P. Venkatarama Reddi, J.
1. The impugned order passed in exercise of the powers vested in appropriate authority under Section 269UD(1) of the Income Tax Act directs pre-emptive purchase of the property belonging to the Estate of late Mrs. Leila D. Lein and the payment by Central Government by way of consideration a sum of Rs.14,19,210/-. The payment already made to the 5th respondent who is the Attorney of the Estate of late Mrs. Leila D. Lein on 12-10-1990, was treated as payment as per the order. It was recorded in the impugned order that the possession has already been handed over to the Income Tax Department on 9-10-1989 by the GPA of the Transferor. Hence, 'it is only reiterated that the property vests with the Central Government free from all encumbrances'. In the Schedule 1 to the impugned order, the description is given as 1/3rd share/interest in the property known as Lilazar Rearing No.8-2-349, Road No.3, Banjara Hills, Hyderabad with the boundaries specified therein. The approximate extent of land in which late Leila D. Lein had I/3rd share is mentioned to be 7,100 sq.metres. The order in question passed on 20-5-1994 was preceded by an order passed on 28-11-1989 under the same provision viz., Section 269UD(1) which was amended by an order dated 28-12-1989. The earlier order dated 28-11-1989 was challenged by the same petitioners in WP No.17315 of 1989. The Constitutional validity of the provisions of Chapter XX-C was mainly in issue in that WP. Following the judgment of the Supreme Court in CB Goutham v. Union of India, 199 ITR 530, and the amended provisions introduced by the Parliament to give effect to that judgment, the Division Bench by its order dated 16-2-1994 allowed the writ petition on the short ground that before passing the order of pre-emptive purchase under Section 269UD(1), opportunity of hearing was not afforded to the petitioners or the transferors. The following is the operative part of the order in WP No.17315 of 1989:
'Having regard to the directions given by the Supreme Court in the above said case, Forms 37-1 filed by the petitioners in these cases would be deemed to have been filed as on today; this is without prejudice to the contentions of the petitioners raised in the writ petitions including the contention that filing of theform for the second or the third time, as the case may be, was only pursuant to the direction of the appropriate authority beyond the statutory period from the date of filing of the form for the second or the third time, as the case may be, was only pursuant to the direction of the appropriate authority and that no valid order of pre-emptive purchase under Chapter XX-C can be made by the appropriate authority beyond the statutory period from the date of filing of the first Form 37-1 in each case. The first respondent shall consider these and other contentions that might be raised by the petitioners in reply to the show-cause notice and pass reasoned orders in accordance with law in the light of the observations of the Supreme Court in Gautam's case. The writ petitions are accordingly, allowed.'
2. Thereafter, the impugned order was passed on dated 20-5-1994 overruling the objections of the petitioners. However, no objections were filed by the attorney of the transferor's executor nor did he avail of the opportunity of hearing.
3. The appropriate authority prefaced its order by referring to the observations of the Supreme Court in Goutham's case (supra) to the effect that completed transactions will be unaffected by the said judgment. The appropriate authority felt that having regard to the observations of the Supreme Court, the steps pursuant to 269-UD order having already been completed, strictly speaking, fresh orders in compliance with the principles of natural justice need not be passed inasmuch as possession was taken over and compensation was accepted by the owner of the property without protest. However, as the judgment of the High Court has become final, the appropriate authority proceeded to consider the matter afresh after giving an opportunity of making representation to the interested parties including the petitioners. The appropriate authority referred to various contentions in detail and having inspected the property, came to the conclusion that there was under-statement of consideration in the Agreement to an extent of more than 15% of the fair market value and such step was resorted to with a view to avoid the tax and therefore passed the order under Section 269UD(1) which is assailed in this writ petition.
