JUDGMENT
The judgment of the court was delivered by [ENTITY] J. - Rule. Mr. [ENTITY], learned counsel for the petitioner, prays to delete Dr. [ENTITY], respondent No. [SECTION], as, according to him, the petitioner does not seek any relief against that respondent. Permission granted. Original respondent No. 1, appropriate authority, will now be treated as sole respondent. Mr. [ENTITY], instructed by [ENTITY], appears and waives service of rule. In the facts and circumstances of the case, the matter is taken up today for final hearing.
This petition is filed by the petitioner for quashing and setting aside the order annexure "E", dated April [SECTION]8, 1995, passed by the appropriate authority in exercise of the powers under [SECTION] of the [ACT] (hereinafter referred to as "the Act"), of pre-emptive purchase of property and consequential order of even date at annexure E-1 vesting the property in the Government under [SECTION] of the Act being illegal, ultra vires and unconstitutional.
It is the case of the petitioner that it is a non-trading corporation incorporated under the [ACT]. It consists of members who belong to the lower middle class. One Dr. [ENTITY], whose family had settled in the United States, decided to sell the property in question with a view himself to settle in America. The petitioner-association, therefore, entered into an agreement on January [SECTION]0, 1995, to purchase Sub-Plot No. [SECTION] of Final Plot No. 178 under the Town Planning Scheme No. [SECTION], admeasuring 74[SECTION] square yards with a superstructure thereon situated behind Mount Carmel High School, Navrangpura, Ahmedabad, for an apparent consideration of Rs. 45,[SECTION]5,000. A copy of banakhat is annexed to the petition. According to the petitioner-corporation, all expenses of stamp paper, registration charges, advocate fees and miscellaneous expenses were to be borne by the petitioner. Since the amount of apparent consideration exceeded Rs. 10 lakhs, the vendor and the vendee filled in Form No. [SECTION]7-I of the Act in accordance with the provisions of the Act on January [SECTION][SECTION], 1995. In that form also, it was mentioned that the transfer expenses were to be borne by the purchaser. It is asserted by the petitioner that the fact regarding expenses were specifically mentioned because according to the usual practice in the State, such expenses were to be shared equally by the transferor and the transferee. For a substantial long period, nothing was done by the respondent authority. The transferor as well as transferee believed that the appropriate authority was satisfied about the consideration and bona fide transaction. However, the respondent authority, in purported exercise of the power under [SECTION] of the Act issued a show-cause notice and called upon the transferor and the transferee on April [SECTION]0, 1995, alleging that taking into account the consideration of the sale instance property, the apparent as well as the discounted consideration of the property under consideration was understated by more than 15 per cent. the transferor and the transferee were, therefore, asked to show cause as to why action under [SECTION] of the Act should not be taken against them and the property should not be ordered to be purchased under [SECTION]. The parties were called upon to file written reply/submission within the stipulated period, failing which the appropriate authority would presume that they had no objection to the proposed order under [SECTION] of the Act.
The petitioner and Dr. [ENTITY] filed replies to the above show-cause notice on April [SECTION]6, and April [SECTION]7, 1995, respectively. It was, inter alia, contended by them that it was not an appropriate case for pre-emptive purchase. It was submitted that the sale instance property was not at all a comparable sale instance inasmuch as the property in that case was located near the High Court where a number of commercial complexes were there, whereas the property under consideration was not in a commercially developed area. It was also pointed out that the property under consideration, had no frontage except 9.15 metres portion of plot which could be used as approach to the property. The shape of the plot was odd and highly irregular. Hence, the property under consideration could not be efficiently developed for commercial purposes. On the other hand, the shape of the sale instance property was regular and it had a frontage of 17.68 metres, i.e., more than double, on the [SECTION]0' wide road and hence, it could very well be utilised and developed for commercial use. It was also contended that the size of the property under consideration was almost double the size of the sale instance property. The larger plot could not be compared with a smaller plot which would fetch a high price. It was also disputed that appropriate authority had not independently valued the property under consideration and merely on a hypothesis of under-valuation, the show-cause notice was issued. The petitioner relied upon two sale instances in support of his argument. Reliance was also placed on the fact that the entire transfer expenses were to be borne by him. On all these grounds, it was submitted that it was not a fit case for pre-emptive purchase and proceedings were required to be dropped.
