Civil Revision Application No.271 of 2003

13th January, 2005

Petitioner Counsel: A. S. JAISWAL
Respondent Counsel: S. Y. DEOPUJARI

Cases Cited:
Diwan Rahul Nanda Vs. Nitish G. Kotak, 1998(2) ALL MR 415=1998(3) Mh.L.J. 35 [Para 1,2,3,4,7]
DFL Universal Ltd. Vs. Appropriate Authority, 2000(5) SCC 552 [Para 3]

JUDGMENT

JUDGMENT :- By this Civil Revision Application under section 115 of Civil Procedure Code, the original defendant challenges the order dated 26-09-2003, by which the Civil Judge, Senior Division, Nagpur has rejected their application at Exh.35, for rejection of plaint in Special Civil Suit No.733/1996, on the ground that, the provisions of Section 269 UC to Section 269 UL of Income Tax Act, 1961 has not been complied with, though the value of the immovable property subjected to alleged agreement is more than Rs.5 lacs. The facts in brief are, that the present non-applicant filed Special Civil Suit No.733/1996, for decree of specific performance, stating that there is oral agreement with late husband of applicant no.1 and father of applicant nos.2 to 4. The said agreement is dated 29-10-1994, by which the deceased agreed to sell his house situated at plot no.4, Gazetted Officers Colony, Civil Lines, Nagpur to the present non-applicant for a total consideration of Rs.12 lacs, and at that time, he paid Rs.15,000/- as earnest money and the balance amount was to be paid at the time of sale deed. The present revision applicants on 13-09-2003, moved an application under Order 7, Rules 11(d) of Civil Procedure Code, vide Exh.35, for rejection of plaint, contending that the oral agreement of which specific performance is sought for, is void in the eye of law, and cannot be enforced. The said application was opposed by the original plaintiff, who pointed out that the provisions of Income Tax Act do not bar such suit and there is no question of rejecting the plaint. It appears that the parties filed their respective written notes of argument before the learned Trial Court, and on 26-09-2003, the trial Court rejected that application. The trial Court has considered the fact that, the said provisions have been removed from the statute by subsequent amendment and has also considered the case law i.e. 1998(3) Mh.L.J. Pg. 35 : [1998(2) ALL MR 415] (Diwan Rahul Nanda Vs. Nitish G. Kotak), and has found that the alleged defect can be removed/rectified within further period of 15 days, which the appropriate Authority under Income Tax Act, could grant for that purpose, and thus there was possibility of making rectification in the present matter. It is in this view of the matter that, the learned Trial Court rejected that application.

2. In this Revision, Advocate A. S. Jaiswal, by placing reliance upon the judgment of Diwan Rahul Nanda Vs. Nitish G. Kotak (Supra) contended that as there was no written agreement, and as there is total bar by Section 269 UL of Income Tax Act on registration of any document, if the value of the property to be transferred exceeds the prescribed value, unless a certificate from appropriate Authority has been obtained, and as there is no scope of obtaining such certificate the present non-applicant/plaintiff cannot seek specific performance of such agreement. He has relied upon the observations made in paragraph no.8 of this judgment, to support of his contention. He further states that perusal of the plaint, particularly paragraph no.26, shows that the cause of action has accrued on 29-10-1994, and hence application for permission to obtain no objection certificate ought to have been made within 15 days, as contemplated by Section 269 UC(3)(iii), read with Rule 48(L) of the Rules, and as that has not been done, the suit cannot be decreed and plaint ought to have been rejected. He contends that there is no question of Civil Court issuing such directions to the parties while passing decree in the suit, as the proceedings before the Income Tax Authorities are totally of different nature, and the legal heirs of the deceased will be put to risk of losing the property itself, at the rate arrived at by the Income Tax Authorities. He further contends that the subsequent amendment to the provisions of Income Tax Act, have got no relevance in so far as the subject matter involved in the suit is concerned. He contends that the trial court has erred in observing that, because of subsequent amendment, no such permission is necessary.

