K.Shivashankar Bhat, J.— The question involved in these two writ petitions pertains to the scope of Chapter XX-A and Chapter XX-C of the Income Tax Act, 1961. The petitioner in C.W.P 2822/1986 is referred hereinafter as “Sunshine Travels” and the petitioner in the writ petition No. 2777/1986 is referred hereinafter as “P.P Singh”.

2. Sunshine Travels entered into an agreement on 30.4.1986, with Anil Vasudeva and others. Anil Vasudeva and others were the co-owners of the property in question. They were constructing a residential building on the said property. They are referred as “Sellers”. Sellers agreed to sell a portion of the building to the purchaser Sunshine Travels. The consideration shall have to be paid in the manner stated in the agreement out of which a sum of Rs. 50,000/- had already been paid under 4 cheques. The stages in which the balance shall have to be paid are narrated in the agreement. The following clause is quite relevant:—

“That under no circumstances, whatsoever, the possession of any portion of the building herein agreed to be acquired by the Purchaser shall be given by the Seller until and unless all payments required to be made in terms of this agreement alongwith any interest have been fully made to the Sellers.”

Various other clauses as to how the building shall have to be maintained, how the taxes are to be paid, how the increased burden shall have to be borne by the parties are not necessary for us to consider. However, clause 15 of the agreement stated that the portion of the building agreed to be acquired by Sunshine Travels shall be transferred in their favour or in favour of their nominee within a period of 3 years from the date of the agreement on payment of the balance sum of Rs. 1 lac agreed to be paid to the sellers under the agreement at the time of transfer.

3. According to the Revenue the transfer of the building in favour of Sunshine Travels could take place only when this clause is satisfied, in other words when the entire amount is paid and the sale deed is registered.

4. On 1.5.1986 Form 37-EE under Section 269 AB (2) of the Act was filed. This was under Chapter XX-A. On 1.10.1986 Chapter XX-C was brought into force in Delhi. On the basis of the New Chapter XX-C, an order was made on 15.12.1986 acquiring the property in question. The petitioner immediately approached this court by filing the present writ petition on 24.12.1986 Petitioner questioned the validity of the relevant provisions of Chapter XX-C. Petitioner also sought the quashing of the order dated 15.2.1986 made under Chapter XX-C. Petitioner also sought the quashing of Rule 48L of the Income Tax Rules because it purports to making the provisions retrospective even though the Act (Chapter XX-C) did not declare its provisions retrospective.

5. The validity of Chapter XX-C has been substantially up-held by the Supreme Court in C.B Gautam's case (199 ITR 530). Therefore, the petitioner confined the arguments as to the application of the provisions of Chapter XX-C to the transaction in question. The petitioner contended that Chapter XX-C was not retrospective and did not apply to the agreements entered into prior to the date of its application to an area. Since the relevant agreement involved in the writ petition was entered into on 30.4.1986, the transaction would come within the provisions of Chapter XX-A of the Act.

6. Before considering the question of law it is necessary to note the effect of the agreement dated 30.4.1986 The sellers/owners agreed to sell a portion of the building put up by them to the petitioner Sunshine Travels. The sale consideration shall have to be paid on various dates. However, the purchaser shall be entitled to have the building transferred in favour of the purchaser on payment of the entire sale consideration. This transfer referred in clause 15 is the transfer as normally under. stood for the purpose of registration i.e to say a transfer effected by way of a sale deed; that is clear from the reading of the entire clause 15 which refers to the several formalities to be completed and the payment of transfer charges, registration expenses and stamp duty etc. However, the agreement proceeds on the assumption that the purchaser will be entitled to the possession of the portion of the building agreed upon to be sold to the purchaser on payment of the entire sums referred in the agreement. In other words the agreement created a right in the purchaser with respect to the building put up and this right had the effect of enabling the enjoyment of the property. At any rate the agreement certainly has the effect of transferring or enabling the enjoyment of the right with respect to the building to be put up. This aspect shall have to be borne in mind while considering the various provisions of Chapter XX-A and XX-C.

