JUDGMENT
N.G. Nandi, J.
(1) In a suit for specific performance of an agreement to sell dated 14th January, 1985 relating to property bearing plot No.G-1, Rajouri Garden, New Delhi issues had been framed on 25th July, 1991 and it has been ordered that issue No.4 be heard as a preliminary issue. Issue No.4, reads as under:- “WHETHER the suit is maintainable in view of provisions of Section 269UC of the Income-tax Act? If so, its effect?”
(2) It is submitted by Mr. Makhija, counsel for the plaintiff that Section 269UC of the Income-tax Act (hereinafter referred to as the ‘Act’) is not attracted since it is an agreement to sell the property, specific performance whereof is claimed in the suit and the consideration is more than Rs.5 lakhs. That in the present case the agreement is dated 14th January, 1985 and Section 269UC of the Act came into force in 1987. That apart from the relief of specific performance, the suit of the plaintiff is for compensation and damages and suit would be maintainable and the question of non maintainability of the suit will not come in the way of the plaintiff.
(3) As against this, it is submitted by Mr. R.G.Srivastava, counsel appearing for defendants 1 to 3 that Section 269UC of the Act contains mandatory requirement and under Section 269UC of the Act transfer is prohibited in absence of the compliance with the requirement of obtaining Income-tax Clearance Certificate. That there is no time limit for the validity of the certificate under Section 269 of the Act. That the agreement is not a contract and the suit is not maintainable.
(4) It is submitted by Ms. Geeta Mittal counsel for defendant No.4 that the agreement to sell dated 14.1.1985 would be void under Section 23 of the Contract Act for want of compliance with the requirement of Section 269UC of the Act. That the purpose of Section 269UC is the public policy.
(5) That in the present case, the plaintiff alleges an agreement to sell immovable property, namely, plot executed by defendants 1 to 3 and admittedly at the stage much prior to executing the regular conveyance or sale deed the question of non compliance with Section 269UC of the Act is raised.
(6) In the plaint, the plaintiff has prayed for the relief of specific performance of the agreement dated 14th January, 1985 and in the event of the failure of the defendants to execute the sale deed in favor of the plaintiff inspite of decree by the Court then the sale deed be drawn up, executed and is registered by appointing a officer of the Court for the said purpose and the plaintiff be put in actual physical vacant possession of the suit plot.
(7) The question therefore would be as to what are the requirements of Section 269UC of the Act and at what stage the same can be invoked. Section 269UC of the Act provides as under:- “(1)Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882), or in any other law for the time being in force, no transfer of any immovable property of such value exceeding five lakh rupees as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub-section (2) at least (four) months before the intended date of transfer. (2) The agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties. (3) ……………………………………….”
(8) It would be seen from the above reproduced portions contained in Section 269UC (1) and (2) of the Act, the transfer of immovable property, the value whereof exceed five lakh ruppees would not be permissible unless the agreement referred to in sub-section (1) is reduced to writing in a form of a statement by each of the parties to such transfer or by any of the parties to such transfer and that the same shall be atleast four months before the intended date of transfer. It will be noticed from the language employed in sub-section (1) that the agreement referred to therein shall be reduced to writing in the form of a statement by each of the parties or any of the parties to such transfer and that at the stage of sub-section (1) and (2) the transaction is at the stage of ‘intended transfer’ and not the transfer. It need hardly be said that the transfer of immovable property, be it with or without the compliance of the provisions of Section 269UC of the Act could be only by the execution of a registered transfer deed executed by the transfoer or; and in case of the property exceeding Rupees five lakhs in value subject to the above document of intending transfer reduced to writing, the same shall be in accordance with the requirements of sub-section (2) of the said Act and thereafter sub-section (3) envisages the statement referred to in sub-section (2) shall be in the prescribed form; set forth such particulars as may be prescribed; and be verified in the prescribed manner, and shall be furnished to the appropriate authority. It would be seen that unless the intended transfer in case of immovable property exceeds five lakh ruppees in value is approved and sanctioned by the appropriate authority after compliance with requirements of sub- sections (1), (2) and (3) thereof, the intending sale or transfer would not be permitted. In other words before entering into the regular sale deed sanction is required to be obtained under Section 269UC of the Act for the intended transfer in favor of the transferee and the transfer would be completed only after such sanction is accorded by the authority under Section 269UC of the Act. Thus the stage of invoking or applying Section 269UC of the Act would be prior to the entering into the transfer i.e. entering into a regular sale deed and not at the stage of entering into an agreement to sell, since the agreement to sell is merely an agreement to sell or transfer the property and not the agreement whereby the property is transfered and no property could be transfered by mere agreement to sell as it merely gives a right to purchase the property and nothing more.
