Parasrampuria Estate Developers Pvt. Ltd. a Company Incorporated Under the Companies Act, 1956 and Mr. Hemant Parasrampuria, a Director and Shareholder of the Abovenamed Company Vs. S.C. Prasad and ors. - Court Judgment

Excerpt:
- section 10: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre, jj] admission to professional colleges - technical courses - publication of brochure on basis of which candidates seek admission to various institution keeping in mind their merit and preference of colleges held, for ensuring adherence to proper appreciation of an academic course, it is essential that the method of admission is just, fair and transparent. the first step in this direction would be publication of a brochure on the basis of which the applicants are supposed to aspire for admission to various institution keeping in mind their merit and preference of college. brochure, firstly has to be in conformity with law and the statutory scheme notified by the competent authority. it is a complete and composite document as it deals with the scheme for conducting their entrance examinations, declaration of results, general instructions and method of admission, etc. this brochure is binding on the applicants as well as the authorities. this brochure or admission notification issued by the state or other competent authority cannot be altered at a subsequent stage particularly once the process of admission has begun. there is hardly any exception to this accepted rule of law. section 10: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre,jj] admission to professional colleges - technical courses - approval to additional seats or to start new course - cut off dates held, the settled principle of law is that merit of the applicant is the primary criteria which would determine his rank as well as the college where he would be entitled to admission. this rule should not be frustrated as it will tantamount to entirely upsetting the object of admissions based on merit oriented method and would cast cloud on the fairness and transparency of the method of admission. one of the ways in which merit can be defeated is allowing increase in the intake strength or commencement if new colleges beyond cut-off date and admissions beyond the last date specified in the notification/calendar issued by the concerned authorities. this can be illustrated by giving an example. college a which is running a professional course like engineering or mba etc. has an intake capacity of 60 seats which has duly been notified in the information brochure. however, after the cut-off date, approval is granted by the aicte and thereafter, the process is taken up by the state and the intake capacity of the college is increased by 30 more seats. these seats would obviously, not be notified in the information brochure and the candidate who are meritorious and for whom college a; be the college of reference could not get seats or give preference as the seats were limited. none had the proper knowledge about the increase in intake of seats though at a much subsequent stage and may be even after the last date of admission is over either by themselves or under the order of the court even it is put on the internet or given in the newspaper, the candidates of higher rank or meritorious candidates would not be able to avail of that benefit because they have already submitted the testimonial, have paid their fees and the courses have commenced. in that situation, for variety of reasons, they may not be able to take admission in the institution of their higher preference while the candidates of much lower merit will be admitted to that course. besides defeating the merit, it has been commonly noticed that the late admissions made by the colleges directly effect notified candidates who have questioned it more than often as their admission process is not so just, fair and transparent which has given rise to the litigation. it is also a kind of back door entry method. another serious consequence that result from such admissions is shortening of the academic courses in an undesirable manner. it is expected of other candidate selected to a professional course that he or she would complete the course in its entirety and not by missing more than a month or so in joining the said course. this results in lowering the excellence of education as well as harms the academic standard of professional education. admission to professional colleges: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre, jj] technical courses - held, in process of admission to professional colleges relating to technical courses, primarily three institutional bodies are involved. (i) all india technical council for technical education, (ii) state of maharashtra through director of technical education and (iii) university to which such institution is affiliated the role of all these institutions in distinct and different but for a common object. primary of the rule of all india council for technical education (aicte) is now well settled but that certainly does not mean that role of the state government and for that matter the university is without any purpose or of no importance. the council is the authority constituted under the central act with the responsibility of maintaining education standards and judging upon the infra-structure and facilities available for imparting such professional education. its opinion is of utmost importance and shall take precedence over views of the state as well as that of the university. the concerned department of the state and the affiliating university has a role to pay but it is limited in its application. they cannot lay down any guidelines or policies which would be in conflict with the central statute or the students laid down a by the central body. state can frame its policy for admission to such professional courses but such policy again has to be in conformity with the directives issued by the central body. while the state grants its approval and university its affiliation for increased intake of seats or commencement for a new course/college, its directions should not offend and be repugnant to what has been laid down in the condition of approval granted by the central authority or council. what is most important is that all these authorities have to work ad idem as they all have a common object to achieve i.e. of proper imparting of education an ensuring maintenance of proper standards of education, examination and ensuring proper infrastructure for betterment of educational system. only if all these authorities work in a co-ordinated manner and with co-operation they would be able to achieve the very object for which all these entities exist admission to professional courses: [swatanter kumar, c.j.,a.p. deshpande & smt. nishita mhatre, jj] admission schedule - interference by courts held, all the expert