Transfer of Property:
Leasehold property – Acquired under Chapter XXC of the Income Tax Act – Income Tax Department paid amount towards unearned increase of market value to Delhi Development Authority (DDA) – Thereafter the property was put to auction, through the department of Revenue in which respondent was the highest bidder – Sale deed was executed in favour of the respondent – Thereafter respondent moved application with DDA for conversion of leasehold rights in the plots into freehold rights and also deposited amount towards conversion charges – DDA, thereupon demanded an amount from the respondent towards unearned increase of market value – The demand raised by DDA was set aside by Single Judge of High Court in writ petition and DDA was directed to refund the conversion amount – In LPA, High Court set aside the order of Single Judge and directed DDA to refund the amount towards conversion fee, while holding that unearned increase was not payable by the purchaser to DDA – On appeal, held: Since the auction was made on the market value of the property, there was no question of claim of unearned increase by DDA – Also, since income tax department had already paid unearned increase, DDA was not entitled to raise any demand of unearned increase – On interpreting the auction notice and the sale deed it is clear that what was transferred to the respondent was leasehold right – Therefore, the respondent is not entitled for refund of conversion charges – DDA is directed to process the respondent’s application for conversion of leasehold rights into freehold rights – Income Tax Act, 1961 – s. 269 UD. Deeds and Documents:
Interpretation of deeds and documents – Held: While construing documents, intention of the parties have to be ascertained.
Doctrines/Principles:
Principle of merger – Applicability of.
Disposing of C.A. No. 1534 of 2019 and dismissing C.A. No. 1533 of 2019, the Court
HELD: 1. In the present case, the appropriate authority has exercised its power under Section 269UD of the Income Tax Act for the purchase of the property by the Central Government. It is by exercise of statutory power that rights of lessee were purchased by Central Government. Central Government issued auction notice for auction of property in question. All bids in auction of a property are given normally to match the market price of the property. When the petitioner gave highest bid and became the successful auction purchaser, the auction purchase has to be treated on the basis of market value of the property. When the auction was made on the market value of the property, there was no question of claim of unearned increase by the DDA. On purchase of the property under Section 269UD of the Income Tax Act, the Income Tax department has already paid unearned increase to the DDA. Therefore, High Court has rightly held that DDA was not entitled to raise any demand of unearned increase from the writ petitioner. [Para 12][736-A-E]
2.1 A plain reading of clauses 1 and 2 of the Sale Deed does give impression that what was sold to the writ petitioner was all rights, titles, interests and appurtenances but Clause 3 of the same Sale Deed, gives a different impression. The principles of construction of documents are well settled. While construing the documents, intention of the parties have to be ascertained. In cases of ambiguity, several parts of the document have to be examined to find out what was really intended by the parties. The auction notice by which the property was put to auction, details of four properties were given. A perusal of the details of the properties indicate that property in question was included as Item No. 2, which was mentioned as “This is a lease hold residential plot”. So far as properties at Sl. Nos. 1, 2 and 3, the words mentioned were “leasehold residential plots” whereas with regard to property details given at Sl. No.4, it was mentioned that “all rights, titles and interests in the dwelling unit”, which, if contrasted with details of properties given at Sl. Nos. 1, 2 and 3 contains the intendment. Thus, there cannot be any doubt that property in question, which was put in auction was a property as leasehold rights residential plots. When property is auctioned, the terms and conditions of auction are binding on both the parties. When petitioner submitted his bid in pursuance of the auction notice, he was bidding for lease-hold residential plot with a double storied building. [Paras 15, 16, 17, 18 and 19][740-H; 741-A-C]
Sahebzada Mohammad Kamgarh Shah v. Jagdish
Chandra Deo Dhabal Deb and Others AIR 1960 SC
953 : [1960] SCR 604 – relied on.
2.2 While interpreting the Sale Deed, the auction notice has to be looked into to find out the nature of transaction. The Sale Deed cannot be read divorced to the auction notice or contrary to auction notice. Auction of a leasehold residential plot and auction of freehold residential plot carries different connotations. Leasehold rights are limited rights, which are subservient to freehold rights of a property. In giving bid for leasehold rights and freehold rights, different considerations are there. Clause 3 indicates that the property sold and transferred is in terms of the agreement dated 29.09.1988 entered into by the originl lease holders. Thus, they could best transfer their right, which was conferred to them by the Indenture dated 18.03.1970.[Para 19][741-C-E]
2.3 Present is a case of Government grant where Government has granted rights by Sale Deed to the writ petitioner. Section 3 of the Government Grants Act, 1895 provides for Government grants to take effect according to their tenor. Paragraph No.3 contains the intention of the granter to transfer the rights to the writ petitioner in terms of the agreement dated 29.09.1988. Clause 3 limits and explains the rights, which were given in Clause Nos. 1 and 2 of the Sale Deed, but it cannot be said that Clause 3 is totally contradictory to Clauses 1 and 2. The three clauses have to be harmoniously construed to give effect to the intention of the granter. Furthermore, auction notice provided for auction of leasehold rights, which is an important factor, which cannot be brushed aside while interpreting the Sale Deed. [Paras 20 and 22] [743-H; 744-E-F]
2.4 While finding out the tenor of grant as reflected in Sale Deed, the provisions of sub-section (1) of Section 269UE of Income Tax Act, 1961 as amended by Finance Act, 1993 has also to be taken note of. In sub-section (1) of Section 269UE in place of words “free from all encumbrances” the words “in terms of the agreement for transfer referred to in sub-section (1) of Section 269UC” have been inserted. When the Sale Deed was executed in favour of the auction-purchaser above amendment in Section 269UE sub-section (1) had already been inserted. The vesting of property in Central Government when is in terms of agreement for transfer referred to in sub-section (1) of Section 269UE at the time of execution of Sale Deed, the statutory mandate has been reflected in Clause 3 of the Sale Deed. Thus, the Court can neither ignore Clause 3 of the Sale Deed nor can hold that said Clause has to give way to Clauses 1 and 2 of Sale Deed. Thus, on true construction of Sale Deed, it is clear that all rights, titles and interests were not conveyed to the petitioner in the leasehold residential plot, when Clauses 1, 2 and 3 are read together. [Paras
24 and 25][745-D-G]
Radha Sundar Dutta v. Mohd. Jahadur Rahim & Ors. AIR 1959 SC 24 : [1959] SCR 1309; S.N.Ranade
v.Union of India and Another AIR 1964 SC 24 : [1964] SCR 885; T. Lakshmipathi and Others v. P. Nithyananda Reddy and Others (2003) 5 SCC 150 : [2005] 3
SCR 1119; Pramod Kumar Jaiswal and Others v. Bibi Husn Bano and Others (2005) 5 SCC 492 : [2005] 3 SCR 1119; M/s. Bansal Contractors (India) Ltd. & Anr. v. Union of India and Others 76 (1998) DLT 805 – referred to.
2.5 Present being a case of a Government grant by virtue of the Section 2 of the Government Grants Act, 1895, nothing in the Transfer of Property Act, 1882, shall apply or be deemed ever to have applied to any grant or other transfer. Issue being Government grant, the principle of merger may not be of much relevance. More so, having construed the Sale Deed as not having conveyed all rights and interests in the leasehold property, the principle of merger does not in any manner advance the claim of the writ petitioner. [Para 27][747-F-H]
2.6 Having held that writ petitioner is not entitled for refund of conversion charges, DDA is directed to process the writ petitioner’s application for conversion of the leasehold rights into freehold rights. [Para 29][748-E]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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