly held by the High Court agreement for
transfer can be oral as well as in writing but
then this agreement for transfer has to be
reduced in writing in Form 37-I. High Court
has held that in certain sections in
Chapter XX-C 'agreement for transfer' in fact
means statement in Form 37-I as mentioned in
sub para (iii) of its findings.
8. The question that arises for consideration is
if the period of 15 days, as mentioned in Rule
48L, is to be calculated from the date when a
prospective buyer applies for allotment of a
flat or from the date when a regular
agreement called the ``Apartment Buyers'
Agreement'` is entered into between
the transferor and the transferee or when the
WP(C) 1757-11 Page 8 of 22
agreement for transfer is reduced into writing
in Form 37-I. Appropriate Authority has held
that 15 days are to be counted from the date
when booking of the flat is done by the DLF or
Ansal as the letter for booking and the official
endorsements thereon constitute a regular
agreement between the parties. This question,
however, becomes academic if we hold that 15
days period is to be counted from the date
when agreement for transfer is reduced into
writing in the form of statement (Form 37-I).
Can it be said under Rule 48L that the term
'agreement for transfer' mentioned in
clause (c) of sub rule (2) thereof in fact means
statement in Form 37-I ? If we take the literal
meaning, this provision will become rather
otiose. An 'agreement for transfer' is inter-
parties and that can always be changed. That
the term 'agreement for transfer' in fact means
statement in Form 37-I, we can get clue from
section 269UK which says that no person shall
revoke or alter an agreement for the transfer
of an immovable property or transfer such
property in respect of which a statement has
been furnished under section 269UC.
Reference to this statement is certainly to
Form 37-I. It would mean that agreement for
transfer can be changed by the parties but
they have been forbidden from doing so
after statement in Form 37-I has been
furnished. We have, therefore, to
give appropriate meaning to the term
'agreement for transfer' appearing in clause
(c) of sub-rule (2) of Rule 48L and cannot just
adopt literal meaning. Foundation for
exercise of jurisdiction by the Appropriate
Authority under section 269UD is the
statement in Form 37-I and not agreement for
WP(C) 1757-11 Page 9 of 22
transfer."
xxxxxxxxxxxxx
"14. DLF and Ansal have strong objection to
findings of the High Court in sub- paras (ix)
and (x) in para 28 of the judgment reproduced
above. However, according to the Appropriate
Authority keeping in view the principles laid
by this court in G. B. Gautam's (supra) case it
can exercise its jurisdiction to acquire the
property if consideration agreed to is less than
15 per cent of the market value. Mr. Verma,
who appeared for the Appropriate Authority,
said that the agreement for transfer contains
variables and unless all these are
known, Appropriate Authority will be
handicapped in making an order under
section 269UD. The variables which form
terms in the agreement for transfer are
external development charges that may be
levied by the State of Haryana and
price escalation up to 20 per cent of the
agreed consideration. It is a matter
of common knowledge that in course of time,
there can be escalation in the prices of
various articles like steel, cement, labour etc.
One can say with certainty that price
escalation would be within the limit of 20 per
cent escalation and the external development
charges that may be levied by the State of
Haryana would be on certain set principles.
Provision of Chapter XX-C do not require
the parties to enter into more than one
agreement for transfer. It is on the basis of the
terms of that agreement for transfer which is
reduced into writing in the shape of Form 37-I
that the Appropriate Authority has to make up
WP(C) 1757-11 Page 10 of 22
its mind to pass an order under section
269UD. These provisions do not contemplate
filing of more than one Form 37-I and grant
of more than one no objection certificate
by the Appropriate Authority. We may in this
connection refer to sub-sections (6) and (7) of
section 269UE, immovable property, subject
matter of transfer is of the nature referred to
in sub-clause (ii) of clause (d) of section
269UA and when an order is made under
section 269UD with respect to that property,
it shall place the Central Government in the
same position in relation to such right as the
person in whom such a right would have
continued to vest if such order had not been
made. The whole agreement for transfer and
Form 37-I are before the Appropriate
Authority. It has to make its mind once for all
whether to pass an order under section
269UD or not. If not, it is bound to grant
no objection certificate as required by section
269UL. We do not, therefore, think that the
High Court was right in its findings as given in
sub paras (ix) and (x) of para 28 of its
judgment."
9. After noticing the observations made by the Supreme Court, the
Division Bench held that the Supreme Court in DLF Universal Ltd.