bodies viz. aicte as well as directorate of education in consultation with the departments of the state regulating the process of admission and maintenance of standards of education had notified a legal binding document specifying dates and schedule for various matters in relation to admission of students and commencement of courses. there has to be so compelling circumstances and grounds before the court to interfere with the prescribed schedule. it is neither so arbitrary nor so perverse, keeping in view the essential features relating to imparting education to professional courses that it should invite judicial chastisement to the extent of laying down entirely new schedule. merely because there has been some delay on the part of either of these authorities to timely grant of either of these authorities to timely grant or decline approval and permission to commence a course per se would not be sufficient ground for disturbing the notified schedule and timely commencement of courses. - away from the property belonging to the petitioners and that unlike the flat sold by the petitioners, the green acres is a highly luxurious complex with facilities like gymnasium, health club, play ground etc. moreover, the said complex was a highly luxurious complex with facilities like swimming pool, health club, play ground etc. it is now well settled by the decision of the apex court in the case of c. however, in the impugned order, the appropriate authority has accepted the contention of the petitioners that the sale instances at green acres are not comparable as that flats in green acres are luxurious flats with facilities like swimming pool, health club, play ground etc. 9. in the present case, the sale instances pointed out by the petitioners clearly show that the sale instances in the adjoining parasrampuria tower no. therefore, in the present case, even if it is accepted that the order passed under section 269ud(1) is proper, in view of the failure on the part of the appropriate authority to tender the apparent consideration within the period set out in section 269ug of the act, it has to be held that the order passed under section 269ud(1) of the act stood abrogated and the property has re-vested in the petitioners.j.p. devadhar, j.1. this petition is directed against the order dated 21st september, 1993 passed by the appropriate authority under section 269ud(1) of the income tax act, 1961. by the said order, the appropriate authority has held that the apparent consideration in respect of the property agreed to be sold by the petitioners to the respondent no. 5 was less than the market value by 15% or more and accordingly ordered pre-emptive purchase of the said flat.2. petitioner no. 1 is a private limited company carrying on business as builders and contractors. the petitioner no. 2 is a director and shareholder of the petitioner no. 1 company. by an agreement dated june 7, 1993 the petitioners agreed to sell to the respondent no. 5 a flat admeasuring 1112 square feet bearing no. 1102/1202 in parasrampuria tower no. 6, oshiwara village, near millat nagar, lokhandwala complex, andheri (w), bombay - 400 058 for a lumpsum price of rs. 28,56,000/-. admittedly, the said building was under construction and the payment schedule as per the said agreement was as follows :(i) rs. 1,50,000/- on execution of the agreement.(ii) rs. 5,00,000/- within 45 days of the execution of the agreement.(iii) rs. 22,56,000/- on completion of the internal and external plaster.(iv) rs. 1,50,000/- at the time of possession.3. on june 18, 1993 the petitioners filed form no. 37-i as required under the provisions of the income tax act read with income tax rules, 1962. on inspection of the property, the appropriate authority issued a show cause notice dated august 26, 1993 under section 269ud(1a) of the income tax act, 1961 calling upon the petitioners to show cause as to why an order should not be made under section 269ud(1) of the income tax act. in the show cause notice, it was stated that in the light of the prices at which similar flats were sold in the building known as 'green acres' situated at lokhandwala complex, andheri (w), bombay -400 058, the appropriate authority has reached to a prima-facie or tentative conclusion that the sale of the flat by petitioners to the respondent no. 5 is undervalued and, therefore, liable to be purchased under section 269ud of the act.4. in their reply dated september 14, 1993, the petitioners stated that comparison of the sale instances at green acres is not proper because that property is situated about 3 km. away from the property belonging to the petitioners and that unlike the flat sold by the petitioners, the green acres is a highly luxurious complex with facilities like gymnasium, health club, play ground etc. in their reply, the petitioners further stated that similar flats in parasrampuria tower no. 5 which is adjacent to parasrampuria tower no. 6, have been sold at the material time at the rate approximately rs. 2,000/- per square feet whereas flat in question has been sold by the petitioners at a higher value of rs. 2,259/-per square feet. since the appropriate authority has granted no-objection certificate to the flats sold at parasrampuria tower no. 5, it was stated that the flat sold by the petitioners in parasrampuria tower no. 6 at a higher price could not be said to be undervalued and, accordingly requested that the show cause notice be dropped.5. by the impugned order dated september 21, 1993, the appropriate authority rejected the contention of the petitioners and held that it is a fit case to exercise powers under section 269ud(1) of the income tax act to order pre-emptive purchase of the subject property by the central government. since the agreement for sale dated june 7, 1993 did not fix specific date for payment of the balance amount, it was held that it is not possible, at present, to determine the discounted value of the flat and accordingly ordered that the amounts payable by the central government pursuant to the order dated september 21, 1993 should be deposited in the account of the appropriate authority for payment in future. challenging the aforesaid order, the petitioners have filed the present petition.6. mr. jaykar, learned counsel appearing on behalf of the petitioners submitted three fold arguments. firstly, he submitted that the appropriate authority was in error in relying upon the sale instances at green acres for ascertaining the fair market value of the flats prevailing at the relevant time. he submitted that the green acres complex was situated almost 3 km. away from the flat sold by the petitioners. moreover, the said complex was a highly luxurious complex with facilities like swimming pool, health club, play ground etc. and, therefore, the price of the flats sold in that complex could not be taken as the