ASGAR S. PATEL AND ORS. versus UNION OF INDIA AND ORS.

Citation: [2000] 3 S.C.R. 483 · Decided: 25-04-2000 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed

Judgment (excerpt)

.. -
ASGAR S. PATEL AND ORS. 
A 
v. 
UNION OF INDIA AND ORS. 
APRIL 25, 2000 
[S. RAJENDRA BABU AND R.C. LAHOTI, JJ.] 
B 
Income Tax Act, 1961: ss. 269-UC, 269-UD, 269-UE, 269-UF, 269-UG 
and 269-UH-Transfer of Property Act, 1882-S. 55(6)(b) and 55(4)(b)-
Vesting of property in Central Government-Pre-paid purchase money by 
transferees-Recovery of-Agreement between the parties clearly stipulating c 
that if transferees were not refunded pre-paid purchase money by Appropriate 
Authority, they would be entitled to claim the same from transferor-Writ 
... 
petition by transferees claiming nfundfrom Appropria;e Authority-Validity 
• 
of-Held, vesting of property in Central Govemment cannot defeat the 
transferees' lien under S. 55(6)(b) of T.P. Act-Vesting not free from encum-
D 
brance unless annulled by Appropriate Authority-However, in the instant 
case since the parties have entered into clear and express contract creating 
mutual rights and obligations, they are bound by it-Thus, transferees not 
entitled to claim any relief under the writ jurisdiction-However they were at 
liberty to seek their remedy against the transferor under the agreement-
Constitution of India, 1950: Article 226. 
E 
Under an agreement to sell immovable property, appellant-transfer-
ees paid part of purchase money to transferor and agreed to pay the 
balance consideration of completion of sale. It was specifically agreed 
between the parties that in the event of compulsory purchase of property 
by Central Government and if transferees were not refunded the pre-paid 
F 
purchase money by Appropriate Authority, then they would be entitled to 
recover the same from transferor. Appropriate Authority passed an order 
for compulsory purchase of property in favour of Central Government and 
distributed the amount of consideration to transferor after paying dues to 
the bank to satisfy the encumbrance of mortgage. Appellant-transferees' 
G 
representation claiming refund of pre-paid purchase money was not con-
,...t 
sidered by the Appropriate Authority. Appellants' writ petition and writ 
petition and writ appeal were also dismissed by High Court. Hence the 
present appeal. 
Dismissing the appeal, the Court 
H 
483 
A 
B 
c 
D 
E 
F 
G 
H 
484 
SUPREME COURT REPORTS 
(2000] 3 S.C.R. 
HELD : 1. Vesting of the property in the Central Government under 
the order of compulsory purchase cannot defeat the transferees' lien under 
Section 55(6)(b) of the Transfer of Property Act. A charge under Section 
55( 6)(b) of T.P. Act was created soon on payment of purchase money. Just 
as the seller has a charge on the property for the unpaid price under S. 
55( 4)(b) of the T.P. Act, the buyer has a charge for price pre-paid. Thus the 
amount of any purchase, money property paid by the buyer in anticipation 
of the delivery and also the earnest money where the buyer had justifica-
tion for declining to accept the delivery constitutes a charge on the property 
forming subject matter of sale to the extent of seller's interest in the 
property and thus would be an encumbrance on the property. Thus, vesting 
of property in Central Government cannot be free from encumbrance 
unless the Appropriate Authority has exercised the power conferred by the 
proviso to sub-section (1) of S. 269-UE of the Income Tax Act and annulled 
the encumbrance. [495-E; 493-G; 492-D; 493-A-B] 
C.B. Gautam v. Union of India & Ors. , [1993) 1 SCC 78; Delhi 
Development Authority v. Skipper Construction (P) Ltd., (2000) AIR SCW 
113, relied on. 
Saidum Nessa Hoque & Ors. v. Calcutta '\.yapar Pratishtan Ltd., AIR 
(1978) Cal. 285, approved. 
2.1. If there is no dispute between the buyer and the seller or a third 
person as to the amount of purchase money to be paid or as to the appor-
tionment of the amount forming part of the purchase money then the 
amount must be tendered by the Centra~ Government to the person or 
persons entitled thereto. However, if there be any dispute raised as to the 
apportionment of the amount by more then one person staking claims 
seeking payment of the amount resulting into a dispute as to the apportion· 
ment of the amount of consideration, in that case the Central Government 
shall deposit so much part of the apparent consideration as is the subject 
matter of dispute with the Appropriate Authority as provided by Sub-
section (2) of Section 269-UG. Failure to make such tender shall result in 
the pre-emptory purchase being abrogated and the immovable property 
sh

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