1. The present writ petition has been filed by the Kelvin Jute Company Limited, a Public Limited Company and one of its Shareholder challenging the orders issued by the Appropriate Authority constituted under s. 269UD of the Income-tax Act dated November 25, 1988 and May 2, 1989 and to refrain from giving any effect to or taking any steps in terms thereof or thereunder and to issue to the petitioners “No Objection Certificate” in respect of the transfer of the land. It is stated that the petitioner no. 1 Company is the owner of the land situated at no. 3, Burdwan Road, Calcutta containing an area 19 cottahs 13 chittarks 3 sq. ft. and on the said premises there are several buildings, dwelling houses, tenants, tiled roof structures and shops which have been let out to several monthly tenants and the remaining portion of the said premises has been mortgaged by the Company with the State Bank of India for securing loans and advances for the purposes of its business. The petitioner no. 1 Company is stated to be a sick industrial unit within the meaning of the Sick Industrial Companies (Special Provisions) Act of 1985. It is claimed that the Industrial Reconstruction Bank of India prepared a rehabilitation scheme for the revival of the Company which was modified by the Board of Industrial and Financial Reconstruction. The draft scheme envisaged the huge cost of modernization and the means of finance proposed in the said scheme included inter alia a sum of Rs. 17 lacs to be realised on the sale of the aforesaid premises and a portion of the property at Titagarh. The petitioners have stated in details in the writ petition that the aforesaid scheme further stipulated that the State Bank of India would give a necessary permission for sale of the said premises and the portion of the property at Titagarh and for utilization of the sale proceeds towards meeting a part of the cost of the said scheme. It is asserted that the scheme further provided that the State of West Bengal will also give necessary permission for sale of the said properties and utilization of the sale proceeds towards meeting a part of the cost of the aforesaid scheme. The petitioners claim further that the draft scheme as formulated by the Board of Industrial and Financial Reconstruction has since been finalised in its meeting held on July 13, 1989 and the petitioner no. 1 Company is required to give effect to the same with effect from September 1, 1989. It is also placed on record that on September 1, 1988 the petitioner Company entered into an agreement for sale with Messrs Granito Ceramics Private Limited having office at no. 19, R.N Mukherjee Road, Calcutta whereby the Company agreed to sell to the transferee the said premises free from all encumbrances but subject to the monthly tenancies and for a ??? price of Rs. 65 lacs which was appropriated towards the consideration at the time of completion of the sale. The transferee proposed to demolish the existing tenements on the said premises and construct a new building thereon. On September 29, 1988 the petitioner Company is alleged to have received a letter dated September 8/9, 1988 from the respondent no. 3 the Assistant Engineer (Technical) having office at no. 54, Rafi Ahmed Kidwai Road, Calcutta that the said respondent would inspect the said premises on September 23, 1988. On November 28, 1988 the petitioner no. 1 Company received the order dated November 25, 1988 passed by the respondent no. 1 in respect of the said Form No. 37-1 filed on September 5, 1988. The petitioners alleged that in the said purported order it was made clear that the proposed transfer was null and void under s. 5(3) of the Urban Land (Ceiling and Regulations) Act, 1976. The exemption under s. 20 of the 1976 Act did not seem to have obtained and even if the exemption applied for and such exemption would be given only for prying the excess vacant land to industrial purpose and not for purpose of sale or for real Estate Development. According to the petitioners, the aforesaid order dated November 25, 1988 and/or the provisions of Chapter XXC of the Income-tax Act are wholly illegal, invalid and without and/or in excess of jurisdiction and/or are ultra vires the Constitution. On February 27, 1989 the Company entered into another agreement with the transferee whereby it agreed to sell to the transferee the said premises free from all encumbrances whatsoever and the said agreement dated February 27, 1989 it was duly stated that the Company had already obtained No Objection Certificate from the Competent Authority under 1976 Act any construction upon the said land. It is also disclosed in the writ petition that March 7, 1989 the Company and the transferee filed Form no. 37-1 before the respondent no. 1 the Appropriate Authority in respect of the said agreement dated 27th February, 1989. On May 9, 1989 the petitioner Company is alleged to have received an order dated May 2, 1989 parsed by the respondent no. 1 and in the said purported order it was alleged that the statement in Form no. 37-1 was premature and invalid and there was no question of acting upon it in any manner and the same was filed as such. It was pointed in the said order that although “No Objection” certificate obtained by the Company for construction of the said premises, there was a still possibility that ultimate permission will be withdrawn by the Competent Authority and in that case provisions of ss. 6 to 14 of 1976 Act would immediately come into play. The petitioners challenged the said order claiming it to be wholly illegal, invalid and without and/or in excess of jurisdiction. Consequently, the petitioners have challenged the orders on the ground that prior to the passing of the said purported orders, no opportunity was afforded to the Company to make its representation and that the consideration for the transfer of the said premises by the Company to the transferee was truly and correctly stated in the agreements dated September 1, 1988 and February 27, 1989 respectively. It is emphatically claimed that the consideration represents the fair market value of the said premises and the respondents have no right and/or power and/or authority and/or jurisdiction to pass the impugned orders under Chapter XXC of the Income Tax Act in respect of the said transfer. The petitioners have tried to make out a case that in passing the impugned orders the respondent no. 1 has clearly exceeded its authority and/or jurisdiction under the said Act and has transgressed beyond the scope of the provision of Chapter XXC. The petitioners also tried to make out a case that the respondent no. 1 failed to appreciate that the purpose for which the said Chapter XXC has been enacted is apparently to prevent evasion of tax. Although the respondent no. 1 is concerned with its counter-evasion of tax and the said respondent is not competent to declare any agreement for transfer either premature or invalid. It is highlighted that the object of the Chapter XXC being apparently to counter evasion of tax, and the said respondent is concerned as to countering evasion of tax, is no competent to declare any agreement for transfer either premature or invalid. In the instant case, according to the petitioners, the authority concerned refused to act upon the statements in Form No. 37-1 in the absence of any such finding and there is no bar to issue a No Objection Certificate in respect of the said transfer.

