Compulsory purchase under Chapter XX-C cannot defeat payment where encroachment was known and title has vested in Government.

Under Chapter XX-C, once a property is compulsorily purchased and vests in the Central Government, the transferor cannot be denied the apparent consideration on the ground that encroachment remains on the property. The encroachment was treated as part of the known condition of the property, not as a legal encumbrance defeating payment, particularly where the authority proceeded with knowledge of that condition and the transferor had already lost title and could not be compelled to perform an impossible act of delivery. The objection based on non-removal of encroachment was rejected, and payment of the apparent consideration was held due.

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Issues: Whether, after an order under section 269UD(1) of the Income-tax Act, 1961, the petitioner was entitled to payment of the apparent consideration despite the existence of encroachment on the property and the respondents' refusal to take possession.

Analysis: The property stood vested in the Central Government on the making of the purchase order, and the respondents could not insist on compliance with an obligation that the petitioner could not effectively perform after losing title to the property. The encroachment was not treated as a true encumbrance in the facts of the case because it conferred no legal right on the encroacher, who had already suffered a decree for removal. The order for compulsory purchase had been made with knowledge of the encroachment, and the apparent consideration necessarily reflected the condition of the property. The respondents, having elected to proceed under Chapter XX-C, could not retain the order and at the same time withhold payment on the ground that possession had not yet been delivered.

Conclusion: The petitioner was entitled to receive the apparent consideration, and the respondents were bound to pay it; the objection based on non-removal of encroachment was rejected.

Ratio Decidendi: Once property is compulsorily purchased under Chapter XX-C after the authority has taken the relevant condition of the property into account, the Government cannot refuse payment of the apparent consideration on the ground that encroachment remains, especially where the transferor has lost title and cannot be compelled to perform an impossible obligation.

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