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CASE NO.:

Appeal (civil) 2423 of 1999

PETITIONER:

D.L.F. UNIVERSAL LTD.

RESPONDENT:

APPROPRIATE AUTHORITY AND ANR, ETC.

DATE OF JUDGMENT: 04/05/2000

BENCH:

D.R WADHWA & RUMA PAL

JUDGMENT:

JUDGMENT

2000 (3) SCR 970

The Judgment of the Court was delivered by

D.P. WADHWA, J. This batch of 12 appeals is directed against the judgment

dated December 1, 1998 of the Division Bench of the Delhi High Court

interpreting Section 269-UC of the Income Tax Act, 1961 (for short the

'Act") and Rule 48-L and Form 374 of the Income Tax Rules, 1962 (for short,

the 'Rules').

A number of writ petitions had been filed in the High Court by various

parties challenging rejection of Form 37-I by the Appropriate Authority.

High Court by its impugned judgment allowed the petitions, set aside the

orders of the appropriate authority and requiring it to take fresh decision

in each of the cases in accordance with law and keeping in view the

principles laid by the High Court in its judgment. Aggrieved Appropriate

Authority has filed 11 appeals. M/s. DLF Universal Ltd. (for short, 'DLP')

has also filed one appeal. It is aggrieved by that portion of the judgment

of the High Court where the High Court said "no objection by the

Appropriate Authority based on an agreement for transfer of property which

is to be constructed cannot be utilised for procuring a deed for transfer

of that property which has been constructed".

To understand the controversy between the parties and findings arrived at

by the High Court, we may examine facts in two cases, one pertaining to DLF

and the other to M/s. Ansal Properties and Industries Ltd. (for short,

'Ansal'). Both DLF and Ansal are engaged in the business of developing and

dealing in real estate, constructing multistorey buildings and selling or

letting them. Ansal floated a scheme which was widely advertised inviting

applica-tions from the public for allotment of apartments. In one of the

cases the scheme pertained to apartments in "Celebrity Homes", Palam Vihar,

Gurgaon. One Mr. Sudarshan Kumar Kohli and his wife Mrs. Nibha Kohli

applied on July 13, 1995 for booking of an apartment. The application was

in the form prescribed by Ansal. The application contains details regarding

the apartment number, rates, accommodation available and payment plan.

Initial deposit was made at the time of booking of the apartment. Building

had yet to come up and payment was to be made as construction progressed. A

formal agreement incorporating the terms of sale of apartment was entered

into on January 1, 1997. This agreement is in more details but incorporates

all the terms of the application for booking of the apartment which was

accepted by Ansal. By the time agreement dated January 1, 1997 was entered

into, certain payment as per the plan had already been made. In January

1997 itself, Ansal as transferor and Kohlis as transferee filed Form 37-I

before the Appropriate Authority seeking no objection to the registration

of the apartment with the registering authority. On March 13/14, 1997

Appropriate Authority sent a notice to Ansal and Kohlis under Section 269-

UC(4) pointing out certain defects in Form 37-I and requiring them to

remove these defects within 15 days and not later than March 28, 1997 by

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filing revised Form 37-I. This was replied to by Ansal by their letter

dated March 27, 1997. However, by order dated April 28/29, 1997 made under

Section 269-UC(4) Appropriate Author-ity held that Form 37-I had been

belatedly filed in contravention of Rule 48-L and was not maintainable. In

short. From 37-1 was rejected. It was already held that From 37-I was

defective inasmuch as particulars required in Column 12 of Form 37-I had

not been furnished. Ansal challenged the order of the Appropriate Authority

by filing writ petitions.

In the case of DLF, a scheme was advertised for sale of flats in Richmond,

a multistorey complex which was to come up in DLF Qutub Enclave, Gurgaon,

Mrs, Ranjana Singh applied for allotment of a flat by making an application

on April 9, 1997. DLF agreed to allot a flat to Mrs. Singh. All the

relevant terms and conditions find mention in the letter of allotment. It

gives the details of accommodation, mode of payment as and when

construction progressed and in the table for office use in the application

for allotment, details of the price etc., were all mentioned including the

initial payment received on making of the application. A more detailed

agreement called the "Apartment Buyers Agreement" was then entered into on

January 2, 1998. By this time, some payments towards construction of

Richmond apartments had already been made by Mrs. Singh. On January 30,

1998, statement in Form 37-I was filed by DLF and Mrs. Singh before the

Appropriate Authority. A notice under Section 269-UC(4) of the Act was

issued by the Appropriate Authority to both DLF and Mrs. Singh on April

2/3, 1998 requiring them to remove certain defects within 15 days failing

which it was intimated that Form 37-I shall be deemed not to have been

famished DLF sent their reply on April 13, 1998 giving the relevant

information. However, by order dated April 30, 1998 passed under Section

269-UC(4) of the Act Appropriate Authority held as under :

"It is the considered view of the Appropriate Authority that the

transaction would fall into sub-clause (ii) of clause 'd' of Section 269-UA

and once die property is not in existence, only the rights therein can be

transferred. Since the major terms and conditions were finalised on the

date of booking/allotment, the form 37-I should have been filed within IS

days thereof. Since this was not so, the form ia treated as belated form.

