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Income Tax Act, 1961 . Sections 269-UD (I), 269-UE (I), 269-UG(1) and 269- UH (I). Income Tax-Immovable property-Compulsory purchase of- Payment of consideration-Hy cheque-Misdescription of name of payee in cheque-Failure to correct same within prescribed statutory time-limit- Effect 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, 1962, R.48-L and Form 37. Income Tax-Immovable property-Compulsory purchase of- 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 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 Jo payment within prescribed period of statutory time-limit. Income Tax-Immovable property-Compulsory purchase of- 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 persons 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 Ready, Partnership Firm”. A statement in statutory form No. 37-1 as required by Section 269-UG(l) and (3) of the Income Tax 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(l) of the Act the purchase order had to be made within a period of 3 months from the date of filing of the agreement. After a show cause notice under Section 269-UD(l-A) of the Act to the persons concerned, the order of purchase was passed under Section 269-UD(l) 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 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 to the appropriate authority contending that the purchase order stood abrogated on account of non-compliance with Section 269-UG(l) 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 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(l) of the Act and, therefore, there was revesting of the property in the transferors in accordance with Section 269-UD(l); 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 other 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 addressee and mere posting of the cheque on the last date for payment of consideration under Section 269-UG(l) 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 purchase order made under Section 269-UD(l) must be quashed. -Allowing the appeal, this Court HELD :”1.1. The appellant-transferee is a partnership firm with the name “Prima Realty” but the cheque described the payee as “Prime Realty Ltd,” which referred to a different legal entity, a limited company instead of a firm. The tender of the cheque could not, therefore, be treated as tender to the appellant-transferee. It was reasonable to assume that (he cheque would not be honoured by the banker to credit the amount of that cheque to the account of the appellant since it could relate to another legal entity, a limited company. In such a situation the appellants were justified in taking the view that the cheque was not meant for them, and they could not lawfully require the bank to deposit the amount of the cheque in their account. There was, thus, clear non-compliance of the requirement of Section 269-UG(I) of the Act, The consequence envisaged by Section 269-UH of the Act ensued. [674-E-G] 1.2. Although the Central Government sent a corrected cheque in the name of “Prima Realty”, the same was admittedly of no consequence. [671-B| 1.3. Accordingly, the order made under Section 269-UD(l) of the Act by the appropriate authority stood abrogated and the property was revested in the transferors in terms of Section 269-UH(l) of the Act with the other consequential results including those specified in Section 269-UH(2) and Section 269-UD(3) of the Act. In view of the fact that the cheque for the amount has not been encashed, the remaining amount has become refundable to the Central Government, which would be refunded by the appellants with interests @12% per annum from the date due till the date of payment. |674- H, 675-AB| Davies v. Elsby Brothers Ltd., (1960) 3 All, E.R. 672, referred to. 2. According to the ordinary course of business usage the only reasonable and proper inference is that the payment of a 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 payee 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 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 amounted to tender of the payment to the payee on that date 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. [672-EH, 673-A] CIT. Bihar v. M/s. Pamey & Co., [1959] Supp. 2 SCR 868 and Shri Jagdish Mills Ltd v. CIT, |1960| 1 SCR 236, relied on. 3. The payment of the entire consideration due under the purchase order was made collectively to the persons entitled to receive the payment even though there was some difference in the amount tendered to the appellant- transferee. The adjustment of the exact amount due to each, between the several persons who had to share the total amount of consideration was an internal arrangement between them, and this by itself would not vitiate the tender of the amount of consideration and order of purchase as required by Section 269-UG(l) of the Act. [673-CD| CIVIL APPELLATE JURISDICTION :Civil Appeal No.l4554of 1996. From the Judgment and Order dated 15.12.95 of the Bombay High Court in W.P. No. 1106 of 1995. F.S. Nariman, Subhas Sharma, P.H. Parekh, Jay Munim and Ms. Sunita Sharma for the Appellant. Dr. R.R. Mishra, Ranbir Chandra, B.K. Prasad, S.N. Terdol and Mukul Mudgal for the Respondents.

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CASE NO.:
Appeal (civil) l4554 of 1996

PETITIONER:
PRIMA REALTY

RESPONDENT:
UNION OF INDIA AND ORS.

DATE OF JUDGMENT: 18/11/1996

BENCH:
J.S. VERMA & B.N. KIRPAL

JUDGMENT:
JUDGMENT

1996 Supp(8) SCR 665

The Judgment of the Court was delivered by

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(I) of the Income Tax Act, 1961 (for short
"The Act") has been dismissed. In short, the challenge 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 269 110 (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 269 UE (1) of the
Act.

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
transferee) 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 instalments 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, 37-1 as
required by Section 269 UC (1) and (3) read with Rule 481, duly signed by
all 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 269 UD(I) the
purchase order had to be made on or before April 30, 1995. Show cause
notice was issued under Section 269 UD (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 Finn". 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 269 UD(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 dale 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''.