(9) Similar question came up for consideration before the learned Single Judge of this Court in the case of Rajesh Aggarwal v. Balbir Singh wherein it is held that “in a suit for specific performance of an agreement, failure to obtain Income-tax clearance, cannot non-suit the plaintiff tranferee, on the ground that the agreement to sell was not enforceable without Income-tax clearance, in view of S. 269-UC of Income-tax Act. In the absence of such clearance no sale could be effected as it would be hit by the relevant provisions of Income-tax Act and rules framed thereunder but for non-compliance of provisions under Section 269-UC of Income-tax Act, the agreement to sell does not become illegal”.
(10) On behalf of the defendants reliance is placed in the case of Universal Plast Ltd. v. Santosh Kumar Gupta , it is held that the agreement to sell spindles without prior permission of Textile Commissioner as contemplated by Control Order is illegal and cannot be enforced and the advance paid pursuant to agreement is not recoverable. It is held considering Sections 23, 24 and 65 of the Contract Act and Section:3 of Essential Commodities Act (Woollen Textiles (Production and Distribution) Control Order (1962), Clause 3.”
(11) In the case of Universal Plast Ltd. letter Ex.P-4 also recorded the fact that the possession of the spindles has already been delivered to the defendant admittedly without obtaining the prior permission of the Textile Commissioner as contemplated by the Control Order and the defendant had paid Rs.10, 000.00 towards part payment and the balance amount of Rs.92,440-18 was agreed to be paid to the plaintiff. It is in the light of these facts that an agreement to sell spindles without prior permission of the Textile Commissioner as contemplated by the Control Order was held illegal and unenforceable and the advance paid pursuant to the agreement not recoverable.
(12) As pointed out above, in the present case the sale has not taken place and it is only an agreement to sell the immovable property in question and the agreement to sell would be nothing but a memorandum of understanding between the parties under which the plaintiff and defendants 1 to 3 are required to perform the conditions contemplated therein. All that could be said is that the agreement to sell does not create any right in the property and it merely gives a right to purchase the property to the plaintiff i.e. the intending vendee, the principle laid down in the Universal Plast (supra) would not be applicable to the present case.
(13) The defendants have also relied on the decision in the case of Shiv Kumar Chadha v. Municipal Corporation of Delhi and Others. wherein the Supreme Court after considering Sections 343 and 347E of the Delhi Municipal Corporation Act, 1957 held that inspite of the bar of jurisdiction of the civil courts, prescribed under sub-sections (4) and (5) of section 343 and section 347E over the power of the Courts, under certain special circumstances, the Court can examine the order on “jurisdictional question”. In my opinion, the principle laid down in this decision cannot be applied to the present case as the facts involved therein being altogether different.
(14) Suffice it to say for the present purpose that Section 269UC would come to play only when the document of conveyance intended to confer title on the transfer by the transferor is to be executed and not at the stage when the parties are only at the stage of agreement to sell. Even assuming that a decree for specific performance is to be passed in favor of the plaintiff then directions to comply with the requirements, if any, of Section 269UC of the Act could be issued under the decree which may be passed against the defendants but it cannot be said that for want of Income-tax clearance under Section 269UC of the Act, the suit for specific performance of an agreement to sell dated 14th January, 1985 would not be maintainable as the agreement to sell merely signifies the intention to sell on full filment of conditions stated therein and for this reason, I am of the view that issue No.4 deserves to be answered in the affirmative by holding that the suit for specific performance of an agreement to sell dated 14th January, 1985 without compliance with the requirements of Section 269UC of the Act, for the reasons aforestated, would be maintainable.
(15) It, therefore, follows from the above that issue No.4 is answered in the affirmative. As far as other issues involved in the suit are concerned, the same would be decided in accordance with law.