Holding

The requirement of hearing and a reasoned order under Section 269UD does not apply to transactions that are final or where the property has already been auctioned, and therefore the appeals are dismissed.

Summary

The appellants, who were the intended purchasers of a property, challenged an order of pre‑emptive purchase made by the Income Tax Department under Section 269UD of the Income Tax Act, 1961, on the ground that the order was unreasoned and they were denied a hearing. The property owner did not contest the order, and after a stay was initially granted, the High Court vacated the stay, allowing the department to auction the property, which was completed before the Supreme Court’s decision in C.B. Gautam’s case. In C.B. Gautam, the Court had held that a hearing and reasons are required before invoking Section 269UD, but clarified that this requirement does not apply to transactions that are already final or where the property has been auctioned. Applying that clarification, the Supreme Court held that the appellants could not obtain relief because the auction had already taken place and there was no challenge by the owner. Consequently, the appeals were dismissed.

Issues considered

Whether an order under Section 269UD of the Income Tax Act must be reasoned and provide a hearing to the intending purchaser and seller under principles of natural justice.
Whether the requirement of hearing and reasons applies to transactions that have become final or where the property has already been auctioned.
Whether the appellants are entitled to a refund of the advance paid after the property was auctioned.

Legislation cited

Income Tax Act, 1961s. 269UD
Income Tax Rules, 1962s. Rule 48L

Subjects

Section 269UDpre‑emptive purchasenatural justicehearingreasoned orderIncome Tax Actauctionrestitutionactus curiae neminem gravabitlex non cogit ad impossibilia

Judgment

1

A KRISHNASWAMY S. PD. AND ANR. ...,._ ..
v.
LNION OF INDIA AND ORS.

FEBRUARY 21, 2006

B [ARIJJT PASAYAT AND R.V. RAVEENDRAN, JJ.)

Income Tax Act, 1961--Section 269UD-Pre-emptive purchase of
immovable property-Requirement of opportunity of hearing to intending
. ~

purchaser and intending seller read into Section 269UD by this Court in C.B.
c Gautam 's case-Applicability of-Held: Not applicable to transuctions which
have become final or transactions where the department has already auctioned
the acquired property-./n the instant case, only the intending purchaser had
challenged the order of pre-emptive purchase-No relief can be granted to
him as the acquired property had already been sold by public auction before
D the decision in C.B. Gautam's case, and as there was no challenge by owner
of th~ property-Income Tax Rules, 1962-Rule 48L--Maxims-"Actus Curiae
Neminem Gravabit" and "Lex Non Cogit Ad impossibilia". •
'-
The Income Tu Department passed an order for pre-emptive
purchase of immovable property under S.269-UD of the Income Tax Act,
E 1961. Appellants, the intending purchaser filed writ petitions pleading that
the order of pre-emptive purchase was liable to be quashed inasmuch as
it was non-reasoned and gave no opportunity of hearing to the affected
parties. Owner of the property however did not put up any challenge. High
Court initially stayed the order of pre-emptive purchase, t,ut later vacated
the stay and directed the owner to deliver possession to the Department
F
It further left it open to the Department to sell the property by public ~
auction. Accordingly, the owner delivered the title deeds relating to the
property to the Department and accepted the entire sale consideration paid
by it. The acquired property was auctioned by the Department. Meanwhile
this Court in C.B. Gautam 's case*, held that that before an order is made
G under Section 269-UD, the intending purchaser and the intending seller
must be given a reasonable opportunity of showing cause against the order;
and that an order under Section 269-UD is required to be supported by I
j,
reasons in writing. Notwithstanding that decision, High Court dismissed
the writ petitions filed by the appellants which had been taken up for
H 390
KRISHNASWAMY S. PD. v. U.0.1. 391
hearing subsequently. A
. The question which arose for consideration in the present appeals is
whether the appellants were entitled to any relief in view of the decision
in C.B. Gautam's case. ...,

Dismissing the appeals, the Court B
HELD: 1. An unintentional mistake of the Court which may
~
J prejudice the cause of any party must and alone could be rectified.
(399-D]

South Eastern Coalfields Ltd. v. State of MP. and Ors., [2003) 8 SCC c
648, referred to•
._,
Freeman v. Tranah. I 2 C.B. 406, referred to.