(supra) had not completely over-ruled the decision of the Delhi High
Court in Ansal Properties and Industries Ltd. (supra) and the
observations were made in the paragraph 27.1 of the said decision. For
the sake of convenience, paragraph 27.1 in Ansal Properties and
WP(C) 1757-11 Page 11 of 22
Industries Ltd.(supra) is reproduced below:-
"27.1 The parties may enter into any private
agreement for transfer. They must wait for the
arrival of the day on which the property has
assumed the shape in which it is proposed to
be transferred. On that day they must enter
into the proforma agreement (Form 37-1) and
file the same seeking no-objection from
the Appropriate Authority. It was submitted
that this interpretation may put the parties to
the agreement in a disadvantageous position.
The initial private agreement may have been
made in the year 1990. The property may take
the shape in which it is to be transferred in the
year 1998. The price would be one agreed
upon between the parties in the year 1990. The
value as shown on the date of proforma
agreement in Form 37-1 would appear to be
undervalued persuading Appropriate
Authority to direct the purchase of the property
by the Central Government. This is a
misapprehension which has to be dispelled.
The proforma agreement of the year 1998
would be accompanied by the
private agreement entered into in the year
1990 and that will be a relevant fact to be kept
in view by the Appropriate Authority while
exercising its jurisdiction under Chapter XX-
C."
10. The following observations, made in the order dated 18.10.2010
passed by the Division Bench of this Court in Writ Petition (C) No.
7591/2000, are lucid and appropriate:-
WP(C) 1757-11 Page 12 of 22
" In view of the aforesaid, we find that there
is substantial force in the submission of Mr.
Sandeep Sethi inasmuch as the Division
Bench in Ansal Properties and Industries
Ltd. (supra) has held that a proforma
agreement can be looked into by the
Appropriate Authority."
11. Pursuant to the order of remit dated 18.10.2010 passed in Writ
Petition (C) No. 7591/2000, the Appropriate Authority has passed the
impugned order dated 22.02.2011. The Appropriate Authority
recorded the contentions of the petitioner before them that the history
of the transaction and property, dates of payment of consideration, the
initial agreement/letter of allotment between respondent No.3 and
Yogeshwar K. Dhawan and Namita Kaul Bhattacharya and the
agreement dated 12.06.1996 (that was filed along with Form No. 37-I)
should be taken into consideration for determining whether it is a fit
case for acquisition u/s 269UD (1) of the Act. However, the said
contention has been rejected. Relevant portions of the order of the
Appropriate Authority dated 22.02.2011are reproduced as under:-
"7.2(a) The sum and substance of these
contentions is that for the purpose of valuation,
the date of initial private agreement i.e.
24.02.1994 is relevant irrespective of the fact
that Form No.37-I was filed on 25.08.2000.
WP(C) 1757-11 Page 13 of 22
This contention of the AR is not tenable as the
Hon'ble Supreme Court in the case of DLF
Universal Ltd., & Others has clearly held that
"foundation for exercise of jurisdiction by the
Appropriate Authority u/s 269 UD is the
statement in Form No.37-I and not agreement
for transfer". The Appropriate Authority
acquires the jurisdiction u/s 269UD of the
Income Tax Act with the filing of the statement
in Form No.37-I and not with respect of any
other agreement for transfer. Therefore, for
the purpose of determining fair market value
of subject property the relevant date would be
the date on which agreement for transfer is
reduced into writing in Form No.37-I.
Following the judgment of the Hon'ble
Supreme Court referred to above, the
Appropriate Authority cannot exercise
jurisdiction in any other manner except based
on the Statement in Form No.37-I. In the
present case, it is admitted fact that the date
mentioned on the Form No.37-I is 24.08.2000.
Therefore, this was the relevant date for the
purpose of determining the fair market value of
the subject property as on this date was
determined at Rs.57,39,353/- based on which
the understament worked out to +58.55%
taking FMV as base. This contention of the
AR, thus fails.
xxxxxxxxxx
7.2(e) without prejudice to the discussion in the
above paragraphs, it is observed that
alongwith Form No. 37-I, agreement dated 12th
June, 1996 has been files. There is no other
agreement filed alongwith the Form No. 37-I.
thus, even the private agreement in this case
was entered into on 12th June, 1996 and not
WP(C) 1757-11 Page 14 of 22
24.02.1994 as mentioned in the written
submissions. However, even this date is not
relevant for the purpose of determining the fair
market value as performa agreement in Form
No. 37-I was made on 24.08.2000."
12. In other words, the Appropriate Authority has held that the land
rate prevalent in the year 2000 is applicable and it is the guiding factor
to decide whether or not there was understatement of the sale
consideration to justify the acquisition.
