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 WRIT WRIT WRIT PETITION NO.720 of 1993 PETITION NO.720 of 1993 PETITION NO.720 of 1993 M/s M/s M/s National Plastics & Allied.. Petitioners National Plastics & Allied.. Petitioners National Plastics & Allied.. Petitioners Industries Industries Industries & anr & anr & anr Vs. Vs. Vs. S.K.Laul S.K.Laul S.K.Laul & ors & ors & ors ... ... ... Respondents Respondents Respondents Mr.Mahendra Mr.Mahendra Mr.Mahendra Ghelani for Petitioners. Ghelani for Petitioners. Ghelani for Petitioners. Mr.R.Asokan Mr.R.Asokan Mr.R.Asokan for Respondents for Respondents for Respondents CORAM CORAM CORAM : Dr.S.Radhakrishnan and : Dr.S.Radhakrishnan and : Dr.S.Radhakrishnan and A.V.Nirgude, A.V.Nirgude, A.V.Nirgude, JJ JJ JJ DATED DATED DATED : 10th June, 2008 : 10th June, 2008 : 10th June, 2008 JUDGMENT JUDGMENT JUDGMENT ( Per A.V.Nirgude, J ) ( Per A.V.Nirgude, J ) ( Per A.V.Nirgude, J ) 1. 1. 1. This Writ Petition is filed challenging the This Writ Petition is filed challenging the This Writ Petition is filed challenging the order order order dated 23rd February 1993 passed by the dated 23rd February 1993 passed by the dated 23rd February 1993 passed by the respondent respondent respondent no.1 - the Appropriate Authority no.1 - the Appropriate Authority no.1 - the Appropriate Authority constituted constituted constituted under Chapter XXC of the Income Tax under Chapter XXC of the Income Tax under Chapter XXC of the Income Tax Act, Act, Act, 1961. (for short the Act) under the 1961. (for short the Act) under the 1961. (for short the Act) under the provisions provisions provisions of section 269 UD (1) of compulsory of section 269 UD (1) of compulsory of section 269 UD (1) of compulsory purchasing purchasing purchasing of the disputed property. of the disputed property. of the disputed property. 2. 2. 2. The Ist Petitioner is a partnership firm and The Ist Petitioner is a partnership firm and The Ist Petitioner is a partnership firm and 2nd 2nd 2nd Petitioner is one of the partners of the Ist Petitioner is one of the partners of the Ist Petitioner is one of the partners of the Ist Petitioners. Petitioners. Petitioners. Ther Ist Petitioners are the owners Ther Ist Petitioners are the owners Ther Ist Petitioners are the owners of of of the disputed property which is a plot of land the disputed property which is a plot of land the disputed property which is a plot of land admeasuring admeasuring admeasuring about 2400 sq.feet with structures about 2400 sq.feet with structures about 2400 sq.feet with structures standing standing standing thereon being an aggragate area of 24,525 thereon being an aggragate area of 24,525 thereon being an aggragate area of 24,525 sq.feet sq.feet sq.feet situated at Marol, Mumbai. The property situated at Marol, Mumbai. The property situated at Marol, Mumbai. The property 2 consists consists consists of different industrial galas. The Ist of different industrial galas. The Ist of different industrial galas. The Ist Petitioners Petitioners Petitioners purchased this property in 1985 from purchased this property in 1985 from purchased this property in 1985 from one one one Virendra Metal Estate. At that time, there Virendra Metal Estate. At that time, there Virendra Metal Estate. At that time, there were were were 6 tenants occupying various galas. Even the 6 tenants occupying various galas. Even the 6 tenants occupying various galas. Even the Ist Ist Ist Petitioner was one of the tenant and was Petitioner was one of the tenant and was Petitioner was one of the tenant and was occupying occupying occupying some galas. The Ist Petitioners became some galas. The Ist Petitioners became some galas. The Ist Petitioners became the the the owner of the property and the remaining owner of the property and the remaining owner of the property and the remaining tenants tenants tenants continued to remain on the property. The continued to remain on the property. The continued to remain on the property. The Ist Ist Ist Petitioners then filed Form 37 EE with the Petitioners then filed Form 37 EE with the Petitioners then filed Form 37 EE with the Appropriate Appropriate Appropriate Authority giving all the details of Authority giving all the details of Authority giving all the details of the the the properties. properties. properties. 3. 3. 