2. The maxim of equity, namely, actus curiae neminem gravabit -
an act of court shall prejudice no man, is founded upon justice and good D
sense which serves a safe and certain guide for the. administration of law.
-+--+ The other relevant maxim is, lex non cogit ad impossibilia - the Jaw does
not compel a man to do what he cannot possibly perform. The law itself
and its administration is understood to disclaim as it does in its general
aphorisms, all intention of compelling impossibilities, and the E
administration of law must adopt that general exception in the
consideration of particular cases. (399-E-F]

Mis U.P.S.R.T.C. v. Jmtiaz Hussain, (2006) 1 SCC 380, Shaikh Salim
Haji Abdul Khayumsab v. Kumar and Ors., (2006) 1 sec 46, Mohammad
Gazi v. State of MP. and Ors., (2000) 4 SCC 342 and Gursharan Singh v. F
New Delhi Municipal Committee, [1996) 2 SCC 459, relied on.

3. One thing is crystal clear from the order of High Court (by which
the earlier interim order was vacated) that the appellants wanted to take
back the money that had been paid to the prospective vendor. Submission
was made on behalf of the appellant that a sum of Rs.6 lakhs paid by way
G
·of advance may be refunded. By seeking the return of the advance, the
) appellants have acquiesced to the property being sold in auction. In the
1\
order it was clearly mentioned that it was open to the writ petitionen
(Appellants) to seek refund of the same from the transferor namely,
respondent No. 4. (399-H; 400-A] H
392 SUPREME COURT REPORTS [2006] 2 S.C.R.

A 4.1. Looking at the controversy from another angle, it is clear that
the requirement relating to 'ilearing read into the provisions of Section T •
269UD by this Court will not apply to transactions which have become
final or transactions where the department has already auctioned the
acquired property. [401-G-H)

B 4.2. There can be no interference in the instant case as the property
which is the subject matter of the compulsory purchase under Section
269UD had already been sold by public auction before the decision in C.
B. Gautam 's case, and as there was no challenge by the owner of the •
property. [402-A-B]
c Union of India and Ors. v. Shatabadi Trading & Investment Pvt. ltd
and Ors., [2001) 6 StC 748 11nd •c.B. Gautam v. Union of India & Ors.,
(1993) 1 sec 78, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3376-3377 of
D 2000.
From the Final Order & Judgment and Order dated 17.4.1998 of
Kamataka High Court in Writ Petition Nos. 247-248/1988.

T.L.V. Iyer, Girish Ananthamurthy, Sanjay Gowda and P.P. Singh for
E the Appellant.

Joseph Vellapally, Harish Chandra, Vibha Datta Makhija Raghuvesh,
Arijit Prasad, B.V. Balaram Das and B.K. Prasad for the Respondents.

The Judgment of the Court was delivered by
F
ARIJIT PASA YAT, J. Challenge in these appeals is to the judgment
rendered by a Division Bench of the Kamataka High Court dismissing the
Writ Petitions filed by the appellants.

