IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION NOTICE NOTICE NOTICE OF MOTION NO. 2340 OF 2006. OF MOTION NO. 2340 OF 2006. OF MOTION NO. 2340 OF 2006. IN IN IN SUIT SUIT SUIT LDG.NO. 1809 OF 2006. LDG.NO. 1809 OF 2006. LDG.NO. 1809 OF 2006. Sasmita Investments Ltd., a Company incorporated and registered under the Companies Act, 1956 having its Registered office at 11, K.K.Marg, Mahalaxmi, Mumbai 400 034. ... Plaintiff. Versus. 1. Appropriate Authority, Constituted under Chapter XXC of the Income Tax Act, 1961, having their office at 3rd floor, Mittal Court, "A" Wing, Nariman Point, Mumbai 40 021. 2. The Union of India, through the Secretary, Ministry of Finance, New Delhi. ... Defendants. Shri Mukul Rohatgi, Senior Counsel with Janak Dwarkadas, Senior Counsel, and Shri Zal Andhyasrujina, Shri Raj Panchmania, Shri Aloukin Pai i/by M/s.Udwadia and Udeshi for the Plaintiff in support of Notice of Motion. Shri M.I.Sethna, Senior Counsel with Shri Rajguru, Shri A.M.Sethna, i/by Shri R.Ashokan for the Defendant No.1. Ms.J.Pandhi for Defendant No.2. CORAM CORAM CORAM : ABHAY S.OKA, J. : ABHAY S.OKA, J. : ABHAY S.OKA, J. DATED DATED DATED : 9th & 10th October, 2007. : 9th & 10th October, 2007. : 9th & 10th October, 2007. ORAL ORAL ORAL JUDGMENT.: JUDGMENT.: JUDGMENT.: 1. I have heard the learned Counsel appearing for the parties in this Notice of Motion as well as in Contempt Petition No.98 of 2006. With a view to appreciate the submissions made by the learned Counsel : 2 : 2 : 2 : appearing for the parties, it will be necessary to refer to the facts of the case in brief. 2. It appears that one Jaysing Gopaldas Mulani and others (hereinafter referred to as "Mulanis") were the owners of the property in dispute, namely a plot of land bearing City Survey No.152 admeasuring 1636.30 sq.meters together with structures thereon situated at Walkeshwar Road, Mumbai. On 16th May 1981 the said Mulanis entered into an agreement for sale in respect of the said property in favour of one Om Prakash Navani on the terms and conditions contained in the said agreement. On July 13, 1991 Mulanis and the said Om Prakash Navani entered into an agreement for sale with the Seawell Interdrill Services Pvt.Ltd. (hereinafter referred to as "Seawell") for sale of the said property and the rights of said Om Prakash Navani. Mulanis submitted a statement in form 37-I under section 269UC of the Income Tax Act, 1961 (hereinafter referred to as "the said Act") to the 1st Defendant, which is an Appropriate Authority under the said Act, giving intimation of the intention to sell the said property in terms of the agreement dated 13th July 1991. 3. By an order dated 29th September 2004, this Court sanctioned a scheme of amalgamation of the Seawell Interdrill Services Pvt.Ltd. with one Trikaya : 3 : 3 : 3 : Investment Ltd. (hereinafter referred to as "Trikaya"). 4. On 27th September 1991 an order was passed under sub-section (1) of section 269UD of the said Act by the 1st Defendant of compulsory purchase of the said property on the ground that the consideration mentioned in the agreement dated 13th July 1991 was understated. A writ petition came to be filed in this Court by Mulanis for challenging the said order. A separate writ petition was also filed by Seawell for challenging the said order. By order dated 12th April 1993, this Court set aside the order dated 27th September 1991 and remanded the matter back to the 1st Defendant to dispose of the Application made by Mulanis in form 37(I). On 29th June 1993 again an order was passed by the 1st Defendant for compulsory purchase on the ground that the consideration mentioned in the agreement dated 13th July 1991 was understated. The said order of compulsory purchase was challenged by Mulanis by filing a writ petition. The Seawell also filed a separate petition being Writ Petition No.1782 of 2002 for challenging the said order. 5. The said petition being Writ Petition No.1782 of 1993 was disposed of by this Court by order dated 11th June 2002 whereby this Court remanded the matter to the Appropriate Authority for a fresh hearing and decision. : 4 : 4 : 4 : To enable the learned Appropriate Authority to decide the matter afresh, the order of compulsory purchase passed on 29th June 1993 was set aside. The order provides that in case the Appropriate Authority again decides to acquire the property, the Petitioners would be free to approach this Court. 