3. As against this, Advocate S. Y. Deopujari, appearing for the respondent/plaintiff, states that, the judgment of this Court in Diwan Rahul Nanda Vs. Nitish G. Kotak (supra), is no longer good law, and he places reliance upon the judgment of Hon'ble Apex Court, reported in 2000(5) SCC Pg. 552 (DFL Universal Ltd. Vs. Appropriate Authority and anther), to contend that even oral agreement for sale is legal and valid. He contends that there is no scope for making any application under Order 7 Rule 11(d), in the facts and circumstances of the case. He further states that in plaint paragraph no.26, it has been contended that the transfer was to be completed on or before 29-04-1996, and hence it was the date of intended transfer. He further states that the provisions of Income Tax Act, were amended w.e.f. 01-08-1995, and ceiling of Rs.5 lacs as value of immovable property imposed by Section 269 UC was raised to Rs.20 lacs, and as such by the intended date of transfer no permission or no "no objection certificate" was required. He therefore, contends that, even on this ground said application ought to have been rejected.

4. I have heard both the sides. It is apparent that this Court while deciding the case reported at 1998(3) Mh.L.J. Pg. 35 : [1998(2) ALL MR 415], was considering the requirement of written agreement between the parties, and it found that, if there is no written agreement, the alleged oral agreement for specific performance is void ab-initio and plaintiff cannot seek specific performance of such agreement. The relevant observations contained in paragraph no.8, read as under :

"8. I have considered the arguments of both the counsel carefully. Under section 269UC of the Income Tax Act, it is provided that not withstanding anything contained in the Transfer of Property Act, no transfer of any immovable property shall be effected except after an agreement for transfer is entered into between the parties in accordance with the provisions of sub-section (2), at least 4 months before the intended date of transfer. Sub-section (2) provides that the agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the parties. The agreement in the present case is admittedly an oral agreement. Thus, obviously no party can claim any relief on the basis of such an agreement. On the relevant date, the agreement had to be registered under section 269UC as the value of the suit property was more than Rs.10 lacs. Admittedly, there was no written agreement. Under section 269UL of the Income Tax Act, there is a complete bar on the registration of any document purported to be transfer immovable property exceeding the value prescribed under section 269UC, Unless a certificate from the appropriate authority has been obtained to the effect, that it has no objection to the transfer of such property. This certificate has to be furnished along with the document for registration. Admittedly then consideration for the said property was either Rs.1,90,00,000/- or Rs.74 lacs. There is absolutely no dispute between the parties that the consideration was more than Rs.10 lacs. Thus, prima facie it has to be held that the agreement of which the specific performance is sought was void ab initio. The plaintiff cannot seek specific performance of such an agreement. This is so as the Court would not order the specific performance of the agreement which would lead to an infringement of the law."

5. Perusal of the provisions of Section 269UC, show that there can be no transfer of any immovable property of value exceeding Rs.5 lacs, except if, an agreement for transfer is entered into between the parties in accordance with sub-section (2) of the section. Such an agreement is also required to be entered into at least 3 months before the extended date of transfer. Sub-section (2) of Section 269UC, requires such agreement to be reduced to writing in the form of statement by all the parties to transfer and it is required to be in prescribed form containing such particulars as are prescribed, and also it is required to be verified by sub-Section (3) of Section 269UC. Thus this agreement in prescribed form is required to be furnished to appropriate Authority in the manner prescribed under Rule 48L of the Rules.

6. These provisions are considered by the Apex Court in its judgment between DLF Universal Ltd. Vs. Appropriate Authority and another. For the purpose of present transfer, perusal of paragraph nos.7 and 8 of this ruling is sufficient. The said paragraphs, read as under :

"7. Agreement for transfer and statement in Form 37-I are two different documents. As rightly held by the High Court agreement for transfer can be oral as well as in writing but then this agreement for transfer has to be reduced to writing in Form 37-I. The High Court has held that in certain sections in Chapter XX-C "agreement for transfer" in fact means statement of Form 37-I, as mentioned in sub-para (iii) of its findings.

8. The question that arises for consideration is if the period of 15 days, as mentioned in Rule 48-L, is to be calculated from the date when a prospective buyer applies for allotment of a flat or from the date when a regular agreement called the "Apartment Buyers Agreement" is entered into between the transferor and the transferee or when the agreement for transfer is reduced to writing in Form 37-I. The appropriate authority has held that 15 days are to be counted from the date when booking of the flat is done by DFL or Ansal as the letter for booking and the official endorsements thereon constitute a regular agreement between the parties. This question, however, becomes academic if we hold that 15 days' period is to be counted from the date when agreement for transfer is reduced to writing in the form of statement (Form 37-I). Can it be said that under Rule 48-L the term "agreement for transfer" mentioned in clause (c) of sub-rule (2) thereof in fact means statement in Form 37-I ? If we take the literal meaning, this provision will become rather otiose. An "agreement for transfer" is inter parties and that can always be changed. That the term "agreement for transfer" in fact means statement in Form 37-I, we can get a clue from Section 269-UK which says that no person shall revoke or alter an agreement for the transfer of an immovable property to transfer such property in respect of which a statement has been furnished under section 269-UC. Reference to this statement is certainly to Form 37-I. It would mean that agreement for transfer can be changed by the parties but they have been forbidden from doing so after statement in Form 37-I, has been furnished. We have, therefore, to give an appropriate meaning to the term "agreement for transfer" appearing in clause (c) of sub-rule (2) of Rule 48-L and cannot just adopt a literal meaning. Foundation for exercise of jurisdiction by the appropriate authority under section 269-UD, is the statement in Form 37-I and not agreement for transfer."