2. The writ petition is contested by the respondent nos. 1 and 2 by filing affidavit-in-opposition. It is disclosed in details that on 5th September, 1988, a statement in Form no. 37-1 under s. 269UC(1) of the Income Tax Act read with Rule 481 of the Income-tax Rules, 1962 was filed before the Appropriate Authority, Income-tax Department, Calcutta after considering all the fact and records, the respondent no. 1 being the Appropriate Authority came to the conclusion that the statement in Form no. 37-1 is premature and invalid and therefore the question of acting upon it did not arise. It was held inter alia that the proposed transfer was null and void in view of the provisions of s. 5(3) of the Urban Land Ceiling Act. It was recorded that although the application was made under Urban Land Ceiling Act no exemption was, however, allowed and even if any such objection was granted, the excess vacant could be used only for the industrial purpose and not for the purpose of sale. It is placed on record also that on 7th March, 1989 the same parties who filed the Form no. 37-1 on 5th of September, 1988 again filed another Form no. 37-1 purporting to transfer the very same property viz. no. 3, Burdwan Road, Calcutta and for the very consideration viz. Rs. 65 lacs. The Appropriate Authority considered the matter and again came to the conclusion that the Statement in Form no. 37-1 was premature and invalid and the question of acting upon such Form no. 37-1 did not arise. The respondent no. 1, however, held that the transferor Company was permitted to contract subject to the provisions of s. 22 of the Urban Land Ceiling Act and if the Competent Authority under the Urban Land Ceiling Act was not satisfied they might withhold the permission to retain the land in excess of the said limit and in that event ss. 6 to 14 of the Urban Land Ceiling Act was not satisfied, they might withhold the permission to retain the land in excess of the said limit and in that event ss. 6 to 14 of the Urban Land Ceiling Act would come into operation. The respondent no. 1 concluded that it was not a clear cut permission and/or clearance under the Urban Land Ceiling Act. The guidelines as laid down by the Ministry of Works and Housing by the Circular no. 1157/76 UCU dated 20th August, 1976 were not complied with. It is further placed on record that the petitioner no. 1 Company own several properties having a total Area 76 Cottahs 9 Chittacks and 1 Sq. Ft. apart from extensive vacant lands at its factory at Titagarh. The petitioner themselves filed an application under s. 20 of Urban Land Ceiling Act in respect of vacant land at Titagarh Factory and they have also filed Statements under s. 6(1) of the Urban Land Ceiling Act and nothing has been disclosed as to what has happened to the said application made under s. 20 of the Urban Land Ceiling Act. The respondents, have however, formally denied allegations of the averments made by the petitioners in the writ petition. The petitioners have also filed an affidavit-in-reply controverting the assertions of the respondents and have reiterated the points taken in the main writ petition.