7. In the writ petition filed by P.P Singh and others there was an agreement dated 9.8.1985 P.P Singh was the ‘Vendor’ under the agreement, Sushil Kumar Vohra and others were collectively called the ‘Vendee’. Vendor agreed to convey the Perpetual Leasehold rights in the plot of land in question alongwith the ownership rights in the superstructure constructed thereon. Vacant physical possession of the property was to be handed over to the vendee at the time of execution and registration of the sale deed. Thirdly, thereafter the entire consideration was paid by the vendee to the vendor and possession was handed over to the vendee. A supplementary agreement was executed on 12.8.1985 and all the payments were made by pay orders and the petitioner has produced the certificate of the bank also, to substantiate the assertion that the sale consideration has been paid in terms of the supplementary agreement. The possession, as already noted, was handed over to the vendee in August, 1985. Having regard to the material on record there can be no doubt that this supplementary agreement was a bonafide agreement entered into by the parties and the payments have been made in full and possession has been obtained by the vendee on 12.8.1985 itself. However, the appropriate authority held that the transfer was not complete and the transfer was to take place only after 1.8.1986 when Chapter XX-C came into force. He made an order on 15.12.1986 ordering the purchase of the property by the Central Government at an amount equal to the apparent consideration for the transfer of the property in question. Immediately, the petitioners approached this court.

8. The short question is whether the transfer for the purposes of Chapter XX-A and Chapter XX-C took place prior to 1.10.1986 or thereafter.

9. Having regard to the agreement and the supplementary agreement there can be no doubt that the possession of the property has been handed over to the vendee and he has been in enjoyment of the same. The agreement created a right in the vendee to enjoy the property. Even assuming that there was only a part performance of the contract, the said part performance was clearly the one falling within Section 53-A of the Transfer of Property Act. In the circumstances it was contended that the case of the petitioner came squarely within the provisions of Section 269-AB in Chapter XX-A of the Act.

10. The concept of “transfer” is defined in Section 269-A(h), in Chapter XX-A, as also in section 269 UA (f) in Chapter XX-C. For the purpose of these chapters, allowing the possession of a property to be taken or retained in part performance of a contract of the nature referred in Section 53-A of the Transfer of Property Act, also is considered as a transfer. The Revenue however, contends that the transfer should be a real transfer and a mere agreement to sell is not a transfer & if the agreement has not fructified in the execution of sale deed before 1.10.1986, Section 269 UC will be attracted.

11. In both the writ petitions on facts we are of the view that the agreements in question have enabled the vendees to enjoy the respective properties or at any rate they have enabled the vendees to enjoy certain rights with respect to the properties in question and those rights are deemed to be immovable properties both under Chapter XX-A and XX-C.

12. To understand the concept of immovable property as well as the concept of transfer it is necessary to refer to a few provisions. However, we have confined our discussions to one aspect of the right created under a transaction referred in Section 269 AB (1)(b).

13. Section 269A(2)(e) defines the term ‘immovable properties’. Its sub-clause (i) refers to the tangible immovable properties such as land or building. Sub-clause (ii) refers to certain rights which are brought into the scope of the term ‘immovable properties’; in other words, rights refused in sub-clause (ii) are also immovable properties for purposes of Chapter XX-A of the Act. To understand the said rights referred in Sub-clause (ii), one has to refer to Section 269 AB (1)(b) as the Section is worded. In other words certain rights are to be considered as immovable properties by reading Sections 269 A (2)(e)(ii) and Section 269 AB (1)(b) together and these rights are covered by Section 269 (2) (h) (ii).

14. As per Section 269AB (1)(b), inter alia, every transaction whereby a person acquires any rights in or with respect to any building which is to be constructed not being a transaction by way of sale, exchange or lease of such building or part of a holding which is required to be registered under the Registration Act, 1908, should be reduced to writing etc. and be registered with the competent authority. While clause (a) of Section 269AB (1) covers a transaction involving possession, as referred in Section 53A of Transfer of Property Act, clause (b) spreads its net wider, to cover other kinds of transactions out of which, one transaction is a transaction whereby a person acquires any right with respect to a building to be constructed. This right with respect to a building to be constructed, is also ‘immovable property’, as this right is referred in the definition of the said term in Section 269 A (e) (ii). For the sake of convenience, we have limited the reference to the words in Section 26AB(1)(b) to the extent of their relevance to the facts before us. Therefore, if under a transaction (other than the transactions referred in the words bracketed) a person acquires any right with respect to a building to be constructed, that right is to be considered on par with the right created by an agreement covered by Section 53-A of the Transfer of Property Act, because Section 269 AB (1)(a) ropes in transactions to which Section 53-A of Transfer of Property Act applies.

