Calcutta High Court
Appropriate Authority Of Income-Tax ... vs Vysya Bank Ltd. And Anr. on 3 February, 2000
Equivalent citations: [2000]244ITR318(CAL)
JUDGMENT Y.R. Meena, J.
1. This appeal has been directed against the judgment and order of the learned single judge dated December 24, 1997. (Vysya Bank Ltd. v. Appropriate Authority of Income-tax [1998] 233 ITR 560). The appeal was listed several times. None appeared for the appropriate authority.
2. Heard learned counsel for the respondents. Perused the impugned judgment. The learned single judge has set aside the order of the appropriate authority on the ground that no reasonable opportunity has been given to the vendor and vendee and there are several discrepancies in the proceeding before acquisition of the property in terms of Section 269UD(1) of the Income-tax Act, 1961. The learned single judge has specifically emphasised on the decision in the case of C.B. Gautam v. Union of India .
3. During" the course of the argument before the learned single judge, learned counsel Dr. Pal on behalf of respondent No. 1 also prayed that the matter be remitted to the appropriate authority to give fresh opportunity to the vendor and vendee. This prayer of Dr. Pal was also rejected following the judgment of this court in the case of Dwarkanath Chatterjee v. Union of India [1995] 213 ITR 470, taking the view that the period of limitation to pass an order of purchase of any immovable property as provided for in the first and second proviso to the said section create an embargo on the appropriate authority, by the Legislature, to pass an order for purchase under the said section after the expiry of the period of limitation and Section 5 of the Limitation Act not having been made applicable to the aforesaid provision of the Act, the appropriate authority loses its jurisdiction to exercise its power under the said section after the expiry of the aforesaid period. The appeal was listed several times but none appeared for the appropriate authority/appellant. Considering the finding of the learned single judge that no reasonable opportunity has been given for the acquisition of the property as required under Section 269UD, we find no merit in the appeal.
4. When the appeal was admitted respondent No. 7 was allowed to file cross-objection, regarding his claim of interest required to be paid for the period, possession has been taken but consideration has not been paid to the vendor. Learned counsel for the vendor placed reliance on the decision in the case of Rajalakshmi Narayanan v. Margaret Kathleen Gandhi , and the decision in the case of Appropriate Authority v. Smt. Sudha Patil .
5. Learned counsel for the Vysya Bank, Shri Bajoria, submits that there was an agreement and the purchaser bank, i.e., the Vysya Bank Ltd. has paid the consideration as per agreement. Therefore, only five per cent. is now left to be paid. Under the agreement that will be paid at the time of completion of conveyance and on that amount, the interest is payable under the agreement itself, by the bank. None appeared for the authority or Government.
6. The relevant facts in this regard are that the bank had agreed to purchase from Delite under two agreements, one dated April 21, 1994, and other dated May 27, 1994, 16 flats under construction at premises No. 250, Nelaji Subhas Chandra Bose Road, Tollygunge, Calcutta-700 047, for the purpose of providing residential accommodation to its officers who came on transfer for serving at its branches at Calcutta. As required by the provisions of Chapter XXC of the Act, the bank and Delite filed Form No. 37-1 in respect of each of the two agreements for issue of "no objection certificate" for the said transfers. The appropriate authority, however, passed the orders of purchase under Section 269UD of the Act in both the cases. The order in respect of the first agreement was passed on July 29, 1994, and that in respect of the second agreement on September 28, 1994, both were set aside by the learned trial judge.
7. The said agreements dated April 21, 1994, and May 27, 1994, in Parts of annexure "A" thereto, respectively provided for payment of consideration as under :
Agreement dated April 21, 1994 :
1. Rs. 9,96,282.50--at or before the execution of the agreement (25 per cent.).
2. Rs. 27,37,091.00--on or before the date of possession (70 per cent.).
3. Rs. 1,95,506.50--at or before the completion of the conveyance (5 per cent.).
8. The bank had thus to pay only 25 per cent. of the price at or before the execution of the respective agreements which it duly paid. 70 per cent. of the price was payable upon the possession being given and 5 per cent. at the time of conveyance. Since the bank's officers had already arrived at Calcutta on transfer, Delite delivered possession of the flats under the first agreement dated April 21, 1994, to the bank.
9. The bank duly paid a little less than 70 per cent. of the consideration as provided in the said agreement which Delite duly accepted.
10. At the time of filing the first writ petition, the bank had duly paid in terms of the first agreement about 95 per cent. of the total consideration on receiving possession of the flats as aforesaid and only the balance about 5 per cent. remains to be paid since the same is payable only on execution of the conveyance which cannot be executed till today as "no objection certificate" has not been issued by the appropriate authority.
11. In the case of the second agreement, Delite delivered possession of the flats to the appropriate authority before any order was passed in the writ petition and thereafter received it back from them under the orders of this court and again under an order of this court in this appeal, Delite handed over possession of the flats to the bank, after receiving 70 per cent. of the consideration. Thus, the bank had duly paid 95 per cent. of the consideration in respect of the second agreement also on receiving possession of the flats.