4. To appreciate the contentious issues, we have to go info the catalogue of events starting with the Agreement of sale entered into on 13-3-1988 by Leila D. Lein and her two sisters with the petitioners herein for the sale of residential property-H.No.8-2-349, Road No.3, Banjara Hills, known as 'Leilazar' approximately measuring 7,100 sq.metres for the total sale consideration of Rs.46,00,000/- out of which a sum of Rs. 1,20,000/- was paid on the date of Agreement. On 7-7-1988, Mrs. Leila D. Lein passed away. An executor was appointed. The executor for the estate of Leila D. Lein appointed a GPA who was infer alia authorised to dispose of the disputed property. On 27-4-1989, the power of attorney holder Sri Armugham (R5) entered into a fresh agreement of sale with the petitioners herein in respect of undivided interest of Mrs. Leila D. Lein in confirmation of the original agreement entered into on 13-8-1988 subject to the same terms. Soon thereafter i.e., on 28-4-1989 and on 31-5-1989 the two sisters of Leila D. Lein executed two separate sale deeds. In fact the 5th respondent happened to be the GPA of one of the two sisters also. The sale deeds specified the extents of land with a portion of the building No.8-2-349 as demarcated in the plan. We may here point out that there is an apparent contradiction between the agreement entered into on the previous day by the executor of Leila D. Lein and the sale deeds executed by the sisters of late Leila. As already noted, in the agreementof sale, one third of undivided interest was sold whereas in the sale deeds which immediately followed the Agreement, there was clear identification of the property sold by the two co-sharers.
5. On 1-6-1989, Chapter XX-C was made applicable to Hyderabad city by means of a notification issued by the Central Government on 31-5-1989. Form 37-1 was filed by the 5th respondent (GPA) in the month of June, 1989. On 23-8-1989, the Appropriate Authority informed the petitioners as well as the transferor that the approval of the Reserve Bank of India for alienating the property belonging to a nonresident was required and in the absence of such approval, the transferor was not able to dispose of the property. It may be mentioned that the executor of the Estate is a permanent resident of London and it is he who gave the power of attorney to 5th respondent. The appropriate authority therefore treated the Form 37-1 as 'premature and invalid'. The appropriate authority observed that 'the statement furnished in Form 37-1 is filed and the Transferor/ transferees are however fee to come up before the appropriate authority after the above defect is cured, if they are so advised'. The permission of the Reserve Bank of India was then obtained and a fresh Form 37-1 was filed by the petitioners and the respondent No.5. On 28-11-1989, the order under Section 269UD was passed by the appropriate authority. By an interim order passed in WP No. 17315 of 1989, the High Court stayed the dispossession of the petitioners. However, the possession was purportedly taken over by the nominated Officer of the Income Tax Department from respondent No.5 on 19-12-1989. By that time, the order of stay was not received by the appropriate authority. Before taking possession, the Department obtained affidavit from the 5th respondent to the effect that there was oral partition amongst the three sisters and each of their shares was specifically identified as per the plan enclosed. The extent of land sold by the two sisters, the details of sales effected by the sisters together with the extents sold were mentioned in the affidavit. However, the date of oral agreement and the source of knowledge of the deponent of the affidavit (R5) have not been disclosed in the affidavit. This affidavit formed the basis for an amendment order passed under Section 269UJ on 28-12-1989 by the appropriate authority. By the amendment order, firstly, the house number was rectified. Secondly, the boundaries were given for the one third share of property held by late Leila D. Lein in the premises known as 'Leilazar with H.No.8-2-349. The northern boundary is shown as 'common road' and the eastern boundary is given as the property falling to the share of Mrs. (late) Kripa Devi (Leila's sister) and sold to four parties. Western and southern boundaries are referred to as 'private property.
6. The events that followed later i.e. filing of the writ petition and disposal thereof broadly in the light of Gowtham's case (supra) have already been adverted to. One more event that has happened during the pendency of the earlier writ petition was the payment of consideration amount of the 5th respondent by an order dated 12-10-1990 passed under Section 269UF. As already noted, the said amount was accepted without protest.
7. The main aspects on which the learned Counsel for the petitioners has advanced his arguments are three fold which in a sense overlap: (1) the validity of the order dated 28-12-1989 passed under Section 269UJ; (2) Limitation and (3) the legal authority and right of the appropriate authority to purchase a specific portion of the property allegedly allotted to the share of the co-owner namely, late Leila D. Lein. The legal basis of the 2nd statement filed on 8-9-1989 has also been questioned. The finding on the question of valuation has also been attacked.