15. The right with respect to a building to be constructed created under a transaction, as is referred in Section 269 AB(1)(b) being an immovable property is dealt in Section 269 (2)(h)(ii); in relation to such a right (i.e to say, in relation to such an immovable property), transfer means inter alia, the doing of any thing which has the effect of enabling the enjoyment of such property. In other words, if under an agreement, a right is created with respect to a building to be constructed enabling the enjoyment of the said building, the agreement is considered a ‘transfer’. The very doing of anything which has the effect of enabling the enjoyment of a building to be constructed, under a transaction, has been brought into the control of Chapter XX-A. The liability created by Chapter XX-A gets attached to such a transaction. The very transaction of that nature incurs the liability, which any other transfer incurs under Chapter XX-A.

16. Thus, the transaction which involves transfer of a right enabling the transferee to enjoy the building to be constructed becomes a statutory transfer for purposes of Chapter XX-A and such a ‘transfer’ is exposed to the statutory steps contemplated by Section 269-C. If there has been an under valuation of the apparent consideration, the Competent Authority may initiate proceedings for the acquisition of the property under Chapter XX-A. Section 269-D provides for issuance of a preliminary notice within nine months of the registration of the instrument of transfer under the Registration Actor under Section 269-AB. After this period of nine months, power to initiate proceedings under Chapter XX-A ceases. Other provisions provide for the filing of objections to the notice and hearing of objections, making an order of acquisition, filing of an appeal and further appeal against the order, vesting of property in Central Government etc. Chapter XX-A is a self contained Code governing these ‘transfers’ as defined in Section 269 A (2) (e).

17. The difficulty of understanding the concept of ‘transfer’ as defined in Section 269 A (2)(h), is the difficulty due to the abstract rights covered by the statutory definitions. If the scope of Chapter XX-A becomes clear and a transaction falls within its net, no argument is needed to conclude that Chapter XX-C would not govern such a transaction, provided the transaction is prior to the date of the coming into force of Chapter XX-C.

18. The width of the relevant terms referred in these two Chapters, is almost the same. The term ‘immovable properties’ is defined in Section 269 UA (d); Sub-clause (ii) is on par with Section 269A(2)(e); similarly the concept of ‘transfer’ defined as per section 269 UA (f) in Chapter XX-C is broadly similar to the language employed by Section 269 AB (2)(h) in Chapter XX-A. The law became more stringent under Chapter XX-C, as compared to the provisions of Chapter XX-A.

19. Any law which operates as a restriction on the rights of persons has to be confined to operate strictly within the area sought to be covered by the language of the said law. If, by the time Chapter XX-C came into force, there has been already a transaction resulting in the ‘transfer’ as defined, the Court cannot read Chapter XX-C so as to make it retrospective to operate on the said transaction or ‘transfer’. The term ‘transfer’ has to be considered in the light of the provisions operating at the time of the ‘transfer’.

20. If a ‘transfer’ falling under Chapter XX-A has not been subjected to any acquisition proceedings under the said chapter, the immunity accrued to such a transfer under the statute cannot be easily defeated by enlarging the scope of subsequently enacted Chapter XX-C, when, the wording of Chapter XX-C clearly and unambiguously does not purport to operate on the earlier transactions. Rights and liabilities created or incurred under a prior law is always considered as continuing to exist, unless the subsequent law has manifestly expressed a contrary intention. The learned counsel for the petitioners advanced a broader proposition to the effect that Chapter XX-C is not made retrospective so as to operate on all pre-existing agreements. We do not think it is necessary for us to consider this proposition, in view of our understanding of the statutory term ‘transfer’, as defined in the two chapters XX-A and XX-C. If the transactions reflected by the two agreements before us are ‘transfers’ as defined in Chapter XX-A, then, provisions of the said Chapter would have already operated on the two agreements, leaving nothing for the application of the provisions of Chapter XX-C. The main contention of the Revenue is that, there were no ‘transfers’ earlier to the bringing into force of Chapter XX-C and the provisions of Chapter XX-C would govern all ‘transfers’ that take place after the said Chapter came into force; on this there should not and cannot be any doubt, because Section 269 UC says that no ‘transfer’ shall be effected except, as stated in the said provision. But, if ‘transfer’ has already been effected, this provision cannot operate on it. As already found by us, the term ‘transfer’ and referred here, is not a transfer as ordinarily understood and this term is not confined to the ‘transfers’ referred in Transfer of Property Act. The term has a wider connotation—both under Section 269UA (f) and Section 269 A (2)(h), read with the relevant definitions.