3. On 26th February 1990 by an agreement of sale, On 26th February 1990 by an agreement of sale, On 26th February 1990 by an agreement of sale, the the the Ist Petitioners agreed to sell the entire Ist Petitioners agreed to sell the entire Ist Petitioners agreed to sell the entire property property property to one Antia Electricals Pvt Ltd and to one Antia Electricals Pvt Ltd and to one Antia Electricals Pvt Ltd and others others others at a price of Rs.1,23,00,000/- on certain at a price of Rs.1,23,00,000/- on certain at a price of Rs.1,23,00,000/- on certain terms terms terms and conditions recorded in the agreement. and conditions recorded in the agreement. and conditions recorded in the agreement. The The The Ist Petitioners then filed Form 37-1 on 20th Ist Petitioners then filed Form 37-1 on 20th Ist Petitioners then filed Form 37-1 on 20th February February February 1990 before the Appropriate Authority. 1990 before the Appropriate Authority. 1990 before the Appropriate Authority. The The The Appropriate Authority however, passed an order Appropriate Authority however, passed an order Appropriate Authority however, passed an order under under under section 269 UD (1) of the Act on 7th May section 269 UD (1) of the Act on 7th May section 269 UD (1) of the Act on 7th May 1990 1990 1990 and intimated it to the Ist Petitioners and and intimated it to the Ist Petitioners and and intimated it to the Ist Petitioners and directed directed directed them to hand over the possession of the them to hand over the possession of the them to hand over the possession of the property. property. property. The Petitioners then filed a Writ The Petitioners then filed a Writ The Petitioners then filed a Writ Petition Petition Petition being Writ Petition No.1633 of 1990 inter being Writ Petition No.1633 of 1990 inter being Writ Petition No.1633 of 1990 inter alia alia alia challenging the legality and validity of the challenging the legality and validity of the challenging the legality and validity of the 3 order order order dated 26th April, 1990. The Petition was dated 26th April, 1990. The Petition was dated 26th April, 1990. The Petition was admitted admitted admitted on 24th May 1990 and an interim order on 24th May 1990 and an interim order on 24th May 1990 and an interim order came came came to be passed preventing the Appropriate to be passed preventing the Appropriate to be passed preventing the Appropriate Authority Authority Authority from taking further steps in the matter. from taking further steps in the matter. from taking further steps in the matter. Thereafter, Thereafter, Thereafter, the Hon’ble Supreme Court in the case the Hon’ble Supreme Court in the case the Hon’ble Supreme Court in the case of of of C.B.Gautam vs Union of India & ors (ITR 530 SC) C.B.Gautam vs Union of India & ors (ITR 530 SC) C.B.Gautam vs Union of India & ors (ITR 530 SC) decided decided decided the validity of chapter XXC of the said the validity of chapter XXC of the said the validity of chapter XXC of the said Act Act Act and passed certain directions regarding orders and passed certain directions regarding orders and passed certain directions regarding orders of of of preemptive purchase of properties. This Court preemptive purchase of properties. This Court preemptive purchase of properties. This Court pursuant pursuant pursuant to the said decision allowed the Writ to the said decision allowed the Writ to the said decision allowed the Writ Petition Petition Petition No. 1633 of 1990 and remanded the case No. 1633 of 1990 and remanded the case No. 1633 of 1990 and remanded the case back back back to the Appropriate Authority on 16th December to the Appropriate Authority on 16th December to the Appropriate Authority on 16th December 1992 1992 1992 for deciding the same in the light of the for deciding the same in the light of the for deciding the same in the light of the directions directions directions of the judgment of the Hon’ble Supreme of the judgment of the Hon’ble Supreme of the judgment of the Hon’ble Supreme Court. Court. Court. 4. 4. 4. The Appropriate Authority then issued a show The Appropriate Authority then issued a show The Appropriate Authority then issued a show cause cause cause notice on 1st January 1993 to the Ist notice on 1st January 1993 to the Ist notice on 1st January 1993 to the Ist Petitioners Petitioners Petitioners and the transferee of the property and the transferee of the property and the transferee of the property directing directing directing them to attend their office and to show them to attend their office and to show them to attend their office and to show cause cause cause why an order should not be made under why an order should not be made under why an order should not be made under section section section 269 UD (1) of the Act. Along with the 269 UD (1) of the Act. Along with the 269 UD (1) of the Act. Along with the said said said show cause notice, the Appropriate Authority show cause notice, the Appropriate Authority show cause notice, the Appropriate Authority also also also enclosed their reasons. The Petitioners then enclosed their reasons. The Petitioners