6. On the basis of the said order, a fresh order was passed of compulsory purchase on 12th September 2002. On 24th September 2002 the 1st Defendant communicated to the Mulanis as well as the said Om Prakash Navani the fact that the 1st Defendant was willing to pay the apparent consideration after the possession of the said property free from encumbrances along with documents and relevant papers was handed over to the 1st Defendant and all the liabilities of the vendors as per the agreement with the transferee are discharged. By letter dated 4th October 2002 Mulanis called upon the 1st Defendant to deposit the sale consideration with the Advocates of the co-owners. The 1st Defendant was called upon not to insist upon the co-owners to hand over the documents and papers relating to the said property to the 1st Defendant. 7. The case of the Plaintiff is that in accordance with the provisions of the said Act, the amount of apparent consideration ought to have been tendered on or : 5 : 5 : 5 : before 31st October 2002. It appears from the further correspondence between Trikaya and the 1st Defendant that it was contended that on account of the failure of the 1st Defendant to pay the requisite amount, the property stood re-vested in Mulanis. A reference has been made to the communications dated 20th May 2005 and 10th June 2005. 8. It is the case of the Plaintiff that the Mulanis and the said Om Prakash Navani terminated the agreement dated 13th July 1981 in favour of Trikaya. The Plaintiff purchased the said property by a deed of conveyance dated 16th May 2006 from Mulanis and the said Om Prakash Navani for a total consideration of Rs.18,25,00,000/-. It is alleged in the plaint that on 13th June 2006 the Plaintiff was shocked to find that the lock put on the outhouse situated on the said property was broken and another lock was put thereon. According to the Plaintiff, they were informed by the security personnel guarding the property that the keys of the new lock were with the Defendants. 9. The contention of the Plaintiff is that the Defendants were admittedly not in possession of the suit property. The suit is filed, interalia, for declaration that the said order dated 12th September 2002 of compulsory purchase of the property stands abrogated on : 6 : 6 : 6 : and from 31st October 2002. The second declaration sought is that on 31st October 2002 all right, title and interest in the said property stood re-vested in the Mulanis and Om Prakash Navani. The third declaration which is prayed for is that on and from 16th May 2006 the Plaintiff is the absolute owner in possession of the suit property and has the absolute right, title and interest in the said property. A decree is also sought for perpetual injunction restraining the Defendants, their agents and servants from interfering with the Plaintiff’s possession and/or its right to develop the property. A prayer for mandatory injunction is also made directing the Defendants to forthwith remove their board and security personnel from the suit property. 10. In the present notice of motion, the prayer (a) is for the same declaration which is sought in the plaint. Prayers (b) and (c) are for perpetual and mandatory injunctions as sought in the plaint pending the hearing and final disposal of the suit. Prayer (d) is for injunction restraining the Defendants in any manner interfering with the Plaintiff’s possession and/or its right to develop, alienate, sell, transfer, and dispose of the suit property. Prayer (e) is for temporary injunction directing the Defendants to remove their board and security personnel from the suit property. : 7 : 7 : 7 : 11. The learned Senior Counsel appearing for the Plaintiff has made elaborate submissions. The learned Senior Counsel has invited my attention to the provisions of the said Act and particularly Chapter XX-C thereof which deals with the purchase by Central Government of immovable properties in certain cases of transfer. He pointed out that the second order of compulsory purchase passed on 29th June 1993 was set aside by this Court by order dated 11th June 2002 and the third order of compulsory purchase was passed on 12th September 2002. He invited my attention to the relevant provisions of Chapter XX-C and in particular sub-section (1) of section 269UF. He submitted that the amount of consideration payable as per section 269UF of the Act ought to have been tendered to the on or before 31st October 2002. He pointed out that the 1st Defendant did not tender the amount on or before 31st October 2002. He invited my attention to the communications issued by the Defendants in which it is stated that the amount payable under section 269UF has been already deposited on the basis of the second order of compulsory purchase passed on 29th June 1993. The learned Senior Counsel appearing for