21. The broader proposition advanced by the learned counsel for the petitioners finds support from some of the observations made by a Bench of this Court in Capt. Sanjeev Sethi… v. Union Of India & Ors.…; 1959 ITR 338. Owner of the property entered into an agreement in the year 1979 under which the developer had to put up a multi-storeyed residential building, in which, the owner was to be allotted 35% of the saleable area. A series of events, involving litigations took place subsequently. An order also came to be passed under Section 269UD(1) under Chapter XX-C ordering the purchase of a flat by the Central Government; this was challenged before this Court. This court held that, the sale of the flat leading to the impugned order under Section 269UD was in effect, the giving effect to the agreements of the year 1979 and therefore Chapter XX-C was not applicable to the transaction. All the subsequent events happened after the year 1979 were traced to the agreement of the year 1979, though another builder had stepped into the shoes of the original builder, but the right to the allotment of the flats under the earlier agreement continued to exist. Further it was held that since Chapter XX-C was not attracted, Rule 48L also was not applicable and that the said Rule had no retrospective operation and would not govern an agreement entered into prior to 1.10.1986 (the date when Chapter XX-C came into force), “specially to such cases where the provisions of Chapter XX-A were applicable like the present case.”

22. The learned counsel for the Revenue sought to distinguish this decision by pointing out that the said decision was rendered prior to the decision of the Supreme Court in C.B Gautam's case (199 ITR 530) and that some of the observations of the Supreme Court in C.B Gautam's case by necessary implication over rule the ratio of the decision of this Court in Capt. Sanjeev Sethi's case.

We do not think so, as will be presently seen.

23. The decision of this court in Capt. Sanjeev Sethi's case stood affirmed by the Supreme Court when the Special Leave Petition No. 8451/1993 filed by the Revenue was rejected, on 23.8.1993 No doubt, dismissal of a Special Leave Petition may not always operate as a binding precedent affirming the ratio of the decision of the High Court. By that time the Supreme Court had decided C.B Gautam's case on 17th and 27th November, 1992.

24. The learned counsel for the revenue laid great emphasis on the facts of C.B Gautam's case. In the said case, owner of the property had entered into an agreement to transfer the leasehold rights on 4.2.1985 (prior to Chapter XX-C); a sum of Rs. 4.5 lakhs was paid as the advance price. There was also an agreement for the construction of a structure on the plot. On 9.7.1986, a fresh agreement to sell the residential house put up on the plot was executed between the parties, wherein the owner agreed to transfer to Gautam his leasehold rights alongwith the ownership of the construction; on 1.10.1986 Chapter XX-C was brought into force, and an order for purchase by Central Government came to be passed under the said Chapter. This was challenged on many grounds, but at the time of the arguments, the learned counsel confined the ground of attack based on the principles of natural justice. The Supreme Court held that before an order of purchase is made under Chapter XX-C, it was, necessary to hear the affected persons and the principles of natural justice are to be read into the procedural requirements (vide 199 ITR 530 at 553). There was also an argument that provisions of Chapter XX-C were invalid as they confer unfettered discretion on the authorities.

25. This challenge also failed (vide: at page 551). However, the Supreme Court struck down the last part of sub-section (1) of Section 269 UE in so far as it provided that the property in respect of which an order is made under Section 269 UE shall vest in Central Government “free of all encumbrances”, (vide at page 557). There are a few more observations, with which we are not concerned here.

26. The learned counsel for the Revenue argued that even though the agreement in question in C.B Gautam's case was prior to 1.10.1986, the Supreme Court proceeded as if Chapter XX-C applied to the transaction; according to the learned counsel, this is a clear indication that all transfers to be effected after 1.10.1986 in pursuance of an earlier agreement, are governed by Chapter XX-C.

27. The contention of the learned counsel for the Revenue assumes that no agreement can be considered as a ‘transfer’ as defined in Chapter XX-A or Chapter XX-C. The argument overlooks the definition of the terms ‘transfer’ and ‘immovable property’. In Gautam's case, the agreement entered into prior to 1.10.1986 was not a ‘transfer’ as defined in these two chapters; the ‘transfer’ took place only after 1.10.1986 Obviously there was no occasion for the Court to apply the definition of the terms ‘transfer’ and ‘immovable property’.