12. The only amount now remaining to be paid by the bank to Delite under the said two agreements is 5 per cent. which is to be paid at the time of execution of conveyances after "no objection certificate" is issued by the appropriate authority. This court by its order dated June 29, 1998 (page 1104 of part II of the paper book in Matter No. 299 of 1998), has also directed for payment of such balance 5 per cent. at the time of execution of the conveyances depending on the result of these appeals, with interest on such balance 5 per cent.
13. This brings us to the question, when possession of the property has been taken by the appropriate authority, or possession has been handed over by the vendor under the order of the court and no consideration has been paid, whether the vendor is entitled for any interest on the outstanding balance of amount for the period till the balance amount is paid ? In this regard, we would like to refer to some observations of the apex court. In Rajalaxmi Narayanan's case , their Lordships have observed as under :
"We can safely take judicial notice of the fact that the prices of immovable properties have shot up continuously for the last few years and today the said property, if sold in the open market, would fetch a much larger amount than that for which it was agreed to be sold to respondent No. 1.
Taking into account these circumstances we modify the impugned order and direct that in the event of the aforesaid order of the appropriate authority being upheld, the Government shall pay to the appellant, as the purchase price, the amount stated as the consideration for the sale of the said property in the agreement entered into between the appellant and respondent No. 1 with interest thereon at 15 per cent. per annum. In case the order of the appropriate authority is set aside and the transaction of sale in favour of respondent No. 1 is completed, respondent No. 1 shall pay to the appellant interest on the balance amount payable on account of the purchase price by respondent No. 1 interest at 20 per cent. per annum. The interest in either eventuality will be calculated right from the day the impugned order was made by the Delhi High Court.
We may clarify that whether interest should be paid to the owner of an immovable property who has entered into an agreement to sell the same which cannot be completed by reason of an order of purchase under Section 269UD of the Income-tax Act and at what rate, will have to be decided in the facts and circumstances of each case. All that can be observed by way of a general principle is that where such a seller has raised no objection or obstruction either to the purchase of his property by an order under Section 269UD or to the completion of the agreement of sale entered into by him but is unable to get the purchase price by reason of the said order and the stay order or orders passed by a court, interest at an appropriate rate can, if equity so requires, be paid to him."
14. In C. B. Gautam's case , again their Lordships have considered that when the payment is delayed on account of acquisition proceedings under Chapter XX-C, interest should be paid to the seller and how much the rate of interest and for what period the interest is payable depends upon the facts of that case. In C. B. Gautam's case , their Lordships have awarded interest at the rate of nine per cent. payable by the Government to the vendor.
15. In the case of Smt. Sudha Patil [1993] 235 ITR 118, the Supreme Court had directed the payment of interest at the rate of 15 per cent. per annum payable to the seller on delayed payment, in a case when delay was not on account of the seller.
16. As stated above there were two agreements regarding the sale of flats by respondent No. 2-Delite Housing Corporation to the Vysya Bank, as per the agreement particular amount was payable at a particular stage of transfer, say as at the stage of execution of the agreement, then on or before the possession, then five per cent. at the time of completion of the conveyances. The details of the amounts which have been paid read as under ;
MAT No. 299 of 1998 :
MAT No. 300 of 1998 :
The Appropriate Authority of Income-tax, Calcutta and Ors. v.
The Vysya Bank Limited and Ors.
(Dues up to 30-11-1999) Particulars 1st writ 2nd writ Total Amount due A Principal due Rs.
Rs.
Rs.
Rs.
Consideration receivable 39,10,130.00 39,10,130.00 78,20,260.00 Consideration receivable for one car parking 75,000.00
-
75,000.00 39,85,130,00 39,10,130.00 78,95,260.00 Less : Payment actually received 34,96,282.50 9,77,532.50 44,73,815.00 4,88,847.50 29,32,597.50 34,21,445.00 Less : Payment received on 22-7-1998, in terms of order of court 30,13,937.78 4,07,507.22
17. On the perusal of the aforesaid details major amount was due against this second agreement for a number of years and possession was with the appropriate authority, for some period possession was restored to the respondent No. 1 as per the court order, but the seller could not make use of it, as there was a prohibitory order of the court and even respondent No. 7, had to incur some expenses on maintenance of the premises, those expenses are allowed to the vendor, respondent No. 7.
18. It is also brought to our notice that the seller never objected to the acquisition under Section 269UD, he simply filed the reply to a notice that it sold the flats to the bank for a consideration shown in the agreement to sale. In our view, this cannot be an obstruction in purchase by the appropriate authority.
19. Considering these facts and circumstances, as referred to above we are of the view that equity requires that respondent No. 7, vendor, is entitled for the interest at the rate of 12 per cent. from the Government, for the period from October 1, 1994 to July 22, 1998, on the amount Rs. 29,32,597 which could not be paid to the vendor, respondent No. 7, on account of acquisition proceedings under Section 269UD of the Act. So far the 5 per cent. balance consideration is concerned, which has not been paid and payable only on completion of the conveyance, for that there is already a provision in the agreement and the purchaser-bank will pay the interest on that balance amount while the conveyance deed will be executed.
20. Considering the above discussion the appeal is dismissed and the cross-appeal of respondent No. 7 is allowed in part as referred to above.
G.C. De, J.
21. I agree.