then enclosed their reasons. The Petitioners then submitted submitted submitted their reply to the show cause notice on their reply to the show cause notice on their reply to the show cause notice on 4th 4th 4th May 1993 and opposed the action. Therefter, May 1993 and opposed the action. Therefter, May 1993 and opposed the action. Therefter, 4 the the the Appropriate Authority after hearing the Appropriate Authority after hearing the Appropriate Authority after hearing the Petitioners Petitioners Petitioners and the transferee passed the impugned and the transferee passed the impugned and the transferee passed the impugned order order order on 23rd February 1993 ordering purchasing of on 23rd February 1993 ordering purchasing of on 23rd February 1993 ordering purchasing of the the the disputed property at a price of disputed property at a price of disputed property at a price of Rs.1,83,77,312/-. Rs.1,83,77,312/-. Rs.1,83,77,312/-. This order is challenged in This order is challenged in This order is challenged in this this this Writ Petition. Writ Petition. Writ Petition. 5. 5. 5. Mr.Ghelani, learned counsel appearing for the Mr.Ghelani, learned counsel appearing for the Mr.Ghelani, learned counsel appearing for the Petitioners Petitioners Petitioners attacked the legality and correctness attacked the legality and correctness attacked the legality and correctness of of of the order on various grounds. Mr.Asokan, the order on various grounds. Mr.Asokan, the order on various grounds. Mr.Asokan, learned learned learned counsel appearing for the respondents made counsel appearing for the respondents made counsel appearing for the respondents made his his his submissions and tried to defend the order. submissions and tried to defend the order. submissions and tried to defend the order. After After After hearing both the sides, perusing the record hearing both the sides, perusing the record hearing both the sides, perusing the record and and and going through the case laws, we are convinced going through the case laws, we are convinced going through the case laws, we are convinced that that that the impugned order cannot be upheld. The the impugned order cannot be upheld. The the impugned order cannot be upheld. The reasons reasons reasons for the same are as under : for the same are as under : for the same are as under : 6. 6. 6. The Appropriate Authority in our considered The Appropriate Authority in our considered The Appropriate Authority in our considered view view view repeatedly violated the principles of natural repeatedly violated the principles of natural repeatedly violated the principles of natural justice. justice. justice. While during the proceedings powers While during the proceedings powers While during the proceedings powers under under under section 269 UD (1) have far reaching and section 269 UD (1) have far reaching and section 269 UD (1) have far reaching and serious serious serious civil consequences. They are to be used civil consequences. They are to be used civil consequences. They are to be used to to to deprive a party of its immovable property. So deprive a party of its immovable property. So deprive a party of its immovable property. So while while while exercising this power the Authority has to exercising this power the Authority has to exercising this power the Authority has to follow follow follow the principles of natural justice very the principles of natural justice very the principles of natural justice very meticulously meticulously meticulously although the proceedings under the although the proceedings under the although the proceedings under the 5 provisions provisions provisions are of a summary nature. The show are of a summary nature. The show are of a summary nature. The show cause cause cause notice was annexed with the statements of notice was annexed with the statements of notice was annexed with the statements of reasons reasons reasons and the Petitioners’s attention was and the Petitioners’s attention was and the Petitioners’s attention was invited invited invited towards the same. But, the reasons that towards the same. But, the reasons that towards the same. But, the reasons that are are are annexed to the show cause notice is nothing annexed to the show cause notice is nothing annexed to the show cause notice is nothing but, but, but, a copy of the order passed by the Appropriate a copy of the order passed by the Appropriate a copy of the order passed by the Appropriate Authority Authority Authority on 28th April 1990 and which was the on 28th April 1990 and which was the on 28th April 1990 and which was the subject subject subject matter of Writ Petition No.1633 of 1990. matter of Writ Petition No.1633 of 1990. matter of Writ Petition