Farther in absence of any power of condonation of delay, the form has to be

orated as non-maintainable."

This was challenged by DLF by filing writ petition in the High Court. These

are some of the bare details.

We may now examine certain provisions of law relevant to OK issues before

us. Chapter XX-C consisting of Sections 269-U to 269-UO was inserted in the

Act by the Finance Act, 1986 w.e.f. October 1,1986. This was to curb the

menace of black money. The basic scheme of Chapter XX-C is that the

immovable property can be acquired by the Central Government if the

apparent consideration as agreed to between the transferor and the

transferee under agreement to sell does not represent the true market value

of the property. The provisions spread a wide not by expanding the

definition of immovable property and the transfer of such property. They

envisage transfer of immovable property yet to be constructed. "Agreement

for trans-fer" is defined in clause (a)' of Section 269-UA, "immovable

property" in

1. 269-UA, (a) "agreement for transfer" means an agreement, whether

registered under the Registration Act, 1908 (16 of 1908) or not, for toe

transfer of any immovable property.

2. 269-UA (d) Immovable property" means, -

(i) any land or any building or part of a building, and includes where any

land or any building or part of a building is to be transferred together

with any machinery. plant, furniture, fittings a other things, such

machinery, plant, furniture, fitting or other things also.

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Explanation. For the purposes of this sub-clause, land, building, part of a

building machinery, plant, furniture, fitting and other things" include any

rights therein clause (d)2 and "transfer" in clause (f)3 thereof. For the

performance of provisions under Chapter XX-C an Appropriate Authority is

constituted under Section 269-UB, Section 269-UC4 provides for restrictions

on transfer of immovable property. Under Rule 48L5 Form 37-1 is prescribed

which is to be filed before the Appropriate Authority signed by both the

transferor and the transferee within 15 days from the date on which the

agreement for transfer is catered into. This is the requirement of Rule 48-

L of the Rules. Section 269-UD6 deals with the order by Appropriate

Authority for purchase by the Central Government of immovable property

subject matter of the agreement to sell. This the Appropriate Authority

does after examining Form 37-I. As to how the immovable property which is

yet to be constructed could vest in the Central Government after order by

the Appropriate Authority is mentioned in sub-sections (6)7 and (7)8 of

Section 269-UE. If there is failure on the part of the Central Government

to mate payment as required under Section 269-UG, the property revests in

the transferor as provided under Section 269-UH. Section 269-UK provides

that after Form 37-I has been filed the agreement for transfer could not be

revoked or altered. Section 269-UL10 places restrictions on the registering

authority from registering a deed of transfer of immovable property unless

no objection certificate has been issued by the Appropriate Authority. When

order for purpose of any immov-able property by the Central Government is

made, transferor is indemnified

(ii) any rights in at with respect to any land or any building or any part

of a building (whether or not including any machinery, plant, furniture,

finings at other things therein) which has been constructed or which is to

be constructed accruing or arising from any transaction whether by way of

becoming a member of, or acquiring shares in, a co-operative society,

company or other association of persons or by way of any agreement or any

arrangement of whatever nature), not being a transaction by way of sale,

exchange or lease of such land, building or part of a building,

269-UA(f) "transfer". -

(i) in relation to any immovable property referred to in sub-clause (i) of

clause (d), means transfer of such property by way of sale or exchange or

lease for a term of not less than twelve years, and including allowing the

possession of such property to be taken or retained in part performance of

a contract of nature referred to in section 53-A of the Transfer of

Property Act, 1882 (4 of 1882).

Explanation - For the purpose of this sub-clause, lease which provides for

the extension of the term thereof by a further term or terms shall be

deemed to be a lease for a terra of not less then twelve year, if the

aggregate of the term for which such lease is to be graded aid the further

term or terms for which it can be so extended is not less than twelve

years;

(ii) in relation to any immovable property of the nature referred to it

sub-clause (ii) of clause (d), means the doing of anything (whether by way

of admitting as a member of or by way of transfer of shares in a co-

operative society or company from any claim that the transferee may have

against him under the agreement for transfer (Section 269-UM")- If we

concentrate on the relevant provisions of Chapter XX-C as applicable in the

present appeals, it will be seen that immovable property means any right in

or with respect to any building or part of a building which is yet to be

constructed which right accrues or arises from any transaction including

that by was of any agreement or any arrange-ment of whatever nature or

being a transaction by way of sale exchange or

or other association of persons or by way of any agreement or arrangement

or in any other manner whatsoever) which has the effect of transferring, or

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enabling the enjoyment of, such property,

4. Restrictions on transfer of immovable property.

269-UC(l) Notwithstanding anything contained in the transfer of Property

Act, 1882 (4 of 1882), or in any other law for the time being in force, no

transfer of any immovable property in such area and of such value exceeding

five lakh rupees, as may be prescribed, shall be effected except after an

agreement for transfer is entered into between the person who intends

transferring the immovable property (herein-after referred to as the

transferor) and the person to whom it is proposed to be transferred

(hereinafter referred to as the transferee) in accordance with the

provisions of sub-section (2) at least four months before the intended date

of transfer.

