Kaushalya Devi & others vs Competent Authority, Urban Land Ceiling, Lucknow and another

B.K. Singh, J.—The petitioners, numbering six, have by the instant writ petition, challenged the orders dated 1351992, 2551992, 2651992 and 2751992, passed by the Competent Authority under Urban Land (Ceiling and Regulation) Act, 1976, hereinafter called ''the Act'', whereby he has rejected the notice of the petitioners under Section 26 of the said Act.

The relevant facts giving rise to the writ petition may be stated. The petitioners gave notices under Section 26 of the Act to the Competent Authority, Urban Land Ceiling, Lucknow, for granting them sanction to transfer the vacant land. The notices were given on 751992 in the prescribed printed forms. The same have been filed as Annexure No. 4 to the writ petition. The petitioners prayed for sanction on the ground that they have entered into an agreement to sell with Small Industries Development Bank of India, a Government of India Enterprise on 1041992. The Competent Authority has not issued �Noobjection Certificates�. According to the petitioners, the ground on which the refusal is based is that the notices submitted under Section 26 were not in accordance with law. The orders according to the petitioners are arbitrary in as much as they are nonspeaking and do not indicate the reason on which Section 26 of the Act is based. Hence the writ petition.

The writ petition has been contested by the Competent Authority. A counter affidavit has been filed by the Assistant Engineer, in the office of the Competent Authority.

The petitioners have filed rejoinder affidavit denying the allegations of Counter Affidavit.

I have heard the learned Counsel for the petitioners and the state at considerable length.

The learned Counsel for the petitioners has stated that as required by subsection (1) of Section 26 of the Act, notices in prescribed printed forms were given on 751992 by the petitioners to the Competent Authority, Urban Land Ceiling, Lucknow. In the notice it was stated that the petitioners intend to sell the vacant land to the Small Industries Development Bank of India. Similar applications had also been moved for Income Tax clearance under subsection (3) of Section 269 U.Lof the Income Tax Act. The Competent Authority under the Income Tax Act after considering the agreement for sale has accorded permission on 561992. The Competent Authority under the Act has not granted sanction and has refused to issue ''Noobjection Certificates'' on the ground that the notice was not given in accordance with law. The orders on petitioners'' applications were not communicated to the petitioners. No opportunity was also given to the petitioners to point out that the notices given were given in accordance with law. According to the petitioners'' Counsel the orders are arbitrary in as much as they are nonspeaking. It has been submitted that the petitioners had purchased the land from the heir of late Mr. Justice Mirza Hamidullah Beg. Late Mr. Justice Mirza Hamidullah Bag had contested the notice under subsection (3) of Section 8 of the Act. The Competent Authority had, vide judgment dated 2551985 declared 4590.45 square meters as surplus land. Late Mr. Justice Mirza Hamidullah Beg had preferred Ceiling Appeal No. 114 of 1985 before the District Judge, who by his judgment dated 4111986 had set aside the Competent Authority''s order dated 2551985 and held that he and other coowners did not hold land in excess of the Ceiling limit. Thus in law, being transferees of the same land from the heir and coowners of late Justice Mirza Hamidullah Beg, it can not be said that the petitioners hold any excess vacant land. As such the provisions of Section 5 (3) of the Act do not apply and the petitioners are competent to move applications under Section 26 of the Act. The learned Counsel has further submitted that the Competent Authority has no jurisdiction to reject the applications on this score. The competent Authority could only exercise the option given under subsection (2) of Section 26 of the Act to purchase the land on behalf of the State Government on price calculated in accordance with the provisions of Land Acquisition Act, 1894 or any corresponding law for time being in force. It has not been exercised. The result is that after expiry of 60 days from the date of receipt of notice it would be presumed that the Competent Authority has no intention to purchase the land on behalf of the State and then it shall be lawful for the petitioners to transfer if to whomsoever they may like. Reliance has been placed on a notification dated 1881991 issued by the State Government directing all the Competent Authorities under the Act in the State of U.P. to accord sanction under Section 26/27 expeditiously and not to delay the matters in case no option is exercised under subsection (2) of Section 26 of the Act. The learned Counsel submits that the stand taken by the Competent Authority in Counter Affidavit is not legal and runs contrary to the provisions of Section 26 of the Act. The Competent Authority is not vested with the jurisdiction to look into the validity of the saledeeds executed by the erstwhile owners in favour of the petitioners. The provision of Section 5 of the Act also does not apply to the present case because the District Judge, Lucknow in appeal has held that Mr. Justice Mirza Hamidullah Beg and other coowners did not hold any excess land than permitted under the Act. It has also been urged that in view of the judgment of the learned District Judge no proclamation under Section 10(1) of the Act has been effected. According to the petitioners they are not parties to the Writ Petition No. 6004 of 1987 and as such merely because the said writ petition is pending it would not be presumed that i has any binding effect on the petitioners. It has also been urged that during the course of hearing on 3171992 the records had been produced in the Court from the side of the Competent Authority. Then it could not be shown that within the mandatory period of sixty days the earlier applications moved by the petitioners transferors were rejected. It has also been urged that the orders passed by the Competent Authority on the petitioners notices do not indicate any valid reason. The decision of Competent Authority is wholly arbitrary and has been passed without giving opportunity of hearing and as such it is liable to be quashed. It shall, on expiry of sixty days i.e. on 771992, be presumed that the permission has been accorded. The Counsel has further submitted that parimateria the provisions of Section 269 U.D. of the Income Tax Act are identical to the provisions of subsection (2) of Section 26 of the Act. Placing reliance on a decision reported in ITR page 307 Appropriate Authority and another v. Tanvi Trading and Credits Pvt. Ltd, and others by Hon''ble Supreme Court, it has been urged that the only right conferred on the Appropriate Authority by Section 269 U.D. is to make an order for purchasing the property and if such an order is not passed it was imperative and obligatory on the Appropriate Authority to issue noobjection Certificates under Section 269 U.L. of Income Tax Act. According to the learned Counsel identically the subsection (2) of Section 26 of the Act can not be interpreted in any other manner. He submits that case for quashing the orders impugned in the writ petition passed by the Competent Authority and for issuance of a writ of mandamus commanding the sub Registrar, Lucknow to register the saledeeds is wholly made out.