7. Thus, it is apparent that agreement for transfer and statement in Form 37-I, required by section 269UC(3), are two distinct documents. The Hon'ble Apex Court has endorsed the finding of High Court, that agreement for transfer can be oral as well as in writing, but then this agreement has to be reduced into writing in Form 37-I and period of 15 days as mentioned in Rule 48-L, is to be calculated from the date of statement in Form 37-I. It will thus be seen that this court has in judgment reported at 1998(3) Mh.L.J. Pg. 35 : [1998(2) ALL MR 415], proceeded under the presumption that the agreement for transfer cannot be oral and it must be in writing. However, the Hon'ble Apex Court, has pointed out clear distinction between the agreement of transfer and statement in Form 37-I. Such distinction has not been brought to the notice of the learned Single Judge, while deciding the above case, thus the observations made therein cannot be read as laying down correct law, after the decision of the Hon'ble Apex Court, mentioned Supra. It is thus, clear that the agreement for transfer between the parties can very well be oral. The insistence of the present revision applicant, that suit for specific performance based upon the alleged oral agreement cannot be entertained, is therefore, without any merit and is liable to be rejected. The question whether there is any oral agreement between any parties or not, is a debatable issue, which the learned trial court would be required to adjudicate upon, after the parties lead their respective evidence, and application under Order 7, Rule 11(d), cannot be entertained for that purpose.

8. In so far as the argument about the cause of action mentioned in plaint paragraph no.26, is concerned, it is apparent that the non-applicant/plaintiff has given initial date of oral agreement as the date on which the cause of action has accrued, and that date is 29-10-1994. The agreement was to be performed within a period of 1 1/2 years, and hence the later date i.e. 29-04-1996, has also been mentioned in that paragraph to contend that on the said date the defendants i.e. the present revision applicants failed to execute and register sale deed, and therefore, the cause of action also accrued on that date. That, there is also reference to the registered notice sent by the original plaintiff to the original defendants for that purpose. It will thus be seen that, whether it was possible for the parties to obtain necessary no objection certificate as contemplated by Section 269UL(1) of Income Tax Act, 1961 before 29-04-1996, or who is responsible for not obtaining that permission or who can be blamed for not obtaining that permission and what is it's effect in the facts of the present case, will all be required to be adjudicated upon as it mostly relates to the province of appreciation of evidence. Thus application under order 7 Rule 11(d), could not have been entertained even for this purpose.

9. The learned Counsel appearing for the revision applicants, has pointed out that the trial court has held that, in view of the subsequent removal of these provisions of section 269UA to 269UL, from the statute book, requirement of obtaining no objection certificate, no longer exists and therefore, application under Order 7, Rule 11(d), is not maintainable. Advocate for the respondent/plaintiff has pointed out that provisions of Section 269 UC(I) have been amended w.e.f. 1-8-1995, and the properties with value exceeding Rs.20 lacs were brought into its compass. It appears that initially the said figure of value of immovable property was Rs.5 lacs, and from 1-8-1995 it has been enhanced to Rs.20 lacs. The plaintiff here has pleaded in his plaint that, value of the property is agreed between them was Rs.12 lacs. Thus it is more than 5 lacs and less than 20 lacs. Hence, the effect of this amendment on oral transaction between the parties or what will be the relevant date, therefor are of the question which matter the learned trial court will be required to consider while appreciating the evidence of parties.

10. In any case, it is thus clear that no interference is called for in the impugned order delivered by the trial Court on 26-09-2003. The said order is therefore maintained. However, the issue about the effect of the amendment to the provisions of the Income Tax Act, as discussed above is left open for adjudication by trial Court, after the parties lead their respective evidence, and at the stage of final arguments. Subject to above, the Civil Revision is accordingly dismissed, with no order as to costs.

Order accordingly.