Section 269 UG(1) requires that the amount of consideration payable in
accordance with the provisions of Section 269 UF 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 property concerned becomes vested
in the Central Government under Sub-section (1), or, as the case may be,
Sub-section (6) of Section 269 UE. In the present case, the purchase order
having been made on April 26, 1995 the property concerned became vested in
the Central Government under Sub-section (1) of Section 269 UE on the date
of that order. The amount of consideration, namely, Rs. 3,58,84,384 became
payable and was required to be tendered to the person or persons entitled
thereto under Section 269 UG(1), within a period of one month from the end
of the month of April 1995, i.e., on or before May 31, 1995. The persons
entitled to the payment of the amount of consideration were the
transferors/respondents 6 to 12 and the legal heirs of Dr. V.S. J, Rao and
the transferee/appellant to the extent of their shares in the
consideration. The appellant/transferee became entitled to the sum of Rs.
66 lakhs which had been paid by them as earnest money to the transferors;
and transferors were entitled to the remaining amount to the extent of
their shares therein, the details of which were given in the statutory form
No. 37-1 filed with the appropriate authority. The dispute relates to the
compliance of this requirement under Section 269 UG(l)of the Act.

On May 31, 1995 the Central Government issued nine cheques, all dated May
31, 1995 drawn on the State Bank of India in fovour of respondents 6 to 12,
Dr. V.S.J. Rao's heirs and the appellant/transferee aggregating Rs.
3,58,84,384. The cheque in favour of the appellant was for Rs. 60 lakhs
only, instead of Rs. 66 lakhs and was drawn in favour of "Prime Reality
Ltd." instead of Prima Realty, partnership firm". This cheque was sent by
speed post on May 31, 1995 and was delivered to the appellant only on June
1, 1995. On June 19, 1995 the appellant returned the cheque dated May 31,
1995 for Rs. 60 lakhs with a covering letter to the appropriate authority
contending that the purchase order stood abrogated on account of non-
compliance with Section 269 UG(1). On June 21, 1995 the appellant filed the
Writ Petition No. 1106 of 1995 in the Bombay High Court for quashing the
compulsory purchase order.

Thereafter on June 22., 1995 the Central Government sent a corrected cheque
for Rs. 60 lakhs in the name of "Prima Realty" which is admittedly of no
consequence, if the consequence of re-vesting of the property in the
transferors on the failure of payment of Consideration within the
prescribed period has ensued by virtue of Section 269Uh (1). However, the
Division Bench of the Bombay High Court dismissed the writ petition. Hence
this appeal by special leave.

Shri F. S. Nariman, learned counsel for the appellant advanced several
arguments but his main contention is that the tender of the amount of
consideration was not as required by Section 269 UG(1) and, therefore.
there was re-vesting of the property in the transferors in accordance with
Section 269 Uh(l). On this basis it was contended that the purchase order
dated April 26, 1995 made under Section 269 UD(1) must be quashed and
consequential reliefs flowing from the re-vesting of the properly in the
transferors under Section 269 UH, must be granted.

Before we deal with the main contention, we may mention the other points
urged by Shri Nariman in which we find no merit.

It was urged by Shri Nariman that the tender of the consideration was made
only on June 1, 1995 when the cheque was delivered by post to the appellant
even though it was dispatched on May 31, 1995 because the post office could
not be deemed to be the agent of the addressee and mere posting of the
cheque on May 31, 1995 would not operate as the delivery of cheque to the
addressee. He argued that the appellant at no time made any request for the
consideration to be sent by post and, therefore, the post Office would not
become the agent of the addressee.

The law on the point is settled by the decisions of this Court. in
Commissioner of Income-tax,. Bihar & Orissa v. M/s Patney & Co., [ 1959]
Suppl. 2 SCR 868, it was held that "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. Therefore, the post office is an agent of the person to whom the
cheque is posted if there by any express or implied authority to send it by
post." In Shri Jagdish Mills Ltd. v. The Commissioner of Income-tax, [I960]
1 SCR 236, it was held as under. ..........The stipulation in the contract
between the appellant and the Government was that the payment would he made
by cheques. The Government of India was located in Delhi and the cheques
would be necessarily drawn by it .from Delhi. Could it be imagined that in
the normal course of affairs the cheques thus drawn in Delhi would be sent
by a messenger to Baroda so that they may be delivered to the appellant in
Baroda? Or that the officer concerned would come to Baroda himself and hand
the same over to the appellant in Baroda? The only reasonable and proper
way of dealing with the situation was that the payment would be made by
cheques which the Government would send to the appellant at Baroda by post.
According to the course of business usage in general Which appears to have
been followed in this case, the parties must have intended that the cheques
should be sent by post which is the usual and normal agency for
transmission of .such articles. If that were so, there was imported by
necessary implication an implied request by the appellant to send the
cheques by post from Delhi thus constituting the Post Office its agent for
the purposes of receiving those payments." (page 247)

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 31, 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. This contention has no merit.