8. Before we proceed to deal with the above contentions, it is necessary to clear the controversy surrounding the binding effect and implications of the judgment of this Court in WF No. 17315 of 1989. It is true that this Court apparently overlooked the following observations of the Supreme Court in Gowtham's case (supra) :
'We may clarify that, as far as completed transactions are concerned, namely, where, after the order for compulsory purchase under Section 269UD of the Income Tax Act was made and possession has been taken over, compensation was paid to the owner ofthe property and accepted without protest, we see no reason to upset those transactions and hence, nothing we have said in the judgment will invalidate such purchases.'
9. From the facts set out supra, the present case may perhaps be regarded as a completed transaction as pointed out by the appropriate authority. This aspect has not engaged the attention of the learned Judges. However, the said judgment has become final. The appropriate authority had given effect to it though it expressed certain reservations in accepting the judgment. We are therefore not inclined to go to the extent of holding that the judgment of this Court in WP No.17315 of 1989 has to be disregarded on the principle of 'per incuriam' or otherwise.
10. What then is the effect of the direction that Form 37-1 filed by the petitioners must be deemed to have been filed on the date of the judgment i.e., 16-2-1994?. That direction was given in conformity with the directions of the Supreme Court in Gowtham 's case (supra). It is the contention of the learned Counsel for Revenue that the period of limitation under the proviso to Section 269UD(1) shall be reckoned from that date. It is no longer open to the petitioners to contend that the initial order passed under Section 269UD on 28-11-1989 is invalid or barred by limitation, more so when such order has been quashed by the High Court. It is only the fresh order passed after the remand by the High Court that survives for judicial scrutiny, according to the learned Counsel for the Revenue. In reply to this contention, the learned Counsel for the petitioners draws our attention to the following observations immediately after the direction that Form 37-1 must be deemed to have been filed on the date of the judgment.
'This is without prejudice to the contentions of the petitioners raised in the writ petition including the contention that filing of the form second or third time as the case may be, was only pursuant to the directions of the appropriate authority and that no valid order of pre-emptive purchase under Chapter XX-C can be made by the appropriate authority beyond the statutory period from the date of filing of the first Form of 37-1. The first respondent shall consider these and other contentions that might be raised by the petitioners in reply to the show-cause notice and pass reasoned orders in accordance with law.'
11. The learned Counsel for the petitioners further submits that if the UD order passed was itself invalid for reasons other than the non-observance of principles of natural justice, that defect cannot be cured by passing a fresh order pursuant to the direction of this Court to follow the principles of natural justice. We see force in the contention of the learned Counsel for the petitioners. Firstly, this Court made it clear in explicit terms that the direction given by it was without prejudice to the contentions of the petitioners including the order of pre-emptive purchase being barred by time. The questions raisedin the writ petition bearing on the validity of the order under Section 269UD were thus left open while setting aside the order only on the ground of non-observance of principles of natural justice following the decision in Gowtham's case (supra). The fresh start of limitation on account of deeming fiction improvised by this Court taking the clue from me Supreme Court's judgment, was only to enable the appropriate authority to pass a fresh order in conformity with the principles of natural justice. But, it was never meant to operate to the prejudice of the petitioners. If the initial order passed was invalid for any reason other than the non-observance of principles of natural justice, nothing precludes the petitioners from raising those questions. The petitioners cannot be put themselves in a worse position than what they were on the date of quashing the order under Section 269UD on the limited ground of want of opportunity of hearing. It cannot be said that the grounds of challenge to the purchase order passed under Section 269UD which was questioned in the first writ petition get effaced or become irrelevant on passing of fresh UD order. In fact, the the appropriate authority has rightly understood the implications of this Court's judgment in WP No.17315 of 1989 and proceeded to consider the contentions as to the validity of the first UD order as well. We cannot therefore accept the contention of the learned Standing Counsel for the Department.
12. Now, let us see whether the orderdated 28-11-1989 passed under Section 269UD read with the order under Section 269UJ is, but for the contravention of principles of natural justice, a valid order passed within the time limit set out in the proviso to Section 269UD.