(2) The agreement referred to in sub-section (1) shall be reduced to

writing in the form of a statement by each of the parties to such transfer

or by any of the parties to such transfer acting on behalf of himself and

on behalf of the other parties.

(3) Every statement referred to in sub-section (2) shall,-(i) be in the

prescribed form;

(ii) set forth such particulars as may be prescribed, and (iii) be verified

its the prescribed manner,

and shall be furnished to the appropriate authority in such manner and

within such time as may be prescribed, by each of the parties to such

transaction or by any of the parties to such transaction acting on behalf

of himself and on behalf of the other parties.

(4) Where it is found that the statement referred to in sub-section (2)

is defective, the appropriate authority may intimate the defect to the

parties concerned and give tham an opportunity to rectify the defeat within

a period of fifteen days from the date of such intimation or within such

further period which, on an application made in this behalf, the

appropriate authority may, in its discretion, allow and if the defect

- is not rectified within the said period of fifteen days, or as the case

may be, the further period so allowed, then, notwithstanding anything

contained in any other provision of this Chapter, the statement shall be"

deemed never to have been furnished.

5. Statement to be furnished under section 269-UC(3).

48-L. (1) The statement required to be furnished to the appropriate

authority under sub-section (3) of section 269-UC shall be in Form No. 37-I

and shall be signed and verified in the manner indicated therein by each of

the patties to the transfer referred to in sub-section (1) of that section

or by any of the parties to such transfer acting on behalf of himself and

on behalf of the order parties lease of such building or part of a

building. "Transfer" in relation thereto means the doing of anything

including by way of an agreement or arrange-ment which has the effect of

transferring or enabling the enjoyment of such immovable property. No

transfer of immovable property shall be effected except after an agreement

for transfer as defined in clause (a) of Section 269-0A is entered into

between the parties, i.e., the transferor and the transferee at least four

months before the intended date of transfer. This is so notwith-standing

anything contained in the Transfer of Property Act, 1882 or in any other

law. This agreement for transfer is now required to be reduced in writing

in the form of a statement by both the parties. The statement is to be in

Form 37-I and is to be furnished to the Appropriate Authority within 15

days from the date on which agreement for transfer is entered into. If a

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defective statement in Form 37-I is filed Appropriate Authority is required

to intimate the defect to the parties concerned and give them an

opportunity to rectify the same within a period of 15 days or within such

further period as may be allowed by the appropriate authority. In case the

statement remains defective, it shall be deemed never to have been

furnished. If the statement in Form 37-I is proper, Appropriate Authority

may make an order for purchase of the immovable property, subject matter of

Form 37-I, by the

(2) The statement in Form No. 37-I shall be furnished, in duplicate, to the

appropriate authority

(a) .....

(b) .....

(c) before the expiry of 15 days from the date on which the agreement for

transfer is entered into, in cases not covered by clauses (a) and (b).

Order by appropriate authority for purchase by Central Government of

immovable property.

269-UD(1) Subject to the provisions of sub-section (I-A) and (1-B), the

appropriate authority, after the receipt of the statement under sub-section

(3) of section 269-UC in respect of any immovable property, may,

notwithstanding anything contained in any other law or any instrument or

any agreement for the time being in force, make an outer for the purchase

by the Central Government of such immovable property at as amount equal to

the amount of apparent consideration :

Provided that no such order 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 269-UC in respect of

such property is received by the appropriate authority :

Provided further that where the statement referred to in section 269-UC in

respect of any immovable property is received by the appropriate authority

on or after me 1st day of June, 1993, the provisions of the first proviso

shall have effect as if for the words "two months", the words "three

months" had been substituted. Central Government at the rate equal to the

amount of apparent consideration. In C.B. Gautam v. Union of India and

Ors., (1993) 199 ITR 530 this Court laid down principles how the

Appropriate Authority would apply its mind, to the term "apparent

consideration". Time limit has been laid by which the Appropriate Authority

has to make an order for purchase by the Central Government of the

immovable property. After an order is made, immovable property vests in the

Central Government in terms of the agreement for transfer referred to under

sub-section (1) of Section 269-UC. When the order is made under Section

269-UD(l) in respect of an immovable property being rights of the nature

referred to in sub-clause (ii) of clause (d) of Section 269-UA the order

shall have the effect of vesting such right in the Central Government and

placing the Central Government in the same position in relation to such

rights as the person in whom such a right would have continued to vest if

such order had not been made. After statement in Form 37-I has been filed

under Section- 269-UC terms of agreement for transfer cannot be altered

unless of coarse no order has been made by the appropriate authority for

purchase of the immovable property by the Central Government

Provided also that the period of limitation referred to in the second

proviso shall be reckoned, where any defect as referred to in sub-section

(4) of section 269-UC has been intimated, with reference to the date of

receipt of the rectified statement by the appropriate authority :

Provided also that in a case where the statement referred to in section

269-UC in respect of the immovable property concerned is given to an

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appropriate authority, other than the appropriate authority having

jurisdiction in accordance with the provisions of section 269-UB to make

the order referred to in this sub-section in relation to the immovable

property concerned, the period of limitation referred to in the first and

second provisos shall be reckoned with reference to the date of receipt of

the statement by the appropriate authority having jurisdiction to make the

order under this sub-section.