The learned Standing Counsel has submitted that petitioners'' transferors held land in excess of the ceiling area and as such they could not transfer the land in question, that the saledeeds executed by them in petitioners'' favour being in contravention of the provisions of Section 26 of the Act no right passed to the petitioners. As such the petitioners are not competent to move application under Section 26 of the Act. Accordingly the Competent Authority has acted legally in rejecting the applications. He has farther submitted that the dispute about the ceiling area of the petitioners''transferors being subjudice in Writ Petition No. 6004/1987 it cannot be said that the land is clear from the provisions of the Act. As such the petitioners can not be said (o hold transferable interest. His further submission is that the dispute being in Writ Petition No 6004 of 1987, the principle of lispendens applies. For this reason the petitioners can not be accorded sanction under Section 26 of the Act. The learned Standing Counsel submitted that the judgment passed by the District Judge can not have binding effect because it is under challenge in the above mentioned writ petition. The Standing Counsel justifies the orders passed by the Competent Authority also on the ground that in such a case there was no need to give any opportunity of hearing by the Competent Authority. He submitted that the writ petition has no merit and is liable to be dismissed.

I have considered the above submissions of the learned Counsel of the parties. Before I dwell on the merits of the case, scope and nature of Section 26 needs to be considered. Section 26 of the Act is quoted below:

�S. 26. Notice to be given before transfer of vacant land.

(1) Notwithstanding anything contained in any other law for the time being in force, no person holding vacant land within the ceiling limit shall transfer such land by way of sale, mortgage, gift, lease or otherwise except after giving notice in writing of the intended transfer to the competent Authority.

