Case: Prima Realty Vs. Union Of India And Ors

In short, the challenge is on the ground that the compulsory purchase order stood abrogated 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.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.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 firm ". On April 13, 1995, Dr. V. S. J. Rao expired and was survived by respondents Nos. 13 to 16 as the legal heirs.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 269UD(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 lakhsthousand three hundred andonly). 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 date 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 croresd three hundred andonly). 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 269UG(1) requires that the amount of consideration payable in accordance with the provisions of section 269UF 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(1), or, as the case may be,(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(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.filed with the appropriate authority. The dispute relates to the compliance with this requirement under section 269UG(1) of the ActOn 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. Raos 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 ofwith section 269UG(1). On June 21, 1995, the appellant filed 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 revesting of the property in the transferors on the failure of payment of consideration within the prescribed period had ensued by virtue of section 269UH(1). However, the Division Bench of the Bombay High Court (see 1997 (223) ITR 634) dismissed the writ petition. Hence, this appeal by special leave

Court's reasoning:
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