1. Sale of property — Purchase order by Central Government under Section 269-UD(1), Income Tax Act, 1961 — Partial non-payment of consideration within the statutory period. (Para 2 , 3 , 4 )
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1995 Supreme(SC) 250
SUPREME COURT OF INDIA
J S Verma, K S Paripoornan
CHAND V. RAHEJA AND ANOTHER, APPELLANTS
VERSUS
UNION OF INDIA AND OTHERS, RESPONDENTS.
Civil Appeals Nos. ... of 1995 (Arising out of SLPs (C) Nos. 18415-16 of 1994), decided on February 17, 1995.
Important Points
Non-payment of the full consideration within the statutory period prescribed under Section 269-UG(1) of the Income Tax Act, 1961, results in the abrogation of the purchase order and the re-vesting of the property in the transferor as per Section 269-UH(1).
Subject
Taxation Law - Property Transfer
Act Referred
Headnote
Income Tax Act 1961 - Section 269-UD - IT Rules - Rule 48-1 – Purchase of property at discounted - Revesting of property in transferor - Appropriate authority issued notice under Section of Income Tax Act calling upon transferors and transferees to show cause as to why the Central Government should not make an order for purchase of the property - On an order was made by appropriate authority Section of Act for purchase of property at discounted value - By virtue of Section on making of order by appropriate authority property vested in Central Government on date of order – Held, Clear from operative part of purchase order that after referring to all facts including terms agreement consideration payable by Central Government was clearly stated at amount that no mentioned was made therein of any part of this amount being required to be paid at any later date or subject to obtaining vacant possession of any part of property including the outhouses and servant quarters - Order clearly says that this was amount for purpose of payment Section read with Section of Act - Counsel for Revenue did not dispute that if that submission is not accepted then the logical consequences mentioned in Section must follow abrogation of purchase order and re-vesting of property in transferor with all consequential results in accordance with law – Appeal allowed
Legal Category Hierarchy
Table of Contents
2. Whether partial non-payment of consideration within the period prescribed under Section 269-UG(1) results in abrogation of the purchase order and re-vesting of property under Section 269-UH(1). (Para 5 , 6 , 7 )
3. The purchase order specified a fixed consideration without conditions for deferred payment; failure to pay the full amount within the statutory period triggers automatic re-vesting. (Para 8 , 9 )
4. Non-payment of any part of the consideration required to be tendered under Section 269-UG(1) leads to abrogation of the purchase order and re-vesting under Section 269-UH(1). (Para 9 )
5. Appeals allowed — Purchase order abrogated — Property re-vested in transferor — Transferee permitted to withdraw deposited amount. (Para 11 )
6. Does partial payment of the purchase consideration within the statutory period prevent the re-vesting of property in the transferor?
No. Under Section 269-UH(1) of the Income Tax Act, 1961, if the Central Government fails to tender the whole or any part of the consideration within the specified period, the purchase order stands abrogated and the property re-vests in the transferor. (Para 4 , 9 )
7. Can the Central Government rely on terms of a private sale agreement to defer payment of consideration specified in a statutory purchase order?
No. If the statutory purchase order specifies a fixed consideration without mentioning deferred payments or conditions like vacant possession, the government must pay that full amount within the statutory period regardless of the underlying private agreement. (Para 8 )
8. What is the legal consequence of the Central Government's failure to tender consideration under Section 269-UG(1)?
The failure to tender the required consideration within the prescribed period results in the abrogation of the purchase order made under Section 269-UD(1) and the automatic re-vesting of the immovable property in the transferor. (Para 4 , 9 )
ORDER
1. Leave granted.
2. In respect of the property known as "Modi Bungalow", Napean Sea Road, Bombay, an agreement dated 24-10-1993 was entered into by Respondents 5 and 6, with the appellants for its sale for a consideration of Rs 19.25 crores payable in instalments. On 30-12-1993, the appropriate authority issued a notice under Section 269-UD(1-A) of the Income Tax Act, 1961 calling upon the transferors and transferees to show cause as to why the Central Government should not make an order for purchase of the property. On 27-1-1994, an order was made by the appropriate authority under Section 269-UD(1) of the Act for purchase of the property at a discounted value of Rs 18,68,54,154. By virtue of Section 269-UD(1), on making of the said order by the appropriate authority, the property vested in the Central Government on the date of the order.
3. In terms of the purchase order made under Section 269-UD(1), the Central Government was required to pay the amount of Rs 18,68,54,154 as the consideration for the said property in accordance with the provisions of the statute. It may be mentioned that the sum of Rs 18,18,54,154 alone was tendered by a cheque dated 25-2-1993 sent by speed post to the transferors which was delivered on 1-3-1994 against the amount of consideration of Rs 18,68,54,154 payable in terms of the said purchase order made by the appropriate authority. In other words the amount so paid on 1-3-1994 to the transferors by the Central Government fell short of the total consideration by the sum of Rs 50 lakhs only. The balance amount of Rs 50 lakhs was paid by the Central Government to the transferors much later on 8-4-1994 only. The only point involved for decision is the effect of non-payment of the balance amount of Rs 50 lakhs along with the amount which was paid by cheque delivered to the transferors by speed post on 1-3-1994.
4. According to Section 269-UG(1) the amount the consideration shall be tendered to the transferor within a period of one month from the end of the month in which the immovable property concerned becomes vested in the Central Government. For this reason the entire consideration had to be paid by the end of the month of February 1993 since the property had vested in the Central Government on 27-1-1994 when the purchase order was so made by the appropriate authority. Section 269-UH provides for the consequences of re-vesting of the property in the transferor on failure of payment or the deposit of the consideration in terms of Section 269-UG. Sub-section (1) of Section 269-UH to the extent it is material reads as under :
"269-UH. If the Central Government fails to tender under sub-section (1) of Section 269-UG or deposit under sub-section (2) or sub-section (3) of the said section, the whole or any part of the amount of consideration required to be tendered or deposited thereunder within the period specified therein in respect of any immovable property which has vested in the Central Government under sub-section (1) or as the case may be, sub-section (6) of Section 269-UE, the order to purchase the immovable property by the Central Government made under sub-section (1) of Section 269-UD shall stand abrogated and the immovable property shall stand re-vested in the transferor after the expiry of the aforesaid period."
5. The first submission of Shri Nariman, learned counsel for the appellant is that the tender of the amount of Rs 18,18,54,154 by cheque which the delivered to the transferor by speed post on 1-3-1994 was also not within the time prescribed by Section 269-UG(1) since the last date for the purpose was 28-2-1994. We are unable to accepted this submission. The cheque for that amount is dated 25-2-1994 and the same was despatched by speed post on 28-2-1994. Moreover, there is an affidavit filed on behalf of the Central Government wherein it is stated that the cheque was so despatched by speed post at the request of the transferor who expressed the inability to come and collect it p
