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 of 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 was 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 accept 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 personally. This fact is not disputed by the transferor. The tender of this amount has therefore to be accepted as validly made within the prescribed period.
6. The next submission of Shri Nariman is that at least the non-payment of balance amount of Rs 50 lakhs even on 1-3-1994 and its payment much later on 8-4-1994 was a clear non-compliance of the requirement of Section 269-UG(1) resulting in the consequences spelled out in Section 269-UH(1) of the Act. It was submitted that as a consequence of the re-vesting of the property in the transferor on the purchase order standing abrogated, all the logical consequences thereof in accordance with the law must necessarily ensue. This is the real question for decision in the present case.
7. Learned counsel for the Revenue in reply submitted that the agreement between the transferor and the transferee enabled the retention of the amount of Rs 50 lakhs out of the total amount of consideration till vacant possession of the outhouses of the bungalow was also handed over to the purchaser (transferee) and since the vacant possession of some of the outhouses and servant quarters had not been given till 18-4-1994, there was no obligation on the Central Government to pay this amount till that date. Learned counsel places reliance on the relevant terms in the agreement entered into between the transferor and the transferee in this behalf.
8. A perusal of the purchase order dated 27-1-1994 made under Section 269-UD(1) shows that this argument cannot be accepted. The operative part of the purchase order is as under:
“For the purpose of payment under Section 269-UF(1) read with Section 269-UA(b), the following adjustments have to be made.
As mentioned in para 8 above, out of total consideration, payment of Rs 17,25,00,000 is deferred as under:
(i) Rs 7,62,50,000 for 120 days;
(ii) Rs 9,62,50,000 for 180 days.
In terms of provisions of Section 269-UA(b) of the Act, read with Rule 48-1 of the IT Rules, the value of Rs 17,25,00,000 discounted for the days mentioned above, works out to Rs 16,68,54,154. The consideration payable by the Central Government thus works out to Rs 18,68,54,154.”
(emphasis supplied)
It is clear from the operative part of the purchase order that after referring to all the facts including the terms of the agreement, the consideration payable by the Central Government was clearly stated at the amount of Rs 18,68,54,154 and that no mention 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 the property including the outhouses and servant quarters. The order clearly says that this was the amount for the purpose of payment under Section 269-UF(1) read with Section 269-UA(b) of the Act. Learned counsel for the Revenue did not dispute that if this submission is not accepted then the logical consequences mentioned in Section 269-UH(1) must follow i.e the abrogation of the purchase order and re-vesting of the property in the transferor with all consequential results, in accordance with law.
9. The plain language of Section 269-UG(1) leaves no doubt that in the facts and circumstances of the case, as a result of non-payment of the balance amount of Rs 50 lakhs in terms of the express requirement of Section 269-UG(1), the failure of the Central Government has resulted in attracting Section 269-UH of the Act. Accordingly, the order dated 27-1-1994 made under Section 269-UD(1) by the appropriate authority stood abrogated and the property was re-vested in the transferor 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-UL. 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.
10. Mr Nariman, learned counsel for the appellant (transferee) stated that the amount of Rs 19,12,69,962 inclusive of approximately Rs 44 lakhs paid as a result of the rectification order which is required to be refunded by the transferor to the Central Government would be paid by the transferee to the Central Government on behalf of the transferor out of the purchase price required to be paid by the transferee to the transferor under the agreement of sale between them on 24-10-1994. This statement is placed on record at the common request of Shri Nariman, learned counsel for the transferee and Shri Sorabjee, learned counsel for the transferor.
11. For the aforesaid reasons, these appeals are allowed with the result that the transferee's Writ Petition No. 862 of 1994 filed in the High Court stands allowed in the manner indicated above. The transferee is also permitted to withdraw the amount of Rs 10 crores deposited in terms of the order made by this Court together with the interest accrued thereon.