The appropriate authority after considering the replies submitted by the parties passed an order on April [SECTION]8, 1995, holding that in the facts and circumstances of the case the authority was satisfied that the property under consideration was fit for pre-emptive purchase under [SECTION] of the Act and accordingly an order to purchase the property under consideration was passed. Dealing with the submissions of the parties and arriving at the satisfaction, the appropriate authority in para 5 observed as under :
"5. The above mentioned submissions have been carefully gone through and the same have been dealt with by us as under :
(1) The property under consideration is situated on a [SECTION]0' wide T. P. Road taking off from Ashram Road, behind Mount Carmel High School. Ahmedabad Municipal Corporation had divided the city into residential and commercial zones according to the pace of commercial development of a particular zone. The property under consideration lies in a commercial zone. Hence, it is not accepted that there is no commercial development around the property under consideration. The comparison of the property under consideration and the sale instance property vide File No. AHD-89[SECTION] is, therefore, fair and reasonable.
([SECTION]) The property under consideration has a frontage on a [SECTION]0' wide T. P. Road, though the frontage is narrow, it does not affect the value of the property under consideration substantially compared to the sale instance property, since the sale instance property, due to its proximity to the High Court suffers from the problems of traffic and vehicular pollution.
([SECTION]) The shape of the plot does not affect the value of the property under consideration considerably. Regarding the size of the property under consideration, the land area of the property under consideration is 6[SECTION]1.[SECTION]4 square metres whereas that of the sale instance property is [SECTION]48.66 square metres. The size of the property under consideration plot is an asset rather than a liability. The size of the property under consideration is more viable to be developed commercially compared to the sale instance property in view of certain restrictions imposed by the Municipal Corporation like provision for parking, etc. (4) As already discussed in [SECTION], [SECTION] and [SECTION] above, the property under consideration is comparable to the sale instance property, we cannot allow any deduction from the rate of the sale instance property.
(5) Regarding the contention of independent valuation of the property under consideration, the market rate of the property under consideration per square metre based on the sale instance property is not less than Rs. 8,9[SECTION]5 whereas the apparent rate as per Form No. [SECTION]7-I comes to Rs. 7,141 only. The rate is, therefore, understand by more than 15 per cent.
(6) The first sale instance quoted (File No. AHD-886) is the property is situated on the dead end of a [SECTION]0' wide road, taking of from C. G. Road, whereas the property under consideration is situated on a [SECTION]0' wide T. P. Road taking off from Ashram Road. Moreover, this sale instance property lies in a residential zone with available FSI 1.00. The property under consideration, on the other hand, is in a commercial zone and the available FSI is 1.[SECTION][SECTION]. Even if this instance is accepted as comparable, the apparent rate of the property under consideration per square metre after giving due weightage to the available FSI is considered to be understated by more than 15 per cent.
The second sale instance quoted (File No. AHD-890) is the property situated on a 40' wide T. P. Road taking off from C. G. Road. This property had a garrage of 181.47 square metres of built-up area occupied by two tenants and the liability of vacating the tenants was with the purchaser. The apparent land rate and discounted land rate per square metre of this property comes to Rs. 9,017 and Rs. 8,8[SECTION]6, respectively. The corresponding rates in the case of the property under consideration are Rs. 7,141 and Rs. 6,9[SECTION]8. This again proves understatement in the case of the property under consideration by more than 15 per cent. beyond any doubt.
(7) The bye-laws of the Municipal Corporation have nothing to do with the value of the property under consideration inasmuch as the said bye-laws are equally applicable to all the cases and are not imposed specifically against the property under consideration.
(8) It is contended that the transfer expenses are to be borne by the purchaser. Again, it does not affect the value of the property since such expenses are payable by the transferee only in the case of sale instance property, vide File No. 898 as also in the case of two instances quoted in the submissions.
