RAMBAI MANJANATH NAYAK AND ORS. versus UNION OF INDIA AND ORS.

Citation: [1992] SUPP. 3 S.C.R. 56 · Decided: 17-11-1992 · Supreme Court of India · Bench: M.H. KANIA · Disposal: Dismissed

Judgment (excerpt)

A 
RAMBAI MANJANATH NAYAK AND ORS. 
B 
v . 
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"' ·UNION OF INDIA AND ORS. 
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NOVEMBER 17, 1992 
•'·[M.H. KANIA, CJ. J.S. VERMA, S.C. AGRAWAL, 
YOGESHWAR.DAYAL AND DR. AS. ANAND,JJ.] 
Income Tax Act, 1961 : Chapter XX-A, Sections 269F(6), 269 I, 269 J, 
269AB~cq~tisition of it11movable property under the Aci.:...;_Right of tenant to 
C c01itinue in possession of acqiiired properly-Held does not survive after pass-
ing o/ final order wider section 269F( 6 )--Right surviving with occupant is only 
to Ctaini share in compensation against the transf erer. 
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E 
F 
Words and Phrase's-Meaning of 'Person in occupation of the 
prope'rty'-Sectiol1 269D(2)(a) /;1co;ne Tax Act, 1961. . 
The appellants for their business had taken on rent a 3-storeyed 
building from its owner on a monthly rent of Rs. 1500. The owner, a 
company incurred huge debts for the repayment of which it executed a 
Composition Deed in favour of a Committee formed by the creditors for 
the . purpose of management and disposal of the debtor's property. A 
registered sale deed was executed on December 27, 1973 conveying the 
building to respondent Nos. 5 to 10 for a consideration of Rs. 4,50,001 paid 
by two cheques, one dated July 12, 1973 for Rs. 50,001 and another dated 
February 4, 1974 for Rs. 4,00,000. According to the recital in the sale deed 
the purchasers were given constructive possession and the existing tenant 
was to attorn in favour of the purchaser. By a letter dated February 5, 1974 
the company informed the appellants of the sale; and required them to 
attorn to the purchasers-respondent Nos. 5 to 10. 
The competent authority under Section 2698 of the Income Tax Act, 
1961 initiated proceedings for acquisition of the said property u~der 
G 
Chapter XX-A of the Act by a notice dated August 31, 1974 under Section 
2690(1).·This notice was also served on the appellants as the persons in 
occupation of the property in accordance with Section 2690(2) of the Act. 
The appellants did not make any objection to the acquisition proceeding, 
and an order of acquisition of the said property was made under Section 
H 269F(6) on December 12, 1975, and that order became final on January 27, 
56 
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RAMBAI NA YAK. v. U.O.I. 
57 
1976. 
The competent authority made an order under Section 269-I(l) 
which was served on the appellants on February 5, 1976 directing them to 
deliver possession. of the property to the Central Government within 30 
days. On February 7, 1976 the Inspecting Assistant Commissioner of 
Income Tax served an order on the appellants wherein also a direction was 
given asking them to hand over the possession of the property within the 
specified period. 
The appellants apprehending their eviction filed a Writ Petition in 
A 
B 
the High Court on ~'ebruary 24, 1976 challenging the constitutional validity C 
of certain provisions of Chapter XX-A of the l_ncome Tax Act, 1961 and 
consequently the order under Section 269F(6) of the Act together with the 
consequential notices dated February 5, 1976 and February 7, 1976 issued 
to them. 
The High Court held that the tenants in occupation of the property D 
acquired under Chapter XX-A of the Income Tax Act, 1961 are liable to be 
evicted therefrom under Section 269-1 of the Act with a view to vest it 
absolutely in the Central Government free from all encumbrances, and 
dismissed the writ petition. A certificate of fitness to a11peal to this Court 
under Article 133(1) of the Constitution was however granted i.n view of E 
the question of law involved being of general importance. 
In the appeal to this Court it was contended on behalf of the 
appellants that the statutory tenancy not being an encumbrance on the 
property does not get extinguished on acquisition of the property and, 
therefore, the right of the statutory tenant to continue in occupation 
remains unimpaired even after the acquisition made under Chapter XX-A 
of the Income Tax Act; and that the tenancy, whether monthly or statutory, 
is property within the meaning of Articles 19(1)(t) and 31 of the Constitu-
tion on account of which there can be no acquisition of the tenancy rights 
without payment cf compensation. 
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G 
The respondents contested the appeal by contending that there is no 
acquisition of the tenancy rights and therefore, the question of payment of 
compensation for the tenancy rights does not arise; that the right of a 
statut('ry tenant to continue in possession an

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