Provided also that the period of limitation reference to in the second

proviso shall be reckoned, where any say has been granted by any court

against the passing of an order for the purchase of the immovable property

under this Chapter, with reference to the date of vacation of the said

stay.

(I-A) Before making an order under sub-section (1), the appropriate

authority shall give a reasonable opportunity of being heard to the

transferor, the person in occupation of the immovable property if the

transferor is not in occupation of the property, the transferee and to

every other person whom the appropriate authority knows to be interested in

the property.

(IB) Every order made by the appropriate authority under sub-section (1)

shall specify the grounds on which it is made.

(2) The appropriate authority shall cause a copy of its order under sub-

section (1) in respect of any immovable property to be served on the

transferor, the person in occupation of the immovable property if the

transferor is not in occupation thereof, or the order if any made stands

abrogated under Section (1) of Section 269-UH. Any transfer of immovable

property made in contravention thereof shall be void. Registering Officer

under the Registration Act 1908 is forbidden to register any document for

transfer of immovable property unless a certificate from the appropriate

authority that It has no objection to the transfer of such immovable

property is furnished. There is also a prohibition on any person from 148

any act which has the effect or transferring any immovable property unless

the Appropriate Authority certifies that there is no objection thereto. In

case no order for purchase by the Central Government is made by the

Appropriate Authority or its order stands abrogated, it shall issue a

certificate of no objection for transfer of the property. Where an order

for the purchase of immovable property by the Central Government is made,

no claim by the transferee shall lie against the transferor by reason of

such transfer not being in accordance with the agreement for the transfer

of immovable property entered into between the parties.

There is no dispute that agreement for transfer, which has been reduced

info writing in Form 37-I, pertains to immovable property and amounts to

transfer of immovable property within the meaning of clauses (d) and (f) of

the transferee, and on every other person whom the appropriate authority

knows to be interested in the property,

7. 269-UF (6) Where an order under sub-section (1) of section 269-UD is

made in respect of an immovable property, being rights of the nature

referred to in sub-clause (ii) of clause (d) of section 269-UA, such order

shall have the effect of -

(a) vesting such right in the Central Government, and

(b) placing in Central Government in the same position in relation to such

rights as the person in whom such a right would have continued to vest if

such order had not been made.

g, 269-UE (7) Where any rights in respect of any immovable property, being

rights in, or with respect to, any land or any building or part of a

building which has been constructed or which is to be constructed, have

been vested in the Central Government under sub-section (6), (he provisions

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of sub-section (1), (2), (3) and (4) shall, so far as may be, have effect

as if the references to immovable properly therein were references to such

land or building or part thereof, as the case may be.

9. Restrictions on revocation or alteration of curtain agreements for the

transfer of immov-able property or on transfer of certain immovable

property.

269-UK (1) Notwithstandntg anything contained in any other law for the time

being in force, no person shall revoke or alter an agreement foe the

transfer of an immovable property or transfer such property in respect of

which a statement has been furnished under section 269-UC unless, -

(a) the appropriate authority has not made an order for the purchase of the

immovable property by the Central Government under section 269-UD and the

period specified for the making of such order has expired-, or Section

269'UA. High Court, after examining the terms of the agreement and the

provisions of Chapter XX-C, reached various findings in paragraph 28 of the

judgment, which we reproduce :

"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 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.

Agreement for transfer, the phrase as occurring in Chapter XX-C has two

meanings depending on the context where it occurs. It may be an agreement

for transfers defined in Clause (a) of Section 269-UA (which in this

judgment has been refereed to as private agreement). It may be an agreement

for transfer as defined in Section 269-UC (which in this judgment has been

(b) in a case where an order for the purchase of the immovable property by

the Central Government has been made under sub-section (1) of section 269-

UD, the order stands abrogated under sub-section (I) of section. 269-UH.

(2) Any transfer of any immovable property made in contravention of the

provisions of sub-section (1) shall be void.

