Full Judgment
Sathiadev, J.
1. Respondents 5 to 7 in W.P.No.4536 of 1988 are the appellants herein. Respondents 1 to 3 therein are respondents 1 to 3 herein, and the writ petitioner is impleaded as fourth respondent.
2. In the Writ petition, fourth petition, fourth respondent had claimed that along with his fat her, he entered into an agreement of sale dated 28.1.1988 with appellants herein and another, for purcha.se of a house property bearing Door No. 6/104, 10th Main Block, Jaya Nagar, Bangalore for Rs. 20,00,000. In terms of Section 269-UC(1) of Income Tax Act, 1961 (hereinafter referred to as the Act), the prescribed statement was filed, and that on 5.4.1988, an order dated 28.3.1988 under Section 269UD(1) was served intimating that the Central Government would purchase the property from the vendors for the consideration shown in the agreement. Hence, challenging the validity of Section 269-UD, he has filed the writ petition. Reference is also made to other similar writ petitions filed in this Court and also in the Supreme Court. Pending disposal of the writ petition, he obtained stay of the order dated 28.3.1988. It is in that writ petition, W.M.P.No.8993 of 1988 was filed by appellants herein, claiming that by virtue of the interim order passed, they are put to considerable monetary loss, and that a member of the family is getting married, and further, they are interested in purchasing the property in Madras, and when neither the purchaser nor the Department are likely to pay them the sale consideration immediately, a direction may be issued to the Department to pay the balance of sale consideration to the owners of the property pending disposal of the writ petition.
3. On the learned Judge directing a sum of Rs. 7,50,000 to be paid after taking note of the fact that a sum of Rs. 5,00,000 having been already received by way of advance : this writ appeal is filed, for recovering the balance amount of sale consideration from the Income-Tax Department. Reliance is placed on a earlier order in Tirath Kaur v. Shyam Investments rep. by its partner, (Writ Appeal No. 1637 of 1987- dated 15.10.1987).
4. Mr. P.S. Raman, learned Counsel for the appellant, submits that, once an order under Section 269UD(1) is passed, the right, title and interest in the property vest in Central Government as found in Section 269UE(1); and therefore, the owners of the property are entitled to get the sale consideration from the Central Government viz., the price for which the property was agreed to be sold under the agreement of sale. He states that irrespective of the fact whether the fourth respondent herein succeeds in the writ petition or not, the appellants are entitled to get the entire sale consideration from the Central Government. When the owners have not been responsible for the litigation, they cannot be made to suffer. They have no control over the prospective purchaser, who had thoughtlessly gone to Court.
5. It is not disputed by him that the constitutionality of Chapter XX-C of the Act is pending consideration before various High Courts and the Supreme Court. In the event of certain provisions being struck down, the vesting under Section 269UD would disappear, and in which event, the owners will have to look to the purchaser for sale consideration. The Act contemplates revesting of property under certain circumstances. Therefore, even though contingent vesting of the property had taken place under Section 269UE; when the Central Government had been prevented from paying the consideration under Section 269UF at the instance of the purchaser, there is considerable risk in directing the Government to pay the entire sale consideration. If the writ petition is allowed, the vesting disappears, and the ownership will be with the appellants. No owner of property could ever ask for payment of sale consideration, before transfer of title in immovable property. It is stated that the appellants will undertake to return the amount, if circumstances warrant. Already in the affidavit sworn to, first appellant has stated that appellants are in dire need of funds for celebrating the marriage of one of their family members, and also for investing money in a property at Madras. Hence it will become next to impossibility for the Government to recover the amount of Rs. 20,00,000 from such parties. It will be highly inappropriate to direct public funds to be parted with especially when the Central Government is prevented from implementing the provisions of the Act.
6. It is also claimed that the property forms a sufficient security for the amount, if any disbursed. It is common knowledge as to how difficult it is for the Government to realise amounts by sale of immovable property. In spite of success in the writ petition, fourth respondent may thereafter commit breach of contract. It would be unwise to subject the Government to part with public funds and thereafter face litigation, and in doing so it would be spending more funds to succeed in those matters.
7. While entering into the agreement, appellants having known about the existence of Chapter XX-C in the Act, ought to have stipulated terms and conditions which would not involve an order being passed under Section 269UD(1). Having entered into an agreement of sale, which is one, that cannot be permitted under Chapter XX-C of the Act; it is the appellants, who will have to be blamed in the manner in which they have stipulated the terms and conditions therein. Therefore, no owner of property can ever ask the Government to pay any portion of the sale consideration, unless and until the proceedings in the Court are disposed of. If any loss occasions because of the conduct of fourth respondent, it is for the appellants to take such proceedings as are available to them in law as against him for indulging in litigation, Public funds cannot be taken away by an owner of property when the agreement-holder resorts to litigation of this nature.
8. As for reliance placed on the decision in WA.No. 1637 of 1987, even in the said order, it has been made clear that the directions given (herein were confirmed to the facts of that case. Therefore, the said order could have no relevance to the claims made by appellants herein.
9. Hence, in matters of this nature, whenever a stay order is obtained at the instance of any of the parties to an agreement of sale; and if there is any interdiction by the Court preventing the authorities from pursuing further steps consequent to the issue of an order under Section 269UD(1); then there would be no directive from the Court to the Income Tax Department to pay the sale consideration during the pendency of proceedings in court.
10. Hence, this appeal is dismissed.