9911796707
TMI Blog1996 (11) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 appropriate authority on January 30, 1995, giving details of the persons " interested in the consideration ". As required by the proviso to section 269UD(1) the purchase order had to be made on or before April 30, 1995. Show-cause notice was issued under section 269UD(1A) addressed to respondents Nos. 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 fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reto 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 compliance with this requirement under section 269UG(1) 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 favour of respondents Nos. 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, par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : " 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 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 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant/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 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 " Prime Reality 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 partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onoured 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 under section 269UD(1) by the appropriate authority stood abrogated and the property was revested in the transferors in terms of sub-section (1) of section 269UH of the Act with the other consequential results including those specified in sub-section (2) of section 269UH and sub-section (3) of section 269UD. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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