10 Restrictions on registration, etc. of documents in respect of

transfer of immovable property 268-UI (1) Notwithstanding anything

contained in any other law few the time being in force, no registering

officer appointed under the Registration Act, 1908 (16 of 1908), shall

register any document which purports to transfer immovable property exceed-

ing the value prescribed under section 296-UC unless a certificate from the

appropriate authority that it has no objection to the transfer of such

property for an amount equal to the apparent consideration therefor as

slated in the agreement for transfer of the immovable property in respect

of which it has received a statement under sub-section (3) of Section 269-

UC, is furnished along with such document

(2) Notwithstanding anything contained in any other law for the time being

in force, no person shall do anything or omit to do anything which will

have the effect of transfer of any immovable property unless the

appropriate authority certifies that it has no objection to the transfer of

such property for an amount equal to the apparent consideration thereof as

stated in the agreement for transfer of the immovable property in respect

of which it has received a statement under sub-section (3) of section 269-

UC. 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-

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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 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

(3) In a case where the appropriate authority does not make an order under

sub-section (1) of section 269-UD for the purchase by the Central

Government of an immovable properly, or where the order made under sub-

section (1) of section 269-UD stands abrogated under sub-section (1) of

section 269-UH, the appropriate authority shall issue a certificate of no

objection referred to in sub-section (1) or, as the case may be, sub-

section (2) and deliver copies thereof to the transferor and the

transferee.

II. Immunity to transferor against claims of transferee for transfer.

269-UM Notwithstanding anything contained in any other law or any

instrument or any agreement for (he time being in force, when an order for

the purchase of any immovable property by the Central Government is made

under this Chapter, no claim by the transferee shall He against the

transferor by reason of such transfer being not in accordance with the

agreement for the transfer of the immovable property entered into between

the transferor and transferee :

Provided that nothing contained in this section shall apply if the order

for the purchase of the immovable property by the Central Government is

abrogated under sub-section (1) of section 296-UH the date of any other

proceeding private agreement between the parties.

(vii) If there ape agreement more than one entered into between the

parties, then it is the latest of the agreement 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 prop-erty. The date of entering into

the performs agreement must have proximity of relationship by time with the

proposed transfer of property as defined in clause (f) of Sec. 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 issued by appropriate authority based on an agreement

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for transfer of property to be constructed cannot be utilised for securing

registration of property which has been constructed."

Agreement for transfer and statement in Form 37-I are two different

documents. As tightly 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 mat 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.

The question, mat arises for consideration is if the period of 15 days, as

mentioned in Rule 48-L, 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 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 48-

L that the term 'agreement for transfer' mentioned in clause (c) of sub-

rule (2) (hereof 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 269-UK 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 269-UC, 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

48-L and cannot just adopt literal meaning. Foundation for exercise of

jurisdiction by the Appropriate Authority under Section 269-UD is the

statement in Form 37-I and not agreement for transfer.

In C.B. Gautam v. Union of India and Others, (1993) 199 ITR 530, reference

was made to an earlier decision by this Court in the case of K.P. Varghese

v. Income-tax Officer, (1981) 131 ITR 597 where the following passage was

quoted with approval :

"The court observed that the task of interpretation of a statutory

enactment is not a mechanical task. The famous words of judge Learned Hand

of the United States of America that "..... it is true that the words used

even in their literal sense are the primary and ordinarily the most

reliable source of interpreting the meaning of any writing : be it a

statute, a contract or anything else. But it is one of the surest indexes

of a mature and developed jurisprudence not to make a fortress out of the

dictionary; but to remember that statutes always have some purpose or

object to accomplish, whose sympa-thetic and imaginative discovery is the

surest guide to their meaning" were quoted with approval." It has,

therefore to be held that his term 'agreement for transfer' in clause (c)

of sub-Rule (2) of Rule 48-L has reference to statement in Form 37-I,

The next question that arises for consideration is if clause (c) is

mandatory or the Appropriate Authority has power to extend the time if the

circumstances so requite. Sub-rule (2) of Rule 48-L in which clause (c)

occurs was substituted by the Income-tax (Seventh Amendment) Rules, 1987.

Sub-section (4) of Section 269-UC was inserted by Finance Act. 1995 with

effect from 1.7.1995. Before the insertion of sub-section (4) this Court in

Appro-priate Authority v, Tanvi Trading and Credits P. Ltd., (1991) 191 ITR

307 approved the decision of the Delhi High Court in Tanvi Trading and

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Credits P. Ltd. v. Appropriate Authority, (1991) 188 ITR 623 by holding :

"We agree that two alternatives are open under the scheme of the

legislation. - (i) The Union of India through the Appropriate Author-ity

could buy the property, or (ii) in the event of its decision not to buy, it

has to issue a 'no objection certificate' leaving it open to the parties to

deal with the property. In that view of the matter the High Court was right

in its conclusion. The special leave petition is dismissed. No costs."