No.1633 of 1990. Obviously, Obviously, Obviously, this order cannot be said to be this order cannot be said to be this order cannot be said to be appropriate appropriate appropriate reasons for issuing the show cause reasons for issuing the show cause reasons for issuing the show cause notice. notice. notice. The show cause notice is issued with the The show cause notice is issued with the The show cause notice is issued with the prima prima prima facie material which the authority has facie material which the authority has facie material which the authority has considered considered considered for issuing the show cause notice. for issuing the show cause notice. for issuing the show cause notice. Issuing Issuing Issuing a show cause notice is not a empty a show cause notice is not a empty a show cause notice is not a empty formality formality formality and so annexing the previous order to and so annexing the previous order to and so annexing the previous order to the the the show cause notice amounted to violation of the show cause notice amounted to violation of the show cause notice amounted to violation of the principles principles principles of natural justice. Reading these of natural justice. Reading these of natural justice. Reading these annexures annexures annexures creates a clear impression that the creates a clear impression that the creates a clear impression that the authority authority authority issuing the show cause notice has issuing the show cause notice has issuing the show cause notice has already already already decided the matter by utilising the decided the matter by utilising the decided the matter by utilising the material material material at their command and drawing a final at their command and drawing a final at their command and drawing a final conclusion conclusion conclusion as to why the property in question as to why the property in question as to why the property in question should should should be compulsorily acquired. The show cause be compulsorily acquired. The show cause be compulsorily acquired. The show cause notice notice notice not only expressed an opinion but, even not only expressed an opinion but, even not only expressed an opinion but, even went went went further to discussing as to how much amount further to discussing as to how much amount further to discussing as to how much amount the the the Appropriate Authority should hand over as Appropriate Authority should hand over as Appropriate Authority should hand over as 6 consideration consideration consideration for compulsory acquiring the for compulsory acquiring the for compulsory acquiring the property property property in question under section 269 UF read in question under section 269 UF read in question under section 269 UF read with with with section 269 UA (B) of the Act. This part of section 269 UA (B) of the Act. This part of section 269 UA (B) of the Act. This part of the the the show cause notice is very absurd because at show cause notice is very absurd because at show cause notice is very absurd because at that that that stage, there was no reason for the stage, there was no reason for the stage, there was no reason for the Appropriate Appropriate Appropriate Authority to discuss as to what Authority to discuss as to what Authority to discuss as to what consideration consideration consideration the government should hand over for the government should hand over for the government should hand over for acquiring acquiring acquiring the property. At the stage of show the property. At the stage of show the property. At the stage of show cause cause cause notice even the Appropriate Authority is not notice even the Appropriate Authority is not notice even the Appropriate Authority is not supposed supposed supposed to have make up his mind whether to to have make up his mind whether to to have make up his mind whether to acquire acquire acquire the property or not ? The stage of the property or not ? The stage of the property or not ? The stage of deciding deciding deciding the consideration comes only after order the consideration comes only after order the consideration comes only after order under under under section 269 UD (1) is passed. The property section 269 UD (1) is passed. The property section 269 UD (1) is passed. The property would would would then be vested in the Central Government then be vested in the Central Government then be vested in the Central Government under under under section 269 UE and thereafter the stage of section 269 UE and thereafter the stage of section 269 UE and thereafter the stage of payment payment payment of consideration would arise. Discussing of consideration would arise. Discussing of consideration would arise. Discussing this this this