S.M Jhunjhunuwala, J.:— In this petition, the petitioners challenge the order passed by the appropriate authority under Chapter XX-C of the Income-tax Act, 1961 (for short, “the Act”).

2. The first petitioner is a company incorporated under the provisions of the Companies Act, 1956, and is, inter alia, carrying on business as builders and developers. Respondents Nos. 6 to 8 are the owners of land lying and being at village Nahur, District Bombay, along with the struc-ture standing thereon.

3. By an agreement dated May 28, 1993, between respondents Nos. 6 to 8 therein referred to as the “vendors”, and the first petitioner therein referred to as the “purchaser”, respondents Nos. 6 to 8 agreed that subject to a “no objection certificate” being granted by the appropriate authority under the Act, respondents Nos. 6 to 8 shall sell to the first petitioner the said immovable property for the consideration of Rs. 69,25,000 to be paid as set out therein.

4. As required by the provisions of section 269UC of the Act, the first petitioner along with respondents Nos. 6 to 8 filed a statement in the prescribed Form No. 37-I with the office of respondents Nos. 1, 2 and 3. Respondents Nos. 1, 2 and 3 by their letter dated July 13, 1993, called upon the first petitioner and respondents Nos. 6 to 8 to furnish documents and information which the first petitioner furnished. A letter dated September 6, 1993, was addressed by respondent No. 4 wherein reference to an order dated January 19, 1991, passed by the Competent Authority appointed under the Urban Land (Ceiling and Regulation) Act, 1976, has been made and it is pointed out that a prohibition has been imposed upon the trans-fer of the excess land so permitted to be held by respondents Nos. 6 to 8 and in the absence of requisite permission from the State Government, the application filed by the first petitioner and respondents Nos. 6 to 8 with respondents Nos. 1 to 3 is liable be treated as “non est”. The said letter has been replied by respondents Nos. 6 to 8 and it is, inter alia, contended that respondents Nos. 1, 2 and 3 have no power to declare any application “non est” but have power either to pass a purchase order under section 269UD or grant a “no objection certificate” under section 269UL of the Act. On September 28, 1993, an order was passed by the appropriate authority by which the said application made by the first petitioner and respondents Nos. 6 to 8 is treated as non est on the ground that the said agreement to transfer the said property is in violation of the provisions of the Urban Land (Ceiling and Regulation) Act and is void. The first petitioner, thereafter, applied for a review of the said order. By its order dated December 3, 1993, the appropriate authority rejected the said application for review. Both these orders dated September 28, 1993, and December 3, 1993, are challenged by the petitioners in this petition.

5. Shri Dastoor, learned counsel appearing for the petitioners, has submitted that the appropriate authority has been constituted by the Central Government under section 269UB of the Act and that section 269UC of the Act places restrictions on the transfer of any immovable property of the value exceeding Rs. 10 lakhs. In the submission of Mr. Dastoor, under section 269UC, no transfer of any immovable property of the value exceeding Rs. 10 lakhs is to be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property and the person to whom it is proposed to be transferred in accordance with the provisions of sub-section (2) at least four months before the intended date of transfer and a statement in the form prescribed is furnished to the appropriate authority. Mr. Dastoor has further submitted that under section 269UD of the Act, the appropriate authority has been empowered to make an order for the purchase, by the Central Government, of such immovable property at an amount equal to the amount of apparent consideration. Such order for purchase has to be passed within three months from the end of the month in which the statement in Form No. 37-I in respect of such property is received by the appropriate authority. When such order is made by the appropriate authority, such property, on the date of the order, vests in the Central Government in terms of the agreement for transfer. Mr. Dastoor has further submitted that in a case where the appropriate authority does not make an order under sub-section (1) of section 269ud for the purchase by the Central Government of an immovable property, or where the order made under sub-section (1) of section 269ud stands abrogated under sub-section (1) of section 269uh, the appropriate authority shall issue a certificate of no objection to the transfer of such immovable property for the consideration stated in the agreement. In the submission of Shri Dastoor, the appropriate authority has no jurisdiction to go into the object or the purpose of the transaction or its validity and legality and since the appropriate authority has failed to exercise jurisdiction under sub-section (1) of section 269ud within the stipulated period, the jurisdiction of the appropriate authority to direct purchase of the said immovable property by the Central Government stands extinguished and the first petitioner and respondents Nos. 6 to 8 are entitled to obtain the “no objection certificate” as contemplated by sub-section (3) of section 269UL of the Act. In support of his submissions, Shri Dastoor has put reliance on the judgment of the Delhi High Court in the case of Tanvi Trading and Credits P. Ltd. v. Appropriate Authority, [1991] 188 ITR 623 which has been affirmed by the Supreme Court in the case of Appropriate Authority v. Tanvi Trading and Credits P. Ltd., [1991] 191 ITR 307 as also on the judgment of the Division Bench of this court in the case of Irwin Almeida v. Union of India, [1992] 197 ITR 609.