3. At the time of hearing of the case, the Learned Lawyers appearing for both ides have unequivocally agreed that there is no bar to dispose of the present matter fully and finally notwithstanding the pendency of the writ petition being numbered 2821 of 1986 Union of India v. C.V Gautam before the Hon'ble Supreme Court. It is also agreed that before the Hon'ble Supreme Court limited question of constitutional validity of the provisions of Chapter XXC of the Income Tax Act is pending for adjudication and the said limited question is sub-judice. It is suggested that ??? he purpose of disposal of the present writ petition, the question of constitutional vies as to Chapter XXC of Income-tax Act is not required to be gone into. It is also agreed that this Court will consider the aspect as to whether the impugned orders are fair and/or justified on the face of the relevant provisions under Chapter XXC of the Income-tax Act.

4. Dr. Pal appearing for the contesting respondent nos. 1 and 2 has mainly agreed that in the absence of the Competent Authority under the (Urban Land Ceiling and Regulations) Act, 1976 and the State Bank of India the present writ petition ought not to be decided and the same may be ??? in limine. It is also contended that the First Form No. 37-1 was filed by the Kelvin Jute Company Limited a transferor and Graneto Ceramic Private Limited as transferee whereby transferor intended to transfer 3, Burdwan Road, Calcutta, for a consideration of Rs. 65 lacs under an agreement dated 1st September, 1988. The prayer was rejected by order dated 25th November, 1988 as it was found premature. The second application has been filed and the same is wholly misconceived. He has drawn the attention of the Court that under s. 269UC(3) of the Income Tax Act inter alia requires Form 37-1 to be filed within such time as may be prescribed, Rule 48L(2)(c) of the Income Tax Rules provides for Form No. 37-1 should be filed before the expiry of 15 days from the date on which the agreement for transfer is entered into. According to Dr. Pal, the second agreement dated 22nd February, 1989 is verbatim the same is the first agreement and an attempt is being made to circumvent the provisions of s. 269UC of the Act read with Rule 48L without complying with the earlier order dated 25th November, 1988. It is also argued that under s. 269UD(1) of the Act Appropriate Authority his implied power to decide all things which will be incidental to the question of purchase by the Central Government of the immovable property in question for the following reasons:—

(1) The entire scheme under Chapter XXC of the Act contemplates a time factor as will appear from the following:—

(a) Section 269UC(1) of the Act requires the agreement to be reduced to writing at least three months before the intended date of transfer.

(b) Section 269UC(3) of the Act read with Rule 48L requires Form 37-1 to be filed within 15 days from the date of entering upon the agreement for sale. Form 37-1 requires all sorts of particulars to be furnished.

(c) Proviso to s. 269UD(1) of the Act requires order to be passed within two months from the end of the month in which statement in Form 37-1 has been filed.

(d) Section 269UE(2) of the Act requires possession to be given within 15 days from the service of the order.

(e) Section 269UG(1) of the Act requires consideration to be paid by the Central Government within one month from the end of the month in which the property vested in the Central Government.

(2) It is in this context the purchase order has to be passed by the Appropriate Authority under s. 269UD(1) of the Act. Unless the transferor has the immediate right to transfer the property the question of filing any statement under s. 269UC of the Act cannot arise.

(3) The Appropriate Authority therefore has to find out whether the Central Government can purchase the property in question. Section 269UI of the Act gives power to the Appropriate Authority to make the investigation. It is now held that the said power is a quasi-judicial power or a judicial power.

