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Judgment
Y. Venkatachalam, J.—Invoking Article 226 of the Constitution of India, the petitioner herein has filed the present writ petition, seeking for
a writ of declaration declaring the provision of Section 269UE(2) of the Income Tax Act, 1961, unconstitutional and void and to grant further
consequential relief.
In support of the writ petition, the petitioners herein have filed an affidavit wherein they have narrated all the facts and circumstances that forced
them to file the present writ petition and requested this court to allow the writ petition as prayed for. Per contra, on behalf of the respondents, a
counter affidavit has been filed rebutting all the material allegations levelled against them one after the other and ultimately they prayed that the writ
petition may be dismissed for want of merits.
Heard the arguments advanced by learned counsel appearing for the parties. I have perused the contents of the affidavit and the counter affidavit
together with all other relevant material documents available on record in the form of typed set of papers. I have also taken into consideration the
various points raised by learned counsel appearing for the respective parties during the course of their arguments.
In the above facts and circumstances of this case, the only point that arises for consideration herein is, as to whether there are any valid grounds
to allow this writ petition or not.
The brief facts of the case of the petitioner herein, as seen from the affidavit are as follows : The petitioner-company is a wholly owned
Government of India enterprise and is engaged in manufacture and supply of life saving drugs to Governmental institutions as well as public. The
petitioner has got a regional office at 109, Anna Salai, Madras, and it has been in occupation of the said premises from August, 1972. The total
area occupied by the petitioner is 6,340 sq. ft. and it is paying rent of Rs. 5,833 per month. Originally, there was a lease agreement between the
petitioner and the owners of the premises and the said lease expired during 1980. Thereafter the petitioner continued as statutory tenants entitled to
the protection of the Tamil Nadu Buildings (Lease and Rent Control) Act. The land owners had made an application to the second respondent on
March 11, 1989, for transferring the land and building located at Nos. 109 and 110, Anna Salai, Madras, for a consideration of Rs. 26,00,000 in
favour of Mr. V. Krishnan. In exercise of the powers u/s 269UD(1) of the Income Tax Act, 1961 (hereinafter called ""the Act""), the second
respondent decided that the property referred to above was fit for purchase by the Central Government as per the provisions of Section
269UD(1) of the Act and an order was passed for purchasing the above property. This order was made by the second respondent on June 22,
1989. Subsequently, a letter was issued by the second respondent u/s 269UE(2) of the Act, requesting the petitioner to surrender and deliver
vacant possession of the above property within 15 days of the receipt of the said letter. The aforesaid letter was received by the petitioner on June
30, 1989. Subsequently, the petitioner requested for extension of time to vacate the property and the same was rejected by the second respondent
in his communication dated July 25, 1989, that there is no provision under the Act for allowing time to vacate the premises. Subsequent request
made by the petitioner was also of no avail. The second respondent is pressurising the petitioner to vacate the premises. Hence, this writ petition to
declare the provision of Section 269UE(2) of the Act unconstitutional and void.
It is the case of the petitioner that Section 269UE in so far as it provides that on making an order under Sub-section (1) of Section 269UD the
immovable property shall vest in the Central Government free from all encumbrances and enable the Central Government to take possession of the
immovable property by using force, if necessary, is unconstitutional void, that the above premises are occupied by the petitioner and are governed
by the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, and under the said Act eviction can be ordered only on the
grounds specified u/s 10. The first respondent has no legislative competence to extinguish the tenancy rights and also to evict persons in possession
of immovable property by resorting to the method contemplated u/s 269UE of the Act, which empower the Central Government to summarily
dispossess a tenant if necessary by using force by requesting the services of a police officer. It is stated by the petitioner that even buildings owned
by the Central or the State Government are not exempt from the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act. Therefore,
it is their contention that even the first respondent can evict a person in respect of a building vested in the Central Government u/s 269UD(1) of the
Act, only by the procedure laid down in the Tamil Nadu Act No. 18 of 1960.
It is also contended by the petitioner that Parliament has no legislative competence to enact law on relationship of landlord and tenant. The
power to regulate the relationship between the landlord and the tenant vests with the State Legislature under entry 18 of List II of the Seventh
Schedule to the Constitution. This entry specifically includes the relationship of landlord and tenant which takes within its ambit tenancy legislation
pertaining to land and building. It is stated by the petitioner that the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, consolidates the
law relating to regulation of the letting of residential and non-residential buildings and the control of rents of such building and the prevention of
unreasonable eviction of tenants therefrom in the State of Tamil Nadu. Therefore, it is the case of the petitioner herein that Section 269UE of the
Act, is unconstitutional and void and it is ultra vires Parliament. According to them, Chapter XXC was inserted by the Finance Act, 1986, with
effect from October 1, 1986, and the said Chapter enables the Central Government to purchase immovable properties in certain cases of transfer.
