Gist of recent judgments – 9th March 2000

Compulsory acquisition of immovable properties by Government of India under Chapter XXC of Income Tax Act
 The Government believed that the parties were under-selling immovable properties in order to save more stamp duty registration charges and tax under the Income Tax Act, hence the Govt. of India introduced Chapter XXC of Income Tax Act. Initially the limit of transaction was Rs. 10 lakhs or more so far as Greater Mumbai is concerned. This limit has now been enhanced to Rs. 75 lakhs. The constitutional validity of this provision was challenged in the Supreme Court of India which held that Chapter XXC of the Income Tax Act was valid. (See S.C. Judgement in the case of Keshav Ram & Co. vs. Union of India, reported in (1989) 3 S.C.C. Page 151).
Supreme Court has also held that if the Government of India takes a decision to compulsorily acquire the immovable property, due notice should be given to the parties concerned and proper hearing should be given to them before taking any decision for compulsory acquisition of immovable property.
Acquisition of Immovable property for Public purposes under the Land Acquisition Act, 1984
The Land Acquisition Act authorizes State Government inter alia, to acquire immovable property for public purposes or for benefit of a Limited Company having certain objects. Sometimes persons whose properties are notified to be acquired submit their opposition when Enquirer is held by the Special 5A of the said Act. If any of the parties affected by the proposed acquisition initiates proceedings for quashing of the acquisition proceedings, the Court may on finding that the acquisition proceedings  were not valid, quash the Notification u.s. 6 of the said Act. But that party which approaches the Court for the relief alone is entitled to the benefit of the decision. Other parties whose property is notified for acquisition are not entitled to take any advantage of the decision so given in favour of only one party who approached the Court.
(See S.C. Judgement reported in 1994 (4) ALL MR in the case of Delhi Administration v.s. Gurdip Singh Urban & Ors. Page 678).
Government dues such as Sales Tax, Income Tax, Land Revenue etc. have priority over other creditors
Borrowers when they approach financial institutions for financial facilities, financial institutions require borrowers to furnish adequate security. Generally, whenever borrower owns any immovable property, he creates an equitable mortgages in favour of the financial institutions as security for repayment of the proposed loan financial facilities. In proceedings initiated by financial institutions for recovery of its claim, it moves the Court for appointment of Receiver of the mortgages property and Court generally appoints a Receiver of the mortgages property. The Government can file a claim before the Court Receiver claiming priority over the financial institutions. The Court has held that claim of the Government for recovery of tax, etc has a priority over all other creditors whether secured of unsecured. (See the Judgement of Bombay High Court reported in 1994(4) ALL MR 679 Bank of Maharashtra vs. Konkan Companies Pvt.Ltd. & Ors.