SUPREME COURT OF INDIA

Before:-S.P. Bharucha, Y.K. Sabharwal and Brijesh Kumar, JJ.

Civil Appeal No. 3685 of 1999. D/d. 24.7.2001.

Sona Builders - Appellant

Versus

Union of India and others - Respondents

ORDER

S.P. Bharucha, J. - The appellant is the transferee of immovable property situated at Sawai Madho Singh Road, Bani Park, Jaipur. In respect of that transfer, the requisite Form 37(I) was filed with the Income Tax Authorities on 9-3-1993 and a valuation report on 9-4-1993. On 21-5-1993, the appellant and the transferor of the said property were issued a notice by the office of the Appropriate Authority, Income Tax Department, New Delhi, to attend a hearing before him at Jaipur on 31-5-1993 at 9.30 a.m. The notice invited the attention of the addressees to a sale instance, namely, the auction of another property on Sawai Madho Road on 3-10-1991. Based upon that sale instance, the notice informed the addressees that the apparent consideration of the transaction in appeal was low. The notice was sent from Delhi to the appellant at Jaipur by speed post and the photocopy of the envelope shows that it was posted only on 24-5-1993. It is averred by the appellant that it was received by it on 26-5-1993. On 29-5-1993, a letter was written to the Appropriate Authority on behalf of the appellant which requested him to supply to the appellant a copy of the deed in respect of the sale instance and a site plan of that property. The letter asked for an adjournment and time to make preparation. On 31-5-1993, an order was made by the Appropriate Authority which held that the apparent consideration of the transaction between the appellant and the transferor was substantially low as compared to the value arrived at on the basis of the sale instance, duly adjusted, and, therefore, the compulsory purchase of the property in appeal was ordered.

2. Writ petitions were filed by the appellant and the transferor to impugn the order of compulsory purchase. It was contended by them before the learned Single Judge that no reasonable opportunity had been given to them to meet the case made out in the notice with reference to the sale instance referred to therein. The learned Single Judge rejected the contention, as did the Division Bench in the appeal filed therefrom. The order of the Division Bench is now under challenge.

3. We are quite unable to agree with the view taken by the High Court. The notice was addressed on 21-5-1993 from Delhi to the appellant in Jaipur fixing the hearing on 31-5-1993. It was patent that it would take two or three days for that notice to be received in Jaipur even though dispatched by speed post. In effect, therefore, the notice gave five days to the addressees to respond, and we are told that two of those days were Saturday and Sunday. Under Section 269-UD the Appropriate Authority had two months to act commencing from the end of the month in which the 37(I) form was filed. The form was filed on 9th March so that the Appropriate Authority had about two months and twenty days to take action. He did not take action until only one week from the last available date, and then it gave the appellant, in reality, only three days to respond. This was, plainly, most inadequate.

4. Further, the notice alleged that the apparent consideration of the transaction between the appellant and the transferor was low based on the sale instance mentioned therein. To be able adequately to respond to that allegation, it was necessary for the appellant to ascertain what the merits and demerits were of that property which had been auctioned, and to know what were the terms and conditions of the auction. No copy of any document relating to the sale instance was furnished by the Appropriate Authority to the appellant along with the notice, or at any time whatsoever.

5. There is no doubt in our minds that on both counts there has been a gross breach of the principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant.

6. Having regard to the statutory limit within which the Appropriate Authority has to act and its failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the Appropriate Authority. We must set its order aside.

7. The appeal is accordingly allowed. The judgment and order under appeal is set aside. The order of the Appropriate Authority dated 31-5-1993 is quashed.

8. The respondents shall pay to the appellant the costs of the appeal.

Allowing the appeal, the Supreme Court.