The factual background in a nutshell is as follows:
G
The fourth Respondent and appellants entered into an agreement of sale
dated 16.7.1987 in respect of premises bearing No.377 R.M.V. Extension,
Bangalore measuring 50' x 90'. The total consideration was fixed at
Rs.18,00,000/-. Appellants paid a sum ofRs.6,00,000/- by two cheques dated
H 16. 7. I 987 to the fourth respondent and the balance consideration was agreed
J
'
KRISHNASWAMY S. PD. v. U.0.1. [PASA YAT. J.) 393
to be paid at the time of registration of sale deed. The parties to the agreement A
\.-~ were required under Chapter XX-C of the Income Tax Act, 1961 (in short the
'Act') read with Rule 48(L) of the Income Tax Rules, 1962 (in short the
'Rules') to file a Statement in Form No.37-1 before the appropriate authority
specified under Chapter XX-C. Accordingly, appellants and fourth respondent
filed Form No.37-1 along with certain documents on 29.10.1987. Thereafter,
the appropriate authority passed an order dated 18.12.1987 purported to be B
under Section 269UD(l) of the Act, for pre-emptive purchase of the said
property by the Central Government at an amount equal to the apparent
1
. ->\· consideration. It was stated that the reasons were recorded separately. The
said order dated I 8.12.1987 was challenged before the Karnataka High Court
in W.P. Nos. 247-248 of 1988. Challenge in the writ petitions was to the c
constitutional validity of Chapter XX-C of the Act with con~equential prayer
to quash the order dated 18.12.1987.
,
:v
The High Court stayed the order of purchase dated 18.12.1987 on
7.1.1988. The interim order of stay was subsequently modified on 13 .1.1988
by staying only the delivery of possession under Section 269-UE and further D
proceedings pursuant to vesting subject to the condition that the transferees
and the transferor shall not effect any change in the nature and character of
-t
~-) the property or alienate or encumber the property during the pendency of the
writ petition. On 1.8.1991, the High Court vacated the interim stay by the
following order :
E
"After hearing both the learned Counsel, we are of the view that stay
of delivery of possession ordered by the learned Single Judge cannot
be continued. Accordingly, the stay is vacated. Therefore, the
transferor-respondent-4 W.G.S. Saldhana shall deliver possession in
favour of respondent-3. the Income Tax Officer, without any demur. F
Within two weeks from the date of delivery of possession, the said
W.G.S.Saldhana shall be paid by the Revenue whatever amount is
due to him. It is open to the Department to bring the property to
public auction. We make it clear that the order relating to delivery of
possession and payment of amount shall be subject to the ultimate
result of the writ petitions. G

Sri. Sarangan, learned Counsel for the petitioners states that a sum of
\
~ Rupees Six Lakhs paid by way of advance under the agreement dated
1617/1987 may be refunded.
.. H
'
394 SUPREME COURT REPORTS [2006] 2 S.C.R.

A It is open to the writ petitioners to seek refund of the same from the
transferor namely, respondent-4."

In view of the vacating of the interim stay, the title-deeds relating to the
property were delivered by the owner to the Income-Tax Department on
27.8.1991. The entire sale c:onsideration paid by the Department was accepted
B by the owner before 15.9.1991. The acquired property was auctioned by the
Department on 26.3.1992. The 7th respondent herein was the highest bidder
and his bid of Rs.46 lacs was accepted and on payment of the said price, he
was put in possession on 25.5.1992. A sale-deed was executed in favour of
7th respondent by the Department on 20. 7.1994. The auction purchaser was
C imp leaded as 7th respondent in the writ petition on 25.8.1997.

During the pendency of the said writ petitions, a Constitution Bench of
this Court by its judgment rendered on 17 .11.1992, upheld the constitutional
validity of Chapter XX-C of the Act in C.B. Gautam v. Union of India &
Ors., [1993] I SCC 78. While so doing, this Court, however, held that before
D an order for compulsory purchase is made under Section 269-UD, the intending
purchaser and the intendin!~ seller must be given a reasonable opportunity of
showing cause against the order for compulsory purchase being made by the
appropriate authority. This Court further held that the provisions of Chapter
XX-C are to be resorted to only where there is significant undervaluation of
.
-

the immovable property to be sold in the agreement of sale with a view to
E evading tax and that an order for compulsory purchase under Section 269-
UD is required to be supported by reasons in writing and such reasons must
be germane to the object for which Chapter XX-C was introduced in the
Income Tax Act, namely, to counter attempts to evade tax. Reading down of
section 269-UD in the ahove manner, to uphold its validity, necessitated
F issue of certain consequential directions. We extract below the relevant portions
thereof:

