Section 269UH — Re-vesting of Property in the Transferor

CHAPTER XX-C — PURCHASE BY CENTRAL GOVERNMENT OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF TRANSFER

Section 269UH — Re-vesting of property in the transferor on failure of payment or deposit of consideration

Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise

Status: Historic / spent. Chapter XX-C was inserted by the Finance Act, 1986 and brought into force area-wise under section 269U; by section 269UP it does not apply to any transfer of immovable property effected on or after 1 July 2002. The pre-emptive-purchase machinery is therefore dormant. The section is reproduced and annotated in full for completeness of the Treatise.

Finance Act, 2026: No amendment. The Finance Act, 2026 does not touch any provision of Chapter XX-C (sections 269U to 269UP).

Mechanism: If the Central Government fails to tender under section 269UG(1) or deposit the consideration within the prescribed period, the purchase order stands abrogated and the property re-vests in the transferor, with provision for return of possession and consequential matters.

Litigation profile: Litigated together with section 269UG — automatic abrogation and re-vesting on default in payment/deposit.

A. COMMENTARY

Automatic abrogation

Section 269UH is the citizen's protection against an acquisition without payment. If the Central Government does not tender the consideration under section 269UG(1), or deposit it, within the prescribed period, the purchase order made under section 269UD 'stands abrogated' and the property re-vests in the transferor on the expiry of that period. The re-vesting is automatic and self-operating; it does not depend on any further order, application or adjudication.

Prima Realty — the leading illustration

Prima Realty v. Union of India is the leading case. Because the tender by cheque named the wrong payee, there was no valid tender under section 269UG(1) within time; consequently, by force of section 269UH(1), the purchase order stood abrogated and the property re-vested in the transferors, who became entitled to consequential reliefs (including restoration of possession). The decision shows that the State cannot save a defective tender after the event — the statutory consequence is mechanical.

Consequential restoration

On re-vesting, the section and the scheme require restoration of the parties to their pre-order position, including return of possession taken under section 269UE. The provision thus closes the loop: vesting under section 269UE is provisional in the sense that it is undone if the State defaults on its reciprocal duty to pay within time.

Candour

There is little authority on section 269UH apart from its operation in tender-default cases such as Prima Realty; it is best understood as the automatic remedial consequence attached to a breach of section 269UG.

B. STATUTORY TEXT (verbatim)

Reproduced verbatim from the Income-tax Act, 1961, as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no change to Chapter XX-C). Page-header/footer artefacts of the source PDF have been removed; wording, clause-lettering and punctuation are unaltered.

Re-vesting of property in the transferor on failure of payment or deposit of consideration.

269UH. (1) If the Central Government fails to tender under sub-section (1) of section 269UG or deposit under sub-section (2) or sub-section (3) of the said section, the whole or any part of the amount of consideration required to be tendered or deposited thereunder within the period specified therein in respect of any immovable property which has vested in the Central Government under sub-section (1) or, as the case may be, sub-section (6) of section 269UE, the order to purchase the immovable property by the Central Government made under sub-section (1) of section 269UD shall stand abrogated and the immovable property shall stand re-vested in the transferor after the expiry of the aforesaid period :

Provided that where any dispute referred to in sub-section (2) or sub-section (3) of section 269UG is pending in any court for decision, the time taken by the court to pass a final order under the said sub-sections shall be excluded in computing the said period.

(2) Where an order made under sub-section (1) of section 269UD is abrogated and the immovable property re-vested in the transferor under sub-section (1), the appropriate authority shall make, as soon as may be, a declaration in writing to this effect and shall—

(a) deliver a copy of the declaration to the persons mentioned in sub-section (2) of section 269UD ; and

(b) deliver or cause to be delivered possession of the immovable property back to the transferor, or, as the case may be, to such other person as was in possession of the property at the time of its vesting in the Central Government under section 269UE.

C. AUTHORITIES

The authority below establishes the automatic abrogation/re-vesting consequence of a default in payment or deposit.

Automatic abrogation and re-vesting on payment default

Prima Realty v. Union of India (1997) 223 ITR 655 / (1996) 11 SCC 65 / AIR 1997 SC ... (SC)

Court / Bench Supreme Court of India (J.S. Verma and B.N. Kirpal JJ.); decided 18 November 1996.

Issue Whether tender of the consideration by a cheque drawn in favour of a wrongly named payee ('Prime Reality Ltd.' instead of the firm 'Prima Realty') was a valid tender under section 269UG(1).

Held Misdescription of the payee amounted to tender to a different legal entity; there was no valid tender within the prescribed period under section 269UG(1). Consequently the purchase order stood abrogated under section 269UH(1) and the property re-vested in the transferor, with consequential reliefs.

Relevance The leading decision on sections 269UG (manner and timing of tender/deposit) and 269UH (automatic re-vesting on failure to tender or deposit within time). Compliance with section 269UG is strict.