UNION OF INDIA versus M/S SHATABADI TRADING AND INVESTMENT PVT. LTD. AND ORS

Citation: [2001] SUPP. 1 S.C.R. 416 · Decided: 10-08-2001 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
UNION OF INDIA 
V. 
M/S SHAT ABADI TRADING AND INVESTMENT 
PVT. LTD. AND ORS 
AUGUST 10, 2001 
[S. RAJENDRA BABU AND K.G. BALAKRISHAN, JJ.) 
Income Tax Act, 1961-Chapter XX-C-Section 269UD-Order of 
C acquisition of property by Appropriate Authority-Writ Petition filed against 
the Order before High Court challenging valuation of property-High Court 
granting interim order of stay-Special Leave Petition filed before Supreme 
Court by Union of India-Supreme Court directing auction of the property-
Sale of property to highest bidder and confirmation by Supreme Court-High 
Court allowing the Writ Petition holding valuation of the property by the 
D Authority as illegal, irrational or arbitrary-Validity of-Held, basis of 
valuation cannot be decided in a writ petition-Hence interference by High 
Court not justified-Article 226-Constitution of India. 
An agreement for transfer of an immovable property was entered into 
by parties for an apparent consideration of Rs. 1.75 crores. The parties filed 
E a statement in Form 37-1 with Appropriate Authority for issuance of 'No 
objection certificate' under the provisions of the Income Tax Act, 1961. The 
Authority, without issuing a show-cause notice, made an order for the 
purchase of the property by Central Government under Section 269UD of 
the Act. A Writ Petition was filed by the parties before High Court against 
F the order of the Authority. The High Court allowed the Writ Petition on the 
ground that no show-cause notice was issued by the Authority in the light of 
the decision of this Court in C.B. Gautam v. Union of India, (1993( 1SCC78. 
Subsequently, the Authority issued a show-cause notice for the purchase 
of the property under the Act as the fair market value of the property is 160% 
G above the apparent consideration stated in Form 37-1. The parties, not 
accepting the basis of valuation of the property by the Authority, contended 
that the conclusions of the Authority are ma/a fide, arbitrary and 
discriminatory resulting in deliberate adoption of a wrong method of 
determining fair market value of the property. The Authority rejected the 
contentions raised by the parties and passed an order for acquisition of the 
H 
416 
U 0.1. v. SHAT ABADI TRADING AND INVESTMENT PVT.LTD. 
417 
property. 
A 
A Writ Petition was iiled before the High Court challenging the order 
of acquisition by the Auth9rity. The High Court admitted the writ petition 
and granted an interim order of stay restraining the Authority to proceed 
further. Against the interim order, petitioner-Union of India filed a Special 
Leave Petition before this Court. Du~iJg the pendency of the proceedings, B 
an order was made by this Court to' auction the property subject to bid 
confirmation by this Court. Auction was held and the highest bidder of the 
property offered Rs. 4.01 crores. Permission was sought by the Authority 
for confirmation of the same. The parties contended that the auction was a 
farce and stage-managed by the Authority in collusion with the highest bidder · C 
and that the Writ Petition filed before the High Court was pending. However 
this Court rejected the contentions of the parties and confirmed the bid. A 
,. 
sale deed was executed by the Appropriate Authority in favour of the highest 
bidders. The original transferor received a sum ofRs.1.75 crores with interest 
without any protest. Subsequently, the High Court allowed the Writ Petition 
holding that.the valuation of the property by the Authority was illegal, D 
irrational or arbitrary. Hence the appeal by the Union of India. 
Allowing the appeals, the Court 
HELD: I.I On materials, if two views are possible, it would not be 
possible for the High Court to substitute its conclusion for that of the Tribunal. E 
It is trite to say that the proceedings arising under Article 226 of the 
Constitution is in the nature of judicial review and such review could be only 
in respect of the process of decision and not the decision itself. In the case on 
hand, the Appropriate Authority had adopted the comparison of the market 
sales approach considering the location of the property. The approach of the p 
High Court, that in cases where the property is a tenanted property and is 
being sold the Department cannot adopt the stand of invoking the provisions 
of Chapter XX-C of the Act, is not correct. Having given due deductions 
towards tenancy arising in respect of the property and on comparison with 
similar properties situated e
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