(9) The contentions in the sub-paras. (9), (10) and (11) of para. 4 above, have been raised in the written submissions received on April [SECTION]7, 1995 in the afternoon. We wish to clarify that after considering all the negative aspects of the property under consideration as pointed out by both the transferor and transferee have been carefully considered and the market rate of the property under consideration per square metres is not less than Rs. 8,9[SECTION]5 after evaluating all the pros and cons of the property under consideration. The rate as per Form No. [SECTION]7-I of Rs. 7,141 per square metre, is, therefore, understated by more than 15 per cent."
Various contentions were raised by Mr. [ENTITY], learned counsel for the petitioner. It was submitted that the exercise of the power was beyond jurisdiction as there was no allegation of avoidance and evasion of tax by the parties. In the absence of such allegation, exercise of the power as bad in law, Mr. [ENTITY] also submitted that no positive finding has been recorded by the appropriate authority as to how it came to a definite conclusion that the apparent and discounted consideration of the property under consideration was understated by more than 15 per cent. This is a sine qua non or condition precedent for exercise of the power under [SECTION] and as the said condition is not fulfilled, the order requires to be quashed Mr. [ENTITY] vehemently contended that the appropriate authority has committed serious error in placing reliance on sale instance property. Considering the location, shape, area, frontage and commercial development of the sale instance property and the property under consideration, no reasonable and prudent man would compare property under consideration with the sale instance property. On all aspects which can be said to be relevant and germane for fixing the market price, the sale instance property was better situated and price of the property under consideration could not have been fixed on that basis. The impugned order, therefore, also requires to be interfered with Mr. [ENTITY] submitted that reliance placed by the transferee on two sale instances were relevant and considering those two sale instances, the authority ought to have held that the apparent as well as discounted consideration of the property under consideration could not be said to be understated by more than 15 per cent.
Mr. [ENTITY], learned counsel for the respondent, on the other hand, supported the order passed by the appropriate authority. He submitted that the notice in accordance with law was issued by the appropriate authority calling upon the transferor and the transferee as to why an action under [SECTION] should not be taken against them. The parties submitted their written statements and after considering them, in exercise of statutory power, the appropriate authority bona fide passed an order which cannot be said to be illegal, improper or contrary to law. Mr. [ENTITY] submitted that this court is exercising extraordinary jurisdiction under [SECTION] of the [ACT] and it will not substitute its opinion for the opinion of the appropriate authority. When action is taken by keeping in mind, relevant facts and circumstances, judicial review is not called for to interfere with the said satisfaction by disturbing the finding arrived at by the respondent authority. The petition, therefore, requires to be dismissed.
On the facts and in the circumstances of the case, the petition requires to be allowed. Apart from any other reason, in our opinion, the appropriate authority has committed a grave error of law apparent on the face of the record in placing reliance on the sale instance property and in passing the impugned order on that basis. As is clear, while passing the impugned order, the appropriate authority has referred to and relied upon consideration and market price of the sale instance property. However, it is the case of the petitioner that the sale instance property could not be said to be a comparable sale instance. Regarding the situation of the sale instance property and the property under consideration, the appropriate authority observed that both the instance property and the property under consideration were situated in a commercial zone. The property under consideration was situated behind Mount Carmel High School in a commercial zone. It was not accepted that there was no commercial development around property under consideration. In our view, Mr. [ENTITY] is right in contending that even if property under consideration is situated in commercial zone, it is indeed a relevant factor whether there is commercial development around property under consideration. Likewise, it is also important to bear in mind whether the frontage available to sale instance property was much more than the one available to the property under consideration. The appropriate authority observed :
"Though the frontage is narrow, it does not affect the value of the property under consideration substantially compared to the sale instance property "
Mr. [ENTITY] rightly contended that it cannot be said that the narrow frontage does not affect value of the property. Regarding shape also, the appropriate authority was not right in not allowing deduction particularly when it did not dispute the submission of the petitioner that the property under consideration was having an odd shape.
