KESHO RAM PASSEY Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) THIS is a petition by Shri Kesho Ram Passey under arts. 226/227 of the Constitution of India for issuing a writ of certiorari quashing orders of respondent No. 1 as conveyed to him through letters, annexs,: P-6, P-9, P-11 and P-13.

(2.) TO highlight the questions that fall for determination, the facts, as they emerge from the pleadings of the parties, may be set down. Shri Kesho Ram Passey, petitioner, sold a plot of land situate at Patiala, on August 1, 1980, for a consideration of Rs. 39,120. He instructed his bankers, the State Bank of Patiala, Patiala, to deposit Rs. 40,000 (by making the figure round) in the 7-Year National Rural Development Bonds (hereinafter called "the Bonds"), through the agency of the State Bank of India, Chandigarh, who were duly authorised agents to accept such payments on behalf of the Reserve Bank of India. The abovesaid amount in the form of a bank draft along with an application on a prescribed form were sent by the petitioner to the State Bank of India through State Bank of Patiala, Patiala, on January 23, 1981, i. e. , well within the statutory period of six months from the date of transfer. The State Bank of India on receipt of this amount made the necessary entries in the receipt register on January 28, 1981, which again was within the prescribed period.

(3.) ON May 22, 1981, the Reserve Bank of India informed the petitioner that he was not entitled to exemption from the capital gains tax as the investment in the scheme had been made by him beyond the period of six months from the receipt of consideration. A copy of this letter is annexed as annex. P-6 to the petition. The petitioner wrote to the Reserve Bank of India and the State Bank of India, Chandigarh, that the application form of the petitioner for investment of Rs. 40,000 with the Bonds duly filled in and signed having been sent on January 23, 1981, along with a bank draft for the said amount, was within the prescribed period of six months from August 1, 1980, and that the objection that the investment had been made beyond six months was wholly untenable. The State Bank of Patiala, Patiala, also addressed a communication to the manager, Reserve Bank of India, on May 30, 1981, reiterating that Shri K. R. Passey had tendered his application for inventing Rs. 40,000 in the Bonds, through them and the amount was remitted to the State Bank of India, Chandigarh, along with the application form, in duplicate, duly filled in and signed on January 23, 1981. The State Bank of India, Chandigarh, vide their letter dated February 3, 1981, intimated the State Bank of Patiala, that the subscriber has not mentioned the amount of sale proceeds received in column No. 4 and advised them to resubmit the same (application) duly completed immediately for onward transmission to the Reserve Bank of India: The needful was immediately done and the information was sent to the State Bank of India, vide letter dated February 7, 1981. The State Bank of India sent a provisional receipt in respect of the application tendered for the Bonds and the receipt was sent to the beneficiary. Under these circumstances, it could not be said that there was any delay and the amount was not invested by the applicant within the stipulated period of six months and that the subscriber was not entitled to exemption from the capital gains tax. It was requested that Shri Kesho Ram Passey be issued the Bonds for the amount invested. A copy of this letter was addressed to the State Bank of India, Chandigarh. On September 4, 1981, the State Bank of India, Chandigarh, addressed a letter to the Manager, Reserve Bank of India, in which it was stated that an application for the Bonds favouring Shri Kesho Ram Passey was received in their office from the State Bank of Patiala, Patiala, on January 28, 1981, and as the amount of net sale proceeds realised was not mentioned therein under col. No. 4, the same was returned. There was hardly any delay in returning this application. The application duly completed was submitted to them, vide letter dated February 7, 1981. The bank draft, which accompanied the application, for Rs. 40,000 was realised on February 19, 1981, and the amount was remitted to the State Bank of India, Calcutta, on February 20, 1981. The Reserve Bank of India, vide their letter dated October 17, 1981, reiterated their earlier stand that in order to earn exemption from the capital gains tax under Section 54e of the I. T. Act (hereinafter called "the Act"), the petitioner should have invested the sale proceeds of the property in the Bonds within six months, i. e. , by February 1, 1981. Since in this case, the complete application was received on February 12, 1981, Shri Kesho Ram Passey's investment became ineligible for exemption under Section 54e of the Act. Despite repeated representations by the petitioner, the Reserve Bank of India did not change their stand. Aggrieved, the petitioner has tiled this writ petition.