Sub-section (4) of Section 269-UC was considered by this Court in Jagdish

A. Sadarangani v. Government of India, (1998) 230 ITR 442. That case

related to the interpretation of the provisions of sub-section (4) of

Section 269-UC of the Act. Sadarangani, the appellant entered into an

agreement dated September 9, 1995 for purchase of certain property in

Madras for a sum of Rs. 5.50 crores. The property comprised upon land and

built-up area. On the same date application in Form 37-I was filed before

the Appropriate Authority. A letter dated October 30, 1995 was addressed by

the Appropriate Authority to both the transferors and the transferees

seeking certain clarifi-cations in respect of certain points. After reply

was received the Appropriate Authority by order dated December 11, 1995

held that in view of the provisions of Section 5 of the Tamil Nadu Urban

Land Ceiling Act the agreement dated September 7, 1995 to transfer entire

land including the excess vacant land shall be deemed to be null and void

and in that view of the matter Appropriate Authority could not effectively

exercise its powers with regard to pre-emptive right to purchase the

subject property. This Court referred to its earlier decision in

Appropriate Authority v. Tanvi Trading and Credits P. Ltd, (1991) 191 ITR

307, which approved the decision of the Delhi High Court as follows: "Sub-

section (4) was inserted in Section 269-UC by the Finance Act, 1995, with

effect from July 1, 1995. Section 269-UC, as it stood before the said

amendment of 1995, came up for consideration before the various High

Courts. In Tanvi Trading and Credits P. Ltd. v. Appropriate Authority,

(1991) 188 ITR 623, a Division Bench of the Delhi High Court has considered

the provisions contained in Sections 269-UC, 269-UD and 269-UL of the

Income-tax Act. It has been held that the only right which section 269-UD

of the Act confers on the Appropriate Authority is to enable it to make an

order for purpose of the immovable property at an amount equal to the

amount of the apparent consideration and that it does not give jurisdiction

to the Appropriate Authority to adjudicate upon the legality of the

transac-tion which is proposed to be entered into by the applicant and that

section 269-UD is not concerned with the validity of the sale. According to

the said decision of the High Court the only order which can be passed

under section 269-UD is an order to purchase and not other order and if an

order of purchase is not passed then it is imperative and obligatory on the

part of the Appropriate Authority to issue the certificate of no objection

under section 269-UL(3). The said decision of the Delhi High Court came up

for consideration before his court in Appropriate Authority v, Tanvi

Trading and Credits P. Ltd., (1991) 191 ITR 307. This court, while

dismissing the special leave petition against the said judgment of the

Delhi High Court has said (page 308) :

"We agree that two alternatives are open under the scheme of the

legislation.- (i) The Union of India through the Appropriate Authority

could buy the property, or (ii) in the event of its decision not to buy, it

has to issue a *no objection certificate' leaving it open to the parties to

deal with the property. In that view of the matter the High Court was right

in its conclusion."

Then this Court construed sub-section (4) of Section 269-UC as under :

"We are unable to construe the provisions contained in sub-section (4) of

section 269-UC as conferring a power on the Appropriate Author-ity to

decide the question about the legality of the agreement which has been

entered into by the parties and on the basis of which the statement under

section 269-UC(2) has been submitted. What is contemplated by sub-section

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(4) of section 269-UC is that if there is a defect in the statement

submitted under Section 269-UC(2), which must comply with the requirements

of sub-section (3), then the Appropriate Authority may intimates to the

parties concerned about the said defect and give them the opportunity to

rectify the defect within a period of fifteen days from the date of such

intimation or within such further period as may be allowed by the

Appropriate Authority on an application made in this behalf. The said

provision in sub-section (4) of Section 269-UC envisages a defect which can

be removed/rectified within the period of fifteen days or the further

period which is given by the Appropriate Authority. A defect regarding the

legality and validity of the agreement which renders the agreement void and

unenforceable cannot be rectified. Since a defect which cannot be rectified

was not within the contemplation of the Legislature in enacting sub-section

(4) of section 269-UC a defect regarding the legality or validity of the

agreement could not fall within the ambit of the said provision. The

objects and Reasons of the Bill which was enacted as Finance Act, 1995,

also do not give an indication that by inserting sub-section (4) in section

269-UC Parlia-ment intended to confer a power on the Appropriate Authority

to go into the legality or validity of the agreement."

Now Appropriate Authority is obliged to give opportunity to the parties to

rectify the defects, if any, in Form 37-I within a period of 15 days or

such extended period as the Appropriate Authority may allow. If we consider

Section 269-UC(4) vis-a-vis Rule 48-L scenario or setting is rather

incongru-ous. If statement in Form 37-I has no defect Rule 48-L mandates

mat it should be filed within 15 days but if it is defective then

opportunity can be granted by the Appropriate Authority under sub-section

(4) of Section 269-UC to correct mistakes even beyond the period of 15 days

after filing of the statement in Form 37-I. It would appear mat no thought

was given to amend clause (c) of sub-rule (2) of Rule 48-L while inserting

sub-section (4) of Section 269-UC of the Act It would further appear as

rightly held by the High Court that Rule 48-L is only directory and not

mandatory.

We may also note the agreement of the Appropriate Authority which was

pressed into service to support its plea, that 15 days period in Rule 48-L

is mandatory and that Section 276AB provides for prosecution in case there

is failure to comply with the provisions of Section 269UC. Submission of

Form 37-I within the prescribed period is not the only requirement of

Section 269UC. Then under Section 278AA12 if a person proceeded against

under Section 276AB13 and shows reasonable cause for his failure to file

the statement in Form 37-I within the prescribed period, he cannot be

punished. We do not think that the provisions of Section 276-AB makes Rules

48-L in any way mandatory.

