IMPORTANT POINT
If it is shown that the creditor authorised the debtor either expressly or impliedly to send a cheque by post the property in the cheque passes to the creditor as soon as it is posted.

Headnote:(i) TAXATION-Income Tax Act, 1961-Section 269UD(1)-Compulsory purchase order-Tender of consideration-Payment of large amount -No express stipulation of mode of payment of consideration-Payees did not indicate mode of payment inspite of letter received by them to indicate mode of payment-Payment made by cheque dispatched by post on the last date-Amounted to tender of payment to payee on the date when cheque was put in course of transmission through post-1960(1) SCR 236 : Relied on.
       Held : Admittedly, there was no express stipulation of the mode of payment of the consideration or that the cheque would be sent by post. However, according to the ordinary course of business usage the only reasonable and proper inference is that the payment of such large amount would be made by cheque issued by the Central Government and unless the payee went to collect the cheque personally, the cheque had to be sent by post to the payee. According to this implied term, it must be assumed that unless the cheque was collected personally by the payee it would be sent by post thereby constituting the post office as the agent of the payee for the purpose of receiving the payment. In the present case the payees did not indicate the mode of payment to them inspite of a letter received by them to indicate the mode of payment. The appellant did not even choose to reply to that letter. In these circumstances it was reasonable for the concerned authority to have waited for the cheque to be collected personally by the payee till the last date, i.e., May 31, 1995 and to have dispatched it by post on that day when no one came to collect the cheque personally from the authority. In such a situation, payment by cheque dispatched by post on May 31, 1995 amounted to tender of the payment to the payee on May 3, 1995 itself when the cheque was put in the course of transmission through post so as to be beyond the control of the sender from the time of its dispatch by post. (Para 8)
       (ii) Income Tax Act, 1961-Section 269UD(1)-Compulsory purchase order-Tender of consideration-Description of payee in cheque -In cheque, payee described as M/s. Prime Realty Ltd. -Correct description of transferee is Prime Realty which is a partnership firm-Tender of cheque could not be treated as tender to transferee -Non-compliance of requirement of Section 269UG(1)-Order u/s 269UD(1) stood abrogated-Property revested in transferors.

JUDGMENT

J.S. Verma, J.-This appeal by special leave is against the judgment dated December 15, 1995 by which the appellant s writ petition challenging the compulsory purchase order dated April 26, 1995 made by the appropriate authority under Section 269 UD (1) of the Income Tax Act, 1961 (for short "The Act") has been dismissed. In short, the challenged is on the ground that the compulsory purchase order stood abrogated under Section 269 UH (1) of the Act in view of the failure of the Central Government to tender under Section 269 UG (1) the amount of consideration required to be tendered within the period specified therein in respect of the immovable property which had vested in the Central Government under Section 269UE(1) of the Act.

2. The material facts are these. An agreement for sale of the right, title and interest of Respondents 6 to 12 and one Dr. V.S.J. Rao (in all eight transferors) was made on 13.1.1995 in favour of the appellant Prima Realty in respect of a property at Chembur in Bombay for an aggregate sum of Rs. 3,60,00,000/- (Rupees three crores and sixty lakhs). Out of the total sale consideration, a sum of Rs. 3,30,00,000/- was to be paid in cash, i.e., by pay orders/demand drafts payable in installments over a period of approximately 24 months and the remaining amount of Rs. 30,00,000/- was to be paid towards the cost of reconstruction of the bungalow occupied by Dr. Rao and his family in that property. A statement in statutory form No. 37-I as required by Section 269UC(1) and (3) read with Rule 48L duly signed by all the parties to the agreement was filed with the appropriate authority on January 30, 1995 giving details of the persons "interested in consideration". As required by the proviso to Section 269UD(1) the purchase order had to be made on or before April 30, 1995. Show cause notice was issued under Section 269UD(1A) addressed to respondents 6 to 12 and Dr. V.S.J. Rao (the transferors) and to the appellant (the transferee). The appellant/transferee was described in this notice as "Prima Realty, Partnership Firm". On April 13, 1995 Dr. V.S.J. Rao expired and was survived by respondents 13 to 16 as the legal heirs. Show-cause notices were then issued by the appropriate authority to the legal heirs of Dr. Rao. On April 26, 1995 the compulsory purchase order was passed by the appropriate authority under Section 269UD(1) of the Act acquiring the property and determining the apparent consideration payable by the Central Government at Rs. 3,58,84,384/- (Rupees three crores fifty eight lakhs eighty four thousand three hundred and eighty four only). The purchase order correctly records that the sum of Rs. 3,58,84,384/- has been arrived at, taking into account the discounted value of the sum of Rs. 3,30,00,000/- with reference to the date on which the payment was required to be made by the Central Government under the Act, i.e., on or before May 31, 1995 which works out exactly to Rs. 3,28,84,384/- (Rupees three crores twenty eight lakhs eighty four thousand three hundred and eighty four only). Thus adding the additional consideration of Rs. 30 lakhs (towards the cost of construction of the new bungalow) the total consideration payable by the Central Government was Rs. 3,28,84,384/- plus Rs. 30 lakhs amounting in all to Rs. 3,58,84,384/-. The purchase order also correctly described the appellant/transferee as "Prima Realty, partnership firm....". On April 29, 1995 a letter in the standard form was addressed by the appropriate authority to the transferors and the transferee requesting them for various documents and papers relating to the property; and the letter to the appellant/transferee was addressed correctly as "Prima Realty, partner".

3. Section 269UG(1) requires that the amount of consideration payable in accordance with the provisions of Section 269UF shall be tendered to the person or persons entitled thereto within a period of one month from the end of the month in which the immovable

Click Here to Read the rest of this document

1996 Supreme(SC) 1909

IMPORTANT POINT If it is shown that the creditor authorised the debtor either expressly or impliedly to send a cheque by post the property in the cheque passes to the creditor as soon as it is posted.

Cases Referred (2)

IMPORTANT POINT
If it is shown that the creditor authorised the debtor either expressly or impliedly to send a cheque by post the property in the cheque passes to the creditor as soon as it is posted.