(4) The above provisions will show that there is an implied power to find out whether the Central Government can purchase the property or not. In other words power has been given to the Appropriate Authority to find out whether the transferor has any immediate right to transfer and there is no fetter or impediment in transfering the property in question

(5) It is now well-established rule of construction that a power to do something essential for the proper and effectual performance of the work which the statute has in contemplation may be implied. The rule of prohibition by necessary implication to such implied power could be applied only where a specified procedure is laid down for the performance of a duty and there is an express prohibition.

5. Dr. Pal had drawn the attention of the Court to the decision reported in AIK 1961 SC page 1170 (J.K Cotton Spinning and Weaving Mills Co. Ltd. v. State of Uttar Pradesh), AIR 1972 SC page 2663 (Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd.), 60 ITR page 392 (Commissioner of Income-tax Patiala v. Shahzada Nand And Sons), 71 ITR page 815 (Income Tax Officer, Cannanore. v. M. K. Mohammed Kunhi). It is emphasized that Urban Land (Ceiling and Regulations) Act, 1976 is a Special Act and non-compliance of the said Special Act will vest the property in the State Government and as a result thereof, the transferor has no right to transfer the property and consequently the Central Government cannot purchase the property. The determination of this question is implicit in the provision of Chapter XXC.

6. Mr. B.N Sen and Mr. R.N Bajoria, Learned Lawyers appearing for the petitioners have strongly contended that the impugned orders suffer from various inherent defects. It is submitted that the changed circumstances the second agreement was made and there is no bar to file the application in Form No. 37-1 and it cannot be argued that is an attempt to circumvent the provisions of law. It is placed on record that there is no bar and/or impediment to file the second application if it fulfils all conditions as required under the law. A strong argument has been made that looking at the scope of the provisions under Chapter XXC of the Income-tax Act, the power exercised by the respondent authority is unwarranted and uncalled for. The acts done and/or caused to have been done are contrary to and/or inconsistent with the provisions of law and the impugned orders ought not be sustained. In support of their contention they have drawn the attention of the Court to various cases reported in ILR (7) All p. 775 Gobind Dayal…(Defendant); v. Inayatullah…(Plaintiff).*), 58 CWN page 957 (Govind Dayal v. Inayatullah) AIR 1957 Raj. page 148 (Motilal Gorilal v. Ram Pal Jagannath) and AIR 1954 SC page 417 (Shri Audh Behari Singh v. Gaiadhar Jaipuria).

7. With great anxieties, this Court has considered the submissions made on behalf of the respective parties and having gone through the impugned orders, this Court finds that Chapter XXC of the Income Tax Act consisting of s. 269U to 269UO have been inserted by the Finance Act, 1986. This Chapter mainly deals with purchase by Central Government of immovable properties in certain cases of transfer. Section 269UC envisages restrictions on transfer of immovable property. Section 269UC(1) provides inter alia that notwithstanding anything contained in the Transfer of Property Act, 1882 or any other law for the time being in force, no transfer of immovable property of such value exceed ring Rs. 5 lacs as may be prescribed, shall be effected except after the agreement for transfer is entered into between the person who intends transfering the immovable property and the person to whom it is proposed to be transferred in accordance with the provisions of sub-s. (2) at least three months (?) before the intended date of transfer. Sub-section (2) provides that the agreement referred to in sub-s. (1) shall be reduced in writing in form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties. Sub-section (3) provides that every statement referred to in sub-s. (2) shall—

(i) be in the prescribed form;

(ii) set-forth such particulars as may be prescribed and

(iii) verify in the prescribed manner

and shall be furnished to the Appropriate Authority in such a manner and within such time as may be prescribed by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of other parties.