"In view of the faci: that the object of the provisions of Chapter XX-
C is a laudable object, namely, to counter evasion of tax in transactions
of a sale of immovable property, we consider it necessary to limit the
G retrospective operation of our judgment in such a manner as not to
defeat the acquisitions altogether. We find that if the original time
frame prescribed in Chapter XX-C is rigidly applied it would. not be·
possible for the appropriate authority concerned to pass an order
under Section 269UD( I) at all in respect of the property in question.
In order to avoid that situation and, yet to ensure that no injustice is
H
KRISHNASWAMY S. PD. v. U.0.1. [PASAY AT. J.] 395
caused to the petitioner, we order, in the facts and circumstances of A
' ---y the case, that the statement in Fonn 37-1 submitted by the petitioner
as set out earlier shall be treated as if it were submitted on the date
of the signing of this judgment. Thereafter if the appropriate authority
considers it fit, it may issue a show cause notice calling upon the
petitioner and other concerned parties to show cause why an order for
compulsory purchase of the property in question should not be made B
under the provisions of Sub-section (I) of Section 269UD and give
-1 a reasonable opportunity to the petitioner and such other concerned
_j parties to show cause against such an order being made. In view of
the limited time-frame this will have to be done with a sense of
urgency. If after such an opportunity is given the appropriate authority c
so considers it fit, it may hold an inquiry, even though summary in
nature, and may pass an order for compulsory purchase by the Central
Government of the property in question under Section 269UD(l).
The appropriate authority will have to decide whether an inquiry is
called for in the facts and circumstances of the case after the show
cause notice is issued ........ D

43. We may clarify that as far as completed transactions are concerned,
--1
_...._).- namely, where after the order for compulsory purchase under Section
269UD of the Income Tax Act was made and possession has been
taken over, compensation paid to the owner of the property and
accepted without protest, we see no reason to upset those transactions
E
and hence, nothing we have said in the judgment will invalidate such
purchases. The same will be the position where public auctions have
been hold of the properties concerned and they are purchased by
third parties. In those cases also nothing which we have stated in the
judgment will invalidate the purchases. " F
[Emphasis supplied]

Subsequently, on 27.11.1992, this Court issued certain clarifications in
regard to the directions in C.B. Gautam 's case (supra), in regard to pending
matters. As cases where public auctions had already been held were excluded G
from the directions relating to pending matters, the clarifications did not
apply to such cases.
)
"I'
The writ petitions filed by the appellants were taken up for hearing by
-=:::;: the Kamataka High Court after the de.cision in C. B. Gautam 's case (supra).
H
1
396 SUPREME COURT REPORTS [2006J 2 S.C.R.

A The only point urged by the Appellants at the hearing of the writ petitions
was that in the impugned order no reasons were stated, as to on what basis
the valuation of the property was arrived at and since the order was non-
reasoned without giving opportunities to the appellants the same was liable
to be quashed.

B Stand of the appropriate authority on the other hand was that decision
of this Court in CB. Gautam 's case (supra), was squarely applicable to the
facts of the case. It was pointed out that instead of declaring the provision
unconstitutional, as it did llOt provide for grant of an opportunity to the
affected persons, the provision was read down and it was held that such a
C requirement wa~ inbuilt as a part of the principles of natural justice. It was,
however, noted in the clarificatory order that whenever the transactions were
completed, the property was purchased under pre-emptive right to purchase
by the Central Government, and the amount was returned back to the vendor
or the purchaser and the poss1:ssion of the property was taken without protest,
there is no necessity of again giving a notice and extending an opportunity
D which was binding in case of others. It was pointed out that in the case at
hand, the authority had already exercised its powers and the amount was
returned to the vendor and the possession was taken.

The High Court held tl~at the crucial question to be determined was
E whether the impugned order was liable to the quashed on the ground that no
reasons were given and reasons stated to be separately recorded were not
supplied to the appellants and it amounted to denial of principles of natural
justice. The High Court noted that the impugned order of the appropriate
authority reads as follows:

F "In view of the rival contentions, the question of law that arises for
consideration is whether the impugned order is liable to be quashed
on the ground that no n:asons are given nor reasons separately recorded
are supplied to the petitioners as it amounts to denial of principles of
natural justice to the petitioners."