basis of the fair market value. secondly, he submitted that the sale instances furnished by the petitioners were comparable instances because the flats sold in parasrampuria tower nos. 5 and that flat sold by the petitioners in tower no. 6 were situate in the same complex and in fact the price of the flat sold in parasrampuria tower no. 5 was less than the price at which the petitioners have sold the subject flat. therefore, it was not open to the appropriate authority to hold that the flats sold by the petitioners to the respondent no. 5 was under valued. thirdly, he submitted that under section 269ug of the income tax act, it was obligatory on the part of the central government to tender the amount of apparent consideration to the petitioners within the period set out therein, failing which, under section 269uh of the income tax act, the property purchased under section 269ud(1) would re-vest in the petitioners. in the present case, after the order passed under section 269ud(1), the amount payable thereon has not been tendered to the petitioners till date and, therefore, in terms of section 269uh of the act, the order passed under section 269ud(1) of the act would stand abrogated and the flat would re-vest in the petitioners. in this connection, he relied upon the judgment of the apex court in the case of union of india v. dr. a.k. garg and ors. : [2002]256itr660(sc) .7. mr. asokan, learned counsel appearing for the respondents, on the other hand, supported the order of the appropriate authority. he submitted that the appropriate authority was justified in rejecting the sale instances pointed out by the petitioners, because, there was a time gap of about two months. he submitted that on the date of purchase order, admittedly the building was incomplete and the possession of the said flat could not be taken and, therefore, the appropriate authority was justified in depositing the amount in the account of the appropriate authority instead of tendering it to the petitioners.8. on careful consideration of the rival submissions, we are of the opinion that the impugned order passed under section 269ud(1) of the income tax act deserves to be quashed and set aside. it is now well settled by the decision of the apex court in the case of c.b. gautam v. union of india : [1993]199itr530(sc) that the appropriate authority can draw presumption of under valuation if the apparent consideration shown in the agreement for sale is less than the fair market value by 15% or more. in the present case, the proceedings for pre-emptive purchase of the flat in question were initiated presuming under valuation on the basis of the sale instances at green acres, as more particularly referred to in the show cause notice. however, in the impugned order, the appropriate authority has accepted the contention of the petitioners that the sale instances at green acres are not comparable as that flats in green acres are luxurious flats with facilities like swimming pool, health club, play ground etc. once the very basis on which the tentative belief of under valuation entertained by the appropriate authority has vanished, there being no other material available to the appropriate authority to hold that flat sold by the petitioners was undervalued, an order to purchase the property under section 269ud(1) could not be passed.9. in the present case, the sale instances pointed out by the petitioners clearly show that the sale instances in the adjoining parasrampuria tower no. 5 are comparable and the flats sold at the relevant time in parasrampuria tower no. 5 at lesser price have been found to be fair by the appropriate authority and, accordingly no objection certificate has been granted. although the buildings parasrampuria tower no. 5 and parasrampuria tower no. 6 are situate in the same complex, the flats sold in parasrampuria tower no. 5 at the rate of rs. 1,900/- 2,000/-per square feet in the month of may, 1993 have been held to fair, whereas the flat in parasrampuria tower no. 6 sold by the petitioners at the rate of rs. 2,259/- per square feet in june, 1993 has been held to be undervalued. the appropriate authority has declined to consider the sale instances in parasrampuria tower no. 5 solely on the ground that there is a time gap of two months. this finding of the appropriate authority, in our opinion cannot be sustained because there is no material on record to show that within these two months the prices in the locality where the flat sold by the petitioners is situated had increased considerably. moreover, the flat sold by the petitioners in june 1993 was much higher than the price at which flats at parasrampuria tower no. 5 were sold in may, 1993. therefore, in the facts of the present case, in our opinion the appropriate authority was not justified in rejecting the sale instances pointed out by the petitioners and holding that the flat sold by the petitioners was undervalued.10. apart from the above, in the present case admittedly the apparent consideration determined under the impugned order has not been tendered to the petitioners and the same has been deposited in the account of the appropriate authority. the only reason given by the respondents for not tendering the amount is that, on the date of purchase the building was incomplete and, therefore, the amount has not been tendered to the petitioners. as held by the apex court in the case of dr. a.k. garg (supra) it was mandatory on the part of the appropriate authority to tender the amount of apparent consideration within the period of limitation prescribed under the act. having purchased the flat under construction, it is not open to the appropriate authority to contend that there is no obligation to tender the apparent consideration till the flat is fully constructed. counsel for the revenue could not point out any provision of law which permits the appropriate authority not to tender the apparent consideration within the period prescribed under section 269ud of the income tax act on the ground that the flat purchased under section 269ud(1) is under construction. therefore, in the present case, even if it is accepted that the order passed under section 269ud(1) is proper, in view of the failure on the part of the appropriate authority to tender the apparent consideration within the period set out in section 269ug of the act, it has to be held that the order passed under section 269ud(1) of the act stood abrogated and the property has re-vested in the petitioners. thus, viewed from any angle, the impugned order passed under section 269ud(1) cannot be sustained.11. for all the aforesaid reasons, we quash and set aside the impugned order dated september 21, 1993 passed under section 269ud(1) of the income tax act.12. the petition, accordingly, succeeds. rule is made absolute in terms of prayer clause (a), with no order as to costs.