TMI Blog1996 (11) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 269UH(1) of the Act in view of the failure of the Central Government to tender under section 269UG(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 269UE(1) of the Act. The material facts are these. An agreement for sale of the right, title and interest of respondents Nos. 6 to 12 and one Dr. V. S. J. Rao (in all eight transferors) was made on January 13, 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 the statutory Form No. 37-I as required by section 269UC(1) and (3) read with rule 48L duly signed by all the parties to the agreement was filed with the appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned becomes vested in the Central Government under sub-section (1), or, as the case may be, sub-section (6) of section 269UE. 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 269UE 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 269UG(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 Nos. 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 the 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-I filed with the appropriate authority. The dispute relates to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 CIT v. Patney and Co. [1959] 36 ITR 488 ; [1959] Suppl. 2 SCR 868, 873, it was held that (at page 491) : " 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 be any express or implied authority to send it by post." In Shri Jagdish Mills Ltd. v. CIT [1959] 37 ITR 114 ; [1960] 1 SCR 236, 247, it was held as under : " The stipulation in the contract between the appellant and the Government was that the payment would be 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has no merit. The next contention of Shri Nariman is that the exact amount required to be 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 269UG(1). This contention also fails. The question now is of the effect of the descript ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment 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 would 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 with the requirement of section 269UG(1) of the Act. The consequence envisaged by section 269UH of the Act ensued. Accordingly, the order dated April 24, 1995, made unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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