IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 2646 OF 2005 UNION OF INDIA ... Appellant VERSUS MUKUND LALDAS VORA ... Respondent ORDER facts which led to appeal before this Court are that respondent herein had agreed to sell his property being residential flat and car parking space for consideration of Rs. 3,70,00,000/-. It was, inter alia, agreed between parties that out of aforesaid amount of consideration Rs. 3,70,00,000/-, sum of Rs. 35,00,000/- would be paid by vendee to respondent immediately and balance amount of Rs. 3,35,00,000/- shall be paid within 48 hours after receipt of no objection certificate from Income-tax Department and/or from Housing Society or 15th March 1994 whichever is later. transfer charges of society were to be borne by vendor and vendee in ratio of 50:50. In pursuance of aforesaid agreement, respondent and purchaser furnished to appellant statement of transfer of immovable property as required by law. Signature Not Verified Digitally signed by Gulshan Kumar Arora Date: 2015.06.02 17:04:05 IST Reason: respondent and purchaser were served with C.A. No. 2646/ 2005 1 show cause notice dated 31st January, 1994, under Section 269UD of Act, calling upon them to show cause as to why order should not be made directing Central Government to purchase said premises under Section 269UD of Act. In reply to show cause notice, it was contended on behalf of respondent that discounting method adopted by appellant was unconstitutional and in any event erroneous. It was further contended that retention of amount in sum of Rs. 5,00,000/- towards transfer fees allegedly payable to society was illegal much less highly excessive since transfer fee was only Rs. 25,000/- out of which petitioner's share was to extent of Rs. 12,500/- only being 50% of transfer charges. appropriate authority rejected all such contentions raised on behalf of respondent and acquisition was confirmed for apparent consideration of Rs. 3,62,25,050/-. On 23rd February, 1994, respondent was served with another notice calling upon him to hand over possession of said premises and relevant documents with respect of title thereof. Pursuant to said notice, respondent handed over possession of said premises to appellant and accepted apparent consideration under protest. C.A. No. 2646/ 2005 2 Being aggrieved by impugned order dated 18th February, 1994, passed by appropriate authority respondent filed writ petition before High Court of Bombay. High Court of Bombay allowed writ petition deciding against appropriate authority. Hence present appeal is preferred confining to finding of Bombay High Court in regard to Discounting procedure. It is clear from above that issue which fell for consideration before High Court pertains to principle of discounting under provision of Section 269UA of Income Tax Act. High Court has allowed writ petition in question answering aforesaid question in following manner: - 19. Having heard parties at length, it is not in dispute that principle of discounting is well known and regularly applied in accounting. In plain words, discount means present value of payment due in future. word discount in Oxford English Dictionary means abatement or deduction from amount or from gross reckoning or value of anything and is used in commerce to mean as deduction made for payment before it is due. word discount has no technical or universal meaning and perhaps its most common meaning is that it is equivalent to payment of interest in advance. 20. principle of discounting is prescribed under Chapter XX-C of Act. Even though agreement between parties provides for transfer, Central Government is require to pay entire consideration within stipulated period from date of purchase. Broadly, order for purchase is to be made within period of three months from date of receipt of Form 37-1 by Competent authority and in case purchase order is passed, then Central Government has to tender purchase price within one month therefrom. In other words, though agreement provides for deferred C.A. No. 2646/ 2005 3 payment, transferors receive payment within stipulated period and that may not necessarily be in consonance with terms of agreement. As transferors get advantage of payment which was due in future, in that event transferors cannot complain if payment is made with discount. If payment is made before date stipulated in agreement, then concept of discounting as already stated hereinabove, which is primarily rebate results in reduction of sum payable. In other words, amount of rebate as prescribed under rules is substracted from amount payable in consideration of pre-payment or payment before due date and if amount is substracted then what remains is discounted value of property. If delayed payment is to be made i.e. after date for payment of consideration mentioned in agreement, when, for want of pre-payment concept of discounting shall not be attracted. In this case on facts, consideration was payable under agreement on or before 15th March, 1994, whereas payment of consideration by department was made on 25.4.1994, obviously, after date of payment mentioned in agreement. In that event of discounting would not attracted. In this case, on facts of case, consideration was payable under agreement on 15th March 1994, whereas payment of balance consideration of Rs.3,35,00,000/- was made by respondent No. 1 on 25.4.1994. Obviously, after date of payment mentioned in agreement. If that be so, concept of discounting as understood could not have been invoked by Competent Authority. As matter of fact, petitioner would have been entitled to interest on delayed payment from department through it is not open