G After examining the facts it was noted that separately recorded reasons
were not supplied to the appellants and the appellants were thus not provided
with an opportunity before arriving at the conclusions. But it was held that
because of the clarificatory order of this Court the appellants were not entitled
to any relief in the instant case. With reference to the interim order it was
H held that the fact situation wa:; clearly covered by the clarificatory order of
KRISHNASWAMY S. PD. v. U.0.1. [PASA YAT . .I.] 397
this Court in C.8. Gautam 's case (supra). It was noted that though the interim A
order is always subject to the final order the fact situation was different as
the transaction ~ad already been completed, possession of the property had
been given and the amount had been returned back and the same was received
without protest. Merely because the writ petitions were pending it cannot be
said that the transaction was not completed.
B
In support of the appeals, Mr. TLV Iyer, learned senior counsel has
submitted that the order dated l.8.1991 on which the High Court placed
1 reliance itself made it clear that the same was subject to the result of the writ
_J petitions. No prejudice should be -caused to a party by an order of the Court.
Therefore, the ratio in C.8. Gautam 's, case (supra),, more particularly, the C
clarificatory order was not applicable to the facts of the cas·e. If any act is
done pursuant to the order of the Court the same is subject to the result of
the writ petitions and it cannot be affected. Reference was made to paragraphs
41, 42, 43 and 46 of C. 8. Gautam 's case (supra), in this context. Even if
there was any auction sale by the Income Tax Department the principle of lis
pendens was clearly applicable. The position would have been the same if D
there would not have been any interim order, and the final order in the writ
petitions would have covered the matter.

In response, learned counsel for the auction purchaser submitted that
interestingly the prospective vendor had not questioned either the legality of E
the order dated 18.12.1987 or the judgment of the High Court. In the auction
sale the amount that had been paid is Rs.46 lakhs which was almost triple of
the amount which was purportedly agreed to be paid originally. The protection
given by the interim order that the actions indicated which determined would
be subject to the result of the writ petitions were restricted to delivery of the
property, which involved the prospective vendor and the department. The F
second condition was the payment of the amount by the department to the
proposed vendor. In this transaction also the proposed purchaser was not
involved. So far as the auction sale is concerned that was not subject to the
final outcome.

It was, however, pointed out by learned counsel for the appellants that G
the third situation was clearly linked with the first two and the doctrine of !is
pendens clearly applied to such a purchase.
\
·l There is no quarrel with the proposition as advanced by learned counsel
for the appellants that an act of a Court cannot affect a party. In South H
i
398 SUPREME COURT REPORTS (2006] 2 S.C.R.

A Eastern Coalfields ltd. v. State of M.P. and Ors.. (2003 (8) SCC 648), it was
noted as follows:

"28. That no one sh~ll suffer by an act of the Court is not a rule
confined to an erroneous act of the court; the 'act of the court'
embraces within its sYieep all such acts as to which the court may
B fonn an opinion in any legal proceedings that the Court would not
have so acted had it been correctly apprised of the facts and the law.
The factor attracting applicability of r~stitution is not the act of the
Court being wrongful or a mistake or error committed by the court;
the test is whether on account of an act of the party persuading the
c Court to pass an order held at the end as not sustainable, has resulted
in one party gaining an advantage which it would not have otherwise
earned, or the other party has suffered an impoverishment which it
would not have suffer~d but for the order of the Court and the act of
such party. The quantJJm of restitution, depending on the facts and
circumstances of a given case, may take into consideration not only
D what the party excluded would have made but also what the party
under obligation has or might reasonably have made. There is nothing
wrong in the parties demanding being placed in the same position in
which they would have been had the Court not intervened by its ,.
interim order when at the end of the proceedings the Court pronounces
its judicial verdict which does not match with and countenance its
E
own interim verdict. \'lhenever called upon to adjudicate, the Court
would act in conjunction with what is the real and substantial justice.
The injury, if any, caused by the act of the court shall be undone and
the gain which the paity would have earned unless it was interdicted
by the order of the court would be restored to or conferred on the
F party by suitably commanding the party liable to do so. Any opinion
to the contrary would lead to unjust if not disastrous consequences.
Litigation may tum into a fruitful industry. Though litigation is not
gambling yet there :s an element of chance in every litigation.
Unscrupulous litigants may feel encouraged to approach the Courts,
persuading the court to pass interlocutory orders favourable to them
G by making out a prima facie case when the issues are yet to be heard
and determined on mt:rits and if the concept of restitution is excluded
from application to interim orders, then the litigant would stand to
gain by swallowing the benefits yielding out of the interim order
even though the battle has been lost at the end. This cannot be
H countenanced. We are, therefore. of the opinion that the successful
KRISHNASWAMY S. PD. v. U.0.1. [PASA YAT. J ) 399

