ADAIR DUTT & CO. INDIA PVT. LTD. vs APPROPRIATE AUTHORITY,INCOME TAX DEPTT.

The Supreme Court addressed whether a bona fide statutory tenant retains the right to possession after an order of purchase under Section 269-UE(1) of the Income Tax Act, 1961. The Court held that the tenant's rights are not extinguished by the vesting of property in the Central Government, as established in C.B. Gautam vs. Union of India, which invalidated the phrase 'free from all encumbrances'. The Court affirmed that the tenant's rights are protected under the Tamil Nadu (Lease and Rent Control) Act, 1960, and thus the appeal was allowed, reversing the High Court's decision.