for him to claim such interest for want of statutory provisions under Act. It is thus clear that on facts; present case is squarely covered by Division Bench of this Court in case of Shri Chand Raheja (supra). As matter of fact, issue as to whether discounting value should be determined with reference to date of agreement, or payment, in our opinion, does not arise in facts of present case. It is, therefore, unnecessary to go into that question. case of Vimala Devi and / or Kamladevi (both supra) have no application to facts of this case. This case is squarely covered by Division Bench judgment in case of Shri Chand Raheja (supra). Accordingly, it needs to be decided following principles laid down in that case. 21. For reason stated hereinabove, we hold that appropriate authority was not entitled to C.A. No. 2646/ 2005 4 determine discounting value payable to petitioner transferor, applying concept of discounting value as it does not get attracted, in facts of case, since payment made by Appropriate Authority was subsequent to date of payment prescribed in agreement for payment. It was not open for Appropriate Authority to estimate or calculate discounting value either from date of agreement or from date of payment. It is, therefore, necessary to give direction to Appropriate Authority to pay entire balance consideration without discounting value of consideration payable to transferor-petitioner. 22. Accordingly, impugned order is quashed and set aside and respondent no. 2 is directed to make within 3 months from today, payment of Rs. 7,75,000/- to petitioner-transferor with interest at 112% p.a. from 25th March 1994 till 31st December 2002 and thereafter w.e.f. 1.1.2002 till payment in full and final @ 10% p.a. instead of 12% p.a. together with Rs.5,00,000/-(Rupees five lacs only), retained by respondent No. 21 on account of transfer fees with interest thereon @ 10 % p.a., from 18.2.1994 to 10.11.1997 together accrued interest thereon w.e.f. 11.11.1997 i.e. from date of investment with State Bank of India till liquidation thereof. If amounts as directed hereinabove are not paid within stipulated period then entire amount due as on 23.4.2004 shall carry further interest @ 12% p.a. until payment in full and final. We find that aforesaid approach of High Court is clearly contrary to judgment of this Court in 'Ramesh Bhai J. Patel and others v. Union of India' [2001 (1) SCC 243] where discounting principle is stated in following manner: - 5. On plain reading of Section 269-UA(b), there is no interlinking of apparent consideration to be determined thereunder with payment to be made by Central Government on purchase under Chapter XX-C. Section 269-UA(b) prescribes how apparent consideration under agreement, that is, consideration for agreement, is to be determined, and it states that if consideration under agreement is payable on any date or dates falling after date of C.A. No. 2646/ 2005 5 agreement, value of consideration that is payable after date of agreement shall be deemed to be discounted value of such consideration as on date of agreement. In other words, apparent consideration in such case will not be consideration that is stated in agreement but it shall be amount thereof less discount to be calculated in manner set out in definition. period of such discount shall be period between date of agreement and date or dates on which consideration or part thereof is payable. 6. To put it differently, because, under agreement, transfer gives transferee time to pay consideration, consideration is assumed to comprehend some element of interest for such delayed payment, and this is ascertained and deducted to arrive at real consideration for agreement, or apparent consideration. period of delay necessarily starts on date of agreement. As result, judgment impugned has to be set aside. We, accordingly, allow this appeal, set aside judgment and dismiss writ petition which was filed by respondent in High Court. J. [ A.K. SIKRI ] J. [ ROHINTON FALI NARIMAN ] New Delhi; May 07, 2015. C.A. No. 2646/ 2005 6 (REVISED) ITEM NO.116 COURT NO.12 SECTION IIIA SUPREME COURT OF INDIA RECORD OF PROCEEDINGS Civil Appeal No(s). 2646/2005 UNION OF INDIA Appellant(s) VERSUS MUKUND LALDAS VORA Respondent(s) (with office report) Date : 07/05/2015 This appeal was called on for hearing today. CORAM : HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN For Appellant(s) Ms. Neeraj K. Kaul, ASG. Mr. Arijit Prasad, Adv. Ms. Aakanksha Kaul, Adv. Mrs. Anil Katiyar, Adv. For Respondent(s) Mr. Umesh Kumar Khaitan, Adv. UPON hearing counsel Court made following ORDER appeal is allowed in terms of signed order. amount deposited in this Court and kept in Fixed Deposit pursuant to this Court's order dated 11.04.2005 be returned to Union of India along with interest accrued thereon till date. (Nidhi Ahuja) (Suman Jain) COURT MASTER COURT MASTER [Signed order is placed on file.] C.A. No. 2646/ 2005 7 ITEM NO.116 COURT NO.12 SECTION IIIA SUPREME COURT OF INDIA RECORD OF PROCEEDINGS Civil Appeal No(s). 2646/2005 UNION OF INDIA Appellant(s) VERSUS MUKUND LALDAS VORA Respondent(s) (with office report) Date : 07/05/2015 This appeal was called on for hearing today. CORAM : HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN For Appellant(s) Ms. Neeraj K. Kaul, ASG. Mr. Arijit Prasad, Adv. Ms. Aakanksha Kaul, Adv. Mrs. Anil Katiyar, Adv. For Respondent(s) Mr. Umesh Kumar Khaitan, Adv. UPON hearing counsel Court made following O R D E R appeal is allowed in terms of signed order. (Nidhi Ahuja) (Suman Jain) COURT MASTER COURT MASTER [Signed order is placed on file.] C.A. No. 2646/ 2005 8 Union of India v. Mukund Laldas Vora