DLF and Ansal have strong objection to findings of the High Court in sub-

para (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 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 12, Punishment not to be imposed in

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certain cases. 27S-AA Notwithstanding anything contained in the provisions

of section 276-A, section 276-AB, or section 276-B, no person shall be

punishable for any failure referred to in the said provisions if he proves

that there was reasonable cause for such failure.

13. Failure to comply with the provisions of sections 269-UC, and 269-UL

276-AB Whoever fails to comply with the provisions of section 269-UC or

fails to surrender or deliver possession of the property under sub-section

(2) of section 269-UE or contravenes the provisions of sub-section (2) of

section 269-UL shall be punishable with rigorous imprisonment for a term

which may extend to two years and shall also be liable to fine :

Provided that in the absence of special and adequate reason to the contrary

to be recorded in the judgment of the court, such imprisonment shall not be

for less than six months. Authority has to make up its mind to pass an

order under Section 269-UD. These provision 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 269-UE. Immovable property, subject matter

of transfer, is of the nature referred to in sub-clause (ii) of clause (d)

of Section 269-UA and when an order is made under Section 269-UD 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 and for all whether to pass an order under Section 269-

UD or not. If not, it is bound to grant no objection certificate as

required by Section 269 UL. 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.

One of the grounds of rejection of Form 37-I was that it did not contain

particulars required by paras 12i4 and 1315 given in the Form. It must be

seen that Form 37-I is a composite form used whether the transaction is

sale, lease or exchange. It may not, therefore, be necessary that all the

paras are required to be filled in when the transaction is either for sale

or lease or exchange. Para 12 requires the particulars about the

acquisition of the property which in proposed to be transferred.

Requirement of para 13 is that names of the persons interested in the

property be given and so also the consideration specifying their shares and

basis thereof. As far as paras 12 and 13 are concerned, these requirements

and particulars in the case of agreement for transfer as ia the present

case would appear to be rather unnecessary. When

14, 12. Particulars about acquisition of the property proposed to be

transferred : (i) Date on which the immovable property was acquired.

(ii) Cost of acquisition of the property, If the property was constructed

by the transferor(s), the cost of acquisition of the laud and cost of cost

of acquisition is to be given separately.

(iii) Was the property or part thereof acquired other than by way of

purchase? If so, give the details of such acquisition and cost of

acquisition to the previous owner. Furnish a copy of relevant document.

15. 13. Persons interested in the property and in the consideration

specifying their shares and basis thereof.(in) the Appropriate Authority

pointed out that this was a defect and required Ansal to remove the defect,

it was submitted by Ansal that it had purchased agricultural lands from

time to time, obtained the licences for sale of plots, houses, flats etc.,

and after obtaining the licences, plots, houses and flats etc. were being

sold regularly. It was further submitted that since last so many years

permission under Chapter XX-C was also being given regularly and further

that the lands were being developed by Ansal and were in their possession.

Similarly, DLF had stated in Form 37-I with reference to paras 12 and 13

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that immovable property was acquired from October 25, 1980 onwards and

costs of acquisition of land worked out Rs. 1,534.00 per square meter. We

do not think anything more was required to be stated in paras 12 and 13 of

Form 37-I. As pointed out by this Court in C.B. Gautam's case (1993) 199

ITR 530 that the very historical setting in which the provisions of Chapter

XX-C were enacted indicates that it was intended to be resorted to only in

cases where there is an attempt at tax evasion by significant under-

valuation of immovable property agreed to be sold. It is the fair market

value of the immovable property, which is to be found out and if the

Appropriate Authority is satisfied that the apparent consideration shown in

the agreement for sale is less than the market value by 15 per cent or more

it may draw a presumption that this under valuation has been done with a

view to evading tax. While examining the statement in Form 37-I this object

has to be kept in view by the Appropriate Authority. It cannot act in a

mechanical fashion and pass its order on irrelevant consideration. Sub-

section (4) of Section 269-UC is not a device for the Appropriate Authority

to raise irrelevant consid-erations ignoring the very object of Chapter XX-

C Paras 12 and 13 of Form 37-I cannot be said to be relevant in the present

cases. We, therefore, fail to understand as to what prevented the

Appropriate Authority to exercise jurisdiction under Section 269-UD. The

view which we have taken of Rule 48-L there is no delay in submission of

statement in Form 37-I in any of the cases. Thus, taking note of all the

relevant consideration, we are of the opinion that the Appropriate

Authority was not correct in passing orders that the statement in Form 37-I

was deemed never to have furnished, thus, creating a stalemate for sale of

the flats which have by now been built but could not be transferred.

High Court by its impugned judgment allowed the writ petitions and set

aside the orders of the Appropriate Authority. It directed that the Appro-

priate Authority shall take decisions afresh in each of the cases in

accordance with law and consistently with the principles stated in the

judgment which may be done within a period of three months. Since we have

not agreed with all the findings of the High Court and in our opinion

Appropriate Authority was not justified in holding that statement in Form

37-I was deemed never to have furnished, the question arises as to how the

relief is to be moulded.

