Case Note & Summary
The petitioner, New White Rose CHS Ltd, a Cooperative Housing Society, filed a writ petition challenging an order dated 21.10.1994 passed by the Appropriate Authority under Section 269UD of the Income Tax Act, 1961, and a subsequent communication dated 2.8.2017 threatening forcible possession of the land. The society claimed ownership of land admeasuring 359.80 sq. yards bearing CTS No. C/1233, Survey No. 282, Hissa No. 3, Sherly Ranjan Road, Bandra (W), on which a residential complex was constructed. The members of the society were purchasers of flats from the developer and claimed to be purchasers for value without notice. The Income Tax Department claimed ownership over the land by virtue of vesting of title under Section 269UE of the Act. The case had a checkered history, with a previous Writ Petition No. 2475 of 1994 filed by the erstwhile owner and proposed purchasers. The court examined the background, including the order under Section 269UD and the subsequent threat of possession. The legal issues included whether the society could challenge the order after a long delay, whether the members were bona fide purchasers for value without notice, and whether the title vested in the Income Tax Department. The court held that the society's members, being purchasers for value without notice, had a right to be heard and the order was not binding on them. The petition was allowed, and the impugned order and communication were quashed.
Headnote
A) Income Tax - Compulsory Purchase - Section 269UD, 269UE Income Tax Act, 1961 - Vesting of Title - The Appropriate Authority passed an order under Section 269UD for compulsory purchase of land. The petitioner, a Cooperative Housing Society, claimed that its members were purchasers for value without notice. The court examined whether the title vested in the Income Tax Department under Section 269UE and whether the society could challenge the order after a long delay. Held that the society's members, being purchasers for value without notice, had a right to be heard and the order was not binding on them. (Paras 1-10) B) Limitation - Challenge to Order - Delay and Laches - The order under Section 269UD was passed in 1994, but the society filed the petition in 2018. The court considered whether the petition was barred by delay and laches. Held that the society was not a party to the earlier proceedings and the threat of forcible possession in 2017 gave rise to a fresh cause of action, thus the petition was maintainable. (Paras 11-15) C) Property Law - Purchaser for Value Without Notice - Bona Fide Purchaser - The society members purchased flats from the developer without knowledge of the Income Tax Department's claim. The court held that they were bona fide purchasers for value without notice and their rights could not be defeated by the vesting under Section 269UE. (Paras 16-20)
Issue of Consideration
Whether the petitioner Cooperative Housing Society, whose members are purchasers of flats for value without notice, can challenge the order dated 21.10.1994 passed by the Appropriate Authority under Section 269UD of the Income Tax Act, 1961 and the subsequent communication dated 2.8.2017 threatening forcible possession, and whether the title to the land vests in the Income Tax Department under Section 269UE of the Act.
Final Decision
The petition is allowed. The order dated 21.10.1994 passed by the Appropriate Authority under Section 269UD of the Income Tax Act, 1961 and the communication dated 2.8.2017 are quashed and set aside. The respondents are restrained from taking forcible possession of the land.
Law Points
- Section 269UD
- Section 269UE
- Income Tax Act 1961
- purchase for value without notice
- vesting of title
- limitation for challenge
- appropriate authority order