13. The aforesaid observations of the Appropriate Authority and the
reasoning given by the Appropriate Authority are contrary to the
specific directions given by this Court in the order dated 18.10.2010,
by which the order of remit was passed. It is unfortunate that the
Appropriate Authority did not appreciate the ratio and the directions
given in the said order. The directions given in the said order were to
take consideration of past history of the transaction which had
culminated in the filing of form no.1 37-I on 25.08.2000 along with the
private agreement dated 12.06.1996. The Division Bench in the order
dated 18.10.2010 had taken pains to refer to paragraphs 6, 7, 8 and 14
of the decision of the Supreme Court in DLF Universal Ltd. (supra)
and paragraph 27.1 in Ansal Properties and Industries (supra) and
WP(C) 1757-11 Page 15 of 22
observed that there was substantial force in the submissions made by
the petitioner that the private agreement can be looked into by the
Appropriate Authority. Even if the Appropriate Authority was of the
view that the initial agreement between the respondent No. 3 and
Yogeshwar K. Dhawan and Namita Kaul Bhattacharya dated
24.02.1994 was not relevant as the agreement was not between the
petitioner and respondent No.3 but between the respondent no. 3 and
third parties, it should not have ignored the agreement dated
12.06.1996 and the factum that the petitioner had made a payment of
Rs.18,56,387/- during the period February, 1995 to May, 1996 towards
sale consideration of the said plot. These payments to the
respondent No.3, a private developer, are not disputed. It is an
admitted fact that the initial allotees between the period February, 1994
to December, 1994 had made payment of Rs.5,24,000/-. Thereafter
between Feb, 1995 to May, 1996 payment of Rs.18,56,387/- was made
by the petitioner. Thus, by June, 1996, substantial payment had been
made to the respondent no. 3. It is obvious that the parties had
contracted on the basis of the then prevailing market rate of land. The
land rate in the year 2000 was not the basis and could not have been
WP(C) 1757-11 Page 16 of 22
the basis. The sale transaction in the present case had its own history
and the transaction in question related to the original
agreement/understanding which was admittedly entered into between
the petitioner and the respondent No.3 vide nomination letter dated
20/21.2.1995; or the Plot Buyers Agreement dated 12.06.1996.
13. The petitioner has placed on record their reply submitted to the
Appropriate Authority in which they had mentioned other sale
instances wherein permission/approvals were granted by the
Appropriate Authority in the year 1994-95. Three other instances are
as under:-
Date of Date of Particulars Area Rate/ Apparent FileNo. Dt. Of
issue of
Applicat- Allotment of property Sq.Mtr. Sq.Mtr. Conside- in which NOC by
Ration NOC A.A.
issued by
A.A.
27.05.94 27.06.94 OW/11 987.96 2847.22 2812945 GR-3655 29.11.1995
12.05.94 07.10.94 OW/16 762.60 2255.64 2171300 GR-2685 30.03.1995
24.04.94 27.04.94 OW/21 1031.36 2757.80 2844285 GR-3408 20.09.1995
14. The sale consideration declared by the petitioner was Rs.2392/-
per sq. meter plus preferential location charges at Rs.60 per sq. meter
and a contingency deposit of Rs.24 per sq. meter. These extra charges
once added, disclose an apparent consideration of Rs.2476/- per sq.
WP(C) 1757-11 Page 17 of 22
meter, even if we exclude external development changes. This sale
consideration is comparable with other instances in which the
Appropriate Authority had granted the permission/No Objection
Certificate during the relevant period.
15. Learned counsel for the respondent No. 1 had submitted that a
second order of remit should be passed. We are not inclined to accept
the said submission. We have already noted the land rates in the same
locality wherein Appropriate Authority had granted permission in the
year 1994-95 and observed the same are comparable. Section 269UD
of the Act stipulated that the compulsory acquisition of immoveable
property could be made if there is a difference of more than 15%
between the fair market value and the apparent sale consideration. This
condition is not satisfied. In this regard we also rely upon the
directions/ ratio laid by a Division Bench of this Court in the case of
Kailash Suneja versus Appropriate Authority (1998) 231 ITR 318
wherein it has been held as under:-
"(1) The condition precedent for passing an order under
section 269UD(1) of the Act is under-statement of apparent
consideration to the extent of at least 15 per cent. and with a
view to evade tax or conceal income.
WP(C) 1757-11 Page 18 of 22
(2) There is a rebuttable presumption of tax evasion where
the fair market value of the subject property exceeds the
apparent consideration by 15 per cent.
(3) The passing of a pre-emptive purchase order under
section 269UD(1) of the Act implies tax evasion and
imputation of tax evasion adversely affects the reputation and
image of the concerned parties and, therefore, the purchase
order shall not be made lightly and in routine.