Having regard to the object behind the introduction of Chapter XXC, it is incompetent for Parliament to legislate on the relationship of landlord and
tenants and especially taking away the rights of statutory tenants granted under the Tamil Nadu Act. They contend that the provision of Section
269UE of the Act gives a favoured treatment to the Central Government when it proposes to exercise its powers u/s 269UE for purchasing the
property. Having regard to the object of Chapter XXC of the Act, the Central Government cannot be allowed to have preferential treatment in the
matter of purchase of immovable properties by the Central Government under the provisions impugned. Therefore, according to them, the
provision of Section 269UE is discriminatory, unconstitutional and void and that there is no justification or reason for favourably treating the
Central Government for and against ordinary purchase of immovable properties.
Having seen the entire record available in this case, the only main contention of the petitioner herein is that Section 269UE of the Act provides
that on making of an order u/s 269UD(1) of the Act, the immovable property shall vest in the Central Government free from all encumbrances, is
unconstitutional and void and that the occupation of the premises by the petitioner is governed by the Tamil Nadu Buildings (Lease and Rent
Control) Act, under which eviction can be ordered only on one of the grounds stated in Section 10 thereof. Further even buildings owned by the
Central or the State Government are not exempt from the provisions of the Tamil Nadu Rent Control Act, the Central Government can evict a
person in respect of a building vested in the Central Government u/s 269UD(1) of the Act only by the procedure laid down in the Tamil Nadu Rent
Control Act.
That being so, relying on the decision of the Supreme Court made in C.B. Gautam Vs. Union of India and Others, it is contended by the
Department that the Supreme Court has upheld the validity of the provisions of Chapter XXC of the Act subject to the position that Section
269UE(1) must be read without the expression ""free from all encumbrances"" with the result that the property in question will vest in the Central
Government subject to such encumbrances and leasehold interests as are subsisting thereon except for such of them as had been agreed to be
discharged by the vendor before the sale is completed. They also contend that according to the Supreme Court, if under the relevant agreement to
sell the property is agreed to be sold free of all encumbrances or certain encumbrances, it would vest in the Central Government free of such
encumbrances. Quoting the above Supreme Court decision, it is also contended by learned senior counsel for the Department that Section
269UE(2) will have to be read down so that if the holder of an encumbrance or a lessee is in possession of the property and under the agreement
to sell the property, it is not provided that the sale would be free of such encumbrances or leasehold rights, the encumbrance holder or a lessee
who is in possession will not be obliged to deliver possession of the property to the appropriate authority or any person authorised by it and the
provisions of sub-section (3) would not apply to such persons. At the same it is the categoric contention of learned senior counsel for the
Department that in the instant case, clause 4 of the agreement for sale specifically provided that ""the parties of the first part undertake to sell the
schedule mentioned property to the party of the second part free from all encumbrances and charges"", and that, therefore, in such circumstances of
the present case, in view of the abovementioned Supreme Court decision, the petitioner shall not have any right to claim that the property will vest
in the Government only subject to his tenancy agreement. There is every force in the said argument of learned senior counsel for the Department,
as the abovementioned clause 4 has not been denied by the petitioner herein in this writ petition.
Yet another significant aspect in this case is that, basing on the tenancy agreement between the land owners and the petitioner, the petitioner is
claiming that the occupation of the premises by the petitioner is governed by the Tamil Nadu Buildings (Lease and Rent Control) Act under which
eviction can be ordered only on one of the grounds stated in Section 10 thereof and hence there is no legislative competence to extinguish tenancy
rights and also to evict persons in possession of immovable property by resorting to the method contemplated u/s 269UE of the Act. But, it is
significant to note that in their affidavit filed in this writ petition they themselves have clearly admitted that the agreement of lease with the owners of
the property had expired during 1980 and thereafter there was no agreement of lease. In such circumstances, it is rightly contended by the
Department that the question of the property vesting subject to any agreement of lease or any tenancy rights as claimed by the petitioner would not
arise. Therefore, it is also contended by the Department that when admittedly there is no agreement of lease between the petitioner and the owner
subsisting on the date of the agreement and as the same had already expired during 1980 as admitted by the petitioner themselves the occupation
of the petitioner of the premises in question is without any authority of law. I see every force in such contention raised by the Department.