28. On the very day judgment in C.B Gautam's case was rendered, the court had also pronounced its decision in another case, Rambai Maujanath Nayak v. Union of India; 201 ITR 422. The court considered the scope of Chapter XX-A, and in so doing made the following observations at page 431:—

“The Scheme of Chapter XX-A clearly shows that the acquisition is not merely of the proprietary rights in an acquired property but also of the possessory rights therein which would undoubtedly include the tenancy rights. This also finds support from Section 269 AB which was inserted subsequently. It requires registration of certain transactions which permit possession of any immovable property to be taken or retained and whereby a person acquires any rights in or with respect to any building or part of it, which has been constructed or which is to be constructed, not being a transaction by way of sale, exchange or lease thereof which is required to be registered under the Registration Act. This provision clearly indicates that any transaction conferring a right to take or retain possession of the immovable property or whereby a person acquires any rights therein is also governed by Chapter XX-A.”

These observations bring out the wide scope of Section 269 AB. The creation of any right enabling the taking up the possession for enjoyment of a building to be put up, under a transaction, would, therefore, attract the application of Chapter XX-A, just like any other ‘transfer’, including, a transfer involved in an agreement referred in Section 53-A of Transfer of Property Act.

29. Mr. Rajendra relied on a decision of a Division Bench of Gujarat High Court in Shantivan Corporation v. Sub-Registrar & others; 189 ITR 583. There Chapter XX-C was made applicable w.e.f 1.6.1989 The sale deed was executed on 29.5.1989, and it was lodged for registration on 30.5.1989 Inspite of these facts, the Court held that, ‘transfer’ took place after 1.6.1989, as there was no registration of the sale deed till that date and therefore, Chapter XX-C governed the transaction. It is necessary to note here that, notification applying Chapter XX-C to the area in question had been issued on 8.5.1989 itself. The court proceeded on the assumption that real ‘transfer’ took place only after the registration of the sale deed (which was after 1.6.1989). The real basis for the findings are found at page 589 thus:

“It is thus clear from the above material terms of the document that the ownership in the said property was to be transferred only on the payment of the entire amount of consideration, i.e when all the postdated cheques including the last post-dated cheque were honoured. The terms of the document clearly show that the title in the property was not intended to be passed until the amount of consideration was fully, received by the transferor. When the said document which was executed on May 29, 1989, provides that the transaction was to be completed only on the payment of the entire amount of consideration and that, thereafter, only the transferee was to be treated as owner of the property, it can never be said that there was transfer of ownership amounting to sale prior to June 1, 1989. It is clear to us from the terms of the deed that the sale had not become effective before June 1, 1989, and, therefore, even apart from the question of the document not being registered, the terms of the deed negative the theory of any transfer of the property having been effected prior to June 1, 1989. As per the terms of the deed, even the possession was not to be transferred before the last payment was received towards the consideration amount. We, therefore, hold that no transfer of property by way of sale had taken place prior to June 1, 1989, so as to make the provisions of Chapter XX-C of the Act inapplicable to the said property as contended by the petitioner.”

30. We do not think it necessary for us to express our agreement or disagreement with this decision. The court found, as a fact that there was no ‘transfer’ as defined in Chapters XX-A or XX-C, prior to the coming into force of Chapter XX-C. If so, necessarily the ultimate conclusion has to be that Chapter XX-C governed the transfer.

31. Petitioners also rely on the decision of a learned Judge of Calcutta High Court in Writ Petition No. 2552 of 1986 decided on 13.1.1994 (Chandravadan Desai & Others v. Appropriate Authority & Others) and a decision of a learned Judge of Rajasthan High Court in Keshav Singh & Another v. Valuation Officer; 195 ITR 435.

32. In view of the statutory definitions of the relevant terms i n Chapters XX-A and XX-C, we have no hesitation in holding that both the agreements in these two writ petitions enable the respective vendees to enjoy the houses to be constructed under the agreements and therefore constituted transfers prior to the enforcement of Chapter XX-C and that these ‘transfers’(agreements) were governed by the provisions of Chapter XX-A.

33. Consequently, these writ petitions are allowed. The orders made under Chapter XX-C for the purchase of the properties in question and consequential vesting in the Central Government are quashed.

Rule made absolute.