(4) The burden lies on the authority to establish that the
apparent consideration falls short of the market value by
more than 15 per cent. and it never shifts ; only the onus
continues shifting from one to another.
(5) The parties are entitled to be supplied entire material
relied upon by the authority including the valuation reports
on record.
(6) The imputation of tax evasion or concealment of income
cannot be mechanically or lightly made without due regard to
the explanation of the affected parties and meticulous
examination of instances of comparable properties cited by
the affected parties and the peculair circumstances resulting
in the reduction of the value of the property.
(7) It is impermissible to pass a pre-emptive purchase order
where material is placed before the authority showing that
there was no occasion for making undervaluation of a
property with a view to evade tax or conceal income.
(8) Since no appeal has been provided for in the Act, the
authority is required to be more cautious in its approach
while passing a preemptive purchase order.
(9) The discretion of passing a pre-emptive purchase order is
to be exercised by the subjective satisfaction of objective
facts.
(10) Except in glaring and clear cases of gross
undervaluation and large scale tax evasion, a purchase order
WP(C) 1757-11 Page 19 of 22
under section 269UD(1) of the Act in respect of properties
with bona fide tenancy of long standing cannot be made.
(11) Where the explanation offered in response to a show-
cause notice is plausible, the plea that there is no tax evasion
deserves to be ordinarily accepted.
(12) While exercising powers of judicial review under article
226 of the Constitution of India, though the case is not to be
examined as an appellate court, but at the same time it has to
be kept in view that a citizen has no alternative remedy. It is
permissible to examine whether extraneous matters have
been considered by the authority and relevant matters have
not been taken into consideration.
(13) The constitutional validity of Chapter XX-C of the Act
cannot be questioned in view of the decision of the Supreme
Court in C. B. Gautam's case [1993] 199 ITR 530.
(14) The court can also look into the files of the authority to
satisfy as to whether the order is perverse or not.
(15) Normally such cases where the pre-emptive purchase
orders are passed in violation of the principles of natural
justice may be remanded for fresh decision by the authority
but in cases where reasons given by the authority in the order
are found to be erroneous, ordinarily the question of remand
would not arise and the said cases would be decided on the
basis of the material on record.
(16) The mode, manner and method of arriving at a
valuation of a property is a part of procedure, which has to
be fair, just and reasonable.
(17) Ordinarily, for determining the fair market value of a
tenanted property no comparison can be made with the sale
instance of a vacant property.
(18) The offer received in respect of subject property from a
third party after the date of the agreement or at the auction of
WP(C) 1757-11 Page 20 of 22
the same property later, cannot ordinarily be taken into
consideration for determining its fair market value.
(19) General guidelines and criteria to make adjustments on
account of time, locations, size of plot, etc., for comparing
values of different properties, to determine the fair market
value of the subject property, shall be made known to the
public and shall not be kept a guarded secret.
(20) In determining the fair market value of a property,
regard must be had to the field realities, such as long delays
taking place in courts in getting possession from bona fide
tenants in cases where tenants have protection of rent laws
and also in cases where suits for possession are filed under
the Transfer of Property Act.
(21) The fair market value of a property cannot be
determined by theoretical considerations in an abstract
manner by applying multipliers and arbitrary adjustments
since, as far as possible, the actual value of a property in the
market is required to be determined for action under Chapter
XX-C of the Act.
(22) The element of guess work inherent in most cases
involving determining of market value has not to be taken as
a factor against the citizens.
(23) For determining undervaluation and tax evasion, events
as on the date of the agreement of sale are to be taken into
consideration.
(24) Where the seller needs immediate money and agrees to
sell his property at a value less than the market value, it
would not be permissible to make an order of pre-emptive
purchase.
(25) The plea of distress sale and at the same time the plea
that the property was agreed to be sold at the market value,
are not mutually destructive and can be raised as alternate
pleas.
WP(C) 1757-11 Page 21 of 22
(26) The failure to tender or deposit the whole or any part of
the amount of consideration in terms of section 269UG(1),
attracts section 269UH resulting in the abrogation of the
purchase order and re-vesting of the property in the
transferor with all consequential results, in accordance with
law."
(Emphasis supplied)
16. In view of the aforesaid reasoning, we allow the present writ
petition and a writ of certiorari is issued quashing the order dated
22.02.2011, passed by the Appropriate Authority. Direction is issued to
the respondent no.1 to grant permission/No Objection Certificate. No
Objection Certificate will be issued within a period of four weeks from
today. No costs.
SANJIV KHANNA, J.
R.V.EASWAR, J. FEBRUARY 02, 2012 mr WP(C) 1757-11 Page 22 of 22