By consent this mater has been taken up for final hearing and learned counsel for the parties heard.
2. The petitioner is aggrieved by the order of the 1st respondent passed on 29-11-94 on the statement in Form 37-1 filed by the petitioner on 31-8-1994, for the transfer of the property located at 33, Rudra Road, St. Thomas Mount, Madras. By that order the authority did not decide to acquire the property. Neither did it issue a No objection certificate for the transfer of the property to respondent 2. The authority's decision was merely to lodge the statement.
3. The reason given for this unusual order is that according to the authority, the land sought to be transferred was in excess of the Ceiling Limit laid down in Tamil Nadu Urban Land (Ceiling and Regulation) Act 1978.
4. This order is wholly unsustainable. The Authority's powers and jurisdiction are limited to safeguarding the interests of the Revenue in accordance with the provisions of the Income Tax Act. It can either decide to acquire the property in accordance with Cl.XX C or grant a non-objection Certificate. If the Authority has doubts about the petitioner's right to the property proposed to be transferred, it may decide not to acquire the property. It cannot thereafter prevent the petitioner from dealing with the property by declining to grant a No objection certificate.
5. The Supreme Court, in the case of Appropriate Authority and another v. Tanvi Trading and Credits Pvt Ltd. and others (191 ITR 307) dealt with this issue and held:
“We agree that two alternatives are open under the Scheme of the Legislation (1) the Union of India through the appropriate authority could buy the property, or (2) in the event of its decision not to buy it, has to issue a “No objection certificate” leaving it open to parties to deal with the property”
6. A perusal of the order of the Authority shows that it has misconceived its role under the Act. Breaches of other laws by the owner, or limitations placed by other enactments on the extent of the property that can be retained by the owner may be relevant for deciding as to whether the Authority should acquire the property. The Authority however cannot itself proceed to penalise the owner by with-holding the No Objection Certificate even after deciding that the property is not to be acquired.
7. The No Objection Certificate only signifies that the authority had decided not to acquire the property and nothing more. Such a certificate is necessary only for the purpose of registering the document of transfer. Such a certificate neither confers immunity from penal or other action for violation of other laws, nor does it have the effect of validating a transfer made in contravention of any other statute.
8. The view of the Authority that the land sought to be transferred is in excess of the ceiling limit, it is submitted by the learned counsel for petitioner, is also erroneous. Counsel referred to certain documents to which there is no reference in the impugned order. The petitioner may produce before the Authority the documents relied on by him if the same had not been produced earlier, to show that the land is not in excess of the ceiling limit.
9. The impugned order of the Authority is set aside. The Authority shall reconsider the matter in accordance with this order within a period of 8 weeks from the date of the receipt of a copy of this order if after such reconsideration the Authority decides not to acquire the property, the Authority shall issue the ‘No Objection Certificate’ to the petitioner.