13. The thrust of the argument of the learned Counsel for the petitioners is on the legality of the order passed under Section 269UJ amending the first schedule to the impugned order by describing the property by boundaries. It is the contention of the learned Counsel for the petitioners that the order under Section 269UD goes beyond the scope of the Agreement of sale in respect of which a statement is required to be filed under sub-section (3) of Section 269UC. That is why the original order passed under Section 269UD on 28-11-1989 rightly referred to the subject matter of the property to be purchased as l/3rd undivided interest in the building and the adjacent land. An order under Section 269UJ could not have been passed on 28-12-1989 purporting to amend the schedule of property so as to convert the undivided interest into an ear-marked divided property. Such power of amendment does not fall within the purview of Section 269UJ. As there was no mistake apparent from the record, no rectification under Section 269UJ could have been possibly done based on an alleged oral partition which is not recognised by law. It goes against the very tenor of the Agreement and the statement tiled. The affidavit of 5th respondent could not have formed a reasonable basis for amending the schedule of property as if the property falling to the share of the transferor was ascertained and demarcated subsequent to the Agreement. The 5th respondent's affidavit is not worthy of credence and cannot defeat the rights of the petitioners. If so, the appropriate authority could have only purchased the undivided interest, but not specific identified property. However, if Section 269UJ order is deemed to be valid, the purchase order gets barred by limitation because Section 269UD order cannot remain independent of UJ order. The effective date for the purpose of reckoning the limitation is 28-12-1989 which is the date on which the UJ order was passed. These, in nut-shell, are the arguments of the learned Counsel for the petitioners.
14. In reply thereto, the learned Standing Counsel contends that the UD order passed in November, 1989 was not beyond the period of limitation. The fact that the said order was amended by an order passed on 28-12-1989 under Section 269UJ does not make any difference from the point of view of the limitation. The learned Standing Counsel for Revenue submits that the amendment order passed under Section 269UJ merges with the impugned order passed under Section 269UD and it has no independent existence. It is contended that the UJ order is not beyond the competence of the appropriate authority as it merely rectifies an apparent mistake evident from the record. In any case, it is submilted that the order passed under Section 269UJ was not challenged.
15. Does the order passed under Section 269UJ fall within the power confided to the appropriate authority to rectify the mistakes apparent from the records and (2) if so, whether the period oftwo months specified in the proviso to Section 269UD(1) shall be computed with reference to the date on which the order under Section 269UJ was passed or the date of passing the UD order. These arc the questions mooted before us at length.
16. Section 269UJ provides for amendment of the order passed under Chapter XX-C either suo motu or otherwise in order to rectify the mistake apparent from the record. An obvious instance of the exercise of the power of amendment under Section 269UJ is to be found in the first part of the order dated 28-12-1989. The building number which was wrongly given was rectified by substituting the figure '8' to '3'. The second part of the order purports to amend the first schedule tome order dated 28-11-1989 by adding the boundaries which, according to the ppropriate authority 'have since been ascertained'. In the amended order, reference to 1/3rd share of Leila D. Lein in the properly known as 'Leilazar' has been retained. But, it is followed by specification of boundaries. Thus, the one third share ofthe transferor has been identified by metes and bounds. Whether the one third share agreed to be sold to the petitioners could be transformed into a specific divided property while passing the pre-emptive purchase order under Section 269UD(1) is one aspect which we shall deal with a little later. The other question is whether by amending the schedule to the order in the manner in which it has been done, can it be said that a mistake apparent from the record has been rectified? Is it a mistake? If so, is it apparent from record? These are the questions which have cropped up in the course of arguments.
17. The basis for amendment seems to be the affidavit given by the GPA holder for the executor of the estate of Leila D. Lein (R5). The affidavit was obtained on 18-12-1989 after the order under Section 269UD(1) was passed. The affidavit says in some what vague terms that on mutual oral agreement, each of the sisters had their one third share specifically identified as per the enclosed plan. The date of division etc., has not been mentioned. Be that as it may, prima facie, we are of the view that on the basis of subsequent information obtained in the form of affidavit from the GPA holder about the division of properties, the order already passed under Section 269UD(1) cannot be dubbed as an order suffering from a mistake apparent from the record. The information leading to the specification of boundaries for the undivided property which was the subject matter of Agreement is something extraneous to the record available with the appropriate authority on the date of passing the order under Section 269UD. It was not a case ofinadvertent omission or even something which the Competent Authority could have, on exercise of reasonable diligence, discovered on the basis of record before it. There was in fact no mistake at all as the order under Section 269UD conformed to the contents to the Agreement as discussed hereinafter.
