Facts

The Petitioner in that case was the intending purchaser of leasehold rights    in a plot of land and ownership rights in the structure standing thereon. The appropriate authority passed an order for purchase of the said property by the Central Government. The said Order was challenged by way of a writ petition before the Delhi High Court which matter came to be transferred to the Supreme Court as a test case. The Petitioner  had  challenged the constitutional validity  of the provisions of Chapter XX-C along with the action of the appropriate authority. Inter alia the challenge included passing of the Order in violation of    the principles of natural justice and no reasons being given in support of the conclusion to order pre emptive purchase. The Attorney General did not press his contentions on this part of the challenge. The Court has dismissed the challenge    to the constitutional validity on certain aspects and read down some provisions with which we are not concerned with in view of the fact that these provisions    are ineffective in relation toimmovable property transferred after 30.06.2002.

Issue

Whether the order passed by the appropriate authoring directing pre emptive purchase of immovable property without affording any opportunity of hearing to the concerned parties and giving reasons in support of the conclusion reached by him is bad in law.

Views

Generally the requirement of giving a reasonable opportunity of being heard before  an order is made which would have adverse civil consequences for the parties     has to be read into the provisions of the relevant sections. In the absence of the same, the validity of the section would be open for serious challenge. Though it  has recognized that there could be situations which could demand the exclusion   of the rules of natural justice by reason of diverse factors like time, place, the apprehended danger and so on, but declined to accept the Revenue’s submission that the time limit provided to the appropriate authority in the said chapter was

so short as to preclude an enquiry or show cause altogether. Moreover, this would also ensure fair play in the proceedings. Accordingly, though not specifically provided it has read the requirement of reasonable opportunity of hearing being given into the provisions of Chapter XX-C. Court has also agreed that recording     of reasons before passing of the order is also necessary because this would enable   a party to challenge an adverse order as erroneous, irrational or being based on irrelevant facts and considerations. This would also act as a deterrent against possible arbitrary action by the quasi-judicial or the executive authority invested with judicial powers. (Followed Karaipak v. UOI AIR 1970 SC 150, Olga Tellis v. Bombay Municipal Corpn. [1985] Suppl. 2 SCR 51 at 89, UOI v. Col. J.N. Sinha [1971] 1 SCR 791)

Held

The requirement relating to compliance with the principles of natural justice and giving of reasons in support of an adverse order has to be read into the provisions though not specifically provided. (TC No 26 of 1987 dt. 17-11-1992)

Editorial: Chapter XX-C comprising of sections 269U to 269UO were  inserted  by the Finance Act, 1986 and was effective only in relation to any immovable property effected on or before 30.06.2002. However the principles of natural justice enunciated therein has universal application. At one place in the judgment, the Court has also referred to various factors which would justify the difference between the alleged fair market value and the actual consideration for which the transfer takes place which might be relevant for the purposes of sections like 43CA, 50C and 56(2)(x) of the Income-tax Act.

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– Mahatma Gandhi