- (1.) In respect of property comprised in 25, Friends Colony West, New Delhi (hereinafter referred to as 'the subject property'), an agreement was entered into to sell for a consideration of Rs. 1.75 crores on 1-2-1991. 0n 4-2-1991, the intended seller and the purchaser filed Form 37-1 for issuance of 'No Objection Certificate'. However, on 18-4-1991 a purchase order was passed by the Appropriate Authority and on the same day, the owner of the land was directed to surrender the possession of the subject property. In that regard, a writ petition was preferred before the High Court and on March 1, 1993, that writ petition was allowed in the light of the decision of this Court in C. B. Gautam v. Union of India,(1993) 1 SCC 78. Subsequent to the decision in the said writ petition decided by the High Court a show cause notice had been issued disclosing the following facts : In the case of subject property, the apparent consideration is Rs. 1,75,00,000. The plot area is 3595.32 sq.mts. including 830.95 sq. mtrs. Declared as excess land under ULCR Act. The net plot area comes to Rs. 3595.32 - 830.95=2764.37 sq. mtrs. If salvage value of Rs. 1,64,445 is considered, the achieved land rate works out to Rs. 1,75,00,000 - 1,64,445 = 1,73,35,555 divided by 2764.37 = Rs. 6271 per sq. mtr. We may compare the sale instance of property at 60, Friends Colony (East) which was agreed to be sold on December 5, 1990 for apparent consideration of Rs. 2,65 crores. If the depreciated value of structure of sale instance is taken at Rs. 11,60,000 the land rate per sq. mtr. Works out to Rs. 2,65,00,000 (-) 11,60,000 = 2,53,40,000 divided by 1173.91 = Rs. 21,586. If adjustment on account of time gap of + 2%, side open + 10%, potential for basement + 10% in the sale instance and nearness to railway track - 5% and size of plot - 5% is taken into account, the rate per sq.mtr. works out to Rs. 24,180. This gives land value of subject property as Rs. 2764.37 x 24180 = Rs. 6.68 crores. In view of the fact that the subject property is tenanted, its value is deferred for 5 years at 8% interest and the present value would work out to Rs. 4.55 crores to which Rs. 1,64,000 salvage value is to be added. This brings value of the subject property to Rs. 4.564 crores which is 160% above the apparent consideration."
(2.) The intended transferor and the transferee raised several contentions before the Appropriate Authority for not proceeding with the said show cause notice. The principal ground is that the difference between the sale consideration and the fair; market value does not exceed 15 per cent if the various circumstances surrounding the sale are taken note of. Even assuming that there is such a difference between the apparent sale consideration and the fair market value beyond 15 per cent it would not automatically prove that there was an under-valuation so as to attract the provisions of Section 269-UD of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). It was contended that the apparent sale consideration of the property in question is higher than the fair market value if determined by an appropriate norm, method or standard. There were several compelling circumstances set out in the affidavit filed by the transferor, which existed under which the property was sold at Rs. 1.75 crores considering the best/maximum price he could get for a tenanted property. Even otherwise, the facts would disclose that the transferor sold the property for Rs. 1.75 crores particularly when he was getting a rental income of the property to the extent of Rs. 4,000 per month and he was residing in a tenanted house where he was paying about Rs. 8,000/- per month as rent and he had no other house in Delhi and no business premises wherein he could carry on his business and that he was also paying very heavily for more than Rs. 14,000/- per month as rent for the business premises and was in dire need of finances to carry on his business gainfully and successfully. The transferor had no hope of getting the property vacated from the tenant, Shri Vinod Jain who was very affluent, possessed of great political influence and at whose instance the action to acquire the property has been initiated. It was contended that the sale instances cited in the notice are not comparable properties because the property comprised in 60, Friends Colony is a vacant property and the actual physical and vacant possession of the property was handed over and delivered to the purchaser while the subject property is a tenanted property occupied by a person who cannot be easily evicted. There were dissimilarities between the subject property and the property comprised in 60, Friends Colony and, therefore, the Department ought not to have compared the same. Thereafter they set out a dozen instances where method of valuation adopted was different. It was also con- tended that the valuation report prepared by the Departmental Valuer is not a bona fide one. Thus, it is ultimately submitted that the conclusions of the Department are mala fide, arbitrary and discriminatory resulting in deliberate adoption of a wrong method of determining fair market value of the subject property. It was also contended that in the previous purchase order made on 18-4-1991 it was noticed that one Vinod Jain had offered Rs. 4.5 crores and it was made clear that the offer of Bishwanath Traders and Investment Ltd. in the case of the previous purchase order and also now the offer of Vinod Jain are all bogus and manipulative and a pretext for the Appropriate Authority to acquire the subject property. The Appropriate Authority rejected the various contentions raised by the parties and proceeded to pass an order for acquisition. Challenging the said order on the averments raised before the Appropriate Authority, writ petition was filed before the High Court.
(3.) The High Court admitted the writ petition and granted interim order of stay restraining the Department to proceed further in the matter. Against the said interim order a special leave petition was preferred before this Court. During the pendency of the proceedings before this Court, an order was made on 25-4-1994 directing that the property be auctioned subject to bid confirmation by this Court. Auction was held and Smt. Anju Jain, Mr. Vineet Jain and Mr. Manish Jain as the highest bidders of the property offered their bid at Rs. 4.01 crores and permission was sought for confirmation of the same. Various pleadings were raised in those proceedings to the effect that the auction itself was a farce and stage managed by the Appropriate Authority in collusion with Mr. Vinod lain and the property was purchased by him in the name of his wife and two sons for Rs. 4.01 crores and that if the said bid was allowed it would be a fraud on the Government and public exchequer and the writ petition filed before the High Court challenging the validity of the proceedings initiated under Chapter XX-C were yet to be considered. However, this Court after hearing the matter at length rejected the said objections of the intending purchasers and confirmed the same on 19-9-1994. A sale deed has been executed by the Appropriate Authority in favour of the highest bidders and it is significant to note that the original owner of the property Arjun Anand, respondent No.9 herein has not challenged the aforesaid impugned order of the Department and in fact without any protest received a sum of Rs. 1.75 crores from the department and a further amount of Rs. 14,03,500/- by way of interest. He had accepted the amount without any protest and has not contested the matter either in the High Court or in this Court and thereafter the said SLP (C) No. 6040 of 1994 filed by the Appropriate Authority along with other connected matters was disposed of as having become infructuous in view of the auction sale held and confirmation thereof by this Court.;