18. In order to make good his submission that the specification of boundaries which were by the date of passing the UD order ascertainable shall be construed to be a mistake apparent from the record, the learned Standing Counsel has placed reliance on the decision of the Supreme Court in Mahendra Mills Limited v. P.B. Desai, Appropriate Authority : 99ITR135(SC) . In that case, the Supreme Court held that the finding of the appellate Tribunal as to the valuation of the stock although recorded subsequent to the decision of the Appellate Assistant Commissioner could still be taken as forming part of record of appeal and be taken into account for the purpose of correcting the mistake under Section 35 of the Income Tax Act, 1922. The ratio of that decision in our view, has no application as there is world of difference in facts. The ratio of the decision in Mahendra Mill's case (supra), can be discerned from the following passages:
'If the Income 'fax Officer's order finding with regard to the closing stock for assessment year 1959-60 was relevant to and part of the 'record of appeal', the Tribunal's decision which superseded that finding was equally so within the contemplation of Section 35 of the Act.'
Earlier, it was observed:
'Thus, to the extent of ascertaining the closing and opening stock positions, the two assessments telescoped into each other. Indeed, it was on this basis that the Appellate Assistant Commissioner had by his decision dated June 10, 1965, allowed the assessee's appeal regarding assessment year 1960-61. The Tribunal's finding, that the value of the closing stock for assessment year 1959-60 should be Rs.5,89,439/- had completely replaced the Income Tax Officer's finding in regard to that fact with effect from the date of the Income Tax Officer's order relating to assessment year 1959-60.'
19. It is on those peculiar facts, their Lordships of the Supreme Court held that the subsequent decision of the Tribunal regarding the value of closing slock of 1959-60 could form the basis for exercising the power under Section 35 of the old Act.
20. Thus, we arc of the considered view that the order purportedly passed under Section 269UJ is beyond the scope of powers conferred on the appropriate authority under that section. It may be that in the peculiar facts and circumstances of this case, the specification of boundaries is not at material variance with the order passed under Section 269UD. It may be in amplification of the original schedule. But, the question is whether such power could be exercised under Section 269UJ. For the reasons stated above, our answer is in the negative because the sine qua nun for the exercise of power under the said section is not satisfied. The order under Section 269UJ cannot therefore be sustained in law.
21. In view of the above conclusion, it is not necessary for us to go into the further question whether the period of limitation is relatable to the date of passing the order under Section 269UJ.
22. There is another angle from which the same problem can be viewed. The foundation and the basis for the order under Section 269UD(1) is the Agreement coupled with the Statement required to be filed by the intending transferor and the transferee. On the language of sub-section (1) of Section 269UD and contextually speaking, the subject matter of purchase could be no different from the immovable property in respect of which the statement in the prescribed form has been furnished. The statement in its turn reflects and embodies nothing more nor less than the terms and subject matter of the Agreement. The purchase order is expected to be in adherence to the subject matter and terms of the Agreement. Taking the present case as example, with the description of the property given in the Agreement of sale and in the statement being one third share and interest in the property known as 'Leilazar, it is not open to the appropriate authority (to inspect the property for the purpose of identification of the undivided share before exercising the option to purchase the property) nor can the appropriate authority pick and choose a particular portion of the property and include it in the purchase order. Viewed in this perspective, the order passed on 28-11-1989 under Section 269UD(1) does not suffer from any apparent mistake so as to call for rectification. The description of property given therein cannot be said to be incorrect. Hence, the occasion to invoke the power under Section 269UJ to amend the order does not arise. At the same time, the first order passed under Section 269UD can stand and remain valid even without the order of amendment under Section 269UJ.
