PRIMA REALTY versus UNION OF INDIA AND ORS.

Citation: [1996] SUPP. 8 S.C.R. 665 · Decided: 18-11-1996 · Supreme Court of India · Bench: J.S. VERMA · Disposal: Appeal(s) allowed

Judgment (excerpt)

PRIMA REALTY 
V. 
UNION OF INDIA AND ORS. 
NOVEMBER 18, 1996 
[J.S. VERMA AND B.N. KIRPAL, JJ.] 
Income Tax Act, I961 : Sections 269-UD (1), 269-UE (I}, 269-
UG(l) and 269-UH (1). 
A 
B 
Income Tax-Immovable property-Compulsory purchase a/-
Payment of consideration-By cheque-Misdescription of name of payee C 
in cheque-Failure to correct some within prescribed statutory time-limit-
Ejfect of-Held: Misdescription of name amounted to description of another 
legal entity-Hence, order of purchase stood abrogated and property got 
revested in transferors-Income Tax Rules, I962, R48-L and Form 37. 
Income Tax-Immovable property-Compulsory purchase a/- D 
Payment of consideration-By cheque-Statutory time-limit-Computation 
of-Payee neither indicated mode of payment nor appeared personally to 
receive cheque-Hence cheque dispatched to payee by post on last date of 
statutory time-limit-Payee received cheque on some later date-Held: It 
was reasonable to assume that payment of a large amount would be made E 
by cheque and sent by post-Post office was agent of payee for purpose of 
receiving payment-Hence, though the cheque was received by payee on 
some later date it amounted to payment within prescribed period of statutory 
time-limit. 
Income Tax-Immovable property-Compulsory purchase of- F 
payment of consideration-Made by cheque-Short-fall in payment to 
transferee-Though entire consideration was made collectively to persons 
entitled to receive payment-Held: Adjustment of exact amount due to 
each person was an internal arrangement-Hence, such short-fall in 
payment by itself would not vitiate order of purchase. 
An agreement for sale of the right, title and interest of the 
respondents~transferors in respect of a property was made in favour 
of the appellant-transferee. The appellant-transferee was described 
as "Prima Realty, Partnership Firm". A statement in statutory form 
G 
No. 37-1 as required by Section 269-UG(l) and (3) of the Income Tax H 
665 
666 
SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R. 
A Act, 1961 read with Rule 48L of the Income Tax Rules, 1962 duly 
signed by all the parties to the agreement was filed with the 
appropriate authority giving details of the persons " interested in 
consideration". As required by the proviso to Section 269-UD(I) of 
the Act the purchase order had to be made within a period of3 months 
from the date of filing of the agreement. After a show cause notice 
B under Section 269-UD(l-A) of the Act to the persons concerned, the 
order of purchase was passed under Section 269-UD(I) of the Act 
acquiring the property and determining the apparent consideration 
payable by the Central Government. The purchase order correctly 
recorded the date on which the payment was required to be made by 
the Central Government under the Act. The cheque in favour of 
C appellant-transferee was drawn in the name of "Prime Realty Ltd." 
instead of Prima Realty, Partnership Firm". This cheque was sent by 
speed post on the required date of payment and was delivered to the 
appellant-transferee only on the next day. However, there was a short-
fall in the amount tendered to the appellant-transferee. Subsequently, 
the appellant-transferee returned the cheque with a covering letter 
D to the appropriate authority contending that the purchase order stood 
abrogated on account of non-compliance with Section 269-UG(I) of 
the Act. The appellant-transferee then filed a writ petition before 
the High Court for quashing the compulsory purchase order, and it 
was dismissed. Being aggrieved the appellant-transferee preferred the 
E present appeal. 
On behalf of the appellant-transferee it was contended that the 
tender of the amount of consideration was not as required by Section 
269-UH(I) of the Act and, therefore, there was revesting of the 
property in the transferors in accordance with Section 269-UD(I); 
F that the cheque was not a valid tender since the description of the 
payee in the cheque was of a different legal entity, i.e., a limited 
company otbe.r than the partnership firm which was the correct 
description of the appellant; that the cheque was sent by post and 
since the post office could not be deemed to be the agent of the 
G addressee and mere posting of the cheque on the last date for payment 
of consideration under Section 269-UG(I) of the Act would not operate 
as the delivery of cheque to the addressee and, therefore, the tender 
of the consideration was not a valid one; and that the pu

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