Again, the appropriate authority has committed an error of law on the face of the record in observing that though the frontage of the property under consideration was narrow on the [SECTION]0' wide T. P. Road, whereas the sale instance property was having a wide road. It would not affect the value of the property under consideration substantially compared to the sale instance property inasmuch as the sale instance property, due to its proximity to the High Court, suffered from the problem of traffic and vehicular pollution. Ordinarily, wide frontage should be considered as beneficial to the property than narrow frontage. It is true that heavy traffic or vehicular pollution may adversely affect the property but then there must be some material or evidence on record on the basis of which, the appropriate authority may form an opinion by recording a definite finding to that effect. In the absence of such finding or material on record, no inference can be drawn nor conclusion can be arrived at that because of proximity to a particular place, there would be a problem of traffic and vehicular pollution.
Despite these facts, the appropriate authority in [SECTION] compared the property under consideration with the said instance property and no deduction from the rate of the sale instance property was allowed to the property under consideration. The above approach of the appropriate authority cannot be said to be legal and in accordance with law.
The appropriate authority has also erred in not relying upon sale instances of sale instance property-1 and sale instance property-[SECTION] on which reliance was placed by the petitioner. Sale instance property-1 is situated at the end of C. G. Road which, according to the petitioner is a commercially developed area. The property under consideration is situated on Ashram Road but on to wide T. P. Road taking off from Ashram Road. Similarly, sale instance property-[SECTION] is situated on 40' T. P. Road taking off from C. G. Road which is also occupied by the two tenants and it ought to have been considered in its proper perspective. Mr. [ENTITY] is right in submitting that the fact that the transfer expenses were to be borne by the purchaser is a relevant fact and it ought to have been given due importance. The authority was not right in observing that it would not affect the value of the property.
Apart from the above grounds, in our opinion, Mr. [ENTITY] is right in submitting that the satisfaction as contemplated by [SECTION] must be based on objective facts. There must be evidence and material to arrive at the conclusion and satisfaction. Rejection of sale instances and/or grounds and/or reasons put forth by the party is one thing. At the most, it can be said to be a negative finding for not accepting the case of the transferor/transferee. But, the law requires something more. In our opinion, it is incumbent upon the appropriate authority to come to a positive finding and definite conclusion that the property was undervalued. In the absence of such a finding or conclusion, no order under [SECTION] can be made. A similar question arose before us in [CASE NUMBER] -Anagram Finance Ltd. v. Appropriate Authority [1996] [SECTION]17 ITR [SECTION][SECTION] (Guj) decided by us on March [SECTION]0, 1995. Considering the relevant provisions of the Act as also the decision of the Honble Supreme Court in Barium Chemicals Ltd. v. Company Law Board [1966] [SECTION]6 Comp Cas 6[SECTION]9; AIR 1967 SC [SECTION]95, we observed (at page [SECTION]8) :
"The combined reading of [SECTION] of the Act leaves no room for doubt that it is a question of objective decision-making process by taking into consideration all relevant materials which have come before the hearing authority and considering the rival aspects of the matter. Moreover, the requirement of law is to specify the grounds on which the order of pre-emptive purchase is made. That obligation does not stop by merely rejecting the submissions made before it. The rejection of submissions made by the vendors or the transferee or the person interested in the property, does not lead to a consequence that grounds for making pre-emptive purchase exist. The sine qua non is that the reasons must exist on the material placed before it, for supporting the action taken for pre-emptive purchase under [SECTION] of the Act. The order clearly falls short of this requirement."
In our opinion, the point is concluded by the above decision also. Since no satisfaction has been arrived at by the respondent on the basis of objective facts and no reasons have been recorded for coming to a positive conclusion as to why there was difference of more than 15 per cent., the order cannot be said to be in accordance with law and must be quashed and set aside.
For the foregoing reasons, the petition requires to be allowed and is accordingly allowed. The impugned orders dated April [SECTION]8, 1995, at annexures "E" and "E-1" passed by the appropriate authority are hereby quashed and set aside. The respondent is directed to complete the necessary formalities within a period of six weeks from the date of the receipt of the order of the court including issuance of clearance certificate. Rule is made absolute. No order as to costs.