23. Coming to the second purchase order passed after remand, no doubt, the specification of boundaries is not in strict conformity with the Agreement and the Statement and that on first look, it may appear that the portion of the order in schedule 1 specifying the boundaries should be expunged. But, the fact remains that by the date of passing the 2nd UD order, the identification of the property representing the share and interest of Leila D. Lein had become a fait accompli. From the affidavit of the fifth respondent (GPA), it became crystal clear that the other two sisters having had equal share with Leila D. Lein sold specific and earmarked portions of property by various sale deeds. The area sold, the name of the buyer, the sale price, sale deed number were all furnished in the affidavit. It was signed by the vendee's representative. Six sale deeds executed by on behalf of her two sisters covered an extent of 5,400 sq.yds., out of 7,100 sq.metres (8,591 yards). The vendees are none other than the nominees of the petitioners who entered into a joint agreement with the three sisters initially. This fact is borne out by the recital in the sale deed dated 28-4-1989 executed by Smt. Krupadevi represented by her GPA Mr. Armugham (R5). The petitioners figured as attesting witnesses therein. It is mentioned in the sale deed that the writ petitioners entered into a further agreement of sale with the vendee to sell the land of a specified extent with the building thereon as per the description given in the schedule and as delineated in the plan. In the impugned order, the appropriate authority also referred to the sale deed dated 30-5-1989 executed by Krupadevi represented by the first petitioner as the GPA. The factum of orai partition effected amongst the three sisters and the portion of the land and building specified in the sale deed having fallen to the share of the vendor is clearly set out in this sale deed as well as in the other sale deeds. In the face of these undeniable facts, it is too much to contend that there was no partition at all. Atleast, the petitioners who are associated with every one of the sale deeds, are estopped from contesting the factum of partition or validity thereof. It is they who agreed to sell specific portions of property and it is they who ensured that the sale deeds were executed in tune with such Agreements. On these facts, it became apparent to the appropriate authority by the time the second UD order was passed that the property was partitioned by mutual agreement and the properties falling to the shares of two of the three co-owners were sold and what remained is the property falling to the share of Leila D. Lein. It is nobody's case that the two sisters of Leila D. Lein had any further stake or rights over the remaining property. Insofar as the portions of land got sold by the petitioners through the sale deeds executed by or on behalf of two sisters, the petitioners cannot take one stand and for the land which is the subject matter of the relevant Agreement, the petitioners cannot take a different stand. In fact, in the affidavit filed in support of the writ petition the factum or validity of partition was never put in issue. Even in the objections filed before the appropriate authority, the petitioners proceeded on the basis that an extent of 2,830 sq.yds., had fallen to the remaining one third share of Leila D. Lein. On the other hand, in Para 13(v) of the affidavit in writ petition, it is stated as follows:
'On the merits of matter, it had been submitted that the entire area which was the subject matter of the agreement dated 13-3-1988 measured 7,100 sq.metres. Out of this, two thirds have been sold away and third parties were put in possession. What remained with the petitioners was one third of the property. This part suffered from several disadvantages.'
24. True, the affidavit filed by the fifth respondent on which the appropriate authority acted did not spell out the details of oral partition i.e., the date of partition and whether it took place during the life time of Leila D. Lein. On that account, we cannot discard the partition nor can we hold that the appropriate authority did not have material before it to believe the partition. The facts stated above speak for themselves and indubitably lead to an inference of partition and demarcation and identification of the specific portions of property that fell to the share of each one of the sisters. In this factual scenario, the description of the property given by the appropriate authority in the impugned order dated 20-5-1994 cannot be said to be at material variance with the Agreement or the Form 37-1 statement. When the one third undivided share became capable of identification by a course of events that occurred in succession after the agreement was entered into, there is nothing wrong in mentioning that identified property in the purchase order. We cannot therefore uphold the contention of the learned Counsel for the petitioners that the description of property by boundaries as per the UD order is illegal and goes beyond the powers of the appropriate authority.
25. Even assuming that the identification of one third share of property by boundaries is impermissible in law and that portion in Schedule 1 of the order mentioning the boundaries has to be expunged, then what follows? In our opinion, it does not make any material difference. The purchase order can still be sustained as far as one third share of Leila D. Lein is concerned. The appropriate authority can in enforcement of such order proceed to take possession of the specific and ascertained portion of land that had fallen to the share of the transferor-Leila D. Lein. The subsequent events that occurred spared the appropriate authority of the need to enforce partition through Court of law or otherwise. Nothing in law prevents the first respondent from taking possession of the specific ear marked portion of land that is left out after the disposal by the other co-owners. The one third share of Leila D. Lein was no longer in the air by the date of passing the impugned order. The vesting of property under Section 269UE(1) can follow by take-over of possession ofthe specific portion of the land that has been left out to the share ofthe transferor Leila D. Lein. Thus, boundaries or no boundaries in the schedule to the impugned order, the appropriate authority is not legally disabled from takingover possession of the land left out to the share of the transferor. No principle of interpretation will come in the way of taking the view that the appropriate authority can take over possession of the property which though remained undivided on the date of Agreement of sale was subsequently divided on the basis of mutual understanding between the co-sharers.
