Section 269UE: Vesting of Property in the Central Government
How a government purchase order affected property ownership, encumbrances, tenants and possession under the former Chapter XX-C regime.
Overview of Section 269UE
Section 269UE formed part of Chapter XX-C of the Income-tax Act, 1961, which regulated the Central Government's pre-emptive purchase of certain immovable properties. When the appropriate authority made a valid purchase order under Section 269UD(1), Section 269UE determined when the property or property-related rights vested in the Central Government, who had to surrender possession, and how existing encumbrances and leases were treated.
Historical scope: Under Section 269UP, Chapter XX-C does not apply to transfers of immovable property effected on or after 1 July 2002. This provision is therefore relevant principally to historical transactions, orders, title records and disputes.
Section 269UE(1): vesting and existing interests
For immovable property within Section 269UA(d)(i), the property vested in the Central Government on the date of the purchase order under Section 269UD(1), in terms of the agreement for transfer referred to in Section 269UC(1).
The proviso permitted the appropriate authority, after providing the hearing contemplated by Section 269UD(1A), to declare an encumbrance or leasehold interest void if it was specified in the agreement with a view to defeating Chapter XX-C. Only then would the property vest free from that declared-void interest. The later statutory wording must not be misread as automatically extinguishing every genuine lease or encumbrance.
Section 269UE(2): delivery of possession within 15 days
The transferor or another person in possession was generally required to surrender or deliver possession to the appropriate authority, or its authorised representative, within 15 days after service of the purchase order on that person.
Protection for bona fide occupiers: This requirement, together with the enforcement provisions in subsections (3) and (4), did not apply to a bona fide encumbrance holder or bona fide lessee whose interest had not been declared void and who was entitled to remain in possession after transfer on the terms of the agreement.
Sections 269UE(3) and (4): taking possession
If a person bound to surrender possession failed or refused to do so, subsection (3) authorised the appropriate authority or its duly authorised representative to take possession, using necessary force. Under subsection (4), the appropriate authority could requisition assistance from a police officer, who was obliged to comply. These provisions must be read together with the statutory protection for qualifying bona fide occupants under subsection (2).
Section 269UE(5): liabilities for encumbrances
Vesting in the Central Government did not release the transferor or another person, other than the Central Government, from liabilities arising from encumbrances on the property. Those liabilities could continue to be enforced against the persons responsible, notwithstanding other laws.
Sections 269UE(6) and (7): transfer of rights in property
Where the purchase order concerned rights of the kind described in Section 269UA(d)(ii), subsection (6) vested those rights in the Central Government and placed it in the position of the person who otherwise would have continued to hold them.
Subsection (7) extended the relevant vesting and possession machinery, so far as applicable, to land, buildings or parts of buildings associated with such rights, including buildings already constructed or proposed to be constructed.
Meaning of important legal expressions
- Appropriate authority
- The statutory authority constituted for Chapter XX-C purposes under Section 269UB.
- Transferor
- The person transferring or agreeing to transfer the immovable property or relevant property rights.
- Transferee
- The person acquiring or agreeing to acquire the immovable property or relevant rights.
- Vesting
- The legal effect by which ownership of the property or the specified rights passed to the Central Government under the applicable purchase order.
- Encumbrance
- A legal burden or third-party interest affecting property, such as a mortgage or other enforceable claim; its actual treatment depends on the statute and transfer agreement.
- Bona fide lessee
- A genuine lessee, as distinguished from a sham arrangement created to frustrate Chapter XX-C; the statutory protection also depends on the conditions in subsection (2).
Practical illustration
Assume a qualifying property was subject to a historical agreement of transfer, and the appropriate authority made a purchase order under Section 269UD. Section 269UE could vest the property in the Central Government on the order date. A transferor who received service of the order would ordinarily have 15 days to deliver possession. However, a genuine tenant whose lease was recognised in the agreement, not declared void and permitted to continue after transfer could retain the statutory protection under subsection (2). The result depends on the actual order, agreement and evidence.
Frequently asked questions
Does Section 269UE apply to new property transfers?
No. Section 269UP excludes transfers effected on or after 1 July 2002 from Chapter XX-C.
When did property vest in the Central Government?
For property covered by Section 269UA(d)(i), vesting occurred on the date of a valid purchase order under Section 269UD(1), subject to the statutory terms.
Did a tenant always have to vacate within 15 days?
No. Section 269UE(2) protected qualifying bona fide lessees and encumbrance holders who could continue in possession under the transfer agreement and whose interests had not been declared void.
Editorial update: 28 October 2026. This is a general explanation of historical statutory provisions, not advice on an individual title dispute or transaction.