Structured Summary of the Opinion — K.A. Swami, A.C.J.

Factual and Procedural Background

This appeal challenges an order dated 1.3.1993 passed by a learned Single Judge in Writ Petition No. 5683/93. The Writ Petition and the present Writ Appeal contest the validity of an order passed by the appropriate authority under Section 269UD (referred to in the opinion both as "Section 269UD(i)" and "Section 269UD(1)") of the Income-Tax Act that directed a preventive purchase of the property bearing No. 3, 1st Cross, J.C. Road, Bangalore. The appellant's asserted interest in the property is that of a lessee. The learned Single Judge rejected the Writ Petition, declining to entertain the challenge to the proceedings under Chapter XX-C of the Income-Tax Act and suggesting that if the petitioner had leasehold rights he could protect them by filing a civil suit. The appellate court heard the matter and issued the order summarized below.

Legal Issues Presented

1. Whether the appellant, claiming only to be a lessee, is entitled to challenge the validity of an order for preventive purchase made under Section 269UD of the Income‑Tax Act.
2. Whether leasehold rights of a lessee are affected by a preventive purchase under Section 269UD, or whether such preventive purchase is subject to the lessee's rights (as per existing Supreme Court authority cited in the opinion).
3. Whether the learned Single Judge was justified in directing the appellant to pursue protection of his leasehold rights in a civil court rather than entertaining the writ petition.

Arguments of the Parties

Appellant's Position

• The appellant's asserted factual position in the record is that he is a lessee of the premises in question.
• The appellant challenged the order for preventive purchase, but in the material before the court he primarily asserted leasehold rights rather than a status as transferor or transferee under Chapter XX‑C.

Respondent / Revenue (As Reflected in the Opinion)

• The learned Single Judge considered that the petitioner was neither transferor nor transferee and declined to determine the broader jurisdictional question under Chapter XX‑C, directing the petitioner to protect any leasehold rights by filing a civil suit.
• Sri Dattu, learned Standing Counsel for the Income‑Tax Department, conceded that the appellant is a lessee of the premises and undertook that this fact would be mentioned in the auction notification and that the auction would be made subject to the appellant's leasehold right. The Standing Counsel's concession and undertaking were recorded by the appellate court.

Table of Precedents Cited

Court's Reasoning and Analysis

The appellate court's reasoning proceeded in the following steps, strictly as reflected in the opinion:

1. The court noted the procedural posture: the Single Judge had rejected the writ petition and declined to rule on the Chapter XX‑C jurisdictional issue, suggesting the petitioner pursue rights in a civil suit.
2. On examining the appellant's asserted interest, the court observed that the appellant only claimed to be a lessee of the premises and did not assert status as a transferor or transferee under the provisions challenged.
3. The court applied the Supreme Court's decision in C.B. Goutham v. Union of India, which the opinion states holds that leasehold rights are not affected by a preventive purchase under Section 269UD and that such preventive purchase is subject to a lessee's rights.
4. From that principle the court concluded that the preventive purchase order could not be regarded as infringing the lessee's rights: any rights that accrue to an auction purchaser are subject to the leasehold rights of the lessee in possession, and an auction purchaser must follow the law applicable to leasehold property to secure possession from the lessee.
5. Given that the appellant's possession as a lessee was not disputed and the Income‑Tax Department's standing counsel expressly conceded the appellant's lessee status and undertook to reflect that in the auction notification (making the auction subject to the leasehold right), the court found the Single Judge was not justified in simply directing the appellant to go to the civil court.
6. Balancing these considerations, the appellate court modified the Single Judge's order, disposed of the writ petition in the terms set out by the appellate bench, and expressly left open to the Department the lawful actions it may take, including eviction measures permissible in law even prior to auction.

Holding and Implications

Holding: The Writ Petition was disposed of and the Single Judge's order was modified. The appellate court held that the lessee's rights are not affected by the preventive purchase order (applying C.B. Goutham v. Union of India) and that the Single Judge should not have simply directed the appellant to pursue relief in a civil court in the circumstances of undisputed lessee possession and the Department's concession.

Direct consequences and practical implications as set out in the opinion:

• The appellant's leasehold interest must be treated as subsisting and the auction of the property is to be subject to that leasehold right (the Income‑Tax Department will mention this in the auction notification).
• Any rights acquired by an auction purchaser are subject to the leasehold rights of the lessee in possession; an auction purchaser must follow applicable law to seek possession from the lessee.
• The Department remains free to take such action as is permissible in law to evict the appellant from the premises, even before putting the property up for sale by auction, but any such action must be within the law.

The opinion does not set out broader novel legal principles beyond the application of the cited Supreme Court authority; the court's decision resolves the parties' dispute by applying the existing precedent and modifying the Single Judge's direction.