In support of their case, learned counsel for the petitioner herein strongly relies on the decision of the Supreme Court reported in the very same
case C.B. Gautam Vs. Union of India and Others, and contends that ""an order for compulsory purchase results in the rights of holders of
encumbrances and leasehold rights being destroyed or significantly diminished."" It is significant to note that in the said case it has been held by the
Supreme Court (at page 557) as follows :
It, therefore, appears to us difficult to uphold the last part of Subsection (1) of Section 269UE in so far as it provides that the property in respect
of which an order under Sub-section (1) of Section 269UE is made shall vest in the Central Government free of all encumbrances. In our opinion,
the expression, ''free of all encumbrances'' is liable to be struck down as arbitrary, without any rational nexus with the object of the legislation in
question and violative of Article 14 of the Constitution.
Therefore, it is contended by learned counsel appearing for the petitioner that the writ petition deserves to be allowed on the strength of the
above decision of the Supreme Court and the impugned Section of the Act is liable to be declared as unconstitutional and void. At the same time, it
is significant to note that such a decision was rendered by the Supreme Court in the facts and circumstances of the particular case. It is common
knowledge that the result of a particular case depends only on its own merits and facts and circumstances. Even in the said decision relied upon by
learned counsel for the petitioner, at page 556 it has been clearly observed by the Supreme Court as under :
In a given case, it might happen that property is intended to be sold under an agreement to sell subject to encumbrances and leasehold rights, and
very often agreements to sell immovable property do not provide that the property sold would be free from encumbrances or leasehold rights.
Thus, as the case dealt with in the said judgment of the Supreme Court came within the second category of property mentioned above, the
Supreme Court came to the said conclusion. But, in the present case, the factual position is different and it comes within the first category of the
property, i.e., where the agreement to sell was subject to encumbrance and leasehold rights. Therefore, under such circumstances of the present
case, the above-said Supreme Court decision is not helpful to the petitioner herein.
It is also contended by learned counsel for the Department that the petitioner cannot claim that it can be evicted only on one of the modes
contemplated u/s 10 of the Tamil Nadu Act since by reason of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, which came
into force with retrospective effect from September 16, 1958, providing for eviction of unauthorised occupants from premises belonging to the
Central Government, the application of the Tamil Nadu Rent Control Act will be excluded. It is also stated by learned counsel that Section 2(g) of
the said Act defines ""unauthorised occupation"" in relation to public premises as meaning ""the occupation by any person of the public premises
without authority for such occupation and includes the continuance in occupation by any person of the public premises after the authority (whether
by way of grant or any other mode of transfer) under which he was allowed to occupy the premises has expired or has been determined for any
reason whatsoever"". ""Public premises"" has been defined in Section 2(e) of the said Act as meaning any premises belonging to, or taken on lease or
requisitioned by, or on behalf of, the Central Government. Therefore, it is contended by the Department that for the abovesaid ground also the
petitioner cannot claim any protection under the Tamil Nadu Rent Control Act from being evicted. I see every force in the said contention of
learned counsel for the Department
Further, it is significant to note that Chapter XXC of the Act is in respect of the right granted to the Central Government for pre-emptive
purchase of properties for various situations relating to the right of pre-emptive purchase which has been granted to the Central Government.
Therefore, in view of the provisions of Chapter XXC providing for a special mode of dispossession of tenants in regard to properties in respect of
which an order of pre-emptive purchase has been made, the said Chapter will override the provisions of all other enactments in that regard. In this
regard it is contended by the Department that when Parliament inserted Chapter XXC by the Finance Act, 1986, with effect from October 1,
1986, it was aware of the provisions contained in the rent control enactments of the various States as well as the provisions of the Public Premises
Eviction Act, 1970. It is also contended on behalf of the Department that when in spite of these enactments relating to the eviction of tenants,
Parliament chose to make a specific departure from the procedure contemplated under the rent control enactments of the various States, the
intention of Parliament must be given effect to and it is only the provisions of Chapter XXC of the Act, that will be applicable in cases of pre-
emptive purchase under the said Chapter and which only will have to be resorted to for dispossession of tenants in occupation of buildings
purchased by the Central Government in exercise of the power under Chapter XXC. Therefore, it is the categoric contention of the Department
that in view of the special enactment for dispossession of tenants in occupation of buildings purchased by the Central Government in exercise of its
powers of pre-emptive purchase under Chapter XXC of the Income Tax Act, 1961, this procedure will exclude the application of the Rent
Control Act to such premises. In the facts and circumstances of the present case, I see every force in the above contention of the respondents.
Therefore, for the above mentioned reasons and in the facts and circumstances of the present case and also in the light of my above discussions
with regard to the various aspects of the present case, I am of the clear opinion that the petitioner herein failed to make out any case for declaring
the impugned Section of the Act unconstitutional and void. Thus, the writ petition fails and the same deserves to be dismissed for want of merits.
In the result, the writ petition is dismissed. No costs. Consequently W.M.P. No. 21649 of 1989 is also dismissed.