the Plaintiff submitted that the deposit of the amount by the 1st Defendant on the basis of the earlier order dated 29th June 1993 in P.D.Account was not at all a valid tender : 8 : 8 : 8 : as per the provisions of sub-section (1) of section 269UG. He submitted that the 1st Defendant offered to pay the said amount subject to conditions such as handing over possession and delivery of the documents of title etc. He submitted that the tender of the amount contemplated by sub-section (1) of section 269UG has no connection with the possession of the property and the period described by sub-section (1) of section 269UG starts running from the date on which the property vested in the Central Government in terms of sub-section (1) of section 269UE. He pointed out that the vesting is on the date of passing of the order of compulsory purchase. He submitted that the requirement incorporated in sub-section (1) of section 269UG is a mandatory requirement and the consequence of non-compliance with the mandatory requirement is as provided in section 269UH. He pointed out that in the present case neither sub-section (2) nor sub-section (3) of section 269UG is applicable and therefore, tender of the amount ought to have been in accordance with sub-section (1) of section 269UG. He pointed out that the tender is not made on or before 31st October 2002. The order of compulsory purchase made by the Defendants under sub-section (1) of section 269UD stands abrogated and the immoveable property subject matter of sale stands re-vested in the transferor. He, therefore, submitted that the date on which the Plaintiff purchased : 9 : 9 : 9 : the suit property by a registered conveyance, the vendors of the Plaintiff were the owners as by virtue of sub-section (1) of section 269UH, the suit property would revest in the vendors. 12. The learned Senior Counsel submitted that though the 1st Defendant claims to have taken forcible possession of the property on 22nd July 1993, the correspondence on record shows that admittedly the Defendants were not in possession. He invited my attention to the copies of the letters on record and in particular letter dated 19th December 2005 issued by the 1st Defendant to Trikaya which proves that the Defendants were not in possession. He submitted that the only the security guards employed by the Defendants are on the suit property and there is a name board on the suit property, however, the possession is with the Plaintiff. 13. He submitted that in any event in view of divesting which has taken place by operation of law, now the Defendants have no right to obstruct the Plaintiff being the real owner of the property from enjoying the property and from developing the property. He, therefore, submitted that the Plaintiff is entitled to the interim relief as prayed. He placed reliance on several decisions which are referred to in the later : 10 : 10 : 10 : part of this order. 14. The learned Senior Council appearing for the first Defendants submitted that under section 269UN of the said Act, the Civil suit filed by the Plaintiff was not maintainable. He submitted that neither the transferee nor the transferor under the Agreement/transaction dated 13th July 1991 have challenged the order dated 12th September 2002 and therefore, the Plaintiff has no locus to institute the present suit. He submitted that the alleged predecessors-in-title of the Plaintiff were not in possession of the property as forcible possession of the property was taken over by the authorities on 22nd July 1993 on the basis of the second order of compulsory purchase passed on 29th June 1993. He submitted that the Plaintiff is disentitled to any interim relief on the ground that the suit is not maintainable and also on the ground that the Plaintiff has no locus. He pointed out that the predecessors of the Plaintiff have not been impleaded as parties to the suit. Moreover he submitted that the Defendants are in possession of the suit property. 