26. The next contention advanced by the learned Counsel for the petitioners is that it is only the first statement filed in June, 1989 which can be acted upon and it is with reference to this statement that the limitation has to be computed. If the appropriate authority for any reason is not in a position to exercise the option to purchase the property within the time limit prescribed, the no-objection certificate under Section 269UL ought to be issued. It is not open lo the appropriate authority to require a fresh statement to be filed and to proceed to lake further action on the basis of such second statement. The invalidity or unenforceability of the Agreement is not a legitimate ground for insisting on filing of second statement. This is the substance of the argument of the learned Counsel.
27. The factual background for advancing such argument may be recapitulated. The statement in Form 37-1 in June, 1989 was 'filed' by the appropriate authority as per its communication dated 23-8-1989. The said communication reads as follows:
'It is observed that the original owner Mrs. Leila D. Lein passed away on 7-7-1988 and her estate is being administered by the executor Shri B.K. Reddy permanently residing in London, U.K. He had given power of attorney to Shri A. Arumugham who signed Form 37-1 on behalf of the transferor. Since the property belongs to a non resident, the approval of the Reserve Bank of India for alienating the same is required and no such approval appears to have been received. In the circumstances, me transferor is not empowered to dispose the property.
3. The statement filed in Form 37-1 is therefore premature and invalid. Therefore, we are unable to issue either a purchase order under Section 269UD(1) or issue a no objection certificate under Section 269UL(1). The statement furnished in Form 37-1 is filed. The transferor/transferees are however free to come up before the appropriate authority after the above defect is cured, if they are so advised.'
28. Thereafter, the Reserve Bank's approval was obtained and a statement in Form 37-1 was filed by petitioners as well as by respondent No.5 on 8-9-1989 without any demur. It is on the basis of this statement that the first order under Section 269UD was passed. It is not in dispute that if the first statement filed in June, 1989 is taken into account, the UD order passed on 28-11-1989 will be beyond time and therefore invalid.
29. The learned Counsel for the petitioners therefore builds up the argument on the basis of the observations in certain decided cases that if the Agreement was tainted with illegality or unenforceable, it is not curable under Section 269UC and the only option left to the appropriate authority is not to exercise the power of pre-emptive purchase but to issue a no-objection certificate under Section 269UL. In reply thereto, the learned Counsel for Revenue submits that the petitioners voluntarily filed the second statement after receipt of the communication dated 8-9-1989 and the petitioners must be deemed to have waived their right to question the action of the appropriate authority in 'filing' the first statement at this stage. If the said action was questioned at the earliest pointof time, there is every possibility of the matter being remitted to the appropriate authority as has been done by the Supreme Court in Jagdish SA. Sadarangani v. Government of India : 230ITR442(SC) On such reconsideration, the appropriate authority would have in any case opted to purchase the property in view of the Reserve Bank's approval that was obtained in the interregnum.
30. In Jaspal Kaur v. Union of India : 232ITR87(Delhi) a Division Bench decision of Delhi High Court, R.C. Lahoti, J., speaking for the Bench succinctly summarised the principles culled out from various decisions on the implications of statement filed on the basis of an illegal or unenforceable agreement. We quote the principles so laid down:
'(i) When there is a proposal for sale, the appropriate authority has only two options available to it (i) either to purchase the property by exercising the right under Section 269UD; or (ii) if it is not inclined to purchase the property, to issue a no objection certificate. There is no third option open IOL Limited v. S.C. Prasad, (1996) 27 ITR 52. Appropriate Authority v. Naresh M. Mehta : 200ITR773(Mad) ; Kelvin Jute Company Limited v. Appropriate Authority. : 185ITR453(Cal) ; Ramanlal B. Pandya v. Union of India : 230ITR454(KAR) ; Ghaziabad General Industries (P) Limited v. Appropriate Authority : 227ITR884(All) .