6. Shri Sethna, learned counsel appearing for respondents Nos. 1, 2 and 3, has submitted that if the agreement for transfer of immovable property is contrary to law, the appropriate authority is entitled to treat the applica-tion made in respect thereof under section 269UC as non est. In support of his submission, Shri Sethna has put reliance on the judgment of the Division Bench of this court in the case of Madhukar Sunderlal Sheth v. S.K Laul, [1992] 198 ITR 594.

7. In the exemption order under section 20 of the Urban Land (Ceiling and Regulation) Act issued by the Deputy Secretary to the Government, Housing and Special Assistance Department, vide his letter No. ULC/P-245.MC/DC HSAD/D-2476 dated January 19, 1991, it is, inter alia, mentioned that respondents Nos. 6 to 8 shall not transfer the exempted land or any part thereof to any other person by way of sale, mortgage, gift, lease or otherwise except for the purpose of mortgage in favour of any financial institutions specified in sub-section (1) of section 19 of the Urban Land (Ceiling and Regulation) Act. It is further mentioned that notwithstanding anything contained in any of the other clauses thereof, if respondents Nos. 6 to 8 desire to transfer the exempted land to any other person by way of sale, mortgage, gift, lease or otherwise, respondents Nos. 6 to 8 would apply to the State Government for prior permission for such transfer. Relying upon the said exemption order, Shri Sethna submitted that it was obligatory upon respondents Nos. 6 to 8 to obtain the requisite permission as contemplated thereunder before entering into the said agreement to transfer the said property and since the requisite permission has not been obtained, the said agreement for transfer, being contrary to law, is void and the appropriate authority is justified in treating the said application as non est.

8. There is no merit in the submission made by Mr. Sethna. The permis-sion as contemplated by the said exemption order can even be obtained after entering into the said agreement for transfer and merely because respondents Nos. 6 to 8 did not obtain such permission prior to entering into the said agreement for transfer, it cannot be said that the said agreement for transfer entered into by and between the first petitioner and respondents Nos. 6 to 8 is contrary to law or void. The only right which section 269UD of the Act confers on 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 entered into by and between the parties to the agreement. Section 269UD is not concerned with the validity of the proposed sale. The appropriate authority cannot, on grounds of alleged infringement of law, exercise its right to purchase and, at the same time, refuse to grant the certificate sought by the seller. If the appropriate authority has reservations or doubts with regard to the legality of the proposed sale, it is open to the appropriate authority not to exercise its right to purchase. If an order of purchase is not passed within the stipulated period, then it is imperative and obligatory on the appropriate authority to issue the certificate under section 269UL(3) of the Act. Section 269UD does not contemplate the passing of any order similar to the order which has been passed by respondent No. 4 on behalf of the appropriate authority. The judgment of the Division Bench of this court in the case of Madhukar Sunderlal Sheth, [1992] 198 ITR 594 relied on by Shri Sethna has no applicability to the facts of the present case. Moreover, it has not been pointed out before the Division Bench in that case that the Supreme Court has affirmed the judgment of the Delhi High Court in the case of Tanvi Trading and Credits P. Ltd., [1991] 188 ITR 623. In view of the decision of the Supreme Court in the case of Appropriate Authority v. Tanvi Trading and Credits P. Ltd., [1991] 191 ITR 307, it is not possible for us to share all the observations made by the Division Bench of this court in the case of Madhukar Sunderlal Sheth v. S.K Laul, [1992] 198 ITR 594.

9. In the circumstances, the petition succeeds and the rule is made absolute in terms of prayers (a) and (b). There shall, however, be no order as to costs.

10. Shri Sethna applies for stay of operation of this order for a period of eight weeks from today. Prayer for stay is refused.