(2) Where a notice given under subsection (1) is for the transfer of the land by way of sale, the competent authority shall have the first option to purchase such land on behalf of the State Government at a price calculated in accordance with the provisions of the Land Acquisition Act, 1894 (1 of 1894) or of any other corresponding law for the time being in force and if such option is not exercised within a period of sixty days from the date of receipt of the notice, it shall be presumed that the competent authority has no intention to purchase such land on behalf of the State Government and it shall be lawful for such person to transfer the land to whomsoever he may like:

Provided that where the competent authority exercises within the period aforesaid the option to purchase such land the execution of the saledeed shall be completed and the payment of the purchase price thereof shall be made within a period of three months from the date on which such option is exercised.

(3) Not relevant

The subsection (1) requires that no person holding vacant land the ceiling limit shall transfer such land by way of sale, mortgage, gift or otherwise except after giving notice in writing of the intended transfer to the Competent Authority. This is an exception to the provisions of the Transfer of Property Act or any other matter for the time being in force. In compliance of this mandate even a person holding vacant land within the ceiling limit must give notice in writing of the intended transfer to the Competent Authority. Incase such a notice is given then the provisions of subsection (2) come into play. The subsection (2) provides that where a notice given under subsection (1) for transfer of the land by way of sale, the Competent Authority shall have the first option to purchase such land on behalf of the State Government at a price calculated in accordance with the provisions of the Land Acquisition Act, 1894 or of any other corresponding law for the time being in force and if such option is not exercised within a period of sixty days from (he date of receipt of the notice, it shall be presumed that the Competent Authority has no intention to purchase such land on behalf of the State Government and it shall be lawful for such person to transfer the land to whomsoever he may like. The Section as such, does not stipulate rejection of the notice by the Competent Authority. The jurisdiction of the Competent Authority is only limited to either passing an order within the mandatory period of sixty days for purchase of the property by the State Government or issuing a Noobjection Certificate for transfer of the property.

The Income Tax Act has identical option contained in Sec. 269 U.C. This Section is identical to subsection (1) of Section 26 and Section 269 U.D. is identical to subsection (2) to Section 26:

Section 269 U.C. is quoted below:

�269 U.C. (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, no transfer of any immovable property of such value exceeding five lakh rupees as may be prescribed shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of subsection (2) atleast three months before the intended date of transfer.

(2) Not relevant

(3) Not relevant

Section 269 U.D. is quoted below;

�269 U.D. (I) The appropriate authority, after the receipt of the statement under subsection (3) of Section 269 U.C. in respect of any immovable property, may, notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force, and for reasons to be recorded in writing, make an order for the purchase by the Central Government of such immovable property at an amount equal to the amount of apparent consideration.

Provided that no such order shall be made in respect of any immovable property after the expiration of a period of two months from the end of the month in which the statement referred to in Section 269 U.C. in respect of such property is received by the appropriate authority.

Provided further that in a Case where the statement referred� to in Section 269 U.C. in respect of the immovable property concerned is given to an appropriate authority, other than the appropriate authority having jurisdiction in accordance with the provisions of Section 269 UB to make the order referred to in this subsection in relation to the immovable property concerned, the period of limitation referred to in the preceding proviso shall be revoked with reference to the date of receipt of the statement by the appropriate authority having jurisdiction to make the order under this subsection.

(2) Not relevant''.

The above Sections of the Income Tax Act have been subject matter of interpretation in Tanvi Trading and Credits P. Ltd and others v. Appropriate Authority and others reported in 1991 ITR page 623. A Division Bench of the Delhi High Court held as under;