8. By looking further, it appears that under s. 269UD the Appropriate Authority after the receipt of the statement under sub-s. (3) of s. 269UC in respect of any immovable property may, notwithstanding anything contained in any other law or any instrument or any agreement for the time being in force and for reasons to be recorded in writing make an order for the purchase by the Central Government of such immovable property at an amount near to the amount of apparent consideration. Provided that no such order shall be made in respect of any immovable property after the expiration of the period of 2 (two) months from the end of the month in which the statement referred to in sub-section 269UC in respect of such property is received by the Appropriate Authority and provided further that in a case where the statement refereed to in s. 269UC in respect of the immovable property concerned is given to an Appropriate Authority other than the Appropriate Authority having jurisdiction in accordance with the provisions of s. 269UB to make the order referred to in the sub-section in relation to the immovable property concerned, the period of limitation referred to in the preceding proviso shall be reckoned with reference to the date of receipt of the statement by the Appropriate Authority having jurisdiction to make order under the said section. Section 269UD(2) indicates inter alia that the Appropriate Authority shall cause a copy of its order under sub-section (1) in respect of any immovable property to be served on the transferor, the person in occupation of the immovable property if the transferor is not in occupation thereof, the transferee and/or every other person whom the Appropriate Authority knows to be interested in the property.

9. Now looking to the impugned order, this Court finds that the Appropriate Authority held that the statement in From No. 37-1 is still premature and invalid and there is no question of acting upon it in any matter and consequently the statement has been filed. The reasons are three-fold (1) although a No Objection Certificate has been obtained by transferor Company in construction at premises no. 3, Burdwan Road, Calcutta, there is still possibility that ultimately permission can be withdrawn by the Competent Authority under Urban Land (Ceiling and Regulation) Act, 1976 and in that case provision of ss. 6 to 14 will immediately come into play. (2) The guidelines issued by the Government of India, Ministry of Work and Housing Circular Letter No. 1157/76-U dated 28.8.76 provides that while granting exemption to an industry to hold vacant beyond land the ceding limit the State Governments may prescribe conditions subject to which the exemption is being granted. (3) Normally, exemption should be granted in cases where the land sought to be exempted is required for the purpose of an existing industry or required office expansion within next 5 (five) years or for any other purpose incidental or ancillary for the carrying of the existing industry, the impact of sub-section (2) of s. 20 upon non-compliance of the essential conditions as incorporated, thereto.

10. The Appropriate Authority has mainly considered that since Urban Land (Ceiling and Regulation) Act has not run its full course one cannot say that the amount of certainty with the special property will not acquire by the State Government besides the transfer having extensive lands at its factory premises at Titagarh may choose to surrender the subject property rather than the lands at Titagarh and consequently the circumstances do not warrant the consideration of the application under Form 37-1 and it has been filed on the ground that it is premature.

11. This Court has the occasion to scrutinize the impugned orders in the background of the facts of the case and the provisions of law as they stand. The Law is very clear that no statutory authority can exercise its power by way of surmises and conjectures. It is not permissible in law to conjure any instance which is likely to happen upon non-fulfillment of certain events. This negative approach is never appreciated by any Jurisprudence. Under the present concept of law the prospective transferor and the transferee have their respective rights to enter into an Agreement for Sate if there is no ever bar and/or impediment in law. The sale is proposed without offending any provision of law prohibiting such transfer. The provisions of Urban Land (Ceiling and Regulation) Act, 1976 are clear enough as to the right to hold the land upon fulfilling certain conditions. Once the conditions are fulfilled the question of vesting will not arise and any surmise due to any eventuality is ruled out. The Appropriate Authority has to exercise its power strictly according to the statute. The question of any implied power or any ancillary power does not appear as sought to be done in the instant case. It has to be remembered that in order to fulfil the scheme in question as indicated above in order to revitalize the sick industry and/or to re-vamp its economy to save the sick industry and for the survival of its employees a proposal has been made to raise the fund and finance by selling the land in question at no. 3, Burdwan Road, Calcutta and broadly speaking the said purpose of raising the fund by selling the property in question is closely associated with the concept of saving sick industry and the fund to be utilized for survival of the industry. It cannot be said that the consent of the State Government and the Financial Institutions including the State Bank of India. Under this background, it cannot be surmised that although No Objection Certificate has been granted by the Competent Authority for raising building thereon would be recalled and there is a chance of “if” and “but” to effect the transfer of the property in accordance with law.