later stage in the show cause notice itself later stage in the show cause notice itself later stage in the show cause notice itself would would would grossly violate the principles of natural grossly violate the principles of natural grossly violate the principles of natural justice justice justice in as much as it created a clear in as much as it created a clear in as much as it created a clear indication indication indication that the Appropriate Authority has that the Appropriate Authority has that the Appropriate Authority has already already already decided to pass the order under section decided to pass the order under section decided to pass the order under section 269 269 269 UD (1) of the Act and therefore the UD (1) of the Act and therefore the UD (1) of the Act and therefore the proceedings proceedings proceedings such as UE etc would be a mere such as UE etc would be a mere such as UE etc would be a mere formality. formality. formality. 7. 7. 7. Next violation of principles of natural Next violation of principles of natural Next violation of principles of natural 7 justice justice justice is the admitted failure of the Appropriate is the admitted failure of the Appropriate is the admitted failure of the Appropriate Authority Authority Authority to give inspection of the documents they to give inspection of the documents they to give inspection of the documents they referred referred referred to before issuance of the show cause to before issuance of the show cause to before issuance of the show cause notice. notice. notice. The property in question was inspected by The property in question was inspected by The property in question was inspected by the the the District Valuation Officer on 21st March 1990. District Valuation Officer on 21st March 1990. District Valuation Officer on 21st March 1990. The The The report of the District Valuation Officer dated report of the District Valuation Officer dated report of the District Valuation Officer dated 6th 6th 6th April 1990 was received by the Appropriate April 1990 was received by the Appropriate April 1990 was received by the Appropriate Authority. Authority. Authority. It was carefully considered by them It was carefully considered by them It was carefully considered by them and and and yet its copy was not furnished to the yet its copy was not furnished to the yet its copy was not furnished to the Petitioners. Petitioners. Petitioners. This would prompt us to draw an This would prompt us to draw an This would prompt us to draw an adverse adverse adverse inference. It was probably not convenient inference. It was probably not convenient inference. It was probably not convenient for for for the Appropriate Authority to show the report the Appropriate Authority to show the report the Appropriate Authority to show the report to to to the Petitioners at the time of hearing of the the Petitioners at the time of hearing of the the Petitioners at the time of hearing of the application. application. application. It was probably not convenient for It was probably not convenient for It was probably not convenient for them. them. them. It was probably supporting the case of the It was probably supporting the case of the It was probably supporting the case of the Petitioners. Petitioners. Petitioners. 8. 8. 8. After perusal of the impugned order, it is After perusal of the impugned order, it is After perusal of the impugned order, it is seen seen seen that the Appropriate Authority repeatedly that the Appropriate Authority repeatedly that the Appropriate Authority repeatedly referred referred referred to the reasoned order passed by the to the reasoned order passed by the to the reasoned order passed by the Appropriate Appropriate Appropriate Authority earlier on 28th April 1990. Authority earlier on 28th April 1990. Authority earlier on 28th April 1990. This This This repeated reference to this order clearly repeated reference to this order clearly repeated reference to this order clearly creates creates creates an impression that the Appropriate an impression that the Appropriate an impression that the Appropriate Authority Authority Authority had almost pre-determined the matter and had almost pre-determined the matter and had almost pre-determined the matter and we we we are not bound to attend with an open mind while are not bound to attend with an open mind while are not bound to attend with an open mind while hearing hearing hearing submissions of the Petitioners. submissions of the Petitioners. submissions of the Petitioners. 8 9. 9. 9. The next reason which in our view is most The next reason which in our view is most The next reason which in our view is most fatal fatal fatal is the failure of the Appropriate Authority is the