party finally held entitled to a relief assessable in terms of money at A
the end of the litigation, is entitled to be compensated by award of
interest at a suitable reasonable rate for the period for which the
interim order of the Court withholding the release of money had
remained in operation.

29. Once the doctrine of restitution is attracted, the interest is often B
a normal relief given in restitution. Such interest is not controlled by
the provisions of the Interest Act of 1839 or 1978."
1
J But the crucial question is whether the appellants were protected by the
order of the Court by which earlier interim order was vacated. As noted in
Eastern Coalfields 's, case (supra) while adjudicating the question as to any C
relief can be granted, the same can be modified to do real and substantial
justice. It is not a case where a right has been created and another party is
impoverished because of the order dated 1.8.1991 passed by the High Court.

The maxim 'actus curiae nerninem gravabit' i.e. an act of Court shall D
prejudice no man is an important one. The maxim "is founded upon justice
and good sense, and affords a safe and certain guide for the administration
of the law'', said Cresswell J. in Freeman v. Tranah. (12 C.B. 406). An
unintentional mistake of the Court which may prejudice the cause of any
party must and alone could be rectified.
E
The maxim of equity, namely, actus curiae neminem gravabit an act of
court shall prejudice no man, is founded upon justice and good sense which
serves a safe and certain guide for the administration of law. The other
relevant maxim is, lex non cogit ad impossibilia the law does not compel a
man to do what he cannot possibly perform. The law itself and its
administration is understood to disclaim as it does in its general aphorisms, F
all intention of compelling impossibilities, and the administration oflaw must
adopt that general exception in the consideration of particular cases. (See: Ml
s U.P.S.R.T.C. v. Imtiaz Hussain, [2006] 1 SCC 380, Shaikh Salim Haji
Abdul Khayumsab v. Kumar and Ors., [2006] 1 SCC 46, Mohammod Gazi
v. State of MP. and Ors., [2000] 4 SCC 342 and Gursharan Singh v. New G
Delhi Municipal Committee, [1996] 2 SCC 459.

One thing is crystal clear from the order dated 1.8.1991 that the
appellants wanted to take back the money that had been paid to the prospective
vendor. Submission was made on behalf of the appellant that a sum of Rs.6
H
400 SUPREME COURT Rl-:l'ORTS 120061 2 S.C.R.

A lakhs paid by way of advance may be refunded. By seeking the return of the
advance, the appellants havt' acquiesced to the property being sold in auction. l"' •
I
In the order it was clearly mentioned that it was open to the writ petitioners
(the present appellants) to seek refund of the same from the transferor namely,
respondent No.4.