�The only right which Section 269 U.D. of the Income Tax Act, 1961 confers the appropriate authority is to enable it to make an order for purchase of the immovable property at an amount equal to the amount of the apparent consideration It does not give jurisdiction to the appropriate authority to adjudicate upon the legality of the transaction which is proposed to be entered into by the applicant. Section 269 UD is not concerned with the validity of the sale. That there is any impediment or defect in the title of the transferor or that there is any other law which would be violated by the proposed sale is of no consequence to the appropriate authority except that it can take all such factors into consideration while making up its mind whether to exercise the preemptive right to purchase or not. The appropriate authority cannot, on grounds of alleged infringement of law, exercise its right to purchase land, at the same time refuse to grant the certificate sought by the seller. Of course in the exercise of its power to decide whether to purchase the property the authority will have other implied powers which he will make the power effective. The authority would be entitled to see materials and documents like documents of title agreements etc., in order to satisfy itself Whether the apparent consideration is proper or not in order to come to the conclusion whether to purchase the property or not. The investigation which will be undertaken by the appropriate authority is only with a view to determine whether the preemptive right of purchase should be exercised or not. If the appropriate authority has reservations or doubts with regard to the legality of the proposed sale, it is open to the authority not to exercise its right to purchase. Sec. 269 U.D., however does not contemplate the rejection of any statement by the appropriate authority If an order of purchase is not passed, then it is imperative and obligatory on the appropriate authority to issue the certificate under Section 269 U.L. (3).�

The appropriate authority challenged the above order of the Delhi High Court by way of a Special Leave petition before Hon''ble Supreme Court. It was registered as Special Leave to Appeal (Civil No 6304 of 1991). The decision is reported in 1991 ITR page 307. While dismissing the above, Hon''ble the Supreme Court held that only two alternatives were open under the scheme of the legislation:

(i) the union of India, through the appropriate authority, could buy the property proposed to be transferred.

(ii) in the event of its decision not to buy, it has to issue a ''Noobjection Certificate'' leaving it open to deal with the property.

In another case, Meqsons Exports v. Union of India and others reported in 1991, 100 CTR (42) a Division Bench of High Court, Delhi, interpreting Section 269 U.C./269 U.D. held �that Appropriate Authority has either to buy the property or issue Noobjection Certificate. He has no jurisdiction to file the application received under Section 269 U.C. as the time limit within which the option to purchase property having been expired, the Appropriate Authority was directed to issue a �Noobjection Certificate.�

The Delhi High Court in another case of Mrs. Satwant Narang v. Appropriate Authority I.T. Dept. New Delhi, while setting aside the order of Appropriate Authority has held (i) that the jurisdiction of the Appropriate Authority was only limited to either passing an order within the specified period for purchase of the property by the Central Government for the consideration recorded on the agreement or issuing a �NoObjection Certificate� for transfer at that consideration.

The above interpretations in similar circumstances envisaged by Section 26(1) and (2) of the Act simplify the controversy that has been raised in the Writ Petition in hand. Admittedly the petitioners gave a notice under Section 26 of the Act to the Competent Authority on 7th May, 1992 in the prescribed printed form. The Competent Authority was to exercise its first option to purchase the said land on behalf of the State Government at a price calculated in accordance with the provisions of the Land Acquisition Act or in any other corresponding law for the time being in force and if such option is not exercised within a period of sixty days from the date of receipt of the notice or else legal presumption would arise that permission has been accorded. Obviously, the option, was to be exercised in writing In the case such an option was not exercised within a period of sixty days from the date of receipt of notice, it shall be presumed that the Competent Authority has no intention to purchase the land on behalf of the State Government. Then it shall be lawful for the petitioners to transfer the land to whomsoever they may like. In the instant case the record that was looked by me on 3171992 did not show that any such option was exercised. The record also did not disclose that anywhere in the file it has been recorded that the applications have not been given in accordance with law. Yet the impugned orders that have been annexed as Annexure No. 1 to the writ petition, and they are six in numbers relating to each petitioner, say so. The impugned orders also do not have any foundation when I scrutinise the contents of the Counter Affidavit. No where in the Counter Affidavit it has been stated that the notices were rejected by the Competent Authority because the same were not in accordance with law. Various other pleas, as have been stated above, have been stated in the Counter Affidavit. I necessarily presume, that for what has been stated in the Counter Affidavit, the reason of rejection of the notices of the petitioners is not that which has been stated in the Annexure No. 1. As such the reason of rejection bf the notices is not that which has been stated but apparently it is cover up.