The next contention of Shri Nariman is that the exact amount required to he
paid to the appellant was the sum of Rs. 66 lakhs and not Rs. 60 lakhs for
which the cheque was sent on May 31. 1995 since the total amount paid as
earnest money .by the appellant was Rs. 66 lakhs. In the facts of the
present case we do not find any merit even in this contention.. There is no
dispute that the total amount of Rs. 3,58,84,384 inclusive of Rs. 60 lakhs
sent to the appellant/transferee was tendered by cheque by the concerned
authority collectively to the persons entitled to the payment. The payment
of the entire consideration due under the purchase order was, therefore,
made collectively to the persons entitled to receive the payment even
though there was some difference in the amount tendered to the
appellant/transferee. The adjustment of the exact amount due to each.
between the several persons who had to share the total amount of
consideration was an internal arrangement between them, and this by itself
would not vitiate the tender of the amount of consideration as required by
Section 269 UG (I). This contention also fails.

The question now is of the effect of the description of the payee in the
cheque for the sum of Rs. 60 lakhs which was sent to the appellant on May
31, 1995. In the cheque, the payee was described as "M/'s Prime Realty Ltd.
" The question is : whether this can be treated as a valid tender of the
amount to the appellant?

The contention of Shri Nariman is that it was not a valid tender to the
appellant since the description of the payee in the cheque was of a
different legal entity, i.e., a limited company other than the partnership
firm which is the correct description of the appellant. The point for
consideration is : whether the description of the payee in the cheque was
of a legal entity distinct from, and other than the appellant. If it be so.
.as contended by Shri Nariman, it was not a valid tender to the appellant/
transferee, The result would be a deficiency in lender of the amount of
consideration to this extent and, therefore, non-compliance of Section 269
UG (1) resulting in the consequences provided in Section 269 UH.

Admittedly the correct description of the appellant/transferee is ''Prima
Realty" which is a partnership firm. It is settled that the firm name is a
compendious mode of describing the partners collectively; and a limited
company, by itself a legal entity, is a distinct person or legal entity,
The description of the payee in the cheque was of a limited company named
as "Prime Reality" and not even "Prima Realty" which is the firm name of
the appellant's partnership firm, Does it describe the appellant as the
payee?

In Davies v. Elsby Brothers, Ltd.. (I960) 3 All E.R. 672 at 676, Devlin,
L.J. indicated the test for deciding whether a misdescription of this kind
is merely a misnomer or the description of a different person or legal
entity. The test is: "......"1 cannot tell from the document itself whether
they mean me or not and I shall have to make inquiries", then it seems to
me that one is getting beyond the realm of misnomer. One of the factors
which must operate on the mind of the recipient of a document, and which
operates in this case, is whether there is or is not another entity to whom
the description on the writ might refer.'' in that decision amendment was
sought to change the defendant from 'EB (a firm)' to 'EB (Ltd.)' and it was
held that these were two different entities, the firm and the company; and
therefore, it was not a case of mere amendment to correct the misnomer but
one of substitution by one entity for another. The position in the present
case is similar.

The appellant/transferee is a partnership firm with the name "Prima Realty"
but the cheque described the payee as "Prime Reality Ltd. " which referred
to a different legal entity, a limited company instead of a firm. The
tender of the cheque could not, therefore, be treated as tender to the
appellant. It was reasonable to assume that the cheque would not be
honoured by the banker to credit the amount of that cheque to the account
of the appellant since it could relate to another legal entity, a limited
company. In such a situation the appellants were justified in taking the
view that the cheque was not meant for them, and they could not lawfully
require the bank to deposit the amount of the cheque in their account. The
result is that the tender of the amount of consideration was short to the
extent of Rs. 60 lakhs for which amount this cheque was made. There was,
thus, clear non-compliance of the requirement of Section 269 UG (1) of the
Act. The consequence envisaged by Section 269 UH of the Act ensued.

Accordingly, the order dated April 24, 1995 made under Section 269 UD(i) by
the appropriate authority stood abrogated and the property was revested in
the transferors in terms of Sub-section (1) of Section 269 UH of the Act
with the other consequential results including those specified in Sub-
section (2) of Section 269 UH and Sub-section (3) of Section 269 UD. It is
not necessary to detail all the consequences which follow as a result
thereof, in terms of the Income-tax Act, 1961 and any other laws which may
be applicable. In view of the fact that the cheque for the amount of Rs, 60
lakhs has not been encashed, the remaining amount of Rs. 2,98,84,384 has
become refundable to the Central Government as on June 1, 1995, which would
be refunded by the appellants with interest @ 12% per annum from June I ,
1995 till the date of payment. It is directed accordingly. All the
consequences in accordance with law including the requirement of execution
of the conveyance in favour of the appellants follow as already indicated.This appeal is allowed in the manner indicated. No costs.

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