12. Law is also clear that Chapter XXC of the Income Tax Act has been added and/or inserted with the concept that there should not be any shady transfer or exchange of under-table consideration with a view to generation of black economy. The Central Government has the option of purchasing the property by way of pre-emption. The essential theory of pre-emption is extended. Chapter XXC has to be followed by letters and no extra power can be inferred and/or conferred.

13. It thus appears that in the instant case, the Appropriate Authority has not acted upon the Form no. 37-1 as filed by the petitioner no. 1 with the view that it is premature inasmuch complications under Urban Land (Ceiling & Regulation) Act are likely to arise as to the question of vesting. The Appropriate Authority also finds the difficulty that although the petitioner no. 1 is entitled to exemption but the operation of s. 20 of Urban Land (Ceiling and Regulation) Act has not been exhausted. It has also tried to visualize that the properties in question are not ripe and ready for transfer and the consideration Form no. 37-1 is not an idle formality. The details of the provisions of Urban Land (Ceiling & Regulation) Act have been considered and on both the occasions the Appropriate Authority found that it is premature to consider the Form no. 37-1 in its proper perspective.

14. With great anxieties, this Court has gone through the entire background of the case, this scheme to re-vitalize the sick industry and the Agreement for sale to raise the funds for the survival of the industry. Admittedly, a scheme has been prepared where State Bank of India and the State of West Bengal have given consent. The transferor Company has obtained ‘No objection’ certificate to raise the building upon the land in question at no. 3, Burdwan Road, Calcutta. Admittedly, the petitioner Company has other lands at Titagarh but it is not appreciated that the apprehension of the Appropriate Authority that the permission granted by the State Government may be recalled. This Court also finds from the materials on record that the State Government has not acted in any manner in respect of the property at no. 3, Burdwan Road, Calcutta treating the property as being vested. It has to be remembered that the right of pre-emption is to accept the title as it is. The pre-emptor cannot demand to better the title before he exercises the right of pre-emption. It cannot be said that the transferor Company has no title to the property in question. When there is a proposal of sale the Appropriate Authority has either to purchase the property by exercising the right under s. 269UD of the Income-tax Act and it if is not inclined to purchase to issue “No Objection” Certificate. The third alternative is not left open that the stage is pre-mature and the transferor has to better the title. In this regard, the theory as propounded in AIR 1957 Raj. p. 248 is very clear. Upon scrutiny of the materials on record, this Court is satisfied that the apprehension of the Appropriate Authority that the property at no. 3, Burdwan Road, Calcutta may be vested subsequently upon fulfilment of certain unknown evasions, is not real. Such an apprehension appears to be vague indefinite and invalid. On the face of the record a “No Objection” certificate has been produced by the transferor Company for the purpose of raising building upon the said land as permitted by the Competent Authority, under Urban Land Ceiling & Regulation Act. This Court also does not appreciate that the matter would be kept in a cold storage for an indefinite period when the person having title cannot transfer the property during the period ??? of necessity and the Central Government will not purchase the property by exercising right of pre-emption as envisaged under Chapter XXC of the Income tax Act. It is not left open to the Appropriate Authority to ??? over the matter by observing that the stage is a pre-mature to act ??? From No. 371 as filed by the petitioner Company.

15. From the materials on record, this Court is of the view that the petitioner has been able to make out a saleable right having title to the property and it is for the Appropriate Authority either to take steps as ??? under s. 269UD of the Income-tax Act and/or if it is not inclined to purchase it may very well issue a “No Objection” Certificate in accordance with law.

16. For the foregoing reasons, this Court is of the view that the reasons assigned by the Appropriate Authority in passing the impugned orders cannot be sustained in law. The writ petition is thus allowed. Let a Writ of Certiorari be issued qua bing the impugned orders. There will be writ of Mandamus commanding the respondents Appropriate Authority to consider the From No. 371 afresh in accordance with law within a period of 60 (sixty) day from the date of communication of the order to take effective steps either under s. 269UD of he Income-tax Actor to issue a “No Objection” Certificate in the event there is no inclination to exercise the right of purchase. There will be no order as to costs.

Petition allowed.