15. He submitted that in view of sub-section (2) of section 269UE of the said Act, it is the obligation of the transferor or any other person who may be in : 11 : 11 : 11 : possession of the immoveable property in respect of which the order of compulsory purchase is passed to surrender or deliver possession of the property in question to the Appropriate Authority. He submitted that as possession was not handed over, on 22nd July 1993 forcible possession of the suit property was taken over. He submitted that though repeatedly the said Mulanis and Om Prakash Navani were called upon to submit title deeds of the said property, the same were not submitted. He submitted that admittedly the consideration amount was already deposited in the P.D.Account of the Defendants on 29th July 1993. He submitted that immediately after order 12th September 2002 was passed and in any event before 31st October 2002, the 1st Defendant offered the amount lying in the P.D.Account subject to the condition of the Trikaya/Mulanis submitting the documents of title as per their obligation under the statute. He submitted that the offer made by the 1st Defendant to pay the amount which was already deposited in the P.D.Account itself is a valid tender under sub-section (1) of section 269UF of the said Act. He submitted that from the scheme of the said Act it is very clear that the deposit of the amount in P.D.Account is itself a valid tender as contemplated by sub-section (1) of section 269UG. He submitted that in view of the fact that the entire amount of apparent consideration was deposited way back on 23rd July 1993, : 12 : 12 : 12 : there is compliance with the requirement of tender. He submitted that at no point of time, any dispute was raised by the parties regarding tender of the apparent consideration by the Defendants. It is submitted that as the Plaintiff’s predecessor-in-title has not challenged the order dated 12th September 2002, now the Plaintiff in the year 2006 cannot challenge the said order. He submitted that even letter dated 19th December 2005 sent by the Appropriate Authority does not contain any admission that the Defendants are not in possession. He invited my attention to the letter dated 11th October 2002 sent by Mulanis to the Appropriate Authority in which it was categorically admitted that the 1st Defendant was in possession of the suit property. The learned Counsel for the Defendants also placed reliance on certain decisions, a reference to which will be made in later part of the said judgment. 16. The learned Senior Counsel appearing for the Plaintiff by way of rejoinder submitted that there was a divesting of the property as a consequence of the failure of the 1st Defendant to tender the amount on or before 31st October 2003. He submitted that there is an automatic divesting by operation of law, even assuming that the possession of the property and possession of title deeds were not handed over by the predecessor of the Plaintiff, the divesting has taken effect. He : 13 : 13 : 13 : submitted that in view of the divesting by operation of law, now the Central Government or any of its wings cannot prevent the real owner of the property from developing the suit property. He submitted that as the Defendants have no right, title or interest in respect of the suit property, the Plaintiff is entitled to the relief of injunction as prayed. 17. I have carefully considered the submissions made by the learned Counsel appearing for the parties. The order dated 12th September 2002 has been admittedly passed under sub-section (1) of section 269UD of the said Act. Sub-section (1) of section 269UE provides that when an order under sub-section (1) of section 269UD is made by the Appropriate Authority in respect of an immoveable property referred to in sub-clause (i) of clause (d) of section 269UA, the said property shall on the date of such order vests in the Central Government in terms of the agreement for transfer referred to in sub-section (1) of section 269UC. In the present case the agreement for transfer is dated 13th July 1991 executed by the Mulanis and Om Prakash Navani in favour of the predecessor of Trikaya. Thus the vesting according to sub-section (1) of section 269UE in the Central Government is on 12th September 2002. Sub-section (2) of section 269 UE enjoins the transferor or any other person in possession of the immoveable : 14 : 14 : 14 : property subject matter of purchase to surrender or deliver possession of the property to the appropriate Authority. In case of failure or refusal to surrender or deliver possession, the Appropriate Authority under sub-section (3) of section 269UE is empowered to take possession of the property by use of such force as may be necessary. For that purpose, the Appropriate Authority can requisition the services of any Police Officer. Sub-section (1) of section 269UF provides that where an order for purchase of any immoveable property by the Central Government is made under sub-section (1) of section 269UD, the Central Government shall pay, by way of consideration for such purchase, an amount equal to the amount of apparent consideration. Sub-section (1) of section 269UG provides that the amount of consideration payable in accordance with provisions of section 269UF shall be tendered