That leads me to scrutinise whether even on the grounds stated in the Counter Affidavit, and as submitted by the learned Standing Counsel the sanction to transfer the property by issuing a �Noobjection Certificate� could be refused by the Competent Authority. It is admitted in the Counter Affidavit that originally the property in question was owned by late Mr. Justice Homidullah Beg and his other coowners. They had contested the notice given to them by the Competent Authority under Section 8(3) of the Act. The Competent Authority by order dated 22585 had declared 4590.45 square meters as excess land in the hands of the petitioner''stransferors. It is also admitted that the erstwhile coowners had preferred an appeal in the Court of the District Judge, Lucknow. After hearing the parties, the learned District Judge vide judgment dated 4111986 had allowed the appeal and set aside the order dated 2251985 passed by the Competent Authority and held that the hind owners did not hold excess vacant land. The said order though challenged in Writ Petition No. 6004 of 1987 still stands. This Court even has not granted stay. Now it has to be seen whether for this reason the saledeeds in petitioner favour could be held to be void and farther whether they are prevented from transferring the property in view of the provisions of Section 5(3) of the Act. The answer to this can only be, no. It is because after the judgment passed by the learned District Judge neither the petitionerstransferors nor after the saledeeds the petitioners could be said to be holding land in excess of the ceiling limit. As such the provisions of Section 5(3) of the Act do not come into play. Thus the right to give notice by the petitioners cannot be subverted by imaginary hurdles.

In this regard a decision of Division Bench of this Court reported in 1980 All LJ 1034 may be relied on. Hon''ble Satish Chandra, Chief Justice held that the ban imposed by subsection (3) of Section 5 relates to only excess land than the ceiling limit. It does not apply to the land which is not in excess of the ceiling limit. In the present case in the face of the judgment of the District Judge the petitioner''stransferors as also the petitioners do not hold excess land. As such subsection (3) of Sec. 5 cannot create a bar.

The learned Standing Counsel has laid great emphasis on the point that the permission cannot be granted because the instant transfer would be hit by doctrine of lis pendens. It is not understood as to how when a notice under Section 26 of the Act is given then doctrine of lis pendens will come in the way of sanction being granted by the Competent Authority. Maybe that the writ petition challenging the order of the District Judge is pending but it would not attract the doctrine of lispendens in so far as the petitioners'' notices are concerned. The correct legal position would be that in case, in the writ petition, the judgment of the District Judge is in any manner altered, modified or set aside by this Court then to that extent the same would bind the petitioners, they being transferees from erstwhile coowners against whom the grievance have been made in the writ petition. But for having binding effect of such a judgment the State should have also impleaded the petitioners in the writ petition as opposite parties. It has, however, been nowhere stated in the Counter affidavit that the petitioners have been impleaded in the writ petition as assignees of erstwhile owners of the property in question.

The above considerations lead me to hold as under:

(a) that the notice given by the Petitioners under subsection (1) of Section 26 of the Act is in accordance with the provisions of the Act and not hit by Section 5(3) of the Act.

(b) that for the reasons stated above the impugned orders of rejection of the notices on the ground that the same are not in accordance with law is manifestly illegal.

(c) that the Competent Authority Urban Land Ceiling, Lucknow, having not exercised the first option of purchase of the property in question within the mandatory period of sixty days from the date of the receipt of the notice, it shall be presumed that the sanction stands accorded and the petitioners can deal with the property in the manner stipulated in the agreement to sell.

(d) that doctrine of lispendens does not apply at the stage of notice given under Section 26 of the Act.

In view of my above findings the writ petition stands allowed and the impugned orders rejecting the petitioners'' notices contained in Annexure No. 1 to the writ petition are hereby quashed. Let a certiorari be issued accordingly.

And a writ of mandamus be issued to the Sub Registrar of Lucknow, competent to register the sale deeds, to register the sale deeds in case duly executed ones by petitioners in favour of Small Industries Development Bank of India are presented before him in respect of the property in question.

In the circumstances of the case I do not impose costs.