Case: Prima Realty Vs. Union Of India And Ors

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 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 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 tender of the amount of consideration to this extent and, therefore, non-compliance with section 269UG(1) resulting in the consequences provided in section 269UHAdmittedly, 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 appellants partnership firm. Does it describe the appellant as the payee ? In Davies v. Elsby Brothers Ltd. 1960 (3) ALLER 672(CA), at page 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 " ....... I 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 the 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 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 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 at 12 per cent. per annum from June 1, 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

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]The appellant/transferee is awith 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, clearwith 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(1) of section 269UH of the Act with the other consequential results including those specified in(2) of section 269UH and(3) of section 269UD. It is not necessary to detail all the consequences which follow as a result thereof, in terms of theAct, 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 at 12 per cent. per annum from June 1, 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