to the person or persons entitled thereto within a period of one month from the end of the month in which the immoveable property concerned becomes vested in the Central Government under sub-section (1) or as the case may be, sub-section (6) of section 269UE. In the present case sub-section (6) of section 269UE has no application. Under section 269UE in case there is a dispute as to the apportionment of the apparent consideration payable by the Central Government, a provision is made for deposit of the said amount with the Appropriate Authority. It is also : 15 : 15 : 15 : provided that if the person entitled to the amount of consideration does not consent to receive or if there is any dispute as to the title to receive the amount of consideration, the Central Government shall deposit with Appropriate Authority the amount of consideration required to be tendered under sub-section (1) of section 269UF within the period specified therein. Sub-section (4) of section 269UG provides that the apparent consideration so deposited with the Appropriate Authority can be invested in Government securities or other securities. Under sub-section (1) of section 269UH it is provided that if the Central Government fails to tender under sub-section (1) of section 269UG or deposit under sub-section (2) or (3) of the said section 269UG whole or part of the consideration amount within the period specified, the order to purchase the immoveable property by the Central Government made under sub-section (1) of section 269UD shall stand abrogated and the immoveable property shall stand revested in the transferor after expiry of the aforesaid period. 18. The Plaintiff has placed reliance on a decision of the Apex Court in the case of Union of India and another v/s. Dr.A.K.Garg and others ([2002] 10 S.C.C. 392). In the case before the Apex Court the amount of apparent consideration was deposited with the Appropriate Authority, but there was no material on : 16 : 16 : 16 : record to show that the same was tendered or offered to the parties concerned. The Apex Court held that as there was no material forthcoming to show that the offer was made within time stipulated by law, the purchase order stood abrogated. 19. Reliance has been placed on the decision of the Apex Court in the case of Prima Realty v/s.Union of India and others ([1996] 11 SCC 65). In the case before the Apex Court, the payment of apparent consideration was required to be made on or before 31st May 1995. On 31st May 1995 the Central Government issued 9 cheques drawn on the same day. The cheques were drawn in an incorrect name. The said cheque was delivered to the Appellant on 1st June 1995. On 21st June 1995, the said cheque was returned to the Appropriate Authority by the Appellant contending that the purchase order stood abrogated on account of non-compliance of the tendering the amount. On 22nd June 1995 the Central Government forwarded a corrected cheque in the sum of Rs.60 lakhs in the correct name. In a writ petition filed by the Appellant before the High Court it was contended that the aforesaid payment sought to be made on 22nd June 1995 was of no consequence. The Apex Court held that the tender of the amount of apparent consideration was short to the extent of Rs.60 lakhs for which the cheque was issued in a wrong name. The Apex Court held that : 17 : 17 : 17 : the order of compulsory sale stood abrogated. 20. Reliance has been placed by the Plaintiffs on the decision of the Division Bench of this Court in the case of Parasrampuria Estate Developers Pvt.Ltd. v/s. Appropriate Authority and others ([2005] 199 [CTR BOM] 143). Reliance has been placed on paragraphs 9 and 10 of the said decision which hold that the requirement of sub-section (1) of section 269UG was mandatory. It was held that on account of non-compliance with the mandatory requirement, the order of purchase stood abrogated and the properties stood revested in the Petitioner before this Court. Thus the position regarding the effect of non-compliance with the requirement of tender under section 269UG appears to be well settled. The consequence of non-compliance is the revesting under sub-section (1) of section 269UH. 21. In the present case the submission of the Defendants is that the amount of apparent consideration has already been deposited on the basis of the earlier order of purchase on 29th June 1993. As pointed out earlier all the three orders of compulsory purchase are on the basis of the same agreement for sale dated 13th July 1991. In fact the order dated 29th June 1993 was passed on the basis of the order of remand by setting aside the first