Under Section 269-UD an order by Appropriate Authority has to be made

within three months of the receipt by it of the statement in Form 37-I. We

have already held that statement filed in Form 37-I was in order. Since the

Appropriate Authority did not pass any order within the prescribed period

it had to issue no objection certificate under Section 269-UL, It is no use

at this distant time sending the matter back to the Appropriate Authority

for it again to apply its mind as period prescribed within which it has to

pass order for purchase of the properly by the Central Government has long

since expired.

In MOI Engineering Ltd. and Another v. Appropriate Authority and Others,

(1992) 198 ITR 270, which is a judgment of the Calcutta High Court, one of

us (Ruma Pal, J.) noted that in view of the decision of Delhi High Court

and the Supreme Court in Tanvi Trading and Credits P. Ltd. the Appropriate

Authority, in exercise of its powers under Section 269-UD of the Act, did

not have the jurisdiction to adjudicate upon the legality of the

transaction, which was proposed to be entered into by the parties. It was

also held that the only order which could be passed under Section 269-UD

was an order of purchase and none other. The only point, therefore, which

fell for consideration, was whether, in the circumstances, the court could

direct the Appropriate Authority to issue a "No Objection Certificate",

under Section 269-UL(3) of the Act or whether the court should direct the

Appro-priate Authority to decide the matter afresh. After examining

provisions of Chapter XX-C and considering various decisions of the High

Courts and of this Court the order of the Appropriate Authority first

holding that the statement filed in Form 37-I was pre-mature and then

refusing to grant No Objection Certificate, were quashed and directions

were issued to the Appro-priate Authority that No Objection Certificate

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under Section 269-UL(3) of the Act in respect of the transfer of the

premises in terms of the agreement between the parties be issued.

In Murlidhar Ratanlal Exports Ltd. v. Appropriate Authority, (1998) 101

Taxman 562 (DB) (Cal.) the High Court was considering an appeal against the

order of the learned single Judge in Shree Digvijay Cement Co. Ltd. v.

Appropriate Authority, (1998) 99 Taxman 32 (CAL.). Here the agreement of

sale was dated 7.3.1994. By insertion of Section 269-UL the Appropriate

Authority treated the form 37-I as non-est. The only question before the

High Court was as to whether upon the submission of Form 37-I the

Appropriate Authority had any option to pass order, the like of which it

has done in the present case. In other words, under the Scheme of Chapter

XXC, particularly with reference to sections 269-UC, 269-UD and 269-UL,

read with section 276-AB, Whether the Appropriate Authority is legally

bound and obliged upon submission of Form No. 37-I only to pass order

either granting 'no-objection' certificate to the parties or to direct the

pre-emptive purchase of the property in terms of section 269-UD, and not to

pass any other order whatsoever. In effect and substance, therefore, the

appropriate authority has only two options, either to grant no objection

certificate or to invoke section 296-UD. The Division Bench noticed that

under the agreement for sale, which was on the basis of Form 37-I, it was

clear that the possession of the property in question was handed over by

the vendor to the vendee not in pursuance of the sale agreement but as a

consequence of the agreement for lease and that, therefore, there was no

transfer within the meaning of clause (f) of Section 269-UA of the Act.

Then the High Court went on to hold as under :

"After having, thus, found that me Appropriate Authority acted in violation

of law and beyond the jurisdiction vested in it, we have no hesitation in

holding that it has lost the right to adjudicate upon the issue of the

genuineness or otherwise on the apparent considera-tion, particularly

because the time during which this had to be done has since expired. Since

the Appropriate Authority failed to exercise the jurisdiction vested in it

by law, and because we are proposing to set aside the order dated

24.6.1994, no purpose would be served by sending the matter back to the

Appropriate Authority for reconsideration on me question of the

appropriateness or otherwise of the apparent consideration. As no decision

was taken by the Appropriate Authority within the time envisaged under

section 269-UD with regard to the apparent consideration, and because of

the reason that we have set aside that order, the time limit cannot be

extended by us and, therefore, the Appropriate Authority is bound to issue

the certificate of 'no-objection' to the parties. We are fortified in our

view by the two judgments of the Calcutta High Court in the cases of MOI

Engg, Ltd. v. Appropriate Authority, . (1992) 198 ITR 270 and Hindustan

Lever Ltd. v. Appmpriate Authority, (1994) 207 ITR 772."

We are of the opinion that these two decisions in MOI Engineering Ltd. and

Murlidhar Ratanlal Exports Ltd. state correct principles which can be

applied in the present cases. We have held that statement in Form 37-I was

in order and was furnished to the Appropriate Authority within the time

prescribed. The Appropriate Authority did not make any order within three

months of its receipt of the said statement for purchase by the Central

Government of the immovable property in question. That being the position,

the Appropriate Authority is duty bound to issue no objection certificate

to the transfer of the property, in the circumstances of the case we can

also exercise jurisdiction under Article 142 of the Constitution. We would,

there-fore, direct the Appropriate Authority to grant no objection

certification to the parties forthwith.

The appeals are disposed of accordingly. Considering the issues in-volved

in these appeals we leave the parties to bear their own costs.