B The controversy can be looked at from another angle. This Court in
Union of India and Ors. v. Shatabadi Trading & Investment Pvt. Ltd and
Ors., [2001] 6 SCC 748 <lea.It with a somewhat similar issue. In paragraphs
3 and 9 of the judgment it was noted as follows:

"3. The High Court admitted the writ petition and granted interim
c order of stay restraining the Department from proceeding further in
the matter. Against the said interim order, a special leave petition was
preferred before this Court. During the pendency of the proceedings
before this Court, an order was made on 25-4-1994 directing that the
property be auctioned subject to bid confirmation by this Court.
D Auction was held and Smt. Anju Jain, Mr. Vineet Jain and Mr. Manish
Jain as the highest bidders of the property offered their bid at Rs.
4.0 I crores and permission was sought for confirmation of the same.
Various pleadings were raised in those proceedings to the effect that
the auction itself was a farce and stage-managed by the appropriate
..
authority in collusion with Mr. Vinod Jain and the property was
E purchased by him in the name of his wife and two sons for Rs. 4.0 I
crores and that ifthe said bid was allowed, it would be a fraud on the
Government and pubHc exchequer and the writ petition filed before
the High Court challenging the validity of the proceedings initiated
under Chapter XX-C was yet to be considered. However, this Court
F after hearing the matter at length rejected the said objections of the
intending purchasers and confirmed the same on 19-9-1994. A sale
deed has been executed by the appropriate authority in favour of the
highest bidders and it is significant to note that the original owner of
the property Arjun Anand, Respondent 9 herein has not challenged
the aforesaid impugned order of the Department and in fact without
G any protest received a sum of Rs. I. 75 crores from the Department
and a further amount of Rs. 14 03,500 by way of interest. He had
accepted the amount without any protest and has not contested the
matter either in the Hign Court or in this Court and thereafter the said
SLP (C) No. 6040 of 1994 filed by the appropriate authority along
H with other connected matters was disposed of as having become
KRISHNASWAMY S. PD. v. U.0.1. [PASAYAT . .I.[ 401

infructuous iri view of the auction-sale held and confirmation thereof A
by this Court.

xxxxxxxxx

9. There is one other factor which is very significant, namely, that
this Court having allowed the auction of the property in question B
ending confirmation of the same and that order having become final,
now to allow the order made by the appropriate authority to be set
aside and to permit the parties to work out in appropriate proceedings
for restitution of the property would lead to a serious anomalous
position. When the transferor without demur allowed the property to
be sold pursuant to the orders of this Court and that sale having taken C
place and this Court having affirmed the same and the proceedings
by way of SLP filed under Article 136 of the Constitution coming to
an end as having become infructuous, the High Court could not have
brushed aside that sale in the manner it has been done. The impact
of such decision ought to have been taken note of by the High Court. D
Indeed in K. Basavarajappa v. Tax Recovery Commr., [1996] 11
sec 632 this Court has held that an agreement to sell creates no
interest in the property and in the absence of a decree of specific
performance of an agreement even though authorized by the general
power-of-attorney holder of the original owner of the property (sic
the purchaser, the appellant therein) had no locus standi to move an E
application for setting aside the auction-sale on offer to deposit full
tax dues. If we extend the said principle to the present facts, we find
it hardly possible to come to the conclusion the High Court has
arrived at. It is possible that the writ proceedings were still pending
before the High Court but those writ proceedings were not at the p
instance of the owner of the subject property and the agreement-
holder did not have any interest other than what was indicated in K.
Basavarajappa case [ 1996] II SCC 632. In that view of the matter,
we do not think the High Court should have ignored the effect of the
same''.
G
It is thus clear that the requirement relating to hearing read into the
provisions of Section 2690 by this Court will not apply to transactions which
., have become final or transactions where the department has already auctioned
the acquired property.

In view of the factual position noted above, tested in the background H
1
402 SU?REMF COURT REPORTS 120061 2 S.C.R.

A of legal principles set out in C.B. (Jaulam 's and Sha!abadi TradinK Cases
(supra) it is clear that there can be no interference as the property which is y ,
the subject matter of the compulsory purchase under Section 269UD had
already been sold by pubiic auction before the decision in C.B. Gautam 's
case (supra), and as there was no challenge by the owner of the property. As
B a consequence, the inevitable result is dismissal of the appeals which we
direct. No costs.

B.B.B. Appeals dismissed.

J •