(ii) The time limit of two months specified in Section 269UD(1), first proviso (within which the appropriate authority has to act) cannot be extended (Appropriate Authority, Government of India v. Naresh M. Mehta : 200ITR773(Mad) ; Irwin Almeida v. Union of India : 197ITR609(Bom) and IOL Limited v. S.C. Prasad : 217ITR52(Bom)
(iii) If no order is passed within the prescribed time of two months, it automatically follows that a certificate under Section 269UL(3) must be issued Mount Plaza Builders Private Limited v. Appropriate Authority : 195ITR750(Mad) ; Moi Engineering Limited v. Appropriate Authority, : 198ITR270(Cal) and IOL Limited's case : 217ITR52(Bom) .
(iv) The only question which the appropriate authority can decide is whether the property is undervalued or not. The appropriate authority cannot go beyond the terms of the agreement; it cannot question the validity of the agreement to transfer immovable property, the legality of the transaction or the title of the vendor.
31. Applying the said principles, the procedure adopted by the appropriate authority in 'filing' the statement in Form 37-1 while at the same time declining to issue the certificate under Section 269UL is unsustainable. If the appropriate authority felt that in the absence of Reserve Bank's approval to the proposed sale, the purchase of property is not permissible or desirable, the only course left open would be to issue the no objection certificate under Section 269UL, instead of keeping the whole thing in abeyance. But, there is one formidable obstacle in the way of the petitioners carrying this legal consequence to its logical end. In the first writ petition filed in 1989 or at any time earlier, the petitioners did not question the 'filing' order of the appropriate authority nor did they seek a direction from the Court nor even make a request to the appropriate authority to grant no objection certificate. But, theyproceeded to act in accordance with the communication dated 6-9-1989 and got the permission of Reserve Bank and filed the second statement in Form 37-1 voluntarily. It is too late in the day to say that the petitioners were entitled to get no objection certificate in the year 1989 itself irrespective of the second statement tiled by them. It is significant to note that the second statement was not filed with any qualification or 'without prejudice'. Having acted on the communication sent by the appropriate authority and filed the second statement voluntarily and having kept quiet for nearly five years, it is not open to the petitioners to raise the bogey of the invalidity of the second statement or the communication which preceded it. The petitioners and respondent No.5 by their conduct must be deemed to have waived their right to question the action of the appropriate authority as rightly contended by the learned Standing Counsel for Revenue. The petitioners are estopped from raising this issue at this distance of time in the second round of litigation after the entire transaction has been completed and the consideration paid to the transferor. The conduct and laches on the part of the petitioners would disentitle them to any relief under Article 226 of the Constitution on the ground that the second statement should not have been processed further.
32. The last question to be considered is about the valuation. It is the contention of the learned Counsel for the petitioners that comparable instances of sale furnished by the petitioners were not taken into account and more over, the remaining land that has fallen to the share of Leila D. Lein suffered from certain disadvantages as pointed out in Para 13(v), The net effective area would be, according to the petitioners, is only 2200 sq.yds,, as against 2830 sq.yds., on paper. According to the petitioners, the conclusion of the appropriate authority that the apparent consideration for the transfer is less than 85% of the fair market value of the property as on 13-3-1988 is not based on relevant grounds. We find it difficult to accept this contention. The learned Members of the appropriate authority inspected the property, took into account the comparable sales and also considered the instances of sale furnished by the petitioners and discussed each and every aspect pointed out by the petitioners in Paragraph 13 of the impugned order. We are unable to say that the finding is vitiated on account of non application of mind to the relevant factors or by reason of taking into account any irrelevant considerations. The process of fixation of fair market value cannot in our view, be questioned on any ground germane to Article 226 of the Constitution.
33. Although a contention has been raised in the writ petition that the Agreement was given effect to and transferees were put in possession even before the date Chapter XX-C was made applicable to the State of Andhra Pradesh, the same has not been pursued before us. We endorse the reasoning of the appropriate authority in Paras 7(ii) to (v) in this behalf.
34. For the aforesaid reasons, the writ petition fails and it is dismissed. No costs.